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October 2010 Country Archive




One of the drawbacks of being the worlds only superpower is that your own people come to believe that massive military reach via fourteen Carrier groups, a enormous nuclear missile inventory and the best that money can buy in every form of offense /defence technology, adds up to invulnerability. The reality, as 9/11 demonstrated, is that it does not. Armed with four fuelled-up civilian planes and the single-minded commitment of religious zealots, nineteen civilians with an originality that left worldwide intelligence agencies floored, struck suddenly and devastatingly not only against America, but also against any such comfortable notion. Invulnerability is out of reach for everybody.

Now that the world has nine nations acknowledged to possess nuclear weaponry, with Iran perhaps seeking to make it ten, it becomes quite clear that these ultimate weapons are almost certainly unusable, other than just owning them as a deterrent. Since they and other WMDs – much more accessible to smaller nations - are a fact of life, this renders the previous concept of military power on a huge scale, as equalling ‘super-powerdom’, rather in need of revision. What really concerns members of the human race are the daily economic realities and those of their families. As the USA and China demonstrate given the necessity of counterparties, there is not and cannot be a single economic superpower.

The US has long been by most indicators the most advanced economy, but now is not alone. Indeed, there are not only rivals but powerful alien investors in their own system, creditors no less since the dollar is the world’s main reserve currency. This means that US Treasury bonds are an instrument by which creditor nations, particularly China, have the theoretical means, admittedly at the price of their own economic destruction, to bring down the US were they so inclined..

But from 1945 to 1991 the world wide supremacy of the US was unsuccessfully challenged only by followers of communism, a system which affected thirty four nation states (five of which remain nominally communist), including China, where the communist doctrine of a centralised command economy wedded to an unfree society, by playing the capitalist economic system, has been a winner. It has successfully challenged ‘the American way’ as the only means of achieving economic success and shows no signs of faltering.

In the context of the future the checks and balances of all such states need to be examined. After WWII, the exhausted nations of that time looked to create solutions to the world’s problems that did not involve war. Even though that fine idea was not to succeed, apart from many (and terrible) civil wars, the wars involving great and small external military interventions, that have happened, were awful, but geographically contained – such as Korea, Armenia-Azerbaijan, Vietnam, Afghanistan (USSR), Iraq I and II; Afghanistan (USA); various African outbreaks, the Falklands (UK), most recently Georgia (Russia); several of which, if sponsoring great powers involved had been overtly opposed to each other, rather than to surrogates, could have escalated into worldwide conflagrations.

So the United Nations, its agencies such as the nuclear watchdogs IAEA, along with the World Bank; the IMF and the international courts, emerged from WWII as an intelligent approach towards facilitating world peace. By being an apparatus involving all the worlds nations, yet owned by none, it was seen as able to deal with the problems not approachable by nation states.

It appeared after WWII absolutely appropriate that the UN’s primary HQ and assembly would be in the USA and of course it had to be paid for. Then as now the US was the largest contributor. Once they had established such vital necessities as that the UN flag would not fly above the Stars and Stripes, many Americans accepted that what passed for the vestigial world government, was securely anchored to them, and since then for many it has passed into irrelevance. After all, apart from the UN Assembly incorporating 192 such diverse nations as Fiji and the Maldives, Latvia and Paraguay, the main decisions were made by the Security Council. At the time its permanent membership made sense - it was obviously designed for the victors of the second world war.

Today, sixty five years after the end of that war it no longer makes sense, not so much by who is in, but by who is excluded. Germany the largest European state and long the most economically successful, is not there. Japan that had astonished the world of an earlier generation, but who became resolutely pacifist and quietly the world’s second most powerful economy, only now challenged by China, is not on the innermost group of world decision makers. China’s membership was established for the grotesque reason that the nationalist Chinese of Chiang Kai Chek, about to be displaced by Chinese communism, found themselves on the winning side when the nuclear bombing of Hiroshima and Nagasaki brought war to an end in 1945.

Additionally none of the permanent members come from the continents of Africa or South America. India, with probably the largest population of any nation is not a member.

There is however another organisation of leading political and economic states, the G20, whose twenty members are also the leading lights in their regions. We have argued and continue to argue that in the 21st century world, the G20 is far more representative regionally, ethnically, religiously and militarily, and should replace the outdated Security Council as the final arbiters of world-wide matters.

