Diplomacy & Crisis News

Suppose one were to plot out on a map the progress of two jihadist insurgencies in Africa: the Islamic insurgency in the Maghreb and the Boko Haram insurgency. The former began in Algeria after the 2002 Algerian Civil War and has since spread east into Libya, northwest into Morocco, southwest into Mauritania, and south into Mali. The latter insurgency began in the extreme northeast of Nigeria and has since spread east into Chad, north into Niger, and west into Benin. If one were to do this, shading in each country along the way, one would see that a single, little-known country stands in the way of both insurgencies, impeding their expansion and separating their fighters in the field. That country is Burkina Faso.

Last weekend, the military government of Burkina Faso demanded that France withdraw its last 400 special forces troops from the country. France had kept the fighters in Burkina Faso after a recent series of troop withdrawals on the continent to assist in the fight against jihadist insurgents. The current Burkinabe military government took power in September 2022 in a coup against the old military government over its failure to handle the nation’s insurgency. Likewise, the previous military government took power in a January 2022 coup against former President Roch Marc Christian Kabore over his failure to handle the nation’s insurgency. The French troops in Burkina Faso had been sent by French president François Hollande in 2013 at Mali’s request after jihadist groups overran the northern half of the country. Moreover, the French troops proved effective. In 2014, France launched Operation Barkhane and, within a year, rolled back jihadist gains and confined the insurgents to a few remote pockets deep in the country’s interior. If the last French troops leave within a month, as the new Burkinabe government demanded, jihadist groups operating in Africa may be encouraged to redouble their efforts against the governments of the Maghreb and the Sahel.

It is no exaggeration to say that the fate of all of Africa might hang in the balance. As Burkina Faso goes, so will the continent.

The southern half of Burkina Faso lies in the lush Sudanian savannah. This savannah is the type of landscape that most Americans associate with Africa—a luxuriant, tropical grassland broken by trees and shrubs. Burkina Faso’s northern half, however, lies in the Sahel, which stretches across the African continent, from the Atlantic Ocean in the west to the Red Sea in the east. The Sahel abuts the Sahara Desert and often features in global news cycles because of the many famines and droughts brought about by its harsh, semi-arid climate. It is important to recall that most African countries have only a wet and a dry season. In the savannah, the dry season means the trees lose their leaves, the shrubs shrink back, and the grasses dry out, only to bounce back in greater abundance when the rains arrive. In the Sahel, however, the wet season means that pastoralists hurry to graze their herds on the region’s sparse grasses before the dry season reduces the area to a desert.

Just as the Sudanian savannah teems with exotic wildlife, the Sahel brims with people; indeed, the region contains countries with some of the world’s highest birth rates. This vitality has also led to a troubling trend from which the Sahel gains most of its notoriety. Jihadist insurgent groups prowl about the region’s isolated settlements, terrorizing civilians and seeking recruits. The Sahel’s climatic volatility aids the jihadists in this latter endeavor, as desperate young men with no other source of employment can easily see in these jihadi groups a solution to their economic insecurity. When jihadism is the only show in town, an AK-47 becomes a meal ticket.

Traditionally, the Burkinabe government has handled the vast difference between its two main biogeographic regions and its peoples by applying a simple policy: in the wet season, maximize the country’s agricultural and pastoral productivity, especially in the fertile south, and use the taxes and other proceeds to employ workers in the north during the dry season, lest they become targets for jihadi groups. Under President Blaise Compaore, who took power in 1987 and resigned during a constitutional crisis in 2014, this policy smoothed over the seasonal transitions and ensured peace and stability. Compaore also enjoyed productive relations with regional Islamic organizations, managing to peacefully free many hostages. However, Compaore’s administration suffered from a failure in succession planning: he sought to cling to power with a constitutional amendment and made no provision for how to peacefully contain protests in the event of a public uprising. Within weeks of the proposed changes, Compaore had no choice but to step down and allow a military government to take power.

After Compaore stepped down, Burkina Faso went through six short-lived administrations. During that period, rival claimants to the presidency obstructed the smooth collection and spending of government funds to mitigate climatic concerns and their political repercussions. The exact chronology of what happened next is complicated due to the number of insurgent groups involved and their tendency to merge, split, and reconfigure themselves, but the upshot is that insurgents moved into northern Burkina Faso from Mali, adding a theater to the Islamist insurgency in the Maghreb and exposing a previously stable country to the ravages of opportunistic militant groups. Meanwhile, Nigeria—which had faced a devastating civil conflict since 2009, when Boko Haram launched its rebellion against the Nigerian government with the intent of establishing an Islamic state—saw an escalation in its conflict with Boko Haram when the jihadist group pledged allegiance to the Islamic State, kidnapped 276 schoolgirls, and embarked on a campaign of daily attacks against Christians and government officials. During that time, the French-led Operation Barkhane employed thousands of French and allied African troops to push back against militant groups. It proved successful until the 2021 Malian coup caused France to wind down and finally end operations in Mali.

Now that the Burkinabe government has announced its desire for a full French withdrawal, the security situation seems poised to deteriorate further. The worst case scenario is that jihadi fighters from the Maghreb insurgency could establish a foothold in Burkina Faso, swarm across the narrow territory of Togo, link up with Boko Haram insurgents in Benin, and from there flood into southern Nigeria. The best case scenario is that these jihadi groups resume their old rivalries instead of joining forces and devote more time to fighting each other than securing areas of the Sahel and Sudanian savannah to prepare for attacks, including against Europe and the United States.

There are no easy solutions or obvious paths forward for the worsening security crisis in West Africa. The situation is made even more complicated by Ghanaian president Nana Akufo-Addo’s allegations that the Burkinabe government hired the Wagner Group to help combat jihadists.  If true, such a deal could precipitate further escalation between the West and Russia. Furthermore, the United States and its allies ought to have been humbled by the chaotic withdrawal from Afghanistan and should approach any long-term military entanglement with caution.

