Thursday, July 31, 2008

So we are (A?)llies now as well as friends?

The Herald

At her press conference in Auckland Secretary of State Condoleezza Rice used the a-word and said that if issues remained in the relationship between the US and NZ then we should address them. Well I have a few issues, and quite a few questions.

Off the top of my head the issues are

1/ when do we get a free trade agreement?

2/ when will military exercises between the two countries stop requiring a presidential waiver?

3/ what is the real state of intelligence co-operation between the two countries and how can it be improved?

4/ if nuclear disarmament really is about to become a more serious concern of the US and of the Rudd government in Australia then surely we have a lot of credibility on the issue and could make ourselves useful? Perhaps in return for consideration on 1-3? (Maybe something like this has already gone on with respect to North Korea, certainly North Korean diplomacy and our activities in Afghanistan are singled out in Rice's speech.)

5/ Most importantly, what kind of relationship does New Zealand want with the US in the 21st century and what kinds of military and security relationships with the US, Australia and others do we want or need? Does our anti-nuclear policy really constitute a barrier to this and if so are there modifications that we could make that would be palatable to the New Zealand public? I am an enormous emotional supporter of the nuclear free policy. However I am not sure that I have ever given it much adult consideration. At this point it would be a good idea to take a sceptical look at both the policy and our "alliance" with the US.

If we are now allies, and given our not totally insignificant contributions in recent years in East Timor, Afghanistan and the Persian Gulf then 2 and 3 at least should surely be addressed by any Secretary of State willing to use the term "ally" even with a small a.

On the other hand if we are now allies, we are surely not the kind of ally that would take part in military action against Iran or China if relations between the US and these countries were to deteriorate further? It would be good to better understand National's vision of this new "alliance". (Not that the Labour's is not vague, more on that later.)

As to my questions. It's more than 20 years since Lange gave his Yale speech and nearly a quarter of a century since New Zealand elected a government bent on banning visits by nuclear-armed ships. We should be able to come to a considered assessment of the Nuclear Free policy and legislation, its long term effects and the future of our relationship with the US and with Australia.

But many aspects of the later history seem very perplexing to me.

(Some of these questions derive from the final chapter of Malcom Templeton's "Standing Upright Here" which seems to be where you go to learn about these issues.)

1/ The nuclear free policy and associated stand-off with the US is a legacy of the Cold War but most of its life has been after the end of that conflict. Why has the cold spell in the relationship lasted so long? There seems to be a large element of stubbornness on both sides in this. In 1991 the G. H. W. Bush administration moved to repatriate its nuclear artillery shells and short range ballistic missiles. This made Neither Confirm Nor Deny as a practical matter something of an anachronism. Naval ship visits from the United Kingdom resumed soon after this but not from the US. The current warming seems to date from the second G. W. Bush term in which the undersecretary of state responsible for our part of the world was for the first time not an active diplomat in the mid-eighties. All this suggests that emotional factors have played a role.

2/ The Bolger National government made a great song and dance about changing the policy, at least to the extent of amending the legislation to allow visits by nuclear powered ships. Whatever the merits of the matter, this would surely have softened US attitudes and could have led to a normalisation of relations between the two countries soon after the end of the Cold War. Having sought expert advice on the safety of nuclear powered ships they decided against taking any action. Why?

3/ When Clark finally visited Washington in this term news reports claimed that one precipating factor was that Key had clearly stated that National would not alter the policy. It was argued that this element of definite bipartisan committment contributed to convincing US policy makers that a continued punishment in terms of really high level contacts was counter-productive. This is very perplexing since National was in government for NINE YEARS and did absolutely nothing about the nuclear free policy. Going by the polls, the NZ public has been absolutely committed to being nuclear free for 25 years or so and its hard to imagine any National government even a Brash government changing the legislation in the medium term. Did the US Embassy fail over such a long period to communicate this to Washington? Did private assurances from sections of National manage to maintain hopes in Washington for all the years until Key rode in on his white horse? Did this political development really have anything to do with the warming relationship?

4/ This leaves us still wondering at the real reasons for the current warmth. I was amazed that Clark in radio interviews tied the small-a alliance to the "security situation" after 9/11. Does she really believe, like Rumsfeld and Cheney, that 9/11 changed everything? With the Iraq conflict the first G. W. Bush term certainly does not look like a high point in the relationship. And why emphasize security issues at all? Clark is presumably one of those in Labour who wanted not just an end to visits by nuclear armed ships but also a definite break in the military alliance. Surely it is precisely the absence of this alliance relationship that made it easier for us to stay out of the initial US invasion of Iraq (if not subsequent UN-sanctioned activities in Iraq or indeed patrols in the Persian Gulf at the time of the invasion.) Surely most New Zealanders support this decision and Clark could regard it as a major achievement and some kind of vindication of her actions in the 80s that we did not take part in this ill-advised and damaging US action? Surely she might see the status of "friends but not allies" as providing insurance against further US misteps or further erosion of US standing? (To be clear I definitely do not want to see such further erosion myself and neither I imagine does Clark.)