The only nation whose support is critical to make this happen is the USA and the problem there is that the man in the street there thinks that the US effectively ‘owns’ the UN - if he is a Fox TV viewer he probably despises it. If the UN don’t agree with US policy, as when the UN refused to legitimise the Bush-Cheney-Blair Iraq adventure, then the thing to do, as we saw, was to ignore it.

The fact is that the world needs a United Nations and the historic shift in world power from the ownership of WMD’s to the ownership of strong economies, reflects the need of nation states to combine more and more in cooperation. If climate change really turns out to threaten ‘life as we know it,’ then survival might depend on it. There are other contingencies. A great deal of scientific endeavour is directed in establishing whether there is intelligent life elsewhere in the cosmos. That fanciful as it may be, is clearly a ‘known unknown,’ capable of concentrating thinking like nothing else. It has long been apparent to many who consider all eventualities, that only a world government has the best answers to many of humanity’s existing problems, both those in nature and self-imposed (like narcotics). But given the many vested interests in remaining as we are, the will for change is not there without the catalyst of some world-threatening event – such as the closest to hand, the climate becoming destructive on a big scale. It might be thought that managing the world economy might become such an obvious area. It may be that future historians will look back at our period of history, just as we look back on monarchical rule and the dynasties of Tudors, Bourbons, Hohenzollerns and Romanovs, with curiosity and sometimes incredulity, that those with the power could have ‘got away with it’ for so long.

North Korea –The Kim family show
Our report for October describes how Kim Junior, Kim Jong-eun has joined the family business and despite his youth he joins as chief executive-elect (except that nobody does much electing). He also gets to become a 3 star general, as does his sister and auntie. The news came a few days back, but our report will tell you things you probably didn’t know and will be amused to find out. It is a revelation to see how communist dynasties work – Junior, whose two elder brothers were passed by, can expect to become the 3d all powerful family ruler of his country, when the current ‘Dear Leader’ gives up the crown – and this is a country with a million strong army, a nuclear weapon, a hopeless economy and unquestionably, a pugnacious attitude.

Turkey stands up
After decades of making the news only when it was ‘bad,’ a reappraisal on all fronts is now required in respect of this large nation that straddles the divide between Europe and Asia. Only recently the world’s headlines were dominated by the ‘Turkish flotilla,’ when a convoy of merchant vessels, mostly of Turkish origin, were very publicly making a demonstration in seeking to take non-military supplies by sea under the white flag, to the Gaza enclave occupied by about half the Palestinian population, under the political control of Hamas. There was a bloody intervention by crack Israeli commandos in international waters, as a result of which nine Turkish (including one Turkish-American) demonstrators were killed in what appeared very much like summary executions. Turkey was inflamed and its government demanded an apology and compensation for the families of the dead. Israel refused everything, secure in the knowledge that the US, heavily influenced in its domestic politics by the US-Israel lobby, would always support them, no matter what.

Turkey, for more than a half century a stalwart member of NATO, was unimpressed by that attitude and it is clear that it will not simply be a supine follower of the US, as in fact they have demonstrated before. They refused to allow US troops landing and transit rights across Turkish territory in the ill-conceived US invasion of IRAQ. Now they have their own position teamed up with Brazil, in relation to next door neighbour IRAN, since they think they are entitled to their own foreign policy when it is on their doorstep.

Our October report goes into more detail in these matters but the most positive news from there is that the Turkish population have overwhelmingly supported the government in a referendum to change the Turkish Constitution. This is hugely important in establishing the democratic credentials of the Turkish republic and enhancing the possibilities of eventual membership in the EU.

South African democracy in dangerous waters
It is painfully apparent that democracy is endangered in SOUTH AFRICA as we demonstrate in this issue. President Zuma seems determined to drive through a bill which effectively would muzzle the press. It is so outrageous that undoubtedly many democrats in that country will refer it to the Constitutional court, but that bastion of democracy might itself be under threat. The monolithic ANC has a youth wing whose ambitious leader is ‘trouble’ - an admirer of the disastrous government of next door Zimbabwe. Meanwhile President Zuma’s family in the two years since the election, have got seriously rich!