However, the United States and its allies might do well to employ a strategy that seems obvious but wouldn’t attract the same attention as a military response: economic incentives. So far, the French and their West African partners have sought to reduce the number of jihadist fighters in the most traditional way: killing them. By way of historical analogy, the current French war on jihadism in West Africa seems to resemble the French campaign in Egypt and Syria from 1798 to 1801. Despite a string of early successes under Napoleon, the French ultimately had no choice but to withdraw their Armee d’Orient for lack of military and material support. Operation Barkhane sought to build on the success of Operation Serval but failed for the same reasons.

Instead, the French should recall another episode: the Viking siege of Paris in the ninth century. After the Frankish successors of Charlemagne proved incapable of deterring Viking attacks, the Vikings grew bold and, for the first time, settled in for a long siege instead of launching one of their usual raids. The Frankish king, Charles the Fat, ultimately opted to pay the Vikings 700 pounds in silver to abandon their siege and attack a rebellious region of the Frankish empire instead. Though fighting and raiding played a key role in Viking religion and culture, Viking raids also had clear economic motives. In the Sahel, where an AK-47 is like a meal ticket for desperate young African men in the way a battle axe might have once been a meal ticket for desperate young Scandinavian men, perhaps it is not necessary to kill insurgents if it is possible to disincentivize insurgency itself. Direct cash payments for public service or other projects could have a deterrent effect, as might grants to establish small businesses for aspiring entrepreneurs or feed depots for herders.

Jihadist insurgency in West Africa seems like both an intractable long-term threat and a present danger. Still, the United States ought to help France formulate alternative approaches to the problem to avoid repeating the same mistake and expecting a different result. One of the key consequences of the Viking siege of Paris was the Franks’ acknowledgment of the strategic importance of Paris. Perhaps the present crisis will at least alert the United States and its allies to the strategic importance of Burkina Faso, the linchpin of security in the Sahel and West Africa.

Anthony J. Tokarz is a banker, political consultant, and amateur historian from northern New Jersey. Additionally, Anthony occasionally moonlights as a policy consultant for the Federation of Catholic Family Associations in Europe (FAFCE), a Brussels-based NGO that advocates for the rights of families and children in the European Union and at the Council of Europe. The views expressed in his writing are his own.

Image: DVIDS.

The Inflation Reduction Act (IRA) of August 2022 is the cornerstone of the Biden administration’s energy and climate change policy, earmarking $369 billion for energy security and climate change. It is also galvanizing the creation of a North American Battery Belt. The matrix of battery and electric vehicles (EVs) manufacturing plants stretches from the old Rust Belt states in the Great Lakes region through Tennessee and Kentucky and into a swath of southern states. It also reaches parts of Canada and Mexico. For those states where the battery belt is expanding, this means jobs, revenues, and better infrastructure. The Battery Belt and, by extension, the EV industry, is a substantial development for the U.S. economy. But the process of developing this broad expanse—as currently envisioned—is going to be a slower and more challenging process than its promoters are portraying. 

Why a Battery Belt?

Why create a Battery Belt in North America? One of the main drivers is the EV. In making the great energy transition from fossil fuel dependence to a world powered by clean energy (or renewables), gas-guzzling autos are being relegated to the dustbin of history, replaced by the no carbon footprint EV. President Joe Biden has indicated that the goal is for the U.S. auto industry to make EVs 50 percent of all vehicles sold in the U.S. by 2030. While that target may be overly optimistic, IRA is accelerating the process. And batteries, made of lithium, cobalt, graphite, and nickel, are central to the process. No batteries, no EVs. 

Equally important in the great energy transition and driving demand for batteries is the development of stationary energy systems. These are needed for the national power grid to store energy storage when wind and solar power generation may not match demand. 

A major challenge for the U.S. energy transition is the heavy dependence on China for batteries, especially in regard to the EV industry. In 2022, Chinese companies dominated the top 10 suppliers of batteries for EVs, accounting for 56 percent of world production. Chinese battery makers are also major suppliers to Mercedes-Benz, Tesla, Volvo, and Volkswagen.

China has been relentless over several decades in knocking other producers out of the industry, making adept use of a lighter environmental regulatory regime, considerable state support, and an innovative cadre of business leaders. Equally important, China’s economic statecraft is supportive of those companies that provide the raw material for batteries: its lithium mining companies are now active in South America’s lithium triangle of Argentina, Bolivia, and Chile, which account for around 30 percent of the world’s lithium. China also provides considerable support for its other mining companies securing supplies of cobalt and nickel. 

If You Build It, They Will Come

The U.S. response to China’s dominance is a combination of protectionism and government support policies to develop the local battery industry (built up around gigafactories which combine lithium-ion battery and EV component production), the development of alternative battery chemistries, and battery recycling. While the latter two options are being pursued, they require long development periods before they become cost-efficient to meet demand from EVs and other battery users. 

Earlier efforts to support the United States had a mixed record. According to the Federal Reserve Bank of Dallas, an initial wave of investment came after the Great Recession, driven partially by $2.2 billion of funding allocated in the American Recovery and Reinvestment Act of 2009. However, the early battery plants were of relatively modest size, following relatively low sales of EVs. U.S. capacity fluctuated through the next decade—as China’s industry boomed. 

Three factors changed the EV battery business landscape. First, U.S.-Chinese relations soured during the Trump administration. This forced a major reassessment of U.S. supply chains and the need to bolster domestic production, including batteries. In 2022, the Biden administration invoked the Defense Production Act (from the Korean War era) with the intention of boosting the domestic supply of battery metals, with $2.8 billion going to companies working on EV battery supply chain projects in the United States. The Biden administration also entered into a pact to invest in critical mineral projects with allies such as Australia, Canada, the European Union, and the UK.

The second factor was that EVs began to sell in greater numbers, hitting record numbers globally in 2021. This was due to growing concern over climate change as well as the major U.S. auto companies recognizing that change was inevitable and that they need to compete with not only Tesla but a growing range of Chinese EV automakers, such as Great Wall and Aiways. 