Given the ambiguities of Clark's attitudes, I'll close with this, one of my favorite photos of Clark as Prime Minister on account of its many ironies.

Some Links: The US

Oil prices are headed down faster than they went up, Econbrowser is great on oil and the US economy has a radical proposal for understanding the fluctations in oil price.

Here's the framework I would propose for answering the question of how much the price of oil should have risen since 2005-- the price of oil needed to go up by whatever it took to persuade places like the U.S., Europe, and Japan to reduce their consumption by the amount that China, the newly industrialized countries, and oil-producing countries were increasing theirs.

Lawrence Summers (one of Clinton's Treasury Secretaries) is advising Barack Obama on the economy (according to Obama himself on this week's Meet the Press). He has an op-ed in the Washington Post and the Financial Times which fleshes out the feeling that one gets from blogs that current bail-out is a stop-gap measure and seems to obliquely suggest that it will eventually be necessary to nationalise Fannie Mae and Freddie Mac.

In this scenario, the government would operate the GSEs as public corporations for several years. They would then be in a position to extend credit where appropriate to support resolution of the housing crisis. Once the crisis has passed, the federal government would divide their functions into government and private components, the latter of which would be sold off in multiple pieces. The proceeds could be used to fund the low-income housing support activity that was previously mandated to the GSEs.

The McCain campaign continues to look like a pack of chumps. Every single story seems to be about who is in who is out, how they are operating. Everyone out of the campaign seems to think that it is "dimishing John McCain" and one has to agree. Tonight's WP for example. Obama's superior campaign message and discipline was the story of the primaries, how is it that the Republican campaign could not get its act together in the months when no one was paying attention?

The most interesting of the many McCain process stories concern the foreign policy clashes between the neoconservatives and the realists advising him. This NYT story covers the cast of characters. It should be interesting to New Zealanders (and not a little ironic) that McCain appears to have adopted the realist view on nuclear disarmament, which is currently that it would be a good thing.

Mr. McCain’s advisers were divided, for example, over a speech he gave on nuclear security policy in Denver in May. Two Republican pragmatists who advise Mr. McCain, the former secretaries of state Henry A. Kissinger and George P. Shultz, supported a call in the speech for a nuclear-free world, an idea they endorse as part of a “Gang of Four” of national security statesmen. But other McCain advisers, including John F. Lehman, a former Navy secretary, and Fred C. Ikle, a defense official in the Reagan administration, were opposed to the idea because, in their view, nuclear weapons act as a deterrent against an attack on the United States and its allies. In the end, Mr. Lehman said, Mr. McCain made the call in favor of a nuclear-free world.

“He wanted to do it,” Mr. Lehman said. “That position is McCain’s position. It’s not a cabal of Kissingerites or a cabal of neo-cons.”

But some of Mr. McCain’s pragmatist advisers remain uneasy that conservatives close to Mr. McCain — among them Mr. Scheunemann and Robert Kagan, a scholar at the Carnegie Endowment for International Peace — will help him mold a more bellicose message than they would like on Iran and its threat to Israel, particularly at a time when there is widespread speculation in the Israeli news media that Israeli may bomb Iran’s nuclear facilities.

Some more specific discussion of who might be involved in a McCain administration can be gleaned from this account in the Washington Note

Democrat Brzezinski said he worried that under a McCain Administration, a Secretary of State Lieberman, or Secretary of Defense Giuliani might jump at the use of force against Iran, but that a Secretary of State or Defense Armitage "may be different".

On that, Scowcroft smiled his best enigmatic smile and studied the ceiling tiles...

A Secretary of State or Defense Armitage would be very good for Australia and New Zealand. I prefer not to speculate on what "Secretary of Defense Giuliani" would get up to.

In case you have been wondering why Obama keeps praising Bush Snr's foreign policy, it's clearly to achieve the silence of these old Republican realists

At CSIS today, Republican Scowcroft (who has rather pointedly not endorsed anyone so far this year)

Oh and if you are interested in the realist case for nuclear disarmament it is here. We seem likely to hear a lot more about it whoever is the next US president.

To my shame, the first time I heard Dick Cheney say that we will have to spend time "on the dark side, time in the shadows", or words to that effect, I didn't think much of it. I spent the early part of the decade living in the United States and we all went a little crazy after 9/11. Anyway go read New Yorker staff writer Jane Mayer's book the Dark Side, discussed here. The video inteview here is an hour long but worth every minute.

Wednesday, July 30, 2008

Political Management of Australian ETS II

Wow! Despite leaking to the papers at the weekend Nelson did not have the numbers in Shadow Cabinet yesterday to significantly move Coalition policy on the ETS.

