2008 - A step closer to the abyss

"Once more unto the breach, dear friends, once more" - the world slips closer to the edge of the precipice, but once more we seem to have been reprieved. This cannot go on indefinitely. The lesson of 2008 is that we have edged closer to self-destruction through war, climate and finance, but the world still has an opportunity to fix itself. The wars in Afghanistan and Iraq have been as bad as they could be, but hope of peace is still there. There has been total inaction on climate change this year, but environmentalist movements are as close to government decision makers as ever. The global economy has taken a battering throughout 2008, but has not touched large sections of society.

Another theme of 2008 has been how unresolved regional issues that have simmered have got close to breaking point. These might include Zimbabwe's internal crisis, Russia's short war in Georgia, the protests for democracy in Tibet or the latest Israeli onslaught on Hamas. This reflects badly on the international community as well as those involved. Internal matters are internal matters and there is a limit to what the outside world can do. But a failure to have united positions on issues like Georgia’s NATO membership or vast differences between southern African and European relations with Robert Mugabe have made the international community powerless.

It’s hard to find some positives in 2008, but three events stick out. The Beijing Olympics were very controversial, with questions on censorship, pollution and Tibet scrutinised in the build up. How China will develop as a country and an international actor is still unclear. But the Olympics was a positive step, showing what China can add, rather than what negatives it might have. In September CERN scientists in Geneva launched the Large Hadron Collider, firing protons around a 27 kilometre ring and recreating the Big Bang. Science is one thing that the world is getting right at the moment, and if the same efforts were put into resolving conflict and poverty, the world would be far better off. Finally, it had to be, the one and only. Barack Obama will inevitably disappoint some in the next four years and many of his plans will not work out as planned - that’s the nature of politics. But November 4 was a great day for the optimists. Here are a few summaries on 2008.

Global Economy
2008 was a devastating year for global economics and the financial sector - with a mere $14 trillion wiped off world share values. From September onwards, the state of the global economy, in particular the financial sector has been a dominant issue. The bringing of American mortgage firms Fannie Mae and Freddie Mac in public ownership was followed by the bankruptcy of Lehman Brothers and the sale of the greatly reduced in value Merrill Lynch. The subprime mortgage crisis of 2007 morphed into the financial crisis of 2008 at this point, since when a tsunami of financial turmoil has followed. The crisis in banking has impacted on most of areas of the economy and has brought the onset of a global recession. The relationship between governments and the free market has been profoundly altered by this crisis. Banks are essential for business, commerce and industry, so a bailout can be justified, even though it was their incompetence that created the mess. A reform of the financial system is promised, but on whose terms - the governments, the taxpayers or the bankers?

Meanwhile, not unrelated, food and energy prices soared in the first half of the year. Food prices increased through many interlinked factors or a “perfect storm“: increased biofuel production; changes in diet in China and India to resource intensive food; higher oil prices impacting on fertilizers and food production; natural disasters like Cyclone Nargis that caused a spike in rice prices. But thanks to the global recession and fall in world demand, food prices are now falling again. Although the credit crunch might impact on farmers production capabilities, causing another surge in prices.

The fluctuating of oil prices throughout 2008 has been one of the year’s most curious economic stories. Prices soared over $100 for the first time in January, and then hit a record $147.27 in July. Prices had been increasing at a gathering rate throughout the decade, but Tensions in the Middle East, increased demand in China and India and a fall in the dollar’s value all contributed to this spike. However just as environmentalists had a minor celebration, hoping that this new era of higher petrol prices would reduce car usage and emissions. And just as governments were talking of pushing the alternative energy agenda further, the global recession brought prices back down again. The rich producer states have invested this incredible boon back into green projects, but will this be enough? Its good PR but expanding these advances in clean technology across the globe will take a long time. The world’s dependency on oil and its role in numerous global issues was reiterated again in 2008.

South Asia

If one area of the globe had a bad year, it was South Asia. 2007 had been a bad year for Pakistan, 2008 was worse. The ongoing conflict in its north westerly border with Taliban militants escalated through the year - air strikes by American unmanned drones raised the temperature further. Pakistan’s chaotic political system took one step forward - with the resignation of the unpopular General Musharraf. This was replaced by the combined PPP leadership of prime minister Yousaf Raza Gillani and president Asif Ali Zardari, widower of Benazir Bhutto. Zardari - also known as Mr 10% - is an unlikely saviour for Pakistan. Deeply unpopular with large parts of the population and faced with a worsening security situation, his chances of success appear slim.

Pakistan’s year was just as bad as Afghanistan, where the decline in security has led to a proposed increase in US troops. The so-called Iraqisation of the conflict, complete absence of political authority and an ongoing humanitarian crisis has made Afghanistan worse than ever. Achieving stability in Pakistan first and securing the border seems a likely solution, but this region is so lawless and uncontrollable, that quick progress is very unlikely soon. A General Petraeus led “Sons of Afghanistan” strategy has been hinted at. But 2008 may well be the year that Afghanistan became unsolvable.

India had escaped this maelstrom for most of the year. Domestic terrorism - linked to the Students Islamic Movement of India and Naxalite groups - had occurred throughout the year, but India’s perilous position so close to this chaos was only fully revealed by the November Mumbai attacks. The Mumbai atrocities proved that India still faced a far from resolved situation in Kashmir and that it was on the frontline in the war against Islamic extremism in northern Pakistan. Lashkar-e-Taiba has liberation of Kashmir as its founding objective, but diverting the Pakistani military from its war against the Taliban in the north, was an additional objective from the attacks.

Pakistan is therefore the key country in the region and probably wins the unwanted end of year prize for most dangerous country of 2008. Obama will focus attention on Pakistan after January. It has become a launch pad for attacks on both its neighbours. British intelligence believes that the majority of terrorist plots in the UK are born there. And just to make things worse, it has nuclear weapons.

On a positive note, India has made further progress in securing its position as a leading economic power. If India can cope with the global recession, then it could - alongside China - dominate the next decade. The rise of the Indian billionaires; the immense Indian middle class and their purchasing power; confident expansions abroad, as seen by Tata’s buyout of Jaguar, reflect this upward growth.

Americas

Two questions have dominated American politics in 2008: who will be the next President and what will happen to the economy? The longest, most expensive and most historical election ever kept America in stasis all year. With the current administration out of ideas and with no agenda, their sole objectives were to not make life too difficult for John McCain and to limit the damage from the economic downturn. The official transition might only have started after Obama’s victory in November, but a transition has been in place since the start of the year. Some President’s - notably Clinton - use their remaining time for shuttle diplomacy and end of term initiatives. The Bush presidency has had a slow death since late 2006. Iraq, the defining issue of the last 8 years, has moved to just about bearable situation for Bush to leave on. The economic problems have either been dealt with by bipartisan cooperation or left half resolved for Obama to pick up (in particular the proposed bailout of the car industry). 2008 was a year of change for America, but not a year of action.