The third factor was IRA, which has raised investment in the battery sector to new levels. According to Benchmark Mineral Intelligence, since IRA’s signing around $13.5 billion worth of investments have been announced, most of them clustered in the south up through the Midwest and Northeast.

The geography of the Battery Belt is being determined by proximity to auto production facilities, namely with the major U.S. companies, GM and Ford, as well as foreign companies like Toyota, Stellantis (Fiat Chrysler-PSA Group), and Volkswagen. This benefits states like Kentucky, Ohio, Tennessee, Illinois, and Michigan—as well as Canada and Mexico. States outside of the new Battery Belt include California and Nevada. 

Clean Energy, but…

While the development of a Battery Belt is a positive development for the U.S. economy, there are challenges. These include environmental concerns, indigenous peoples’ rights, finding enough skilled workers, and energy supply. In January, it was announced that the Australian lithium company Ioneer had secured a conditional commitment for a loan of up to $700 million from the U.S. Department of Energy to develop a lithium site that, when fully operational, will supply 400,000 EVs per year. Ioneer has already secured agreements with Ford and Toyota. While this indicates a degree of momentum in developing the U.S. battery and EV business, the permitting process for new lithium mines is lengthy. What could kill the project is a rare wildflower, Tiehm’s buckwheat. The Center for Biological Diversity is arguing that the lithium mine represents an “existential threat” to the flower.

Another proposed lithium mine in Nevada, Thacker Pass, is also being opposed by conservation groups. In North Carolina, another proposed mine has been stalled over regulatory issues. Currently, the United States has only one operational lithium mine, which cannot possibly meet American battery demand. This means that U.S. EV batteries will use Canadian, Argentine, or Chilean lithium. 

One last consideration is the issue of financing. For all the Biden administration’s enthusiasm for the development of a Battery Belt, ESG (Environment, Social, and Governance) represents a challenge to the mining part of Battery Belt development. Mining runs into a wall of concerns over biodiversity, ecosystem services, water management, mine waste, carbon footprint, hazardous substances, indigenous peoples’ rights, vulnerable people, and mine closure/after use. 

The U.S. battery belt is already having an impact on state and local governments in terms of jobs, revenues, and infrastructure. But Americans should be careful about the sales pitch – there is not going to be a rapid and easy transformation of energy generation and transportation. The push-pull of national security and economic needs vis-à-vis environmental concerns is part and parcel of the process. Indeed, the battery belt (and by extension critical metals mining) faces the same challenge facing wind and solar power; people support it, but don’t want it in their own backyards. There are tough choices to be made: do we keep a rare wildflower alive for future generations and not build a mine… or do we develop the mine, make batteries and EVs, and herald in a new energy age? Once the flower is gone, it cannot be replaced. 

Time is a factor in dealing with the environment. It is also a factor in geopolitics; China has little hesitation in securing access to critical metals even if the process includes environmental degradation both at home and abroad. And China wants a highly competitive battery and EV industry. This can cost the United States both jobs and revenue, as well as leave the country dependent on a rival power. America is putting the right tools on the work table to enhance its competitiveness with both batteries and EVs, but time is slipping away. Americans should remember the words of Benjamin Franklin, “Lost time is never found again.”

Dr. Scott B. MacDonald is the Chief Economist for Smith’s Research & Gradings, a Fellow with the Caribbean Policy Consortium, and a Research fellow with Global Americans. Prior to those positions, he worked for the Office of the Comptroller of the Currency, Credit Suisse, Donaldson, Lufkin and Jenrette, KWR International, and Mitsubishi Corporation. His most recent book is The New Cold War, China and the Caribbean (Palgrave Macmillan 2022).

Image: Shutterstock.

The Air Force has been clear about its plans to retire the F-22 Raptor in the 2030s, seemingly drawing a parallel between it and another legendary air-to-air fighter that flew into the sunset sooner than many had hoped — the Navy’s F-14 Tomcat.

You may be asking yourself, how are older jets like the F-15 and F-16 still in service if the F-22 is aging out of relevance? It’s a fair question — and like the Tomcat in the early 2000s, the answer comes down to a simple matter of cost versus capacity.

Unlike the Raptor, which has been out of production for more than a decade, the F-15 and F-16 never really stopped rolling off the assembly line floor. America’s new F-15EX, for instance, benefits from a breadth of avionics upgrades that required the same sort of hardware changes that seem prohibitively expensive for the Raptor — but most of those upgrades were actually funded over time by foreign customers like Qatar and Saudi Arabia.

Importantly, because these aircraft are widely operated and still in production, sustainment costs are lower, logistics are simpler, and parts are much easier to come by. The F/A-18 Super Hornet is also an older platform that remains in service, but it too is now expected to retire sometime in the 2030s.

The balance of cost versus capacity

The Air Force has to make some tough decisions about cost because it has very little leeway when it comes to requirements for capacity — or the number of jets needed to fill America’s defense obligations. The fact of the matter is, no matter how capable a single fighter may be, it can still only be in one place at a time — and that means ensuring the Air Force has enough fighters to meet its needs.

One Raptor may have a decent shot at downing three F-16s in a single sortie, but it can’t actually do the jobs of those three F-16s all at once. In other words, capability is sometimes just not as valuable as capacity. If you need 400 fighters to fulfill your mission requirements but can only afford 200 stealth jets, you may need to operate just 100 stealth jets and 300 cheaper 4th-generation fighters in order to get the job done.

This question of cost versus capacity isn’t a new one. In fact, it was presented as justification for the early dismissal of another dogfighting dynamo that was beloved by just about everyone (except by its maintainers and the DoD’s accountants) — the Grumman F-14 Tomcat.

The Raptor and the Tomcat

Entering service in 1974, the F-14 has been called the world’s first 4th generation fighter by some, and while that title is subject to debate, the F-14’s sheer combat potential coupled with its wild popularity following its appearance in 1986’s Top Gun could be seen as a parallel to today’s Raptor. While all of America’s fighters have fan clubs of their own, few are as widely beloved among aviation fans as the Tomcat or the Raptor.

