Wednesday, February 28, 2007

U.S. to Enter Talks with Iran and Syria on Iraq


Bummer about the stock market yesterday; hooray for today's rebound. But did anyone notice a major shift in U.S. foreign policy amidst all the financial hand-wringing?

Even if the talks ultimately accomplish nothing for the U.S. situation in Iraq, or for the Iraqis themselves, they are still a badly needed sign to the world that U.S. foreign policy need not be unreasonable in the Middle East.

If nations were stocks in a public-diplomacy market, the American issue would have ended the last two days hundreds of points higher.

Monday, February 26, 2007

"Maps of War"

Thanks to Matt Armstrong at MountainRunner for pointing me to Maps of War, whose current "cover story" is a map of the spread of religions across the world. Useful if you'd like a really large-scale view of historic events—5,000 years' worth of major religious trends gallops by in 90 seconds. Highly recommended.

Monday, February 19, 2007

Beacon No. 102: Viva Al-Vegas


I’ve been on a couple of press junkets to Las Vegas that involved being squired around that city’s more remarkable attractions. I highly recommend it. If you can suspend the snobbery—none of this emerged organically, in patchwork fashion, over centuries, as did Paris—Official Vegas is pretty spectacular: flaming volcanoes, tropical jungles, sphinxes and coliseums, highly trained performing wildlife, endless Cirque du Soleil shows, acres of gaming and shopping, faux downtowns, lavish high-roller palazzos, and endless people-watching.

Executives at MGM Mirage, which sponsored both junkets, described constant pressure to innovate. They see themselves competing not against Atlantic City, Reno or Foxwoods, but against Macau, Monte Carlo, the Disney properties, and anywhere else that features spectacle and/or gambling. MGM Mirage and their competitors have become extremely good at this competition, inspiring tens of thousands to fly directly to the middle of the desert from Europe and Asia.

But in the press and through occasional contacts with a colleague there, I hear a lot about Dubai, where the ground rumbles from all the construction and every structure tries to trump its predecessors. I wonder whether it is emerging as a potential Vegas competitor.

The Christian Science Monitor has a nice write-up on the Dubai phenomenon, highlighting the ferocious pace of change there. Remarkably, international tourism drives that change and makes up an increasing share of Dubai’s GDP—and how many Arab countries can claim any significant non-religious tourism?

Just as with Vegas, tourists turn up in Dubai for the spectacle and the excess:

And what to do while in town? Shopping, maybe? Shopping just happens to be Dubai's forte, with everyone from veiled Saudis to tank-topped Germans joining the mad rush – to the strains of Muzak – to get into the Victoria Secret sales or get a new MP3 player in one of the mega-malls. The recent Dubai Shopping Festival featured late-night shopping specials, carnival performances, Foreman-esque special appearances, a private island lottery (second prize: a private jet), and a whole range of Guinness World Record events.

In fact, breaking records is a national pursuit here. Among those contested in Dubai this year were the world's largest gathering of people reading at one time, longest line of footprints, and largest buffet; also the world's biggest wallet, pillow, inflatable balloon, and spoon. Results were not yet in, but Hisham Nammour, owner of the feng shui stall at the Emirates mall was hopeful. "We always win," he said over a mug of hot chocolate at the après-ski bar. "We excel at breaking records."

And indeed, last year, Dubai broke the record for the largest gathering of people sharing a name (2,500 Mohammads showed up) – leaving previous record-holder Spain (375 Marias) in the dust. Also Dubai put together the largest display of rice dumplings: 23,000 – trouncing dumpling doyen Singapore (13,192 in 1992). And, let's not forget to mention the "Burj Dubai (u/c)" which aims to be the tallest skyscraper in the world. They had a little celebration here last month when the building hit the 100-floor mark – 67 more are apparently on the way.

Dubai long ago figured that oil was a dead end and decided that, like Singapore, they could jump from Third World to First by liberalizing their economy and creating a sort of non-gambling Las Vegas. (Ironically, Singapore is now gunning to become a less-mobbed-up Macau.) Dubai’s approach seems to be working, with the same growing pains—human-rights, labor and environmental—that Las Vegas went through in the mid-20th century:

The Maktoum sheikhs – Rashid bin Saeed al Maktoum, who ruled Dubai from its independence in 1971 until his death in 1990, and his sons Maktoum bin Rashid and Mohammad bin Rashid, aka "Sheikh Mo" and currently Dubai's emir, get much of the credit for the transformation. They realized early on that oil riches were ephemeral and would one day run dry, and they started liberalizing and broadening the economy to attract outsiders.