Asia’s Sleeping Giant
One of the more extraordinary phenomena of world politics is the place within it of Japan. It is 65 years – a respectable lifetime, since Japan featured large in strategic thinking. Once, post-WWII it was secured by an American army of occupation and the Russians were no longer coming, it has nationally kept the lowest possible profile militarily. There was the regional flurry of the Korean war from which Japan was scrupulously excluded, but that too is nearly a lifetime away. After that came the cold war in which Japan effectively was represented by the USA, which had moved from being the conqueror into mentor. The US helped to restructure Japan’s society through introducing a modern democracy including relatively honest government, fair courts of justice, and a free press. Japan it is clear now has every right to consider itself one of the ‘good guys’. Now there is a challenge, of what depth it is difficult to say but it has ugly connotations. The cause is the vexed problem of a string of uninhabited rocks in the East China sea, known as the Diaoyutai islands to the Chinese but there are three claimants to ownership: China; Japan who call them the Senkaku islands; and Taiwan – they are just 200kms east of Taipei.

For generations they have been regarded as fairly unimportant, but now ‘the oil-devil’ has arisen. It is now believed that their area may have substantial sub-sea hydrocarbon deposits. A Chinese fishing boat was arrested there a short time ago by two small Japanese naval vessels, and a rapidly escalating row between Beijing and Tokyo was de-escalated by Japan releasing the Chinese skipper, who was flown home to a hero’s welcome. But the Chinese are now insisting that the Japanese apologise and pay compensation, which it can safely be assumed Japan will not do. It seems that China, or its military, is spoiling for a fight with the Japanese, but the upshot of it is, that this seat of tension is unlikely to go away and more can be expected, perhaps even accelerating Japan’s enlarging of its naval forces, in the face of what appears to be provocation.

It was notable that after WWII, the restless spirit that had driven Japan to seek an empire of its own, was diverted into hi-tech manufacturing. The energy that had previously been directed at militarism now became economic. The world has witnessed the outcome. How astonishing that this democratic nation of 130 million climbed the economic league tables and is only now seriously challenged for its long held second place by neighbouring China, with nearly ten times the population who are completely subservient to its government. It has to be fervently hoped that their competition will be at the economic level only and not descend into violence.

Iraq's post-election hiatus
It is unfortunately quite obvious to a reader of our current monthly report that in the labyrinthine twists and turns of politicians trying to form a coalition government in IRAQ, it is clear that neighbouring IRAN is an invisible presence as a player, seeking an outcome satisfactory to itself. This is of course greatly facilitated by the fact that so many Iraqi pols are Shia, and have been sustained on and off by their co-religionists across the border. As we have reported previously, the other neighbours – SAUDI ARABIA and SYRIA are also manoeuvring for a satisfactory outcome to themselves, whilst the US who now are relying more heavily on giving financial help, after a large swathe of their military have departed, very much want to see a government that is not doomed to permanent instability by unfair representation of minorities (of course including the previously dominant Sunni). That is broadly their pledge of what they would need to see come about, before they would leave the country.

It is also clear that quite apart from the neighbouring states, Al Qaida in Mesopotamia is a political player also, permanently seeking advantage according to their own radical agenda of returning Damascus to be the seat of a new Imam for (Sunni) Islam, In effect this would be matching the Shi’ite Ayatollah in neighbouring IRAN.

There seem to have been a lot of misguided self-destructive suicide bombers, who don’t realise that it is just not going to happen!

Syria comes into focus in mid-east Quagmire
With the world picking up on the Israeli-Palestinian discussions, which as we go to press look to have sunk before they could swim, SYRIA takes on a new significance. It is our view that Obama would have been well advised to have obtained an Israel – SYRIA agreement first (which is simply the terms for the return of the Golan), before embarking on ‘the big one, ’the creation of the state of Palestine.  SYRIA is no longer in the dog-house – it has been cleared of the Hariri assassination in the Lebanon, which is being laid at the door of Hezbollah. The implications of this as we explain in this issue are profound, and could lead to a certain shift in middle-east alliances.

Russia - a time for personalities
In our October update we continue looking at some of those politicians who are not called Putin or Medvedev. The mayoralty of Moscow has for eighteen years had a remarkable and very rich mayor, Yuri Luzhkov whose days in office are over, following his summary dismissal by President Medvedev. An old player, throwing his hat into the ring for that so lucrative job, is a stalwart of the Duma, Vladimir Zhirinovsky, a ‘brown’ politician (which in his time was the colour coding for Russian fascists). He talked the fascist talk whilst walking the communist walk, his extremism being exhibited in a deeply unattractive species of nationalism.