In fact, the F-14’s $38 million price tag back in the early ’70s may seem like a bargain today, but when adjusted to 2022’s inflation, it comes out closer to $230 million per airframe — only a million more than the F-22’s per-unit price of $150 million per airframe when also adjusted to today’s inflation. And while the troublesome radar-absorbent coating and limit-pushing performance of the Raptor reportedly require between 40 and 43 hours of maintenance for every flight hour, the Tomcat reportedly needed as many as 50 hours of work or more for each hour in the sky, thanks to its complex variable geometry wings and… well, its limit-pushing performance.

Like the Tomcat, the Raptor was built to win a global conflict that never came and that would have justified its immense expense and maintenance requirements against a backdrop of looming nuclear annihilation. When these threats passed, the high costs of these fighters became harder to justify in political debate, resulting in the early retirement of both in comparison to their peers.

It’s entirely likely that, like the F-14, the F-22 will retire without ever seeing the war it was designed to fight. And like the Tomcat, some of the credit for deterring that terrible war rests squarely on the Raptor’s wings.

This article was first published by Sandboxx.

Alex Hollings is a writer, dad, and Marine veteran who specializes in foreign policy and defense technology analysis. He holds a master’s degree in Communications from Southern New Hampshire University, as well as a bachelor’s degree in Corporate and Organizational Communications from Framingham State University.

Image: DVIDS.

In Late December, the U.S. Treasury Department issued new regulatory filings as part of what it billed as a “historic” effort to address the humanitarian cost of sanctions. The core of the new regulatory exemptions is an effort to ease sanctions-related obstacles that prevent the work of non-governmental organizations (NGOs) and charities from reaching populations. More broadly, these new measures are part of the Treasury Department’s ongoing effort to address the harm that sanctions often cause.

These concerns are certainly well-founded. As both scholarship and many United Nations reports have made clear, sanctions cause a significant increase in unemployment, inflation, and poverty in targeted states. Sanctions can severely restrict access to essential goods, including food and medicine. They have also often had a negative impact on a variety of other non-economic factors. Scholars largely believe that economic sanctions tend to reduce the level of democracy in states, expand corruption, and undermine human rights. This became a particular cause of concern in the midst of the COVID-19 pandemic as sanctioned countries struggled to acquire vaccines and basic medical necessities. Medical researchers decried these broad sanctions campaigns as a form of collective punishment and as “barbaric.”

The Folly of Smart Sanctions

This isn’t the first time the negative humanitarian effects of sanctions have come into the spotlight. After the disastrous effect of the comprehensive economic embargo on Saddam Hussein’s Iraq during the 1990s and early 2000s, there was a great degree of hesitation, including in the UN and among European countries, to engage in such campaigns. This was a problem for Washington and security-focused elites in major European capitals, who saw broad sanctions efforts as key to a variety of post-9/11 foreign policy goals.

The tattered reputation of sanctions resulted in an effort to devise “smart sanctions.” Smart sanctions should be viewed less as a new form of economic sanctions but as a new strategy of sanctioning. In this context, rather than sanctioning an entire economy, targeted sanctions would be imposed on elites closer to decision-making circles, and the general population would be spared the effects of sanctions. The problem was that this form of sanctioning ultimately proved ineffective in coercive missions. Elites had a greater capacity for circumventing economic sanctions, greater ideological commitment to state goals, or some combination thereof.

But while smart sanctions failed to produce a more humanitarian form of sanctioning, they did rehabilitate the reputation of sanctions, which helped gain support for the new form of “comprehensive” sanctions, where economies would be broadly targeted through a barrage of financial and sectoral sanctions. Even the most aggressive and broad sanctions campaigns, such as the one implemented against Iran between 2010 and 2013, were cloaked under the banner of “smart sanctions.”

Sanctions Objectives and Humanitarian Harm

As many scholars have argued, imposing pain on the population is often the purpose of sanctions. A broad sanctions campaign may be formally designed to reverse a particular policy in the target state, but it often hopes to achieve this by causing instability or regime change.

But even when the formal goals of the sanctions policy can be taken at face value, achieving them requires harming the population. U.S. sanctions architects have specifically pointed to exacerbating unemployment and inflation as key goals for sanctions efforts and have used terms like economic “strangulation” to describe their endeavors.

Arguably, the most frequently sighted goal of sanctions is to deny the target country funds with which to carry out the policies being objected to—for example, a military or proliferation-related policy the sanctioning country finds objectionable. So the policy effectively becomes limiting, as best as the sanctioning country can, the target’s access to necessary financial resources. But it is important to remember that the budget from which the military of a country is financed is the same budget that a variety of other services, such as education, healthcare, and pensions, receive their funds.

Financial Sanctions and Humanitarian Harm

Ultimately, even if the will to protect civilians existed, the fundamental problem is that one cannot impose widespread sanctions while sparing the target country’s population. Central to the twenty-first-century sanctions campaigns pursued by the United States is the imposition of financial sanctions. As financialized globalization makes participation in international value chains and the U.S. dollar increasingly important to any country’s development strategy, Washington can restrict a country’s trade flows without the need for the kind of broad trade embargo imposed on Iraq in the 1990s.

As U.S. sanctions designers have themselves made clear, key to this effort is convincing international banks at the center of interstate trade to sever all lines of interaction, including all financial channels and correspondent banking relationships, with the financial sector of the target country. This means that even medical and food-related transactions (so-called “humanitarian trade”) are usually not possible in large volumes, as the means for such transactions do not exist even when such transactions are statutorily exempted from the sanctions campaign. When small transactions are possible, their financial viability for the bank is overwhelmed by the substantial compliance costs imposed by sanctions measures. As Obama administration sanctions architect Richard Nephew stated while discussing the COVID-19 pandemic in Iran, despite formal exemptions for the commerce of medical equipment, “in reality … [f]or Iranians with almost non-existent commercial and financial ties with the outside world, it is difficult to import spare parts for medical equipment, ventilators, and protective gear.”