So you can pretty much ignore my previous post.

Paul Kelly writes about the politics of climate change and the ETS in the wake of this development here. It seems like NZ politicians should read it.

The politics of emissions trading is dominated by four events.

First, emissions trading is a de facto new tax that arises from pricing carbon. The notion that you can de-carbonise the economy without pain is ludicrous. New taxes are usually unpopular. But this will be presented as a "saving your planet" tax and many people will buy such a polemic. ...

Second, those who think the economics are on the side of delay are wrong. While action now has a price, action later means the final price gets higher. As Howard learned, any leader branded a delayer will be ruined. ...

Third, climate change requires national action but a global solution. ...

This weakens the case for action. So Rudd must argue that Australia has a responsibility as a global citizen to contribute to the solution. But he is trapped in the prisoners' dilemma: each nation benefits from having the problem solved while minimising its own share of mitigation. ...

The fourth event, revealed in Rudd's green paper, is that Labor lacks the nerve for a pure system of emissions trading. It is drawn to political fixes and carve-outs from the carbon price. It plans to offer 30per cent of pollution permits for free, give assistance to generators and cap the carbon price in the early phase.

The risk was highlighted by Garnaut: a hybrid system inviting endless political negotiations and compromises, weakening economic competitiveness for little gain on emissions. The moral is that implementing an emissions trading scheme is an epic task.

Sunday, July 27, 2008

Sir Robert and Winston

OK, so my pessimism of last week on the Peters front has eased. Maybe there will eventually be enough dirt to bring Peters down. And if anyone can do it Sir Robert Jones is the man to try.

More importantly, maybe there will be enough dirt to bring about public financing?
And an Australian-style corruption watchdog?

Jones' account of pre-EFA electoral financing arrangements of all the parties, as he saw it, on Morning Report last week was very enlightening and suggests stories about murky funding arrangements could run for a very long time and be targetted against any major party.

India and the Nuclear Trade

Until now the Australian Government's policy not to sell uranium to non-signatories of the NPT has been a moot point.

With the vote in the Indian parliament last week it will presumably come under more pressure to follow the Coalition government and make a special India-exception to this long-standing Australian policy.

I can't see how to read such a development as anything other than a slap in the face to sagging international non-proliferation efforts but obviously the question is complex, particularly given the possibility the deal would ease the rate of increase of India's greenhouse gas emissions.

Greg Sheridan gets in early with an entertainingly hyperbolic stance.

In his speech, Singh listed 10 countries with which India has particularly good relations. Australia was not among them.

I suspect that very soon we will enter the top 10 with a bullet or sink to a previously unimagined place of infamy in the Indian mind. This Indian parliamentary vote was mighty important for us, too.

See also Lowy Interpreter.

Political Management of Australian ETS

If the weekend papers are to be believed the Liberals are likely this week to alter their policy to oppose any ETS prior to commitments to reduce emissions from the major emitters; the US, China and India. Nelson seems keen to find a way to oppose the Rudd legislation without moving too far from their previous position.

The green paper which has very similar proposals to the model that was being investigated by the previous government was thought by many to be aimed at ultimately getting support from the Coalition. That support seems very unlikely to be forthcoming unless perhaps Turnbull becomes leader in a hurry.

That would mean the ETS would need support of the Greens AND a selection of populist independents to get through the Senate. It may not be possible to satisfy all the factions of the Labor party, the Greens and the assorted loose cannons.

There is a kind of nuclear option known as double dissolution. The government could try to push their desired model through parliament, fail, call an election in which the House and the entire Senate stand for re-election and hope that the Senate that is returned is more friendly to an ETS. This may emerge as a real possibility.

See also John Quiggin.

Tuesday, July 22, 2008

Immigration Bill Reported Back

I was struck some days ago by this passage from the maiden speech of Lady Manningham-Buller in the UK House of Lords

I have weighed up the balance between the right to life – the most important civil liberty – the fact that there is no such thing as complete security, and the importance of our hard-won civil liberties. Therefore, on a matter of principle, I cannot support 42 days' pre-charge detention. I do understand different views and that there are judgements honestly reached by others, and I respect these views.

Struck of course because Lady Manningham-Buller was so recently head of MI-5, and because it is so much in agreement with my own notions about the appropriate response of Western societies to the serious but persistent and usually manageable threats of terrorism.

The issue is rather different but I am struck also by the fact that the purpose of the new Immigration Bill (of which I have only recently become aware despite its advanced progress through the House) is to "manage immigration in a way that balances the national interest, as determined by the Crown, and the rights of individuals."

It doesn't seem to me that the Bill achieves this in its security related provisions.