We also describe someone who may well be Russia’s leading female politician. She is the boss of St Petersburg, no mere mayor but the governor no less. Valentina Matviyenko, appointed by Vladimir Putin appears to be formidable and a success. We speculate whether she might not go on to even higher things.

In Afghanistan this month, we look beyond the wily president Karzai who has seemed, time and again to outflank his US and allied mentors. Once the US said there wasn’t anybody else for the job who wouldn’t make matters worse, but that is frankly doubtful – if fate decreed his departure from the scene, and in a violent country like this, it is a possibility, then no doubt the best man available would emerge, be hailed as an ally and enthusiastically received in the White House. But with the unhappy experience of post-occupation IRAQ, it is now possible to perhaps discern the shape, of AFGHANISTAN were it ever to achieve that desirable state of a post-conflict scenario, which might enable the ISAF allies to go away. Unlike Afghanistan, Iraq is a seething complex mass of political and religious groupings, with the powerful nation state neighbours having a very close interest in the political outcome –still unsettled since the elections of half a year ago. It would have been infinitely better if it had been organised as a federation, a course we have always supported. The IRAQ situation is constantly shifting but in AFGHANISTAN, Karzai in power is a constant, even though he and his relations and tribal supporters are believed to routinely plunder the nations assets. Of course any disengagement, unlike that in IRAQ, will first mean an accommodation with the potent current enemy whom ISAF are fighting on the ground. If they conclude that the westerners will depart as a part of a peace agreement, they will have achieved perhaps their main objective. A deal would then be whatever could be done with Karzai, including his going away with his accrued fortune to more peaceful parts, (the previous King of Afghanistan lived out many happy years on the French Riviera). There is in the offing a potentially powerful Afghan army, probably the counterweight to a complete Taleban takeover, who may not be content to be the instruments of a crooked regime in Kabul. It also cannot be forgotten that when the US and NATO entered AFGHANISTAN there was a bitter civil war going on, with the mostly Pashtun Taleban government facing Uzbeks,Tajiks,Hazara and other non-Pashtun. These are thinly represented in Karzai’s government, but an outcome that we would not be surprised to see would be a substantial decentralisation of power to federated provinces, some of which might even be well ruled, backed by a federal army and government. This seems a more likely outcome than a continuing Karzai government sitting down in a nightmare cabinet with a selection of fundamentalist Taleban ministers - potentially a collection of crooks and religious fanatics.

Pakistan slithering towards being a Failed State
Through the floods and the mud that almost overwhelmed this country it can be seen that PAKISTAN is indeed becoming a failed state, and would be by now, were it not for US subventions and World Bank help. The only national institutions fit for purpose are the armed forces and perhaps the Supreme Court, although they seemed to becoming more politically engaged. The army’s stock went up given their very practical and speedy help to hundreds of thousands of citizens endangered by the awful flooding, just as the politicians stock went even further down.

The political scenario moves from bad to worse with a corrupt president, the temporary ‘forgiveness’ of whom has slipped away; a deeply unattractive leader of the opposition Nawaz Sharif, that had also been indicted for corruption, who in his former time as prime minister sought by Mussolini-type tactics to have the constitution of the nation overthrown in favour of Sharia law. Happily this was unsuccessful, but barely so.

Where does this nation turn for the leadership they so desperately need? One possibility, as we report in this month’s PAKISTAN is to General Musharraf, former Commander-in-Chief who took power away from the awful Nawaz Sharif, ruled the country quite well – it was certainly in better case than it has ever been since he left power. He stood and was elected as President, but then under great pressure from the courts stood down to allow the politicians back in – the Zadaris, the Nawaz Sharifs, since when things have gone steadily downhill. We followed his political story quite closely and admired what we understood to be his main project. This in our estimation, was to seek to emulate Kemal Ataturk and remake PAKISTAN on the Turkish model as a secular state, an ambition worthy of a farsighted patriot. The military have been restrained about taking political power since the Musharraf days, but we think it highly likely that he would not have considered re-entering ‘the lists,’ without some measure of support at least, from his former colleagues and subordinates who are plainly disgusted with their civilian ‘masters’.

