Nuclear security summit 2016 (articles from Al Jazeera and The Intercept)

Nuclear security summit to focus on dirty bomb scenario
Al Jazeera : 31 March 2016

When it comes to nuclear attacks, there is no shortage of nightmare scenarios. Saboteurs could breach a nuclear power station and start a reactor meltdown. A renegade Pakistani general could seize tactical nuclear weapons and blow up a city. Radioactive materials, which are found in many hospitals, could cause dirty bomb mayhem at an airport.

Against this backdrop, US President Barack Obama will host world leaders for a Nuclear Security Summit on Thursday, in an international effort to stop possible assailants from using radioactive material to outdo the 9/11 attacks on New York and Washington.

The leaders may not be doing enough. Analysts point to big gaps in the global security architecture, dozens of atomic power plants coming online in developing regions and new threats, such as Islamic State of Iraq and the Levant (ISIL also know as ISIS), on the scene.

"The world has drastically improved nuclear security these past 25 years but significant gaps remain and the government structure for nuclear security is a patchwork," former White House science adviser Matthew Bunn told Al Jazeera.

"The key question for this summit is: will leaders take enough action to put the world on a path of continuous improvement and steadily reducing the risk of nuclear terrorism, or will attention turn elsewhere, progress stall, and complacency return?"

A psychological weapon

 

Fears of attacks with nuclear materials resurfaced after the March 22 bomb attacks at a Brussels airport and on a packed metro, which killed 35 people and injured more than 300, and indications that the ISIL-linked attackers had nuclear ambitions. The suicide bombers may have originally planned to hit a nuclear site, according to reports. Last year, it emerged that those behind ISIL's November 13 attack on Paris, which killed 130 people, had been video-recording a high-ranking Belgian nuclear official. These revelations stoked fears that ISIL sought radiological material to wrap around explosives and yield a dirty bomb that, if detonated, would cause alarm, even if the radioactivity itself was not life-threatening.

"It's a psychological weapon that causes economic damage," Kenneth Luongo, president of the Partnership for Global Security, a think-tank, told Al Jazeera. "If those two bombs in the Brussels airport had any radioactive material in them, you would not be cleaning that airport so it reopens within in a week, you would be building a new airport." The problem for summit envoys is that a dirty bomb's radiological ingredients are found in many hospitals and industrial sites around the world. Despite efforts to secure them, they go missing at a worrying rate.

"This is not science-fiction. Creating a dirty bomb is not difficult. Every piece of food sold in a supermarket has a barcode on it, but these radioactive sources don't. We don't have a good tracking system," added Luongo. "All we have is a completely voluntary international system and national regulations. We must improve the way we secure, track and dispose of high-intensity radiological sources."

'An apocalyptic ideology'

 

Most "insurgents" are content with AK-47s, Semtex and other conventional arms, said Victor Asal of New York State University. In recent years, only about two dozen groups have upped the ante with chemical, biological and other mass-casualty weapons. According to Bunn, a Harvard University scholar, ISIL's known efforts in the nuclear field fall short of its forebear, al-Qaeda, which sought highly enriched uranium (HEU) and hatched plans for a crude nuclear device akin to those dropped on Japan in 1945.

"There's no public evidence of a focused ISIL nuclear programme, as al-Qaeda had back in the day. But ISIL has an apocalyptic ideology that envisions a total war with crusader forces, including the US, a nuclear-armed superpower," Bunn said. "If ISIL does turn to nuclear pursuits, they have more money, people, territory and a greater ability to recruit experts globally than al-Qaeda at its strongest ever had. And they've shown an ability to manage and implement long-term projects."

Other dangers are growing too, analysts say. Pakistan has embraced smaller, tactical nuclear weapons that can be deployed on the battlefield. Islamabad insists they are secure; the US and others worry they could fall into the wrong hands. An uptake in atomic power has seen Northeast Asia become a "thicket of nuclear facilities" in the neighbourhood of North Korea's volatile regime, and where the security of fissile material is imperfect, said Luongo. Plans for new plutonium-yielding plants in China, India and Japan will increase the global stockpiles of bomb-making fuel, which currently amounts to about 2,000 metric tonnes.