Not when it allows for the arrest of non-citizens "suspected by an immigration officer or member of the police of constituting a threat or risk to security" and subsequently their indefinite detention under endlessly renewed warrants of committment. When charges are brought they can be based on secret evidence to which the accused will have no access and the defense is to be mounted by special advocates who cannot communicate with the accused after they have seen the totality of the Crown's evidence in the case.

I'm no lawyer and the security of New Zealanders is not my responsibility but these measures seem hugely out of proportion. There are many other issues with the Bill although I am relieved to find that it is now consistent with the treaties we have signed opposing torture.

If I stay this angry about the Bill I may have to vote for a party that opposes this legislation in the House.

On this issue read No Right Turn and Gordon Campbell.

I'd be happy to consider any serious defense of the Bill.

Compulsory Owen Glenn Donation Post

I am pretty new at this blogging thing, and still trying to come to good decisions about what to write and what not to write about. It's clear that I've made one really serious mistake over recent days in that it seems that it is compulsory to have some comment on the current Winston Peters imbroglio.

So here goes.

1/ Like most members of my generation I have been hoping for the end of Winston Peters' political career since I first became aware of politics (so for at least 20 years now.) These hopes have always been dashed. In retrospect it was a sign of everything that has proven to be wrong with the current term of the Labour-led government when he took such a prominent role in cabinet. I applaud the efforts of Kiwiblog, The Hive, No Right Turn and many others to give him the old heave ho and put us all out of our misery by having an early election. (I have to say I have particularly enjoyed The Hive's attempts to enlist the American's in this effort, although frankly I do think the CIA should stay out of it. The State department maybe I can live with :)

2/ I lost nearly all hope that this admirable effort would succeed after listening to Peters and his lawyer on Morning Report (broadcast yesterday, podcast by me this morning.) Peters' first calling was judicial recounts and it seems he has had the same lawyer for a long time, they were very confident and we can very sure they know the relevant law backwards. I imagine they have followed the letter of the law, and the letter of the Cabinet manual. I suspect that Clark will require proof of outright illegality to take action and it will not be forthcoming. End of story. The Vela donations are ugly as well, rorting the system as well, likely to be technically legal as well. The most interesting part of the story was the question of how Glenn was contacted originally and who let it be known that he would be amenable to making a donation to the legal fund. This seems more likely to be bad news for Labour than for NZ First but if I were an investigative journalist I would be following this one up.

3/ Now this should be bad for Peters at the polls, hope does spring eternal, but if I were the National candidate in Tauranga I'd be very concerned that maybe any news is good news when it comes to Peters' vote.

4/ Of course I deplore all these shady financial deals. It seems that all the major parties in New Zealand have engaged in various sharp practices to fund their efforts on our behalf. It should stop. We need electoral finance legislation that works and preferably public funding of campaigns.

Monday, July 21, 2008

The Headlines Say It All

Nuclear Talks With Iran End in a Deadlock.

Will Israel bomb its way to the table?

Israel's Growing Consensus: Bomb Iran .

ISRAEL will almost surely attack Iran’s nuclear sites in the next four to seven months — and the leaders in Washington and even Tehran should hope that the attack will be successful enough to cause at least a significant delay in the Iranian production schedule, if not complete destruction, of that country’s nuclear program

This last from Benny Morris.

The Return of Regulation

Have you noticed it too? There seems to be a lot more room for proposing big-government policies these days.

It seems that just as there are no atheists in foxholes, there are no libertarians in a financial crisis.

In the New Zealand context this raises some interesting political questions. Would one of the major parties desert the market-driven policy consensus of the last two decades? Crazy surely? Colin Espiner reminded us that it is possible (perhaps)

So what has Labour got up its sleeve? Has it completely forgotten its socialist roots? How about a return to subsidised milk, as proposed by the Green Party? A daily bread allowance? Cut-price petrol and power? Laughable, right? Well, in recent history, yes, but we used to have them all. Many nations - including OECD countries such as France - still do.

There’s little doubt Labour will be punished in the polls for the way Kiwis are now hurting, and I’m not saying it shouldn’t be. But it would be nice to know the alternative.

There is quite a lot going on in the US and Australia that suggests a greater willingness on the part of governments of all stripes to intervene.

For the sake of narrative lets say I noticed it first in the Atlantic's recent 'Ideas Issue'. Idea number seven? The Return of Regulation. Clive Crook notices the regulation of mortgage backed securities prompted by an earlier phase of the current sub-prime mortgage crisis.

In the 1980s, Ronald Reagan and Margaret Thatcher made deregulation a guiding theme of economic policy in America and Britain, and much of the world followed along. ...

Now a major rethink is under way. Regulatory failure in banking and “shadow banking” is widely seen—even by onetime proponents of the light touch—as a main cause of the subprime-mortgage meltdown. A Republican administration hitherto committed to deregulation is calling a halt, and in mortgage-lending is proposing new rules.