India frets over Pakistan’s new reactors
Our India report for October shows the concerns over its northern neighbour’s new nuclear reactors being supplied by China. The fear of course shared with other concerned nations is the depth of any penetration of Islamic or Pakistani tribal operatives into the area of nuclear power, and the dangers of nuclear materials falling into the hands of terrorists.

There is a backlash going on about the very public problems of the October Commonwealth Games hosted by INDIA at enormous expense, primarily as in all such things, to gain some reflected glory and prestige. The world media picked upon the numerous problems, some of which clearly would be corrected before the due date, but a spectacularly collapsed bridge in the games area is harder to wish away.

Militant Buddhists cause strife in Bangladesh
A nasty episode of religious intolerance from of all faiths, is unusually that of Buddhists - described in this issue of BANGLADESH – and it is a sect of Christians that have been on the receiving end. Better news for this country (that doesn’t get all that much), is that the UAE have been making deals with Bangladesh’s finance ministry that could facilitate capital investment from those who have got it, to a country where few have.

There is already a sizeable funds-inflow from the Gulf States as so many tens of thousands of Bangladeshi workers there make up much of the UAE’s oil industry work force - and much of the payroll is remitted home.

Philippines: The Aquino effect
The new president Begnino Aquino, elected on a clean-up government ticket has a lot to do, so it is encouraging that this early on in his presidency he has been emboldened enough to take on the Roman Catholic Church. Unlike any other nation on earth, the religion the Spanish brought to this archipelago is in a highly dominant position, having for centuries been in alliance with the great landowners and the army. What ‘Nino’ did, was to call for the use of condoms for birth control in his islands, which has aroused arch-episcopal outrage. The urgency is because scandalously enough, the Philippines are so overcrowded they cannot provide employment for millions of their citizens, who have no option but to spend much of their adult lives living in foreign countries, wherever they can find work. Filipino nannies are a middle-class fixture in homes all over the world. Filipino sailors account for a large proportion of the deckhands of the world’s merchant marine. The remittances home of these exiles balance the national budget. It is a human tragedy that families are split up from youth until old-age, and the first measure a responsible government should take would be to discourage limitless births. Our Update this issue looks at other effects of the new government.

Taiwan:China. 14 agreements later shows little benefit
Since President Ma went flat out to ‘roll-over’ for China, no less than fourteen agreements have been signed with the mainland, but the people of Taiwan see little benefit and are not happy. Now China having polished off its agenda for economic colonialism, wants to move on to embrace political unity. The KMT government in Taipei seem willing enough, but their popularity has taken a plunge and they are having to get the mainland to slow down.

Problems of doing business with Libya- A new ‘Profumo affair’
Italy the former imperial power is the closest amongst European friends of the Colonel and looks for opportunities. We describe some of the problems they have encountered in taking the mighty petro-dollar.

Is Iran becoming ‘sanctions adapted’?
There is some suggestion that IRAN, as we indicate in the October Update, may be coming less affected by some sanctions than had been expected. Or to put it another way, some sanctions have been successfully countered by Iranian action.

Ahmadinejad came across in his recent UN Assembly speech as being ‘one sandwich short of a picnic.’ Addressing we must assume, his domestic audience, he was stating that the US blew up its own twin towers in ‘a plot’ to in some way advantage the Israelis. In other words it was merely a ploy in the Israel-v-Arabs issue, which is once again exercising the watching world with the stalled peace talks on Palestine that both got started, then stopped in September.

The anti-Ahmadinejad movement in IRAN which flared up after the crudely rigged elections has died down, partly because of the extreme violence used by the governments internal forces, and the murder and torture of demonstrators protesting the corrupt outcome, which has persuaded many terrified middle-class parents, by one means or another, to keep their kids away from street demos. The sheer sustained horror of the Iranian prison system, quite comparable to the Nazis at their worst, is best exemplified by the now well attested documents collected by the Iran Human Rights Documentation Center ( One example quoting Akbar Rafsanjani, long close to the top of Iranian governments, whose name has been prominent in the opposition to Ahmadinejad, and himself being re-classified as some species of ‘moderate,’ was asked about the execution of political prisoners in 1988. He responded “that in the past few months less than a thousand prisoners were executed”. The reality as the Iran HRDC papers make clear, is that the regime continues to closely resemble some 16th century European nation, where the Inquisition had, but in the case of IRAN, continues to have absolute powers, where the rule of law has been subsumed into the unaccountable world of religious thuggery. Is it any wonder that as recent stats show, 25% of all Iranians with degrees now live abroad.