A serious threat

 

US officials point to improvements since Obama launched the first nuclear security confab in 2010. Stockpiles of HEU and plutonium have been removed or downblended from more than 50 facilities in 30 countries. Japan and Ukraine are ditching much of their fissile material. Hospitals and industrial plants have stricter rules on radioisotopes nowadays. Borders are better guarded. Nuclear workers are more vetted and better trained, US officials said.

Delegates have made more than 260 pledges over the course of three summits. More are expected at the fourth meeting, which begins in Washington on March 31 - the last in the series, before the UN, Interpol and other multination organs assume the watchdog role. Some 50 countries will take part, but Russia - a key nuclear power - will stay away. Governments have shown willingness to act, but not enough for more sweeping controls, said Ben Rhodes, Obama's deputy national security adviser.
"In an ideal world, a treaty, for instance, related to fissile material is something that we have expressed support for in the past, but there is not sufficient international buy-in to advance at this time," Rhodes told Al Jazeera.

Over two days, Obama will meet the leaders of South Korea and Japan to discuss Pyongyang's recent atomic tests, and privately with Chinese President Xi Jinping. Separate sit-downs will cover ISIL and a nuclear deal with Iran. Carl Robichaud, of the Carnegie Corporation think-tank, warned that leaders may still be complacent. Governments have resisted tough curbs on plutonium activity, which has commercial uses, and fissile material for weapons, submarine engines and other military uses - which account for 85 percent of global stockpiles, he said. "It's hard to muster the political will to take steps," Robichaud told Al Jazeera. "It's either going to be a serious incident or a very close call that drives people to take this threat seriously."

http://www.aljazeera.com/indepth/features/2016/03/nuclear-security-summit-focuses-dirty-bomb-scenarios-160331075557558.html

Obama’s Nuclear Security Summit Neglects 98 Percent of the World’s Bomb-Ready Uranium
The Intercept : 1 April 2016

AT PRESIDENT OBAMA’S fourth and final nuclear security summit taking place this week, world leaders are confronting the danger posed by nuclear terrorism — specifically, by reducing the ways that terrorists could get their hands on the uranium they would need to build a nuclear bomb.
But critics have pointed out that the summits have only focused on highly enriched uranium in civilian possession, which, according to the Department of Energy, only accounts for 2 to 3 percent of the world’s supply. That small percentage is used mostly by academics for research and medical isotope production.

The remaining 97 to 98 percent is held in military stockpiles, which the security summits have largely ignored. Countries keep the safeguards on these stockpiles secret, and military material falls outside the scope of international security agreements. One fact sheet from the 2014 summit acknowledges that military stockpiles receive far less attention, and explains: “Nuclear materials in weapons are not excluded from the [nuclear security summit] discussions as such, but the emphasis is on nuclear materials in industry. … Military stocks are a sensitive issue, and discussing them could be an obstacle to achieving results in dealing with civil nuclear materials.”

Bruce Blair, co-founder of the Global Zero campaign to eliminate nuclear weapons, complains that “the summit virtually ignores the rest of the materials and the ways they can cause a catastrophe.”
Blair tells The Intercept that “terrorist capture and detonation of nuclear materials under military control” is a real threat. That’s particularly the case because, ever since the end of the Cold War, countries have increasingly neglected the security of their military stockpiles. For instance, in 1994, German police recovered nearly 400 grams of plutonium-uranium oxide, believed to be of military origin, from smugglers in the Munich Airport. In 2012, three American activists, including an 82-year-old nun, broke into the Y-12 National Security Complex in Oak Ridge, Tennessee, and were not arrested until half an hour later.

An even greater threat comes from military insiders, who can slip material to terrorists. WikiLeaks cables have revealed concerns among top U.S. and U.K. diplomats about jihadi sympathizers in the Pakistani military. One 2010 cable from Anne Patterson, then-U.S. ambassador to Islamabad, said, “Our major concern is not having an Islamic militant steal an entire weapon but rather the chance someone working in government of Pakistan facilities could gradually smuggle enough material out to eventually make a weapon.” Experts have proposed ways for countries to reduce their military stockpiles. For instance, out of the 600 tons of highly enriched uranium in the U.S. military stockpile, around 150 tons is set aside to fuel the Navy’s nuclear-powered ships. According to a 2016 report by the International Panel on Fissile Materials, the U.S. could power its Navy using lower enriched uranium, prompting other countries dependent on the U.S. for enriched uranium to follow suit.
Kelsey Davenport, director of nonproliferation policy at the Arms Control Association, called the insecure military stockpiles “the elephant in the room.”