This is before the Fannie Mae, Freddie Mac sort-of bailout. Some observers even seem to regard nationalisation of the GSEs as a possibility. That would be the notion that the US government should own half the mortgages in that country, 5 trillion dollars worth!

In Australia the new government is pretty keen on nation building as Paul Kelly discussed after the budget.

A strange, unresolved mix of modernism and tradition stamps the Rudd Government. They are proud of their surplus and dance merrily on the grave of Keynesian economics. But they love to intervene, to build, to correct market failures and to design new methods and institutions for Labor's grand designs. They are a synthesis of Chifley and Paul Keating.

(Chifley's government lost power attempting to nationalise the banking industry!)

We all know that the Clark government has been trying to protect the odd "strategic asset" in New Zealand. You may have missed the fact that the Rudd government has effectively decided that mines could well be strategic assets and told a bunch of Chinese businesses that if they didn't want lose face they should quietly rescind their applications to purchase while the government decides its policy.

AT least 10 Chinese companies have withdrawn foreign investment applications to buy into Australian resources companies after pressure from the Rudd Government.

The main issue seems to arise if a company owned by a foreign government is to take a controlling stake, particularly if that government happens to be Chinese.

THE Rudd Government is understood to be preparing a new foreign investment regime that would limit state-owned corporations from taking technical control of Australian companies.

Over the weekend NYT columnist David Brooks shocked his conservative confreres by declaring a new activist age. Of course he believes that it should be Republican activism but that's my point, everyone is onto it.

Once you look for it there are signs everywhere of a sea change on this kind of issue.

Thursday, July 17, 2008

The Australian ETS Green Paper

Even the summary is 80 pages, so that's weekend reading.

It seems though that the near consensus on the left at least is that too much has been conceded too early to special interests.

The Government are now calling the scheme the 'Carbon Pollution Reduction Scheme' which sounds like a good spin to me. That is until you hear Kevin Rudd on the ABC this morning unable to reassure his interviewer that it will in fact reduce carbon pollution! (At least in the medium term).

The Taiwan Straits

As a New Zealander living in Australia for some time now, the most disturbing and opaque question about Australian foreign policy has been their reaction to any conflict over the Taiwan straits. This is related to the issue of what an American reaction would be, and is presumably the subject of much 'interagency process' in both capitals.

It's been a relief to see tension over the Straits subside slightly this year.

Apparently the Australian Defense Minister made a very interesting and, to me, surprising comment at the Lowy Institute this week. I am looking forward to the podcast appearing.

Finally, he made one comment which has not been picked up in the media coverage but which I thought was notable. In the context of talking about Australia’s capabilities and possible deployments, Fitzgibbon said: ‘If there were miscalculations in the Taiwan Straits, for example, we’d be expected, I think, to play our role.’

That statement seemed to be a clearer official indication that we are used to getting from Australian ministers that Australia would likely participate in a conflict in the Taiwan Strait. He later noted, I should say, that cross-Strait tensions have decreased of late, which has lessened the chance of such miscalculation. Furthermore, as a colleague observed to me, ‘would be expected to’ is not the same as ‘would’. Nevertheless, it’s a small insight into the new government’s thinking.

Presumably New Zealand's stance is "like hell we'll 'play our role'"????????????

Of course one could ask what is meant by 'play our role' just as much as by 'would be expected to'.

Wednesday, July 16, 2008

The French Mind

I am often accused by one particular friend and collaborator of being intellectually French. This is due to a fascination with things called Lagrange multipliers and is deemed a major deficiency on my part.

Since said friend has recently discovered me time-wasting on here I thought I would post this great quote from Gore Vidal.

"The French mind," he adds, "is addicted to the postulating of elaborate systems in order to explain everything, while the Anglo-American mind tends to shy away from unified-field theories. We chart our courses point to point; they sight from the stars. The fact that neither really gets much of anywhere doesn't mean that we haven't all had some nice outings over the years."

Monday, July 14, 2008

Freddie Mac and Fannie Mae

Their near collapse is not good news for the US economy. The just announced Federal bail out is remarkable but in line with the intervention in Bear Stearns earlier this year.

News analysis here.

Thursday, July 10, 2008

$500 oil?

An interesting blog post from Willem Buiter of the LSE at the Financial Times web page.

So how high are oil prices likely to go once we get through the cyclical global slowdown that is now under way. Arjun N Murti, a Goldman Sachs expert believes we will soon hit $200 a barrel (up from the current $146 level). The CEO of Gazprom has predicted a $250 barrel of oil before long. Dr. Robert Hirsch, a Senior Energy Advisor at MISI and a consultant in energy, technology, and managemen, says that oil will peak at $500 within the next 3 to 5 years. While your guess is as good as mine (likely better), none of these figures seem outlandish.