The active opposition to the president is coming from clerical conservatives which as with their motivation, could hardly be more different from that of the youthful protesters and victims of the latest wave of arrests, torture and death.

On the nuclear acquisition front, Ahmadinejad has picked on and expelled two of the IAEA inspectors, the very people whose reports are awaited by world powers to alert then to clear evidence, if the Iranians are speaking with forked tongue about their nuclear intentions. That is not the behaviour of a nation with nothing to hide.

Saudi Arabia and the threat of Somalia
Our last issue forecast the now confirmed arms purchases - the largest ever in US history and US60 billion buys a lot of military hardware. Apart from the obvious defence considerations with IRAN in mind, it now seems that Saudi military power will be needed to contest regional dangers in neighbouring states such as Yemen and Somalia - our report gives more information and who else could / would do it?.

The political confrontation with IRAN spills over into Lebanon and SYRIA where Riyadh has become much more proactive and conceivably might wean away Iranian influence in these key middle-eastern countries. It is a fluid situation worth watching.

There are few nation states that would not benefit from reforming their tax systems. UKRAINE certainly could and new president Viktor Yanukovich intends to do so. He says he will deliver a tax code that will be good for business and for the state budget. Where business is concerned, with the political parties in UKRAINE, they are key players, and in this sense are not unlike neighbouring RUSSIA where many politicians are there because as a result they expect to get rich.

His government hopes the tax base will increase, boosting budget revenues instead of deepening a current fiscal deficit, which is expected to hit 5.5 per cent of GDP this year. Ukraine is kept financially afloat thanks to a $15bn IMF standby loan. GDP plummeted 15% during 2009’s global recession. However, 40-50% of business activity is in the black economy and managing to get citizens and companies to pay up is challenging.

First, the new laws must be adopted and then implemented and enforced. A draft tax code earlier this summer was declared “liberal”. But when it was made public, many were shocked to find it would have made taxpayers defenceless in disputes with notoriously unruly and corrupt tax inspectors. Deputy Prime Minister, Borys Kolesnikov, says that with lower taxes, ordinary citizens and oligarchs alike will have to pay their fair share. It will no longer be acceptable to hide profits offshore. If Ukraine fails to win over the trust of business and citizens, if taxpayers fail to pay, the country could become even more dependent on IMF aid.

Central Asia

Kazakhstan, Kyrgyzstan, Uzbekistan
KAZAKHSTAN, curiously enough, is the current chair of the Organisation of Security and Cooperation in Europe (OSCE). It also belongs to the Shanghai Cooperation Organization (SCO).

A unit of a Chinese army corps recently joined anti-terrorism drills in KAZAKHSTAN under the framework of the SCO. The unit is among about 1,000 personnel from the land and air forces of China's People's Liberation Army (PLA) that took part in "Peace Mission 2010", as it was called. Some 4,000 troops from Kazakhstan, Kyrgyzstan, Russia, and Tajikistan also joined the drills, which ran from Sept. 9th to 25th.

Meanwhile tensions have risen between KAZAKHSTAN and Britain, despite normally good relations. Mukhtar Ablyazov, the founder of the Democratic Choice party that campaigns for economic and political reform in Kazakhstan, fled to Britain claiming that he was the victim of persecution by President Nursultan Nazarbayev. A banker and free market advocate, Mr. Ablyazov claims he was tortured after being jailed for six years and has applied for political asylum. The Kazakh authorities have rejected Mr Ablyazov’s allegations and accused him of defrauding the state-owned BTA bank of an estimated £185 million. The Kazakhs are lobbying Foreign Office ministers not to grant him asylum, which they say could jeopardise Britain’s ties with Kazakhstan.

The Foreign Office regards Kazakhstan’s support for the Afghan military campaign as important. Its role has assumed greater significance following the unrest in neighbouring KYRGYZSTAN the location of a key NATO airbase which is used to supply troops in Afghanistan.