Even making the mentioned humanitarian trade exemptions viable would require the re-establishment of banking channels that would, at least to some extent, undermine the financial sanctions at the core of sanctions pressure campaigns. According to Lee Jones, when reacting to the UN’s endorsement of smart sanctions, one UN ambassador rejected any changes to the basic structure of sanctions, noting that they would be “inimical to their basic purpose: to cause civilian suffering. To reform sanctions, he said, would be to weaken them.”

The New ‘Historic’ Measure

The new regulations issued by the Biden administration are far from historic. They are largely focused on extending exemptions to NGOs and multinational institutions of credit and standardizing ineffective existing exemptions around humanitarian trade across different sanctions programs. This does not sufficiently address the many problems with these exemptions. An accompanying FAQ issued by the Treasury Department’s Office of Foreign Assets Control (OFAC)—the agency that issues designations and enforces financial sanctions—reasserts that banks are allowed to facilitate financial transactions involving exempted economic activity, but provides little guidance on how that can be practically done beyond what has already been said in the past.

Ultimately, it is unlikely that the new measures introduced by the Treasury Department will meaningfully alter this dynamic. The fact that these measures are predominantly focused on NGOs and charities is an effective admission that imposing broad sanctions regimes and maximum pressure campaigns that do not immiserate the population or at least endeavor to do so is not a viable notion. NGOs and charities may be able to provide limited relief in countries suffering severe devastation, such as Afghanistan. Still, they have neither the means nor the resources to have a measurable effect in addressing the harm brought about by sanctions in the vast majority of target countries.

The Treasury Department clearly feels no need to go further. Sanctions have long enjoyed a “misleading reputation of harmlessness.” Bombing hospitals attracts scrutiny in a way that depriving them of funding and medicine does not. As the West is now looking to sanctions as the tip of the spear to thwart Russia’s invasion of Ukraine, the humanitarian devastation of sanctions is likely to be further marginalized in the public discourse. Recent concerns about the severe situation in Afghanistan seem to have resulted in pressure on the Treasury Department, leading to the issuance of these recent exemptions. But a more meaningful reckoning with the severe harm sanctions impose on civilians will likely not be on offer anytime soon.

Ali Ahmadi is a scholar of sanctions and geoeconomics. He is currently an Executive Fellow at the Geneva Center for Security Policy (GCSP) and a Research Fellow at the Brussels-based Vocal Europe foreign policy think tank. You can follow him on Twitter and Linkedin.

Image: Flickr/White House.

There is a Turkish proverb: When an idiot throws a stone into a well, forty wise men can’t pull it out. Well, that’s what an anti-Muslim activist succeeded in doing last Saturday when he burned a Quran outside the Turkish embassy in Stockholm.

According to the perpetrator, Rasmus Paludan, the leader of a fringe Danish party, Stram Kurs (“Hard Line”), he was put up to the idea by a consultant for the right-wing Sverigedemokraterna (Sweden Democrats), who paid $30 for his demonstration permit. The Sweden Democrats provide parliamentary support for the Swedish government, but their view of Sweden’s NATO membership is ambivalent. Whatever the motive for the provocation, it has thrown a spanner in the works.

Adding insult to injury, ten days earlier a pro-Kurdish group hanged an effigy of Turkish president Recep Tayyip Erdogan upside down from a lamppost outside Stockholm’s City Hall.

At the best of times, the Turkish president has a short fuse but burning the Quran played into his hands. With popular support, he roundly condemned the provocation and declared Sweden could no longer expect Turkey’s support for its application for NATO membership. A visit by Sweden’s minister of defense has been canceled, and Turkey has postponed NATO accession talks with Sweden and Finland.

Protests have also spread to the Middle East, Pakistan, and Indonesia, which has the world’s largest Muslim population. However, Paludan’s provocation is not the first time this has taken place in Scandinavia.

In 2005 the Danish daily Jyllands-Posten published twelve cartoons of the Prophet Muhammad in protest against the fact that a Danish writer couldn’t find an illustrator for a children’s book about the Prophet. Eleven Muslim ambassadors called on the Danish prime minister Anders Fogh Rasmussen “to take all those responsible to task under law of the land.” Rasmussen replied that “The freedom of expression has a wide scope and the Danish government has no means of influencing the press.”

There were widespread demonstrations, some of them violent, in a number of Muslim countries and a boycott of Danish goods. Turkey, as it already intends to do in the present situation, made political capital out of the situation, and strongly opposed Rasmussen’s appointment as NATO’s new secretary-general.

America also has its Bible burners, but their activities are met with a shrug. However, there is no doubt Paludan’s demonstration is gratuitously offensive and has met with international condemnation.

In Erika López Prater v. Trustees of the Hamline University of Minnesota  America faces a conflict similar to that of the cartoon crisis in Denmark. Erika López Prater, an adjunct professor at Hamline University, showed a fourteenth-century painting of the Prophet Muhammad in a lesson on Islamic art, and was fired because the university considered her conduct “undeniably Islamophobic.”

Hamline has admitted its action was “a misstep” but López Prater has opened a lawsuit claiming religious discrimination and defamation.

On the whole, there seems to be confusion as to what constitutes Islamophobia and criticism of political Islam. The Turkish constitution states in its preamble that sacred religious feelings shall absolutely not be involved in state affairs and politics as required by the principle of secularism.

Further, in Article 24, “no one shall be allowed to exploit or abuse religion or religious feelings, or things held sacred by religion, in any manner whatsoever, for the purpose of personal or political interest or influence, or for even partially basing the fundamental, social, economic, political, and legal order of the State on religious tenets.”

Yet, as I have pointed out here, Erdogan has imposed his Islamist mindset not only on Turkey’s domestic policy (including the economy) but also foreign policy.