Fundamentally, this means that the most effective energy policy (including the most effective energy security policy) is conservation. The only way to encourage conservation is higher prices for the user, that is prices that fully reflect the long-run social marginal cost of energy. We are just beginning to see more realistic prices for energy, even in parts of the world where low-cost energy is seen as a social entitlement.

McCain on Habeas Corpus

How on earth did I miss this great diatribe from George Will at the time?

The day after the Supreme Court ruled that detainees imprisoned at Guantanamo are entitled to seek habeas corpus hearings, John McCain called it "one of the worst decisions in the history of this country." Well.

Does it rank with Dred Scott v. Sanford (1857), which concocted a constitutional right, unmentioned in the document, to own slaves and held that black people have no rights that white people are bound to respect? With Plessy v. Ferguson (1896), which affirmed the constitutionality of legally enforced racial segregation? With Korematsu v. United States (1944), which affirmed the wartime right to sweep American citizens of Japanese ancestry into concentration camps?

Did McCain's extravagant condemnation of the court's habeas ruling result from his reading the 126 pages of opinions and dissents? More likely, some clever ignoramus convinced him that this decision could make the Supreme Court -- meaning, which candidate would select the best judicial nominees -- a campaign issue.

Comparing Emissions Trading and Carbon Taxes

John Quiggin has some understandable (to me) reasons to prefer an ETS. One and three seem particularly important to me, changing the carbon tax rate regularly to achieve the desired level of consumption may address 2.

More on UNHRC

There has been quite a bit of criticism of New Zealand's candidature in the blogosphere and the media. For example this from Fran O'Sullivan.

Within the Israeli community, there are concerns that neither politician wants to say anything on record that might disturb New Zealand's campaign for a seat on the two-year-old United Nations Human Rights Council.

But Beehive officials say travel disruption at Wellington Airport meant that Rotem's meeting with Peters was cut short and the resultant meeting was not all-embracing. Goff's media availability has been constrained due to a family bereavement.

The unfortunate upshot is a perception that neither politician wants to speak frankly about Iran in case New Zealand's UN campaign is jeopardised by the Organisation of the Islamic Conference which is one of the dominant forces on the rights council.

Firstly I would say that Canada is leaving the Council and has been the only reliable vote for a balanced assessment of Israel. I hope, perhaps in vain, that we would continue the same role.

Secondly I would say that the situation with Iran here makes me uneasy also, if true. However, there is quite possibly room for some work sharing here. It may be more important to have Canada and Australia speaking out robustly against the nuclear program and New Zealand on the Council rather than Canada, Australia and New Zealand speaking out robustly against the nuclear program and none of these countries on the Council.

Kiwiblog has also been on a crusade against our candidature. It seems that his main objection is to some of the abuses that I referred to in my previous post and to some of the more dubious members of the Council. It seems to me that if we withdraw rather than attempting to continue the process of reform then that is a very serious message that we have lost faith in the UN and the possibility of UN reform more generally. The consequences of this are serious, and particularly with the Bush administration shortly to depart the scene I can't see that we should be ready to do that yet. Can I just note that Iran is not now and has never been a member of the Council contrary to what DPF appears to believe. (Saudi Arabia seems to me the most egregious admission to membership of the Council.)

Finally the Hive has a series of useful posts on this issue. Although I can't quite decide if they are in favour of or against our candidature.

New Zealand's Candidature for UN Human Rights Council

The UN Human Rights Council has had a bad year. Finger wagging at Israel and the UK. Removing monitors from Belarus and Cuba. Writing a requirement to investigate criticism of world religions into the role of the UN's free speech watch dog.

Nevertheless this is a new organisation. New Zealand put a lot of effort into helping to set up the council in place of its late, unlamented predecessor the Human Rights Comission. New Zealand has a long and proud history of involvement in the UN and we stand to gain a lot from the existence of an effective multilateral body like the UN. UN reform is and should be a major goal of New Zealand diplomacy.

Moreover, Canada's term on the Council is coming to an end and Canada and Australia are supporting our candidature as a representative of the CANZ grouping.

The Human Rights Council is far from perfect but I am not ready to give up on the UN as an organisation that can provide leadership on human rights, particularly in this the 60th anniversary year for the Universal Declaration of Human Rights. We have a lot to contribute and I wholeheartedly support New Zealand's candidature for the UN Human Rights Council.

This WSJ opinion piece on the Council is more negative than I am but it's conclusion seems exactly right.

A forum that serves as a real tool in service of human rights is worth fighting for.


Due to markedly increased work pressures I have not even managed to read the analysis of the Garnaut report in the Australian papers at the weekend, nor am I up with the status of the New Zealand bill. A slower rate of blogging may persist for a while.

Royal Society of New Zealand on Climate Change

Comments here. Hat-tip: No Right Turn.