But it is Britain’s trade ties with Kazakhstan that are the concern. Its vast, untapped energy and mineral reserves means that Britain is among the country’s top five investors. The Kazakh government has warned it will punish British firms by awarding lucrative contracts to China if Mr Ablyazov is granted asylum.

KYRGYZSTAN is living in the aftermath of the recent ethnic violence which broke out in June. Thousands of Uzbeks were killed and hundreds of thousands were displaced, many to UZBEKISTAN. So far, the authorities in Bishkek and Tashkent have acted with restraint. Furthermore, Kyrgyz President Roza Otunbayeva has launched what is fervently hoped to be the first free election for a parliamentary republic in Central Asia, when she signed a decree setting the date for 10 October. She is the first woman leader in Central Asia ever. The impoverished country of 5.5 million people has long held the best promise for democracy in the region. However, relations between ethnic Uzbek and ethnic Kyrgyz remain tense in Osh and Jalalabad. Ethnic Uzbeks in the town accuse local police and government, who are predominantly Kyrgyz, of continuing harassment. Mrs Otunbayeva herself has conceded that police had targeted ethnic Uzbeks. Miroslav Jenca, UN special representative for Central Asia, warned that the run-up to the elections could see a return to violence.

Meanwhile, UZBEKISTAN has closed its border to refugees fleeing Kyrgyzstan, some of whom have accused Kyrgyz government forces of helping armed gangs slaughter ethnic Uzbeks. With estimates of up to 100,000 refugees already inside Uzbekistan, the Central Asian state's Deputy Prime Minister said the border would be shut, despite pleas from aid groups and the UN to leave it open. "Today we will stop accepting refugees from the Kyrgyz side because we have no place to accommodate them and no capacity to cope with them," he said.

The president of Uzbekistan, Islam Karimov, has an ambitious daughter, keen amongst other things to succeed him. Karimov is said to be ailing, but then this has been the case for several years. Gulnara Islamovna Karimova is Uzbekistan’s ambassador to Spain, Permanent Representative of Uzbekistan to the United Nations Office and other International Organizations in Geneva. She is also the Director of the Centre for Political Studies (Tashkent) - not a bad array of offices when you are limbering up for supreme power.

Azerbaijan, Armenia, Georgia
The Caucasus is a troubled place that has led to conflicts in recent times. One such is the uneasy stand-off between ARMENIA and AZERBAIJAN concerning Nagorno-Karabakh, the Armenian enclave in the latter republic. So long as Azeri refugees have to live outside their former homeland in the enclave, there will always be cause for new hostilities. And this occurred again at the end of August. There were fatalities on both sides, each blaming the other. The showdown still goes on.

Russia, the regional power wants a quiet Caucasus. The recent Russia-Armenia agreement (protocol) which extended the term of the Russian base in Gyumri until 2044, has given the task of defending Armenia to the Russian forces at this base. It has also allowed Armenia to obtain modern weaponry and special military equipment from Russia. The pact has, nevertheless, created harsh reactions from among opposition circles in Armenia, nervous that Russian military and economic domination threatens its independence, as in Soviet days.

That Russia-Armenia agreement has met with hostility in GEORGIA. The Georgian Foreign Minister reportedly described Armenia's defence agreement with Russia as a threat to regional security. He was quoted as saying that the Yerevan-Moscow deal will impede "stability, security, and cooperation" in the South Caucasus and that "the sole goal of the Russian military base is to heighten tension in the region. The extension of the term of that base's deployment in Armenia by 24 years and the change in its functions poses a big threat to the region." Commenting on the statement, an Armenian Foreign Ministry spokesman said: "We do not share that view." He added that no foreign official has the right to meddle in Armenian affairs and make comments on their security issues.

Georgia has troubles at home. About 6% of its population (about 246,000 people) are displaced, according to a recent report by Amnesty International. About 220,000 left their homes during conflicts in the early 1990s. Some 128,000 people fled South Ossetia and Abkhazia during and after the August 2008 war. The majority of them have since returned to their homes, but almost 26,000 people are still unable to return.

Russia recognized Abkhazia and South Ossetia as independent states after a five-day war with Georgia in August 2008, which began when Georgian forces attacked South Ossetia in an attempt to bring it back under central control. Since then, Russia has deployed thousands of troops and border guards to the two regions, which Georgia considers part of its sovereign territory.