South of the border and into Latin America, many questions are unanswered. How will the region cope with a global downturn? Will left wing governments maintain their ascendancy? Whilst Fidel Castro stepped down after half a century, Hugo Chavez looked set to fulfil his ambition as US - antagoniser in chief in the region. The failure of the Bush administration to effectively engage in the region has presented openings for China and Russia to strengthen ties. Latin American leaders are not only looking for new alliances, but they are also strengthening cooperation across the continent.

The problems that have characterised Latin America still exist though. Drug trafficking on a vast scale still has a deep impact on society and politics from Colombia north to Mexico. In the latter, brutal and gruesome gang wars threaten to consume the whole state. With such narco-power, gangs in Mexico have turned the country into a northerly version of Colombia. Corrupt politicians have allowed the traffickers to become a real threat to the state. The drug wars in Latin America have simmered for a long time, they reached a dangerous point in 2008, next year will probably be worse. President Obama might face one of his worst crises just south of the border.

Environment

One step forward, one step back was the theme for the environment in 2008. Governments claim that they have introduced a range of measures to cut emissions and made the changes necessary for society to tackle climate change. Activists will claim that these measures have not gone far enough and that other actions - like proposed extra runways or nuclear power stations - are at best counterproductive, at worse a major step backwards.

America's new ally

Its four weeks until President-elect Obama's inauguration and then the fun begins. The members of his new administration are very familiar - made up of current Bush appointees like Robert Gates and Democrat regulars, in particular Secretary of State Clinton. But we are no wiser as to how the new administration will approach the countless problems facing the world. Foreign policy never works the same in print or the academic arena as it does in the bad and dangerous real world.

Plenty has been written about who President Obama will visit first and which foreign leader will have that privilege of an Oval lawn press conference first. The convention says that American leaders usually engage with key regional allies first. Canada and Mexico are the usual favourites. But international allies often follow quickly. President Chirac was the first foreign leader to visit George Bush, although this was before his inauguration. Blair was the first non North American leader to visit in February 2001. British prime minister Brown and President Sarkozy will be champing at the bit, after either Mexico or Canada are catered for.

But given the critical situation in the world, this convention of meeting key international allies should be put off this time. Here is an alternative first visitor. Russian President Dmitry Medvedev should at least be at the White house before the first month is out. Russia are widely feared and distrusted, but their importance is vastly understated.

The worsening in relations between the United States and Russia during the Bush era was totally avoidable, reflecting American arrogance and Russian bitterness. The five day Georgian conflict was the culmination of this decline. Bush and Putin had initially warmed and had many similarities - both blunt and arrogant men united with machismo and callousness as seen by their hardline responses to terrorist atrocities. As Obama's website summarizes well: "the Bush Administration's erratic policy of embracing Vladimir Putin but neglecting U.S.-Russian relations". America's Iranian obsession that led to missiles defence plans in Eastern Europe and blind unilateralism that left no room for anyone but a few willing "partners", created unnecessary splits.

The installation of missiles in Poland and Czech Republic and the encroaching expansion of the NATO to Georgia, owed plenty to a Cold war ideology of containment and arms build ups that still remained in the Republican party. As Obama's campaign puts well again: "Retrofitting outdated 20th century thinking to address this new 21st century challenge". With these Cold war warriors finally gone, a new attitude to Russia can develop in Washington. Not only is Russia a different international player to its Cold war guise, new global realities make Russia both a completely different potential ally with modern day interests but also with a previously untouched range of talents that the international community can draw on. Russia through its immense historical authority and vast natural resources still has the power to influence in the world's most difficult places. This persuasiveness has been left on the sides lines for the last eight years. Obama, hopefully, is smart enough to realise that Russia is indispensable.

Russia realises like the rest of the world that Obama's presidency is a watershed. Obama and Medvedev have already spoken and US-Russia relations were put down as a priority. Creating positive relations with Russia, is also given its own sub-heading on Obama's website. To him it should and does rank alongside working with Israel, dealing with Iran and of course Iraq.

The Real Rulers of Damascus

In the first high-level visit by a British official for seven years, David Milliband will meet Syrian president Bashar al-Assad tomorrow with the hope of bringing the pariah state back into the fold of the Middle East peace process. The foreign secretary will be hoping for an easier time than Tony Blair encountered in 2001, when the Syrian (and Arab) view of the region was stated in blunt terms. For many analysts Syria is the potential linchpin of stability and security: the patrons of Hamas and Hizbollah; the key to easing tensions over Iran's nuclear programme. But Syria is not simply Assad. Behind this young and confident leader is a complex hierarchy that few outside Damascus understand.

'If we do not talk with Assad, there will not be peace in the Middle East.' President Nicolas Sarkozy said recently. His importance to the country's fortunes is beyond doubt, but his control over internal security in Syria and Lebanon is unclear. What role did Assad have over the Hariri assassination, what control does he have over insurgent camps on the Iraq border, would he have the authority to break from Iran and suspend support for radical groups?

Bashar al-Assad assumed power in July 2000 after his father's death, having held no interest in politics to that point. Trained in London as an ophthalmologist, his rule has reflected this worldly and progressive background. But being thrust into the intensity of Middle Eastern politics at thirty-four years, a naivety has often been shown. Whilst this inexperience was shown in his reaction to the UN's Hariri investigation, there has been shrewdness in maintaining Syria's influence and combativeness against the West's pressure. Assad has been no pushover - whether against Blair in 2001 or after the barrage of warnings from America in mid 2003.

One of the West's prime accusations against Syria is its support for radical Islamist groups through its Iranian alliance. But this stands in stark contrast to Assad's own secular progressive background and also his wife's. Born and educated in Britain and having pursued a career in investment banking, Asma al-Assad has championed women's rights as Syria's first lady. The relationship between Iran and Syria can thus be explained as one of convenience rather than shared values. When interviewed by news channels Bashar Assad appears mild mannered, intelligent and fluent in English, but to many he is seen as one of the main obstacles to peace in the region and a supporter of violent radicalism. The two don't match up - an explanation may be that he represents a front and real power lies elsewhere.

Assad's sister Bushra is regarded as the intellectual force in the Syrian inner circle and has promoted her husband - Assef Shawkat - up the ranks of Damascus power, against the family's wishes. He now is head of military intelligence and is seen as the strongman of the regime. Shawkat had his assets frozen after being implicated in the Hariri assassination. He has also been accused of supporting Sunni Islamist terrorist groups in north Lebanon, whilst duplicitiously also conducting a public campaign to contain terrorism. Bushra - known as the "iron lady" - has the steel to drive her husband's ambitions but also to ensure her brother's position is secure. They are both considered to have held ambitions for Syria's top job. Finally the fourth member of this inner circle is the fourth Assad brother Maher, who has violent reputation and fell out with Shawkat in the late 1990s. Also implicated by the UN's Mehri report, he controls Syria's Republican Guard.