The End of the American Century

The dean of the Australian press corps Paul Kelly returned from the US-Australia gabfest the week before last struck by the signs of decaying American power.

THE energy, financial and political woes that grip the US signal a decisive shift in world power, mocking the liberal delusion that Barack Obama or John McCain can return American prestige and power to its pre-Bush year 2000 nirvana. There is no such nirvana. There is instead a new reality: the greatest transfer of income in human history, away from energy importers such as the US to energy exporters; the rise of a new breed of wealthy autocracies that cripple US hopes of dominating the global system; and demands on the US to make fresh compromises in a world where power is rapidly being diversified.

Read the whole thing. I am also planning to read Fareed Zakaria's book The Post-American World. Based on his comments on BBC Radio he is an optimist.

Obviously this situation is exercising Australian foreign policy thinkers, not all of whom are so sanguine. The future relations between China, Japan, India and the US present many challenges. To give you an idea here is Hugh White in the Interpreter

Japan’s role is critical – it’s not just a US-China thing... let me put the point more bluntly: a stable concert in Asia is only possible if Japan is no longer a strategic client of the US, and that means it needs to have its own nuclear weapons. It is a measure of the strangeness, newness and scariness of our future that we may find ourselves concluding that, absent global abolition of nuclear weapons, an independent Japanese nuclear deterrent is necessary for peace in Asia.


Economics of Cap and Trade

Peter Orzag, the head of the US Congressional Budget Office, has written a major opinion piece in the Washington Post.

He argues strongly for the importance of "banking and borrowing provisions" that allow emitters to shift their allocations slightly from year to year. He is also concerned about offsetting the costs to people on low incomes. These sorts of options will make cap and trade more palatable to a domestic audience which will in turn lead to more effective reductions in emissions and thus better outcomes in international negotiations.

Given that climate change is a global problem, effective solutions will require care toward not only these domestic design issues but in coordinating efforts with other major emitters. Whereas timing flexibility and the use of revenue from allowance sales can be legislated, such coordination is difficult to legislate -- but may be easier to negotiate the more credible the U.S. effort, which in turn depends on avoiding excessive domestic costs. Giving firms flexibility about when they reduce emissions and devoting the revenue from selling allowances to reducing either the macroeconomic costs or the distributional consequences would not make it free to reduce the risks associated with global climate change, but such strategies could reduce the domestic economic costs substantially.

Tuesday, July 8, 2008

Learning to Live in Bizarro World

In any reasonable world last week's disruptive protest by truck drivers would have been a great advertisement for rail.

It seems pretty clear though that we are living in a kind of irrational Bizarro world where many people have reacted to it in the way it seems to have been conceived; as a enormous two-fingered salute to the government that has almost nothing to do with the modest increase in road user charges.

In Ruth Laugeson's article in the SST over the weekend a Labour MP speaking anonymously says that people are not listening to the government. Although I agree with the statement, it absolutely misses the point. The reaction to this protest suggests to me that people feel the government is not listening to them.

Everyone is worried about the price of food, the price of oil, the recession, drops in house prices and increases in interest rates.

But all we get from the government is talk about buying rail, setting up an incomprehensible emissions trading scheme, or preparing to ban the light bulb. (Not to mention murders and mayhem or stuff ups in Corrections and Defense, or the running sore of the Electoral Finance Act.)

When you go down to the bus stop to get to work there are government ads asking you to tune the cars you are now avoiding driving. There are other posters telling you to invite your friends over and have a candle-lit dinner to save power. Have you costed a dinner party recently?

If I was in the Cabinet I would now aim to do nothing, that's right nothing until the election except for

a) giving lots of feel your pain speeches that actually address people's real concerns including even the ones that governments of whatever party can do nothing about.

How is it that an economic downturn is turning New Zealanders away from a Labour-led government that has significantly improved their lot with measures like Working for Families. Measures that are sure to be ended or strangled by the coming long-term National government? Is there no populist remaining in Labour ranks?

b) getting my ministry to end all of their dreadful nagging advertising, particularly the ones that ask people to spend money they no longer have.

c) rather than focussing publicly on the achievements of the last three terms (a great exercise for Labour insiders staring down the barrel of defeat and looking to regroup after the election but not an election advertising strategy), I would be developing a message that explains what the government will do in the future. This "but we've been a good government and John Key is untested" line was one of the things that did for the Liberals in Australia. Everyone knew Howard would not be PM in three years regardless and neither he nor his team seemed to have any ideas about what they wanted to do in the future. Everything they said was an advertisement for Rudd.

For six months I have been convinced that National would win the election with enough of the party vote to govern alone. The BBQ chatter over the Christmas season was devastating for the Government and almost no one of my acquaintance is a natural National voter. I am beginning to be concerned though at the scale of disaffection with Labour reflected in the polls. As a rusted-on Labour voter looking for renewal in the party, a bit of creative destruction could be a good thing, outright rout would be very unpleasant.