With regard to freedom of expression, there is also a conflict of interest between the Islamic and Western views. The Islamic definition, as defined by the Cairo Declaration of Human Rights in Islam (1990), limits the expression of opinion to a manner that would not be contrary to Sharia—Islamic law based on the Quran—which is incompatible with the UN Declaration of Human Rights and the International Covenant on Civil and Political Rights.

But Turkey is a signatory to both the Cairo Declaration and the International Covenant. Furthermore, as a member of the Council of Europe, it is also a signatory to the European Convention on Human Rights.

Erdogan’s chief advisor and spokesperson, Ibrahim Kalin, in his keynote speech at the Istanbul Forum in 2012, mentioned the growing gap between Islamic and Western notions of what constitutes sacred religious rights and freedom of expression.

In Wednesday’s meeting of the Turkish National Security Council, it was underlined that states wishing to join NATO should also act in accordance with the law and spirit of the alliance.

It would be timely to point out that NATO in its preamble states that the organization is founded on the principles of democracy, individual liberty, and the rule of law.

Robert Ellis is an international advisor at the Research Institute for European and American Studies in Athens.

Image: Mustafa Kirazli / Shutterstock.com

Planned economics is enjoying yet another revival. Climate protection advocates and anti-capitalists are demanding that capitalism be abolished and replaced with a planned economy. Otherwise, they claim, humanity has no chance of survival.

In Germany, a book called Das Ende des Kapitalismus (The End of Capitalism) is a bestseller. Its author, Ulrike Hermann, has become a regular guest on all the talk shows. She openly promotes a planned economy, although this has already failed once in Germany—just like everywhere else it has been tried. Unlike under classical socialism, in a planned economy, though companies are not nationalized and are allowed to remain in private hands, it is the state that specifies precisely what and how much is produced.

There would be no more flights and no more private motor vehicles. The state would determine almost every facet of daily life—for example, there would no longer be any single-family houses and no one would be allowed to own a second home. New construction would be banned because it is harmful to the environment. Instead, existing land would be distributed “fairly,” with the state deciding how much space is appropriate for each individual. And the consumption of meat would only be allowed as an exception because meat production is harmful to the climate.

In general, people should not eat so much: 2,500 calories a day are enough, says Herrmann, who proposes a daily intake of 500 grams of fruit and vegetables, 232 grams of whole meal cereals or rice, 13 grams of eggs, and 7 grams of pork. “At first glance, this menu may seem a bit meager, but Germans would be much healthier if they changed their eating habits,” reassures this critic of capitalism. And since people would be equal, they would also be happy: “Rationing sounds unpleasant. But perhaps life would even be more pleasant than it is today, because justice makes people happy.”

Such ideas are by no means new. Popular Canadian critic of capitalism and globalization Naomi Klein admits that she initially had no particular interest in climate change. Then, in 2014, she wrote a hefty 500-page tome called This Changes Everything: Capitalism vs. The Climate. Why did she suddenly become so interested? Well, prior to writing this book, Klein’s main interest was in the fight against free trade and globalization. She says quite openly: “I was propelled into a deeper engagement with it partly because I realized it could be a catalyst for forms of social and economic justice in which I already believed.” She calls for a “carefully planned economy” and government guidelines on “how often we drive, how often we fly, whether our food has to be flown to get to us, whether the goods we buy are built to last…how large our homes are.” She also embraces a suggestion that the most well-off 20 percent of the population should accept the largest cuts in order to create a fairer society.

These quotes—to which many more such statements in Klein’s book could be added—confirm that the most important goal of anticapitalists such as Herrmann and Klein is not to improve the environment or find solutions for climate change. Their real goal is to eliminate capitalism and establish a state-run, planned economy. In reality, this would involve the abolition of private property, even if, technically, property rights continued to exist because all that would be left is the formal legal title of ownership. The “entrepreneur” would still own his factory, but what and how much it produces would be decided by the state alone. He would become an employed manager of the state.

The biggest mistake planned economy advocates have always made was believing in the illusion that an economic order could be planned on paper; that an author could sit at a desk and come up with the ideal economic order. All that would be left to do would be to convince enough politicians to implement the economic order in the real world. It may sound cruel, but the Khmer Rouge in Cambodia also thought that way.

The most radical socialist experiment in history, which took place in Cambodia in the mid to late 1970s, was originally conceived in the universities of Paris. This experiment, which Khmer Rouge leader Pol Pot called the “Super Great Leap Forward,” in honor of Mao’s Great Leap Forward, is most revealing because it offers an extreme demonstration of the belief that a society can be artificially constructed on the drawing board.

Today, it is often claimed that Pol Pot and his comrades wanted to implement a puritan form of “primitive communism,” and their rule is painted as a manifestation of unrestrained irrationality. In fact, this couldn’t be further from the truth. The Khmer Rouge’s masterminds and leaders were intellectuals from upstanding families who had studied in Paris and were members of the French Communist Party. Two of the masterminds, Khieu Samphan and Hu Nim, had written Marxist and Maoist dissertations in Paris. In fact, the intellectual elite who had studied in Paris occupied almost all of the government’s leading positions after the seizure of power.

They had worked out a detailed Four-Year Plan that listed all the products the country would need in exacting detail (needles, scissors, lighters, cups, combs, etc.). The level of specificity was highly unusual, even for a planned economy. For example, it said, “Eating and drinking are collectivized. Dessert is also collectively prepared. Briefly, raising the people’s living standards in our own country means doing it collectively. In 1977, there are to be two desserts per week. In 1978 there is one dessert every two days. Then in 1979, there is one dessert every day, and so on. So people live collectively with enough to eat; they are nourished with snacks. They are happy to live in this system.”

The party, the sociologist Daniel Bultmann writes in his analysis, “planned the lives of the population as if on a drawing board, fitting them into pre-determined spaces and needs.” Everywhere, gigantic irrigation systems and fields were to be built to a uniform, rectilinear model. All regions were subjected to the same targets, as the Party believed that standardized conditions in fields of precisely the same size would also produce standardized yields. With the new irrigation system and the checkerboard rice fields, nature was to be harnessed to the utopian reality of a fully collectivist order that eliminated inequality from day one.