The latest rapprochement between Syria and the West is a positive development. But like Iran, domestic politics will play as much an influence on the course of negotiations as any shared interests between the Damascus leader and Western diplomats. Bashar al-Assad sent a congratulatory message to new president Barack Obama and Britain and Syria have agreed to closer intelligence co-operation. Shortly after the publication of the UN's report on the Hariri assassination, Bashar's days appeared numbered. He could have easily capitulated to Western demands and handed over his brother or brother-in-law, but he successfully weathered that storm. Faced with extreme external pressure, the Assad family has united around Bashar's leadership.

The rumour mill of the Middle East loves characters like the Assads, as their secrecy means that any host of interpretations of their intentions can be devised. Bushra a-Assad was this year rumoured to be seeking political asylum in France; Shawkat was reported to be under house arrest for his role in the assassination of Hezbollah number two Imad Mughnieh. The "suicide" of interior minister Ghazi Kanaan in 2005 was a classic addition to the Syrian rumour mongers armoury. Western politicians may have some greater insight than the public, but they may also be as confused as everyone else about where the true power in Damascus lies.

As America celebrates...

Whilst well over half of America celebrates the election of the first black president and the end of a disastrous Republican administration, two world events could prove prescient for the four years ahead. Six militants were killed in the first serious incident between Israel and Hamas since the ceasefire was agreed and in Mexico a plane crash has killed some of the government's top anti-cartel figures. These represent just two current flash points and who knows where other dangers lie in the next four years. Afghanistan, Iraq, Iran, Russian Caucasus and Pakistan are obvious locations. Barack Obama has other more urgent issues like the economy to deal with, but at some point foreign policy will rise to the top of his in-tray with a vengeance. For all his charisma and international appeal, Obama does not hold the silver bullet to world order and America will hold enemies regardless of who is in the White house.

The escalating narco-wars in Mexico represent a new potential threat on America's southern flank, whilst the Israeli-Palestinian conflict is the oldest foreign policy issue around but still the most important. Northern Mexico has resembled Iraq of late with a wave of brutal inter-cartel murders often accompanied by gruesome torture. Corrupt police forces and politicians have left the Mexican government impotent and powerless to act. The cartels have even infiltrated the US embassy. American policy in Colombia under four previous Presidents made no difference to the narcotic flow despite the billions being pumped south, so success in Mexico is a tough task. Mexico has not been listed on many analyses of Obama's foreign policy priorities, but it could be a running sore for the next few years. The intensity of the violence could spark something more serious.

A resolution of the Palestine question would not end the turbulence in the Middle East, but it would neutralise some of the poison that has afflicted America's relationship with the region. Syria would offer less antagonism towards the US, and so may Iran. The Palestinians plight has never been central to Al-Qaeda's agenda, although it has been used all the same, so a settlement would not ease this front. But the resentment in the wider region that provides a pool of recruits would be relieved by any agreement. The need to prioritise the peace process is obvious, but achieving this is another matter. This has been beyond almost all previous Presidents, even Clinton failed and that was with two fairly moderate leaders and a positive mood in the wake of the Oslo accords. Now Hamas and Israel could launch full scale hostilities any day. With the possibility of an intransigent right wing government being elected in Israel early next year, the two sides could become even more entrenched.

Afghanistan and Iraq will most likely take precedence in the early part of the Obama presidency. If there is an advantage for Obama over previous Clinton and Bush administrations, it is that the seriousness of crises on his in-tray, forces quick and decisive formulation of foreign policy strategy. Clinton spent his first year in foreign policy anonymity, Bush only showed an interest once he had to - after September 11. The Obama doctrine has been clearly set out over the course of the campaign, but events and new conflicts can alter or ruin any pre-planned ideas very easily. Both his predecessors doctrines were widely discredited by the end of their presidencies.

Many foreign policy experts believe the Obama presidency will represent continuity. But the relationship between America and its allies will certainly see improvements. The total break down of relations between Europe and the Bush administration that began with the build up to the Iraq war has remained for the last five years. The rapturous reception Obama received on his late summer tour of Europe is pretty much mirrored by European politicians. The EU was humiliated by Russia in its conflict with Georgia, so it is crying out for new encouragement on the world stage. The role of the EU had been undermined in international issues - like the Iran nuclear issue. Carrot and stick diplomacy usually meant the EU provided weak carrots; the American administration wildly brandished the stick. A more multilateral approach is surely more likely now.

With the middle name of Hussein, you would think that Barack Obama will be able to reach out to moderates across the Middle East. This will happen and America's soft power will be restored, but the region has become riven with cynicism after the last eight years. Radical groups like Al-Qaida are a different matter. Engaged in a long war, the individual characteristics of presidents is not that relevant. Obama has placed Afghanistan as a priority as well as stabilising Pakistan. General Petraeus is looking to divide nationalist insurgents from jihadists in Afghanistan as was successful in Iraq. The approach to Iran will require real patience and tact -Obama traits - but it might be a Syria first strategy.

So Obama has four years to clear up the mess left by the Bush administration. No recent president has had such a daunting foreign policy agenda to deal with. Clinton had Somalia but this hadn't escalated; Bush snr had the Cold war but perestroika was in full flow by 1988. Obama will hope that Bush leaves no more unwanted legacies in the transition period. A possibility but unlikely given today's gracious congratulations. But then as Mexico's upward violent spiral shows, other fronts and crises are able to arise at any moment.

End of days

In 40 days time, the American public will vote for a new President, who then will be sworn in a further two and a half months later - a hell of a lot can happen in this time. Three crises are reaching fever pitch at the moment and at least one will cast a dark shadow over this concluding period. First Iran. Tensions between the United States, Israel and Iran have simmered all year. Mahmoud Ahmadinejad's recent speech to the UN in New York has only outraged anti-Iran groups further and now even Obama is expressing outrage at his anti-semitic and confrontational comments. The war of words has continued with the IAEA acting as an ineffectual referee. The longer Iran is perceived to be un-cooperative and obstructionist - the less patient America and Israel will be. An attack on Iran is not considered likely before 4 November, but in the post election vacuum, and if there is an Obama victory, a parting shot by Bush (egged on by Dick Cheney) at Iran's nuclear installations is considered a real possibility.

Will this happen? The Bush administration has had Tehran in its cross hairs for most of its tenure. The "not on my watch" syndrome is a strong influence for Bush and Iran continues to provoke and be defiant. But whether America attacks Iran seems related to the second crisis that dominates US foreign policy. The crisis in Pakistan that is now on all fronts - military, political and economic is making the Iran crisis seem totally innocuous in comparison. The expansion of Taliban-jihadi influence in the tribal areas of north-west Pakistan, the weakness of Islamabad's civilian leadership and the duplicitous role of the military-ISI has created an explosive mix. Pakistan is getting worse every day. It seemed to be on the precipice at the end of last year, after the assassination of Benazir Bhutto, but its state has only detiorated since. On top of this, American and Pakistani troops have exchanged fire, after US Special forces conducted a cross border raid from Afghanistan.