It seems that some kind of rout is what we will get though. New Zealand politics in 2008 seems to be mirroring Australian politics in 2007. As well as the disease of resting on your laurels mentioned in c), the desparate policy ploys and the serial scandals, there is also the leadership question. Remarkably Helen Clark was saying in yesterdays paper that she will not step down as PM, this is not the sort of headline you want less than six months out from an election. She should have resigned six months ago and cannot do it now. However like John Howard I suspect she will not be able to keep leadership speculation out of the newspapers for the rest of the year.

So anyway I am going to keep trying to live with a Bizzaro world where everyone loves MACK trucks and John Key is a friend of the 'little guy' we kept hearing about from those protesting drivers.

Nicki Hager should sue

The ABC's new political satire on spin doctors in a parliamentary leader's office is entitled 'The Hollowmen' and starts this week.

Full story.

Friday, July 4, 2008

Draft of Garnaut Report on Climate Change Out

You can find a copy on the Australian's web page. Look out for coverage over the next couple of days. (But don't expect much discussion of the New Zealand proposals, we just don't rate the kind of attention over there that many seem to hope for.)

In recent weeks Rudd, Swann, Wong and others have been walking back the suggestion (based on election campaigning) that they will follow whatever advice is contained in it. Rudd is now saying the report is "just one input" into eventual policy. A government green paper will be released by Wong July 16.

Anyone Trying to Buy Steel?

We don't read a lot about it but the price of steel has been growing rapidly this year for much the same reasons that oil has been (demand in China and India, difficulties with supply).

I was disturbed to hear the suggestion last week that there is a kind of de facto steel rationing in New Zealand currently with suppliers usually unable to supply the full quantity asked for in an order.

Reporting on IEA Medium Term Oil Report

For those of us that can't afford it, there's a long article in the Financial Times.

In related rumour and speculation I found this one very interesting

I have been told by a reliable source that the IEA has been forbidden by the US administration from updating their absurdly cornucopian oil supply and demand scenarios until the report that comes out late this year (after the election); that report, which will publish the result of a "bottom-up" analysis (ie a summary of all existing oil fields, their production and/or prospects) is expected to show that oil production is unlikely to reach the levels that so many have blithely assumed - notably on the basis of previous optimistic IEA reports.

Hat-tip: Andrew Sullivan

Science Funding in New Zealand

Can I applaud the recent signs that lifting science funding in New Zealand may reach some level of political priority. In particular Anthony Scott's opinion piece in the Herald. Hat-tip The Hive.

I strongly disagree with Scott on one point. The Marsden Fund is essentially the only source of pure science research funding in this country and its value in real terms seems to have been decreasing markedly in recent years, driving several excellent scientists in my field to desparate measures, including expatriation. I know of at least three excellent young researchers in my relatively small area of physics that have left permanent jobs in New Zealand universities for a variety of reasons including better funding opportunities overseas. Maintaining research expertise in areas like physics is essential and I am not talking about people that lack international reputations. These people are supported by blue skies research funding like the Marsden Fund and they are able to attract it in other countries with relative ease. Not all Government science funding should have a definite technological of commerical application in view. Indeed it seems to me that the private sector should be funding the lion's share of such work. Please someone, increase the value of the Marsden Fund now.

For some time one of the glaring issues in science funding has been appallingly low private sector funding for research. This will always be an issue in New Zealand's small economy and it is great to see the government addressing it with the Fast Forward Fund. However there are companies that should be more involved in funding scientific research given their size and the huge role of technical advances in their business, I'm thinking of you, Fonterra.

Wednesday, July 2, 2008

Rudd commits to ETS?

There are now several pieces in the Australian press suggesting that Rudd is now doubly committed to the ETS and willing to abandon petrol populism and tell the electorate some home truths. For example this from Dennis Atkins.

Australian Labor Party and Nuclear Power

Somewhat surprisingly a senior Union figure and former NSW Premier Bob Carr pushed the idea of an Australian Nuclear power industry at the Australian American Leadership Dialogue in Washington at the end of last week. Rudd told ABC radio that he remains opposed.

One big concern for Australia is finding the power to fuel their booming minerals industry if an ETS makes coal fired power stations uneconomic.

Oil Market

Speculation seems definitely to be going out of fashion as a reason for high oil prices.

The IEA has just released a medium term oil market report that is far too expensive for me to purchase. In press releases and talks supporting the release they seem to be trying to damp down talk about speculation by noting the current contraction in oil stocks. The Executive Director comments:

Speaking at a press conference at the World Petroleum Congress, Mr. Tanaka emphasized that market fundamentals were the main underlying factor behind high oil prices. “OPEC production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build. These factors demonstrate that it is mainly fundamentals pushing up the price,” he added.