Almost as fast as you could say, "outrageously bling-bling-tourism is our future," this little fishing port on a creek had been turned into a wonderland of artificial attractions. Soon they had a growth rate bigger than that of China, more tourists than India, and – people here like to quip – more than half of the world's building cranes. They also had growing labor abuse charges (Human Rights Watch reported nearly 900 construction deaths here in 2004), prostitution (the US State Department reports that Dubai's efforts to curtail sex trafficking fall short of "minimum standards"), and looming environmental disasters (man-made islands upset the entire ecology of the western Persian Gulf).

But, regardless, Dubai, one of seven small Persian Gulf emirates that form the United Arab Emirates, has become its own sort of modern Mecca for expatriates, laborers, and tourists making pilgrimage here. Out of a population of 1.2 million, 80 percent are foreigners, and tourism now accounts for almost 20 percent of Dubai's $30 billion GDP – compared with less than 5 percent for oil revenue. Last year, close to 6 million visitors came here – a figure Dubai hopes will rise to 15 million by 2010.

Threats to Dubai’s new prosperity include war or terrorism, which could frighten off those expat execs and construction workers, and global recession, which could dry up the flow of tourists. In the meantime I’d watch Dubai hotel properties more closely to see whether they try to book Wayne Newton or even, in a nod to East Asian tourists, Alan Tam, the reigning King of Cantonese pop music.

Sunday, February 11, 2007

The Price of Corn in Iowa—and Mexico


At his recent State of the Union address, President Bush made more than his usual nods toward energy independence, and states from Iowa—where I’m living—to Idaho stand to win big if the president follows through on his ambition to quintuple production of renewable fuels. Last year’s high petroleum prices increased ethanol demand sharply, and Farm Belt refiners are already running full out while licking their lips over expansion plans.

The result has been a spike in demand for corn, which in turn has doubled its per-bushel price in the last six months.

That’s great news for farmers in Iowa and neighboring states, where the vast majority of the country’s corn is produced. It’s not such good news for downstream users of corn syrups, like Coca-Cola and Pepsi, which use football stadium-sized amounts off the stuff each year but have little retail pricing power in an eternally competitive beverage market.

It’s also raising prices for animals traditionally fed by corn or other grains (cattle, chickens), since farmers are planting more corn and less everything else; here in the Hawkeye State, that means many fewer soybean fields.

But another unintended consequence of the president’s energy-independence drive has gone unnoticed until now: Rising world corn prices are increasing the price of tortillas in Mexico, where they are a staple food among the poor. In some cases tortillas are now three or four times as expensive as they were a year ago, and Mexican consumers are increasingly protesting the rise.

It must be doubly baffling to consumers in Mexico, which is a net oil exporter, to know that corn is ever-pricier because the U.S. wants to convert it to economically impractical ethanol. Tax subsidies are needed to make ethanol practical here, and meanwhile the rise in corn prices is, in essence, a regressive tax on some of Mexico’s poorest consumers.

This is one definition of “blowback”: The attempt to decrease U.S. dependence on foreign oil leading to a damaged U.S. image among Mexicans, as well as a potential wave of economic refugees to the U.S. should food inflation increase South of the Border.

Friday, February 02, 2007

Beijing Backlash Begins


Finally, signs that aggressive Chinese investment is beginning to step on African toes, from today’s Wall Street Journal. “In Africa, China’s Expansion Begins to Stir Resentment” (sub required) details how Hu Jintao canceled a stop in Chambishi, Zambia partly because Chinese supervisors at a Chinese-owned mine—there’s no polite way to say this—fired on protesting employees in 2006.

Set amid rolling hills in Zambia’s copper belt, Chambishi was supposed to be a showcase of Sino-African friendship. China’s state metals conglomerate, China Non-Ferrous Metal Mining (Group) Co., bought the mothballed copper mine here in 1998, bringing plenty of jobs and investments. Initial gratitude, however, quickly turned into seething discontent, as the new Chinese owners banned union activity and cut corners on safety. In 2005, dozens of locals were killed in a blast at the Chinese explosives facility serving the mine—the worst industrial disaster in Zambia’s history. Then, the following year, protesting Zambian employees were sprayed with gunfire. “The Chinese, they don’t even consider us to be human beings,” complains Albert Mwanaumo, a former Chambishi miner who says he was shot by a Chinese supervisor. “They think they have the right to rule us.”


South African President Thabo Mbeki has repeatedly cautioned in recent weeks that China risks replicating in Africa a “colonial relationship” of the kind that existed under white rule.

China, the colonial power! Since China spent the past half-century screaming about American “imperialism,” it’s refreshing to see Beijing run into the same complaint.
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