The Bush administration has finally realised the seriousness of the Afghanistan conflict, having been pre-occupied by Iraq for most of the last five years. It also hopes to capture or kill as many Al-Qaida leaders as possible in its remaining months, including possibly the greatest prize Osama Bin Laden. The re-organized Taliban and its Al-Qaida allies are so submerged in the region though, that air raids, lightning operations and certainly conventional operations are fairly ineffective. A large scale bombing campaign might eliminate a score of enemy fighters, but would create an outcry in the region fierce enough to push Pakistan over the edge. Last weekend's suicide attack on the Marriott hotel underlined what everyone knows - Pakistan is facing a grave threat from jihadist terrorism. Repelling the attacks from the safe haven of the Pakistani tribal areas is an immense challenge to the American military, let alone a disorganised Pakistani army. Dealing with this situation is Bush's priority and thus puts Iran on the back burner.

But the two crises are related - logistically at least - Taliban forces have been armed by Iran according to some reports. Pakistan's upheaval and Iran's nuclear ambitions are driven by domestic factors way beyond the influence of Washington policymakers. Bush's role is forgiven in some respects. But the policies of the Bush administration have also made these countries worse, and the president might feel obliged to tidy up his mess in the crudest way possible.

Finally as the credit crunch is approaching its moment of truth, the US treasury is pushing for Congress to approve a $700bn bail out package for American banks. The deal will go through - simply because its failure would end American economic power as we know it. But whether it is the panacea for the global credit crisis is unclear. The American economy may well suffer further for the rest of the year. Whatever happens Bush's economic legacy seems as bad as his foreign policy one. Not only has America moved nearer recession and its previously unrivalled position as the centre for global capital been severely dented, but it has surrendered economic initiative to China and to a lesser extent India, Russia and the EU. One could also argue that the loss of soft power under Bush has made America an unattractive economic prospect as well. The Bush administration has been plagued with incompetent decision making, but fortunately the global financial crisis is such an out of control behemoth that any Bush action will probably make little difference. A parting shot is in the offing, the world will be holding its breath until January 20th.

End of the silly season?

British politics has the fortune of a peaceful summer month to give followers of current affairs a welcome break from the turbulent world that we live in. In such unforgiving environments elsewhere, a similar break would be a minor miracle. But despite the perpetual gloom, some positive moments have occured in the Middle East. As the season ended, the US significantly handed over the restive province of Anbar in west Iraq. Once the epicentre of the insurgency - a destructive nexus of Al-Qaida in Iraq, Sunni nationalists and Ba'thists - it has experienced a dramatic improvement in the last year. An important moment for the country.

The success here linked, not to a large degree but in part, to a ruthless campaign in Baghdad by the coalition. A good summer story to boost sales and provide some gung-ho sweat to a predictably cold summer was the disclosure by General Petraeus that SAS had played a vital role in securing the capital. Undercover SAS hit teams conducted a secret war had taken out 3,500 terrorists in a year and a half. Pure but probably true propaganda. The story was only picked up by the right wing newspapers, and was probably good sunbed reading.

More machoism this week, as an Israeli cabinet minister suggests that Mossad could kidnap Iranian president Ahmadinejad. Forgetting the logistical difficulties, Israel would be walking into a legal minefield. A country that has by many accounts broken numerous international laws tries to prosecute a leader who has threatened to break another law, in a figurative sense. It would dominate the syllabus of international law students for years.

Some wilder moments have arisen in the summer's required reading that has been published in Washington. First the revelation that American intelligence spied on Iraqi prime minister Nouri al-Maliki.

It's the climate stupid!

The Democrats have anointed Barack Obama and now the Republicans will do the same for John McCain in Minnesota this week. The differences between how each candidate will preside are becoming starker as Obama's progressive middle class multicultural agenda clashes with a conservative coalition of evangelicals and the free market financial elite. The backdrop of a serious global economic downturn, war in the Caucasus, and yet more confrontation in the Middle East, will probably dominate for the next few months of the contest, but by far the most important issue is still the lowest priority and this despite recent events in New Orleans.

Voters have been myopic when it comes climate change so far. We have yet to have a climate change election and fortunately on this occasion, it won't be. Both Obama and McCain accept the reality of climate change and will push for renewed international co-operation if elected. McCain's vice president Sarah Palin does not believe climate change is man-made - a problematic position for sure. And if elected the traditional economic interests that bankroll the Republicans may come to the fore. But compared to Bush's obstinacy and ignorance on the issue, the future is more optimistic. The UN Secretary General believes the next president must take the global lead on the issue.

Fanning the Olympic flames...

Sport and politics don't mix they say - try telling that to the Olympians. The history of the modern Olympics has been laced with incidents ranging from good old fashioned boycotts, to exploiting the games for propaganda, to acts of mindless terrorism. Look at the games through the years and the prevailing malaise often comes to the fore. The rise of Nazism marked the 1936 event; the Mexico City games of 68 were remembered for two American athletes' black power salute. 1972 was in the midst of ever more imaginative international terrorism - the death of 11 Israeli weightlifting team members made the event permanently associated with terror not sport. Then in the height of the "second Cold War", both the United States and the Soviet Union used the 1980 and 1984 games not as a platform for detente but - through boycotts - as another way to show disgust towards the other.

Thankfully recent Olympics have been more docile, without violence or part of warped geopolitics. Although the 1996 Atlanta event felt the ugly side of homegrown American terrorism. Perhaps staging the event in the kind of places most people would go on holiday, with no indigenous terrorism or autocratic regimes looking for any fillip possible, helps. Barcelona, Sydney and Athens fit the safety first option.

For Beijing though, the decision to award the Olympia was based on "international recognition of China's social stability, economic progress and the healthy life of the Chinese people." The IOC probably knew they were gambling, considering the safe alternatives that lost out to Beijing - Toronto and Paris. But the Olympics has always seen itself as a force for change and good in the world - the chance to bring one billion Chinese into the 21st century was too good an opportunity to miss.

Unfortunately under the international microscope, Chinese government policies are exposed. It is interesting to consider whether these issues are being examined minutely due to the Olympics, whether the protagonists are raising the protests and odds to capture this moment, or whether in a more globalised world we are just more interested in what happens thousands of miles away. So we have had international protests against China's long running iron fist policies in Tibet. Firstly in Llasa itself and then during the cross nation Olympic flame journey. China's misconception of how the world perceived their brutality in Tibet was exposed in snowy April Sunday in London, although not to the viewers back home. Then China suffered a devastating earthquake in Sichuan province, where nearly 70,000 people have died. Although an apolitical event, the Chinese authorities knew international focus required a decisive and compassionate response, which was delivered. It would be extremely cynical to say that such response was purely due to the Olympics, but international opinion was probably not not considered.