Last week’s terror attacks in Brussels have heightened concerns about nuclear terrorism. Belgian investigators discovered in November that the Paris attackers had spied on a senior Belgian nuclear official, prompting concerns that the attackers were trying to obtain radioactive material. Some commentators suspected the attackers were attempting to create a “dirty bomb” — a combination of radioactive material and conventional explosives that causes contamination, rather than massive destruction.

But a Harvard study released this month argued that if ISIS could obtain fissile materials, it could construct an improvised nuclear device. In a 2009 address in Prague, President Obama called the threat of nuclear terrorism “the most immediate and extreme threat to global security.”

Since the first nuclear security summit in 2010, world leaders have made modest advances in nuclear security. Twenty participating countries have committed to increased efforts to combat nuclear smuggling, and at least 14 countries have eliminated their entire stockpiles of highly enriched uranium.

https://theintercept.com/2016/04/01/obamas-nuclear-security-summit-overlooks-98-percent-of-the-worlds-bomb-ready-uranium/

 

The Negative Rates Club

Project Syndicate: 9 February 2016

BRUSSELS – For the better part of a decade, central banks have been making only limited headway in curbing powerful global deflationary forces. Since 2008, the US Federal Reserve has maintained zero interest rates, while pursuing multiple waves of unprecedented balance-sheet expansion through large-scale bond purchases. The Bank of England, the Bank of Japan, and the European Central Bank have followed suit, each with its own version of so-called “quantitative easing” (QE). Yet inflation has not picked up appreciably anywhere.

 

Despite their shared struggles with deflationary pressures, these countries’ monetary policies – and economic performance – are now diverging. Whereas the United States and the United Kingdom are now growing strongly enough to exit their expansionary policies and raise interest rates, the eurozone and Japan are doubling down on QE, pushing policy long-term interest rates further into negative territory. What explains this difference?

The short answer is debt. The US and the UK have been running current-account deficits for decades, and are thus debtors, while the eurozone and Japan have been running external surpluses, making them creditors. Because negative rates benefit debtors and harm creditors, introducing them after the global economic crisis spurred a recovery in the US and the UK, but had little effect in the eurozone and Japan.

 

This is not an isolated phenomenon. By now, most of the world’s creditor countries – those with large and persistent current-account surpluses, such as Denmark and Switzerland – have negative interest rates, not only for long-term governments bonds and other “riskless” debt, but also for medium-term maturities. And it is doing little good.

 

Despite the weak impact of low interest rates, central banks in these economies remain committed to them. If it is suggested that QE or lower interest rates are unlikely to benefit their economies much, they shift the focus of the discussion, railing against the notion that raising interest rates would stimulate the economy – an ostensibly airtight argument. Only it is actually far from airtight.

 

Basic economics courses cover the curious case of the “backward-bending supply curve of savings”: In some circumstances, lower interest rates can lead to higher savings. Because lower rates reduce savers’ income, they spend less, especially if they have a savings target for their retirement.

 

None of this discredits the general rule – which forms the basis of modern monetary policymaking – that a lower interest rate tends to stimulate consumption and other expenditure. The impact simply varies according to the economy’s debt position.

 

In a closed economy, there is a debtor for every creditor, so whatever creditors lose from ultra-low interest rates, debtors should gain. But in an economy with a large net-foreign-asset position, there are naturally more creditors than debtors. For a country with large foreign debts, the opposite is true. The effectiveness of monetary policy at the lower bound should thus be different in creditor and debtor economies.

 

Until recently, this condition did not matter, because foreign-asset positions were usually small (as a percentage of GDP). Today, however, these positions in the major industrial economies are large and increasingly divergent, partly owing to the buildup of leverage that led to the global financial crisis of 2007-2008. And, in fact, at the international level, leverage is continuing to grow.