The Balkans

Serbia, Croatia, Bosnia
The Serbs consider Kosovo to be part of Serbia. But Serbia lost control of the territory during a 1998-99 war against ethnic Albanian rebels, and the ensuing NATO air bombardment of Serbian installations led to the international administration of Kosovo. On 22nd July the International Court of Justice in the Hague (ICJ) finally ratified Kosovo as a sovereign state. The court reaffirmed Kosovo's place in the international community, something which 69 countries have already recognised. In a concession to the European Union that it hopes to join, Serbia supported a compromise U.N. resolution on Kosovo on 9th September 9th that dropped its earlier demands to reopen talks on the status of its former province. Instead, Serbia agreed to an EU-backed dialogue with Kosovo that the non-binding General Assembly resolution said would aim to promote cooperation. The resolution was passed by acclamation by the 192-nation assembly. The amended text passed by the General Assembly drops condemnation of Kosovo's independence declaration, acknowledges the ICJ opinion and welcomes EU readiness "to facilitate a process of dialogue between the parties." This mature outcome is a great success for SERBIA’s standing in the world!

"That dialogue would be to promote cooperation, achieve progress on the path to the European Union and improve the lives of the people," said the resolution sponsored by the 27 EU countries and by Serbia itself.

Past foes in the 1991 war that broke up the former Yugoslavia, Croatia and Serbia, in June signed an agreement to cooperate on fighting organized crime. Consequently, Croatia on August 25 extradited a man convicted ‘in absentia‘ for the assassination of Serbian Prime Minister Zoran Djindic to authorities in Belgrade, say Croatian police.

Sretko Kalinic, nicknamed “Beast,” was tried in Belgrade in 2007 ‘in absentia’ for the 2003 assassination of then-Premier Djindjic. He was sentenced to 40 years in prison for his role in the assassination and other crimes. Kalinic, a Serb citizen, had been on the run until June this year, when he was shot and wounded in Croatia’s capital of Zagreb by another Serb. Both men had been at large since the reformist Mr Djindjic was killed by a sniper linked to former paramilitaries. A court in Zagreb on August 24 sentenced him to one and a half years in prison for fraudulently obtaining two Croatian passports.

Bosnia, meanwhile, continues on its uncertain course. A confederation within a confederation, it consists of a Serb republic and a Croat-Muslim republic, held together by the protection of the international community, whose attention of late has wandered. Bosnia suffered through a devastating war that destroyed vital infrastructure and bankrupted the country. It has since had to recover from the effects of the war and manage the transition from a command to a market-driven economy. Once again it is on the brink. Its key troublesome entity, Republika Srpska, is holding elections in October. Milorad Dodik, the president, is threatening once again to divide Bosnia. Dodik has no reason to support the institutions of the central government. He does not need to share power with Bosniak and Croat politicians. Neither does he need the international community, which sends little money or support to the Republika Srpska whose economy is partly dependent on neighbouring SERBIA and in true Balkans style heavily dependent on smuggling and criminal activities.

Bulgaria Romania
The European Commission infuriated the left, the liberal and green groups in the European Parliament on 7 September, after it failed to provide an answer on whether France had breached EU law by organising the expulsion of hundreds of Roma to BULGARIA and ROMANIA in recent weeks. According to the European Commission, the Roma are the EU's largest ethnic minority, and frequently cites the number of 12 million Roma across Europe. Many Roma from Eastern Europe moved to the West following the EU's enlargement, creating tensions, particularly in Italy. An estimated 15,000 Roma from Romania and Bulgaria live in France. The French government is presently expelling large numbers of them in groups. Fundamental Rights Commissioner Viviane Reding appeared to play for time, as in a much-awaited debate on the Roma controversy in the Strasbourg plenary, she said her services had not yet obtained or analysed information from France over the controversial expulsions. She also pointed out that the Commission had found that not all relevant EU legislation was taken on board by the French authorities, stressing that she had sent them a letter informing them of this. Some members of the European Parliament have expressed disquiet at the Commissioner’s lukewarm response to the crisis which clearly relates to France’s ‘clout’ and prominence in the EU.

Clive Lindley

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