The prickly subject of censorship is an ongoing source of tension between the relative organisers. Having promised open media access, Chinese authorities have been slow in unblocking websites deemed politically sensitive, but progress is being made - apparently. Add to this ongoing concerns with Chinese human rights record that Amnesty are more than happy to raise - a series of broken promises as their timely report reveals. Oh and don't forget chronic smog over Beijing that puts the games (well outdoor events at least) in real doubt. The embarrassment of smog effected delays and cancellations could do far more damage than any protester might inflict, whether in a "protest pen" or not.

The final factor that threatens to turn a merely controversial Olympics into an ugly one, is that old favourite - terrorism. Today's attack by separatists from the Muslim region of Xinjiang on a police border post has brought serious concern for the organizers. Previously unheard of groups like the East Turkestan Islamic Movement (ETIM) and Turkistan Islamic Party (TIP) are now centre stage. Predictably linked to Al-Qaeda they are putting the Olympics in a new perspective.

But despite minor teething problems, these Olympics are China's sales pitch to the world. It is their chance to impress us, beyond simple economic competence and it is also, at the same time, China's chance to understand the rest of the planet. China is an easy target for anyone concerned with human rights and there will be many who hope that the Olympics somehow fail as justice for their disregard for Tibet, Tianamen, etc. But there is a benign innocence to the Chinese - vis-à-vis the rest of the world - and any embarrassing cock-up would be a tad cruel given their zeal and desire for recognition.

Justice land

After the controversial, time consuming and ultimately unsuccessful trial of Milosevic, the UN war crimes tribunal at the Hague has its second big catch - Radovan Karadzic. His arrival at the Hague today provides an opportunity of justice for some of worst crimes in Europe since the second World War, but as Milosevic's trial showed, this can be an arduous process. Lower ranking individuals with less responsibility and blood on their hands have been prosecuted successfully, but those further up the Serb food chain have thus far escaped justice. Croat, Bosnian and even Kosovar idictees have faced the Hague, but none of the very unholy trinity of Milosevic, Karadzic or the still at large Ratko Mladic, who were responsible for the vast majority of the carnage, have faced a final reckoning. Although the ICTY is 15 years old, without a full and complete prosecution of these three, the court will be perceived as under-achieving.

Karadzic's crimes are numerous. As leader of the Serbian Democratic Party (Srpska Demokratska Stranka) in Bosnia, he assumed the commanding military role, as Bosnian Serb forces sought to preserve their territory at the expense of Bosniaks and Bosnian Croats. Beyond the relentless campaign of ethnic cleansing, Karadzic oversaw the cruel siege of Sarajevo, then is alleged to have ordered the Srebrenica massacre in July 1995. Milosevic's take on Serb nationalism was manipulative and opportunistic, and was also from a distance in Belgrade with every effort to avoid culpability. But Karadzic sought no veil of guilt, his pronouncements at the time were unflinching: "In just a couple of days, Sarajevo will be gone and there will be five hundred thousand dead, in one month Muslims will be annihilated in Bosnia and Herzegovina". The ICTY has a compelling case for Karadzic.

Middle East - Chapter 6

The Middle East see-saw is fluctuating with its characteristic unpredictability as moves towards peace and ceasefires are matched by new tensions and violence. There is a sense that a new chapter in the region is opening. Partly due to several political facts that will occur in the next six months, but partly due to a long overdue re-evaluation of the problems in the region and the best way to resolve them. This new chapter could possibly see South West Asia move onto a more equal standing to the rest of the industrialised world, but it also has the potential to become far worse - even to the point of total destruction. So finish reading chapter five, make yourself a cup of tea, then turn the page to start this gripping new chapter....

What we do know and can predict with some certainty are the following. That a new American president will be elected by the end of the year and with this will follow a re-consideration of US policy in the region. The new President will either stay in Iraq until an unspecified date or will initiate a troop withdrawal to be completed within a 16 month time frame. Those are pretty stark differences in policy. The second way in which the new President will impact on the region is diplomatic. One will maintain the current diplomatic freeze on Iran, tighten sanctions and take military action if it comes to it. The other will meet the Tehran leadership without preconditions. Again with such differences in policy the future of the region could go either way. Tehran will also hold elections in 2009 and the end of Ahmadinejad's radical rule could change the course of this crisis. Regarding Israel and the Palestinians, both candidates have expressed strong support for Israel recently and have not put forward any radical alternatives to the status quo, so that conflict will continue as it is.

Linked to America's destiny in the region is the strong possibility of some sort of enhanced sovereignty for Iraq. As Iraqi forces gain the upper hand against the insurgency, greater political control will follow. Ten out of Iraq's 18 provinces have been handed back to Iraqi government control - Diwaniyah is the latest. The tide may well have turned since the start of the surge in 2007, but Sunni provinces are still beyond the Baghdad government's control. Iraq also remains heavily influenced by Iran, the provinces under Iraqi government control are Shiite and Prime Minister Maliki shows no sign of cooling Iranian ties under American pressure. But the battle against the militias appears to being won and maybe, just maybe, 2009 could be a year of serious reconciliation for Iraq. Iraq is pushing for further sovereignty with the setting of a US timetable for withdrawal and possible prosecution of American troops but these are flimsy aspirations.

Finally for the United States, as Iraq achieves some vague concept of stability, a new front is re-opened in Afghanistan. The recent revival of the Taliban shows that western concepts of victory are very flimsy. A "victory" in late 2001 seems a long way off now. The Taliban may have been in power from 1996 for five years, but once ousted, they simply reverted back to their previous guise as the insurgency that defeated the Soviets in the 1980s. Having regrouped in Pakistan, they pose an even greater threat to regional stability. Bin Laden is not heard of, but he seems irrelevant, as the international jihadist movement has established its own momentum. Expect America's involvement in the Afghan war to take a dangerous twist in the next chapter.

Another near certainty for the region is a change in political leadership in Israel. A Likud win in Israel's elections raises the possibility of renewed war with Hezbollah and military strikes against Iran's nuclear facilities. Iran will achieve nuclear capability in the next two years, according to Israeli intelligence, so war may be inevitable regardless of who leads Israel. The long delayed full scale invasion of Gaza will probably happen as well, regardless of who leads Israel. Linked to America's destiny closely, the relationship between new leaders in both countries, will be critical. Presidents have regularly been well received in Israel, mostly because the said President has gone out of his way to appear pro Israeli. But Israeli public opinion is unsure about Obama and what approach he will adopt. A new US-Israel relationship could emerge, but many have argued it will slip back into the traditional mould.

Some slightly less certain but equally important possibilities for the region revolve around economic factors. The region's wealth has clearly developed at a rapid rate, but now with this growth, influence might follow. Saudi Arabia, the UAE and Qatar are the powerhouses using oil wealth to not only expand international economic influence - the rise of sovereign wealth funds being the main vehicle - but through significant investment in education and technology - the region is developing its own soft power. Dubai is a centre for experimental architecture, science and medicine research - providing an intellectual export to go with the energy one. Talent may also be drawn into the region, lured by advanced educational institutions flushed with investment and superior facilities.