 

Though current-account imbalances have generally fallen since the financial crisis began, they have not reversed. This implies that the surplus countries continue to strengthen their creditor positions, diverging from the deficit economies.

 

Commodity exporters like Russia and Saudi Arabia, which ran large current-account surpluses when oil prices were high, are the main exception to this pattern of diverging foreign-asset positions. With the precipitous decline in world oil prices since June 2014, their fortunes have reversed. Their export earnings have plummeted – falling by half in many cases – forcing them to run deficits and draw on the large sovereign-wealth funds they accumulated during the global commodity boom. A radical reduction in expenditure has now become unavoidable.

 

The industrialized economies face very different challenges. Their problem – in a sense, a luxury problem – is to ensure that their consumers spend the windfall from lower import prices. But in the creditor countries, negative rates do not seem to advance this goal; indeed, some external surpluses are even increasing.

 

This divergence is also playing out within the eurozone. Though it is a creditor economy overall, it comprises debtor countries as well. The debtor economies, such as Spain and Portugal, now run small current-account surpluses, and are gradually reducing their debt. But the traditional creditors have seen their current-account surpluses grow so much that the debtor/creditor asymmetry continues to increase.

 

Most notably, since the start of the financial crisis, Germany's current-account surplus has increased to nearly 8% of GDP, meaning that the country has accumulated more surpluses in that period than in its entire previous history. On current trends, the German creditor position might rise from 60% of GDP to 100% of GDP.

 

Central bankers are supposed to be patient. Indeed, economists supported the global movement toward central-bank independence precisely because it seemed that central bankers would be less inclined to try to stimulate the economy for short-term gain. But central bankers seem to have become impatient, fretting about low inflation, even though the output gap is slowly closing and full employment has been reached in the US and Japan.

 

Creditor countries’ central bankers must stop trying to manipulate their economies with more potentially counterproductive monetary easing. Instead, they should allow the recovery to run its course, even if that happens slowly, and wait for the base effect of lower oil prices to disappear. ECB President Mario Draghi recently admitted that, in today’s global context, the current monetary-policy approach might not be effective. But promising more of the same is not the answer.

Richest 62 people as wealthy as half of world's population, says Oxfam

Richest 62 people as wealthy as half of world's population, says Oxfam
The Guardian: 18 January 2016

The vast and growing gap between rich and poor has been laid bare in a new Oxfam report showing that the 62 richest billionaires own as much wealth as the poorer half of the world’s population.
Timed to coincide with this week’s gathering of many of the super-rich at the annual World Economic Forum in Davos, the report calls for urgent action to deal with a trend showing that 1% of people own more wealth than the other 99% combined.

Oxfam said that the wealth of the poorest 50% dropped by 41% between 2010 and 2015, despite an increase in the global population of 400m. In the same period, the wealth of the richest 62 people increased by $500bn (£350bn) to $1.76tn.

                    

Mark Goldring, the Oxfam GB chief executive, said: “It is simply unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich – so few, you could fit them all on a single coach.

“World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action to ensure that those at the bottom get their fair share of economic growth. In a world where one in nine people go to bed hungry every night, we cannot afford to carry on giving the richest an ever bigger slice of the cake.”

Leading figures from Pope Francis to Christine Lagarde, the managing director of the International Monetary Fund, have called for action to reverse the trend in inequality, but Oxfam said words had not been translated into action. Its prediction that the richest 1% would own the same wealth as the poorest 50% by 2016 had come true a year earlier than expected.

The World Economic Forum in Davos comes amid fears that the turmoil in financial markets since the turn of the year may herald the start of a new phase to the global crisis that began eight years ago – this time originating in the less-developed emerging countries.

Oxfam said a three-pronged approach was needed: a crackdown on tax dodging; higher investment in public services; and higher wages for the low paid. It said a priority should be to close down tax havens, increasingly used by rich individuals and companies to avoid paying tax and which had deprived governments of the resources needed to tackle poverty and inequality.