Yet the arrangement of irrigation dams in equal squares with equally square fields in their center led to frequent flooding because the system totally ignored natural water flows. 80 percent of the irrigation systems did not work—in the same way that the small blast furnaces did not work in Mao’s Great Leap Forward.

Throughout history, capitalism has evolved, just as languages have evolved. Languages were not invented, constructed, or conceived. Rather, they are the result of uncontrolled spontaneous processes. Although the aptly named “planned language” Esperanto was invented as early as 1887, it has completely failed to establish itself as the world’s most widely spoken foreign language, as its inventors had expected. Socialism has much in common with a planned language, a system devised by intellectuals. Its adherents strive to gain political power in order to then implement their chosen system. None of these systems have ever worked anywhere—but this apparently does not stop intellectuals from believing that they have found the philosopher’s stone and have finally devised the perfect economic system in their ivory tower. It is pointless to discuss ideas like Herrmann’s or Klein’s in detail because the whole constructivist approach, i.e. the idea that an author can “dream up” an economic system in their heads or on paper, is wrong.

Sociologist and historian Rainer Zitelmann is the author of the book In Defense of Capitalism, published in 27 languages.

Image: Flickr/White House.

“Every ten years, it is decline time in the United States,” wrote journalist Josef Joffe in 2009. Yet the story of U.S. decline has constantly turned out to be the story of the boy who cried wolf. Time and again the United States has shown that its leading position in international politics, what some have classified as a hegemony, is unique and capable of withstanding a variety of economic, political, and security crises.

What is distinctive about U.S. hegemonic endurance, however, is that it does not rest primarily on coercive power, international regimes, capitalist ideology, or sheer wealth. As data shows, U.S. relative power is declining in all of the aforementioned dimensions. Yet this is not the case when it comes to the U.S. global monetary centrality. Even in times of severe economic and monetary crisis, such as the breakdown of the Bretton Woods system in 1971, or the Global Financial Crisis in 2008, we have not witnessed such a decline. In fact, quite the opposite is true. The U.S. dollar fortified its global centrality after each and every crisis. This remained the case, currently as well, during the global pandemic of 2020–22 and its related economic aftershocks. Recognizing the link between monetary centrality and overall international influence is critical if the United States policy is to sustain U.S. power globally.

Predictions suggesting that perhaps the euro, renminbi, or IMF special drawing rights (SDR) would replace the dollar have not panned out, primarily because the system surrounding the U.S. dollar reinforces its centrality. But what if the fundamentals of that system were displaced through a new modality of currency—a change not simply in who stood behind the currency but a change in currency form itself? Our research indicates that this prospect is what should concern American decision-makers and those that rely heavily on American centrality.

Little Snakes

Two of the most often evoked substitutes for the U.S. dollar are the euro and the renminbi. However, both lack the market, institutional, and geopolitical fundamentals for such an endeavor. As such, they do not generate confidence, which is the crucial criterion for a currency to be central to global economic activity. Both alternatives remain subject to greater uncertainty, and thus reliability, than the U.S. dollar.

Looking at the euro first: the European financial system is still dependent on the United States and the U.S. dollar. U.S. financial markets account for 30 percent of the movement in the euro financial markets, whereas the number is only 6 percent in reverse. The eurozone lacks a clear authority. In contrast, everyone knows that behind the U.S. dollar is a political entity and an institution that makes decisions and vouches for those decisions. Who is the Euro’s political head, who is the Euro’s guarantor? There are no eurobonds. Lastly, the euro does not reach beyond its region. Almost two-thirds of all Euro “banknotes exports” stay on the European continent as they are obtained by non-eurozone European states, and only 50 percent of EU trade is invoiced in euros. Benjamin Cohen stated in 2009: “Europe’s money in a sense could turn out always to be the ‘currency of the future’—forever aspiring to catch up with the dollar but, like an asymptote, destined never to quite get there.”

Regarding the renminbi, Standard Chartered Bank’s index of renminbi globalization displays global stagnation since 2015. There is no genuine global demand for the renminbi. This is not a surprise as the Chinese economy’s foundations are underlined by demographic decline, falling labor productivity, issues with transparency and property rights, housing and financial bubbles, and rising debt. Institutionally, China lacks the political will to change domestic policies that would enable the renminbi a greater global role: open financial accounts within the balance of payments, floating not managed exchange rates, full foreign access to China’s asset market with legal and property rights, and central bank independence. It is difficult to see how China might move forward with necessary reforms since party elites, state-owned enterprises, and local governments that currently dominate China’s political economy all have everything to lose with such relaxation. Moreover, Chinese foreign loans are by and large denominated in U.S. dollars, not in renminbi. China is thus a bank-driven economy, which is potentially prone to burst. Again, fundamentals that do not inspire confidence.

A Crucial Threat: Central Bank Digital Currencies

A third, and we argue a more likely threat to U.S. dollar centrality, are Central Bank Digital Currencies (CBDCs). Our claim rests on the assumption that cryptocurrencies indicate a changing nature of the economy—akin to the introduction of fiat money or financial economy.

By and large, there are three types of cryptocurrencies: private cryptocurrencies, stablecoins, and CBDCs. Although all are tokens of a new era (pun intended), only the latter present a challenge for the U.S. dollar, while the first two suffer from embedded flaws that will cap their potential preeminence.

Private cryptocurrencies such as Bitcoin suffer from several deficiencies contributing to their volatility and, in the words of former IMF director and current Europen Central Bank president Christine Lagard, “le Bitcoin, ce n’est pas une monnaie.” They do not function as a currency (i.e. as a store of value, unit of account, and medium of exchange). Rather, they should be understood as (risky) financial assets. Stablecoins are digital assets that are pegged to a traditional currency. So, when the latter moves, this puts pressure on the issuer of the former to assure the peg. There are legitimate empirical doubts if stablecoins can deliver when the situation will be dire’—i.e. if each stablecoin can indeed be backed by its respective currency.