So that's what could be reasonably expected for the next few years, there are certainly more probabilities and there will also be the odd surprise. Could Syria finally come in from the cold? Could a democratic forces gain momentum in say Lebanon or Pakistan? Another rollercoaster chapter for the region. But in this next stage, events will also lead to new thinking.

The mistakes and misadventures of the last seven years have now spurred a new wave of intellectual output. How the West should interact with the Middle East (and the rest of the world for that matter) is analysed in some new groundbreaking works. Robert Kagan, neoconservative writer and adviser to John McCain, in his new book The Return of History and the End of Dreams, sees the Middle East being absorbed into a larger geopolitical game with the democratic West facing the autocratic East - Russia and China. The extremist forces in the region dedicated to tradition that reject modernity, argues Kagan, such as Al-Qaeda and Iranian Mullahs, simply cannot win. Neither the outside world with such a vested interest in the region, nor the peoples themselves, will allow this backward path to happen.

On an even broader scale, Philip Bobbitt's Terror and Consent sets out the landscape for the 21st century, as states divide between those of terror or consent. With this new paradigm must also follow a re-evaluation of the war on terror to date, which has been misconceived and mismanaged. Islam is not the issue but rather shifts in how states and warfare are linked. Like Kagan, the Middle East is a focus for the 21st century conflict, but certainly will not be the sole arena. But critically America's role in the region and the world may be diminishing - the view of Fareed Zakaria in his book The Post American World. The threats that have emerged from the Middle East, argues Zakaria, are essentially exaggerated. Once American policymakers realise this, they will see the folly of involvement in the region.

Lebanon - the enemy within

The recent talks between Lebanon's leaders in Doha has merely ushered in a lull, and whether a civil war or long uneasy ceasefire follows is an unanswerable and complex question. The urgent gathering that followed Hezbollah's mock coup last month has presented an uneasy calm - requiring conflict management not conflict resolution. This was the consensus at the Frontline club's panel discussion on Lebanon's future last week. Not only is Lebanon's complex internal fabric highly flammable, but an explosion of violence could equally be provoked by its neighbours Syria and Israel and the more distant meddlers Iran and the United States. A country that is only slightly smaller than Jamaica and Kosovo, is a battleground for all the major players in the region. Like Kosovo Lebanon is on the fault line. Christian post colonial remnants battles the emerging so-called Shia crescent. Cutting across this split are Lebanon's Sunni population still influenced by Syria and an anxious Israel seeking to protect its northern border at all costs. The root of this current imbroglio could be the inconclusive Taif agreement in 1989, Israel's invasion in 1982, the initial eruption of violence in 1975 or the anachronistic overtly confessional constitution drawn up in 1943. But the history - although critical - will come later.

All sides made concessions at Doha, including Hezbollah. But the Shia movement ultimately received what it wanted, negotiating from a position of strength, gaining greater cabinet representation. The fighting that erupted in May and the following deal proved several facts. That the Lebanese army is no match for Hezbollah; the neighbouring powers, especially Syria, do not wish for civil war; that the United States is a peripheral player in this crisis; and the Arab states for once invested political capital in a Middle East peace agreement. So crisis averted and some stability might be on the horizon. But the possibility of violence is there on all fronts.

Hezbollah, designated a terrorist organization by the US, Israel obviously, and many other western states, has real political representation. Unacceptable to the US and funded by Iran, Hezbollah presents Lebanon's gravest problem. That is a fact, regardless of whether you are pro or anti Hezbollah. The movement has rearmed to its levels pre 2006 war, its support has galvanised and returned. The spark for the recent trouble was an incursion against Hezbollah's communications network and the sacking of an airport security chief with alleged links to the group. This network - revealed in its full extent last month - shows the grip Hezbollah has on Lebanon and its position as a state within a state. Dominance in the Bekaa valley and the coastline puts them in a strong strategic position. It also raises the vision among western intelligence agencies of Iranian presence on the eastern Mediterranean.

Israel's fear of Iranian influence on its northern border only grows as Hezbollah strengthens. Historians may debate whether Israel's 1982 invasion of Lebanon created Hezbollah or whether a Shia political force would inevitably have developed, given the Shias lowly position in Lebanese society. But Iranian influence put resistance to Israel in south Lebanon or in all of historic Palestine at the heart of Hezbollah's ideology. This opposition led to a painful guerrilla war in the 1990s until Israel's withdrawal in 2000. The 2006 war was merely a messy draw and the long awaited replay will most likely be even more inconclusive and bloody. Especially as both Iran and the United States have reiterated their material support on both sides.

The outcome in Lebanon will depend on whether US-Iranian relations improve. With a new presidency next year, things could improve. Then again, Lebanon like Iraq could be the spark for the much feared wider showdown between America, Iran and Israel. But for Lebanon, local issues are always more important than the geopolitical games it seems to be dragged into. The concept of Lebanon needs re-examination, its constitution is long overdue reforming and political flexibility must be paramount for leaders on all sides. Bottom up solutions as always. The Lebanese are tired of the Middle East's political roundabout. Hezbollah's presence is problematic, but despite Israel and America's opposition, they have shown that they are impossible to ignore.

One man's oil price, is another man's....

The discovery of oil could be regarded in the same breath as the discovery of fire, electricity or nuclear technology, but none of these human revelations has created the division and conflict that the black gold has inflicted on the world. Oil has fed greed the world over, led to countless wars and set in motion a potentially unstoppable environmental catastrophe. Without oil our standards of living might not be as high and access to essentials may not be as instantaneous, but we could have adapted. Oil has enabled transportation to move at what would have seemed galactic pace only a few hundred years ago, but do we need to get across the globe in such a short space of time. Electrical communications may make physical communication - that is actual travel - irrelevant one day. Oil has been responsible for creating the world as it is, but would an alternative world been worse? It's debatable. So oil has achieved short term gratification but long term damage.

In 1973 the West's reliance of oil for the first time was laid bare. Finally the Achilles heal had been exposed. And this was only after a limited one month embargo and a price increase to a mere $11.65 per barrel. But the West managed to tame the Saudis and consequently OPEC through weapons and various other backhanders and oil prices stabilised (although they increased to $30-40 per barrel for much of the 1980s and 1990s), allowing sustained growth. But this Achilles heal is laid bare once more. The Middle East is floating on immense oil revenues, it is an architects paradise and is now providing finance back to its customers just to reiterate its economic clout. So for this part of the world, higher oil prices mean even greater wealth. And to rub it, petrol prices in the Middle East are decreasing.

Oil is a finite resource, so unless the Middle East diversifies (which it is doing through education, finance and science), it will be washed up in a century. Likewise, but more immediately, the West needs to wake up to the reality of a limited resource and shift its economy to non-petroleum reliance. Predictably this has been left too late, so now it will only be achieved the hard way and may well lead to violence, social unrest, etc. Now the West are not the only consumers, India and China, with a combined population closing on the 3 billion mark, are radically altering the market.