Three years ago, David Cameron told the WEF that the UK would spearhead a global effort to end aggressive tax avoidance in the UK and in poor countries, but Oxfam said promised measures to increase transparency in British Overseas Territories and Crown Dependencies, such as the Cayman Islands and British Virgin Islands, had not been implemented.

Goldring said: “We need to end the era of tax havens which has allowed rich individuals and multinational companies to avoid their responsibilities to society by hiding ever increasing amounts of money offshore.

“Tackling the veil of secrecy surrounding the UK’s network of tax havens would be a big step towards ending extreme inequality. Three years after he made his promise to make tax dodgers ‘wake up and smell the coffee’, it is time for David Cameron to deliver.”

Oxfam cited estimates that rich individuals have placed a total of $7.6tn in offshore accounts, adding that if tax were paid on the income that this wealth generates, an extra $190bn would be available to governments every year.

The charity said as much as 30% of all African financial wealth was thought to be held offshore. The estimated loss of $14bn in tax revenues would be enough to pay for healthcare for mothers and children that could save 4 million children’s lives a year and employ enough teachers to get every African child into school.

Oxfam said it intended to challenge the executives of multi-national corporations in Davos on their tax policies. It said nine out of 10 WEF corporate partners had a presence in at least one tax haven and it was estimated that tax dodging by multinational corporations costs developing countries at least $100bn every year. Corporate investment in tax havens almost quadrupled between 2000 and 2014.

The Equality Trust, which campaigns against inequality in the UK, said Britain’s 100 richest families had increased their wealth by at least £57bn since 2010, a period in which average incomes declined.
Duncan Exley, the trust’s director, said: “Inequality, both globally but also in the UK, is now at staggering levels. We know that such a vast gap between the richest and the rest of us is bad for our economy and society. We now need our politicians to wake up and address this dangerous concentration of wealth and power in the hands of so few.”

richest-62-billionaires-wealthy-half-world-population-combined

 

 

The very unpleasant echo from the 1930s

The very unpleasant echo from the 1930s
The Market Monetarist: 26 November 2015

I am trying very hard not to become alarmist, but I must admit that I see very little positive news at the moment and I continue to see three elements – monetary policy failure/weak growth, the rise of extremist politics (Trump, Orban, Erdogan, Putin, ISIS etc) and sharply rising geopolitical tensions coming together to a very unpleasant cocktail that brings back memories of the 1930s and the run up to the second World War.

It has long been my hypothesis that the contraction in the global economy on the back of the Great Recession – which in my view mostly is a result of monetary policy failure – is causing a rise in political extremism both in Europe (Syriza, Golden Dawn, Orban etc) and the US (Trump) and also to a fractionalization and polarization of politics in normally democratic nations.

That is leading to the appeal of right-wing populists like Donald Trump, but equally to the appeal of islamist groups like ISIS among immigrant youth in for example France and Belgium. Once the democratic alternative loses its appeal extremists and populists will gain ground.

The geopolitical version of this is Ukraine and Syria (and to some extent the South China Sea). With no growth the appeal of protectionism and ultimately of war increases.

Unfortunately the parallels to the 1930s are very clear – without overstating it try to look at this:

• Syrian war vs Spanish civil war: Direct and indirect involvement of authoritarian foreign regimes (Stalin/Hitler vs Erdogan/Putin)
• Euro  zone vs the gold standard
• The rise of populists and extremists: Communists, Nazis and Fascists vs Syriza, Golden Dawn, Jobbik, Orban, regional separatism in Europe, anti-immigrant sentiment, Trump and ISIS (in Europe) etc.
• The weakening (failure?) of democratic institution: Weimar Republic vs the total polarization of politics across Europe – weak and unpopular minority governments with no “political muscle” for true economic reforms across Europe.

Maybe this is too alarmist, but you would have to be blind to the lessons from history not to see this. However, that does not mean that history will repeat itself – I certain hope not – but if we ignore the similarities to the 1930s things will only get worse from here.

PS if you are looking for more empirical evidence on these issues then have a look at Manuel Funke, Moritz Schularick and Christoph Trebesch’s recent very good post on voxeu.org on The political aftermath of financial crises: Going to extremes.