Finally, there are CBDCs. Our proposition is that it would be incorrect to assume the digital economy and digital monetary relations as merely an extension of the traditional economic world. Although the actors are the same in both worlds, their respective power is not. It is possible that the fundamentals in the digital space can reset and therein lies the threat to U.S. global monetary centrality. The relations between the state, individual, private bank, and international relations will be profoundly impacted by the introduction of CBDCs. Although the political and legal authority is not questioned when it comes to CBDC, its revolutionary potential comes in a new source of monetary power and monetary relations.

Specifically, CBDCs potentially can leapfrog the intermediary role of private banks, which has been a mainstay of traditional economic activity. Under fully implemented CBDC arrangements, efficiency and profitable economic activity may dictate that citizens and business hold their electronic wallets directly with a central bank. In other words, private banks could potentially run out of business as the transactional activity of economic exchange bypasses them and central banks managing CBDCs become direct support institutions. Policy surrounding the introduction of CBDCs is not being coordinated globally. This could exacerbate market forces driving a change in this fundamental institutional arrangement. Central banks are closely observing each other’s CBDC activities. Some even cooperate in pilot projects and research. Yet, even joint research about an interoperability system for CBDCs, the most advanced is the mCBDC endeavor, does not constitute nor assure a coordinated approach in designing the international CBDC architecture.

Perhaps the best example of how the introduction of CBDCs could threaten the centrality of the U.S. dollar is the eurodollar market. This market has been a crucial mainstay reinforcing U.S. dollar centrality. But what would a digital eurodollar market look like? Would this market even exist under the architecture of no intermediate banks? If not, then what would generate preferences for the usage of e-dollar not e-euro nor e-yuan? There are multiple scenarios and designs of how CBDSs can be introduced. We can assume that there will be a period of trial and error, in which multiple alternative architectures will exist. These are the questions and challenges that the United States needs to face if it wishes to solidify its global economic centrality.

One of the reasons why no one challenges the greenback is that there is no alternative. In the emerging digital currency economy this is not the case. The advantages of the real U.S. dollar are not transcended onto the e-dollar automatically. Potentially, the e-yuan, the Chinese CBDC, could have a first-mover advantage. If e-yuan really takes off as an internationally leading CBDC, then China would be in a good position to determine the rules, standards, and economic trends of CBDCs globally. Or in other words, China would center the global digital economy around itself—which in fact is essential for hegemony.

Although the e-yuan project has several deficiencies, the United States should not be a passive observer assuming its traditional dollar advantages will hold against this new technology. Ultimately, setting up an international CBDC order will not be a consequence of “being the first,” but “getting it right” if U.S. policy recognizes how this all relates to its position in the world. Questions of security, personal freedom concerns, a transparent legal framework, universality, and the very manner in which a CBDC is introduced (token or account based) can outweigh the first-mover advantage—but only if the United States positions itself in a strategic fashion. Whatever the Chinese do technically, it will not be simply adopted by others without the aforementioned ethical and political considerations. Therefore, the United States should step up with its own CBDC project as part of an international strategy.

What Should the United States Do?

In the past, U.S. hegemony endured because it withstood the test to renew itself and incorporate new technologies and innovations that reinforced an imbalance of global power in its favor. The United States was able to generate the buy-in dynamic of the rest of the world regardless of the novel nature of the economy. Its objective in digital monetary relations should be the same – meaning it should seek a policy environment in which other states in the system reinforce continued centrality as it introduces the e-dollar.

We endorse proposals made by the Roosevelt Institute to build efficient, inclusive monetary and financial systems, expand the emerging FedNow payment system, take on a serious study of a public option for banking offered by the U.S. Federal Reserve or Treasury Department, and regulate the stablecoin market. We view these as necessary tactical advancements. Yet, without a strategic framework guiding them, they will not reinforce the core element that itself reproduces American advantages.

The United States should as soon as possible explore the introduction of the e-dollar with a strategic objective to advance the principles that have supported the liberal economic order it created at the end of the Second World War. Rapidness is necessary so that it signals to the world that it is aware of the changing nature of the economy.

Second, it should strategically seek a public-private alignment for the future in which its big-tech retail companies such as Amazon, Google, Microsoft, Apple, and others, universally accept payments also in e-dollars. Subsequently, it should make efforts to other companies to follow suit.

Next, it should make clear that changes to the architecture of the e-dollar are likely to be made in the future—it should create an early regulatory oversight mechanism that is flexible and allows for adaptive change as clarity about fundamentals become clearer. As the digital economy evolves, so too will solutions for assuring the advancement of liberal democratic values such as privacy and transparency. The United States, if it seeks to continue to lead in the latter twenty-first century, must intentionally serve as the vanguard for introducing new digital financial instruments. This is why close cooperation with the fintech industry, think tanks, and other stakeholders is necessary along with cooperation with other liberal democratic currencies. Essentially, the United States should lead the development of e-financial markets.

Lastly, the United States should develop a network of bilateral relations with other states issuing CBDCs and design bilaterally tailored agreements that would include the determination of the exchange rate of their CBDCs, exchange of information and innovations, and other rules for joining the two e-financial markets. Such bilateral approaches will serve as confidence-building mechanisms and are easier to address than multilateral larger arrangements.

Change is coming. The potential for CBDCs must be regarded not as a technical extension of current economics, but as a resetting of some core fundamentals. The United States cannot be on auto-pilot and expect its global dominance to sustain. That will require strategic action that shapes the emergence of CBDCs. Ceding the initiative to others in this area is not simply about an economic transactional mechanism—it is about the centrality of American global power. A centrality that must be protected now.

Dr. Igor Kovac is Secretary at the Government Information Security Office of the Republic of Slovenia and a Research Affiliate at the Center for Cyber Strategy and Policy at the University of Cincinnati.

Professor Richard Harknett is Co-Director of the Ohio Cyber Range Institute.

The views expressed are the authors’ and do not represent any department or agency of the governments of the United States or Slovenia.

Image: Shuttersock.