Organized Chaos

The tide of globalisation was unstoppable in the 1990s and whilst free trade benefited the Western world with an enhanced communication networks and higher standards of living, the downside - exploitation of the Third world, vast disparities in the distribution of wealth, unchecked and corrupt power to corporates - has been clearly evident. But even worse consequences have emergedv - terrorism and crime. Transnational terrorism has benefited from globalisation rather than being caused by it, but organized crime has evolved and mixed with this new globalised world into a hybrid operating at new unprecedented and dangerous levels. Journalist and historian Misha Glenny investigates this post globalisation criminal underworld in his new book McMafia. Having reported first on the collapse of communism in 1989 and then the Balkan wars 1991-1995, Glenny has witnessed, first hand, the rise of Eastern European thugs, gangsters and wrestlers to the form a new elite mafia.
The mix of rampant capitalism, corruption, unscrupulous morality and plain old brutality underpinned the rise of gangs in Serbia, Russia and Bulgaria in the early 1990s. Glenny identifies the imposing of an arms embargo on the former Yugoslavia in 1991 as a significant moment. The republic was not short of weaponry, but this gave every incentive for smugglers and gangs to create sophisticated plans to circumvent the embargo and get rich in the process. Another factor - following the collapse of communism - was the mass dismissal of intelligence services personnel who had enforced the Iron curtain's will. Individuals trained in surveillance, assassination and deception were perfect recruits for criminal gangs. Another key factor that Glenny explains - is the unbreakable link between politics and organized crime in the region. This was brutally demonstrated by the 2003 assassination of Zoran Djindjic, who had mixed with organized criminals and relied on their support on his rise to office. His death followed a pledge to crack down on these groups.

States of decline

The world has witnessed several seismic shifts in the last eight years, but these transformations to the international order have fallen beyond the traditional realm of the state system and in particular the leading Western powers plus China, India and Russia. Control is moving beyond the capacity of governments, statesman, alliances or treaties. The state system is becoming a redundant order – power has spread to every corner of the globe. We live now in a world where economic fluctuations are so complex that unitary political control is impossible. Climate change has reached unstoppable levels and measures taken now will only turn the catastrophe into disaster. Connected to these environmental forces is the rapid depletion of earth's natural resources as oil, water, gas are devoured with little thought of the long term impact. Finally religious forces have been revitalised in this period - both for the devout and the non-believer - with governments pushing extremists further but also unable to successfully defend the secularists. In this 21st century structure, transnational and virtual actors hold the cards. Governments can favour interest groups - corporates, secularists or scientists for example - but for the most part they are simply observers powerless to control what is occurring.

This perspective of international relations is embryonic though and has subsumed the world so quickly that it is as yet undefined. But before it becomes the norm, the old state structure is making a comeback and hopes to stamp its authority on this amorphic upstart. Although in a state of flux, America will - once a new President is elected - look to revive its traditional hegemonic position. Russia has had enough of the doldrums and is looking for new arenas and cause celebres to assert itself. Added to this Cold war redux is the rise of India and China, who are slowly transferring manpower and natural resources into economic, military and cultural influence. The EU is suffering from years of identity crisis but still as an economic bloc surpasses the other superstates GDP and has centuries of culture to rely on.

But what about the wars in the Middle East, nuclear proliferation or civil wars in Africa and South America? Will these necessitate state structures to be resolved? These will continue to rage and draw in the major powers - but just as during the Cold war - will not alter the international system. Iraq like Vietnam has severely bruised America, but it still maintains it world status. Emerging forces like Iran will try and stake their claim to the top table, but years of economic neglect and a chaotic political scene limit any threat to the established order, regardless of recent cosmic ambitions. Obviously a long and painful war in either Iraq or Afghanistan could seriously undermine America's position, likewise a nuclear armed Iran may well change the rules of the game, but simile other sleeping giants might emerge and others may regress. The traditional state system is trying to hang onto its position and still is very much calling the shots, but new emerging threats and dynamics are rapidly making state boundaries and their decision making irrelevant.

Take the global economy. The sub-prime mortgage crisis and ensuing credit crunch has led to record losses for investment banks, widespread nerves and falls in stock markets, and the possibility of a full blown US recession in 2008. The cuts in Federal Reserves rates will be government's opportunity to turn the tide. Economists and lawmakers worldwide have devised a host of recovery plans to stimulate economic growth, but the sense of powerlessness is widespread. Opposition politicians will seek to blame economic mismanagement, but governments have been one of several guilty parties. Mortgage brokers, bankers, consumers are also to blame. In this fully integrated globalised market economy, government's role has been reduced - advocates say for the better - but control has been sacrificed. In our new economic world order, investment bankers, hedge fund managers, even the local mortgage broker, is as significant player as the treasury official. Greater mobility of labour has reduced state economic control further.

Climate change is also a global issue that crosses state boundaries and is so potentially devastating that political differences seem irrelevant. The leading industrialised powers are constantly debating what environmental policies to adopt without losing any economic advantage, but this will seem fairly irrelevant once serious climate change effects follow. The conflict between cuts in emissions and economic growth is being played out in the current US-China relationship. America feels threatened by Chinese growth, so is not prepared to make economic sacrifices. China wants to continue its ascendancy. Both states will need to set aside their competiveness if global warming is to be slowed down. IPCC projections on the impact of climate change leave no continent untouched. China faces flooding and famine; India flooding and consequently disease; America will suffer from heat waves and coastal damage. When it comes to climate change – either the state system will evaporate as global co-operation becomes essential or state rivalry becomes more acute as the situation becomes more desperate. A similar case can be made for the threat of global pandemics. Global co-operation is essential – inter state rivalry would have devastating consequences. Influence would also shift to scientists and academics who generally act in transnational ways.

The depletion of the planet’s natural resources will also undermine the traditional state system. As resources become sparse, nations assume new geographical importance, strategic alliances will develop. Since 1973 oil producing states have challenged Western states economic dominance. The rise of the energy superpowers has been in parallel to the rise of influential oil companies. If energy resources or water supplies diminish then the state has less control. A government cannot always provide for these necessities. This is where the private sector steps in and overseas exploration (and exploitation) – although far from a new international concept – is developing further and increasingly transcending state boundaries with ease. A state’s own resources and sovereignty are threatened as importing state’s dependency increases. The global reach and influence of large corporates in industrialised nations can potentially create sub state systems in which cultural pockets thrive. The expat community in the Gulf has remained fairly isolated from the locals, although recent Chinese exploration in Africa has seen unlikely cultural ties develop. Chinese companies have little interest in diplomatic relations - Africa’s resources are the target, state dynamics are an after thought. The absence of any significant natural resource commodity exchange in Africa highlights the disparity between resource extraction and financial gain.

Since oil’s discovery, state sovereignty has been threatened. Foreign oil speculators exploited reserves, gathered oil revenues and left their host states under developed – Iran is a prime historical example. Nationalisation did follow, but the oil companies – the Seven Sisters having rebranded themselves - still managed to have to carry an overt influence in the oil producing states. Securing oil supplies has been a priority for America since the Carter doctrine. The establishment of aggressive global military strategies in oil rich regions and support of undemocratic regimes has secured supplies but state sovereignty has been compromised. But when it comes to oil, an inter state conflict is more likely than independent actions by non state actors. A war between China and the United States over oil could occur. An oil led Cold war or even a military conflict would re-establish – for the worse – the international traditional state system.

The final domain where the state system has lost its influence and been threatened is the realm of religious extremism. Transnational terrorism has existed since the late 1960s when state less Arab radicals launched their socialist tinged campaign against Israel and its supporters. International counterterrorism co-operation followed, but lagged behind the growth of Islamist tinged terrorism that expanded in the 1990s. Post 9/11, a renewed state system effort has been designed to counter international jihadism. But whilst jihadists share a common ideology and goals – the state system is fragmented, un-coordinated and often contradictory in its response. The battle against Islamist terrorism has employed actors usually beyond the grip of governments. Intelligence officials have recruited warlords, former radicals, and religious leaders as their proxies in shady espionage campaign. Establishing a link between states and terrorists was one of the first policies in the U.S. War on terror and was also one of the first mistakes. This might have been easier for foreign policy novices to understand, but it represented a fundamental misunderstanding of how terrorist groups had come to interact with their state hosts in the preceding decade. The consequences of this policy have been played out in Afghanistan, Iraq and Lebanon.

The state seeks control, through the use of traditional mechanisms: law enforcement, military capability, central fiscal or public policy. But these tools are static – the state inevitably sticks to what it knows. This leads to predictable and often ineffective responses to the new threats and challenges of the 21st century. The individual is proving more adept and in tune with this age. The power of the non-state actor over the state is becoming clearer. This might range from the citizen journalist, the academic, the philanthropist on the benign side. It includes the terrorist cell, the corrupt oligarch and unscrupulous financier on the negative. Either way, states aren’t what they were and in - who knows - ten years may evaporate altogether, leading to a new international relations era.

Endless cycles...

The world's most intractable conflict visits London this week as journalists from both sides put their arguments to the capital's lecture circuit. Palestinian Zaki Chehab, political editor of newspaper Al-Hayat, spoke of his close contacts with the Hamas leadership, as described in his acclaimed Inside Hamas. And editor of the Jerusalem Post David Horovitz presented the view from other side of the barbed wire fence. The backdrop is the desperate and dramatic events in Gaza this week, where a blockade has brought further misery but has been relieved across the Egyptian border as militants have destroyed parts of the fence.

The conclusion from both London events is that neither side is right or wrong - the solution will lie with those willing to compromise and probably through moderate politically secure leaders. Unfortunately neither have such direction. Despite a PR coup for Hamas this week, they are still considered too extreme for anyone away from the Arab street. Abbas is constantly undermined by Hamas and is powerless in Gaza and increasingly across the West Bank. Olmert is under renewed pressure from his conduct of last year's Lebanon war via the Winograd report. But the Israeli political minefield means that his departure would have no guarantees of enhanced political leadership.


Chehab describes Hamas leaders as friends and moderates, describing his people as oppressed, dispossessed but prepared to suffer whatever it takes to achieve the dream of statehood. Whilst his journalistic credentials are admirable, he is let down by an inability to criticise his own leaders, failure to understand the ordinary Israeli's perspective, and a naivety towards the role of Iran. A sentiment no different to that on the ground. Horovitz represents mainstream Israeli society. This narrative states that the 2005 withdrawal from Gaza has been squandered by Hamas; all Israel wants is a partner for peace; unlike the Palestinians there are no illusions towards the role of Iran. Leaving aside the permanent restrictions on travel, economic sanctions, checkpoints and assassinations, Israel - says Horovitz - want nothing to do with Gaza. If the Qassam rockets were to cease, the blockade would end and negotiation could follow.

Unfortunately - as Chehab seems to confer - resistance is regarded as the legitimate right in whatever form that might be, and Hamas are simply responding to Israeli restrictions and pressure, rather than attacking Israel unprovoked. The break over the Egyptian border has now undermined Israel's siege tactics and given no reason for Hamas to discontinue Qassam attacks. Horovitz believes Israel does not know what it is doing. Its tactics haven't succeeded, so what next? The full scale invasion of Gaza has been hinted for months, but negotiation looks more likely than total war. Former members of the Israeli military establishment have called for talks with Hamas. But this is a long way off, hatred and distrust are currently too great. Whatever the path to peace is, Hamas - despite the efforts of Bush, Abbas and Olmert to sideline - is too strong and an unavoidable player in the crisis. Horovitz is obviously sceptical - Hamas' religious imperative means that negotiation and concession are against their nature. But hardline religious parties are also influential in Israel and concessions in Judea and Samaria are equally difficult to extract.

Fuelling the feudalism...

Political assassinations, government corruption, state of emergency rule and an ongoing guerrilla war have brought Pakistan to its knees. Under such pressure, life still goes on though and Pakistan's economy - having shown steady growth over the last decade - has yet to be infected by the widespread political turmoil. But a sudden downturn in Pakistan's economy could be the tipping point. The diversity of Pakistan's economy fuels this political discord - the military retain vast industrial assets reinforcing their stranglehold on the state; whilst poverty and the collapse of state education fills madrasas and bloats radical jihadist movements. Recent power shortages and creeping inflation are signs of an impending economic collapse. The economy is moving up the long list of issues for candidates to discuss at the much delayed election. As India booms next door, the middle classes become further disillusioned - the group that politicians ultimately appeal to in elections.


The feudal system - that empowers landowners in a close knit clan society - has been Pakistan's backbone since its inception. Agrarian holdings provide economic power for aristocrats, from which - through corruption - political and military power is derived. And now this tradition has spread to the military establishment. The seminal text by Dr Ayesha Siddiqa on this hidden industrial empire estimates that the military holds £10bn of assets, 12m acres of public land and a third of heavy manufacturing output. Whilst this infrastructure accumulates untold wealth for a cadre of generals - a national network of bakeries, banks, insurance companies and universities funded by the army benefits Pakistani society. This omnipresent role has been accepted as part of Pakistan since partition and Pakistanis clearly benefit from the stability provided by such a behemoth. But since 2001, American aid has gone directly to reinforcing the military's dominance, undermining moves towards democratic economic transparency and perpetuating a culture of corruption and feudalism.

The black economy also plays a vital role in arming and supporting violent Islamist groups' war against the state. The hawala money transfer system has enabled an influx of funds from the Gulf and Europe. Despite efforts by Pakistan and American treasury intelligence to outlaw such transfers, Pakistan's porous financial system and foreign donations disguised as charitable gifts make prevention impossible. So this source of funds - with additional finances from the opium trade - leaves militant groups relatively unaffected by economic downturns. Recruitment to militant groups via madrasas also benefits from poverty, as through their dual position as welfare centres, religious schools provide shelter to the needy. Further poverty will maintain this flow of militant recruits, but the situation is already bad.