AAM DISPATCH

At work in my room at a hotel that may or may not have gotten seed money from a member of the Kikuyu tribe.

Yesterday, as I was riding home from dinner, my cab driver told me that he is Kikuyu, and that I should know that Kikuyu are extremely hard-working people.

“Myself, I get up at 4:00 am,” he said. “What should I do? I have children and a family to support!” Most all taxi drivers, he said, are Kikuyu. The matatu drivers are also Kikuyu. In fact, any working person you see in Nairobi is likely Kikuyu. He reiterated several times that the Kikuyu are a very industrious tribe.

So then today, I got a ride back to my hotel from a man who calls himself a “modern Maasai” – which means he’s educated and only wears traditional dress for special occasions. He drives an SUV and is often taking calls on two different cell phones at once (this is actually common here, but I haven’t yet asked why this is). Anyway, I had interviewed him about traditional Maasai medicine (he’s chairman of the Maasai Reto Conservation Programme), and he offered to drive me home.

As we neared the hotel, he got a very serious, almost pained expression on his face.

“Jordana, there is something that I have to tell you,” he said. “There is a tribe which you must really watch out for because they CHEAT. And that is the Kikuyu. You must be very careful with Kikuyu because they are lazy, and they don’t want to work for their money.”

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Jordana Gustafson Africa, Economy, Kenya

America’s national debt is large, and it’s getting larger every year. With the U.S. Budget Office projecting that America’s debt will rise to more than 90% of GDP by the end of the decade, more and more Americans and governments around the world are worrying about America’s fiscal future.

America Abroad presents a special discussion with former President Bill Clinton and other top officials, about America’s fiscal future and the implications for U.S. power in the world. Listen to America’s Growing Debt: The Stakes for the U.S. and the World.

Javier Barrera Economy

Faisel al Hemyri is 28-years old. He looks like he’s closer to 40. He’s a police soldier. It’s a job he’s held since the age of 14. He drives around in patrol trucks every night, and sometimes during the day. He’s originally from a village in southern Yemen, but moved to Sana’a for his job 14 years ago. Today he lives in a small cinder block house with his wife, mother and four children – a small family by Yemeni standards. His house is in a remote village on the outskirts of Sana’a (but still within the city limits, and within the ring of security checkpoints that surround the city).

The drive to his house from downtown Sana’a takes about 30 minutes. The scenery and terrain gradually transforms from the dense urban bustle of the city center, to a gradually more industrial and sparse surrounding. Industrial should be qualified – small-scale industries like cinder block plants, construction businesses and auto repair shops. Periodic stretches of markets line the streets, and men mull about chewing qat and buying fruit and wares from vendors chewing qat.
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Sean Carberry Economy, security, Yemen

Mexico’s Ciudad Juarez, across the Rio Grande from El Paso, is now an infamous place. The international and Mexican press is peppered with tales of drug smuggling, rehab center massacres, inter-cartel killings and cartel-military clashes. Just this week, the number of murders in Juarez passed the 2,000 mark, surpassing last year’s 1,600 murders with more than two months left in the year. Its American sister city is now home to pockets of Juarenses who can afford to flee the violence. These rates are astounding and alarming for a city of 1.5 million that before 2008 had about 200 murders a year.

These numbers tell the bloody story of a city under siege and brought to its knees by drug violence, tragedy and hopelessness. But the story of Juarez is not just a drug story – it’s also a story of economics, where the aftershocks of the global financial crisis play out in unforgiving ways.

After ratifying NAFTA in 1994, Mexico tied its economic fate intimately to the US, and for a time, that approach seemed to work well, at least for some sectors of the Mexican economy. The Juarez-El Paso metro area became one of the largest manufacturing hubs in North America, as hundreds of maquiladoras opened their doors in Juarez. American companies found these Mexico-based factories appealing because they offered the twin advantages of lower worker wages and close proximity to the large US market. Maquiladoras producing anything from clothes to electronics offered a livelihood to thousands of Juarenses and migrants from other parts of Mexico and a steady supply of goods for American customers.

But the US economic crisis brought this manufacturing engine to a sputter – with Americans not buying, thousands lost their jobs in Juarez. America’s recession has been devastating for the Mexican economy – at least for its “legal” economy. Meanwhile, the global economic slowdown has yet to bruise the “illegal” economy and slow the flow of drugs, guns and laundered money across the US-Mexico border. With the contraction of Mexico’s economy, the value of the peso has fallen, which means that drugs coming from Mexico are cheaper than they were before the economic slowdown and demand among American consumers, whose wallets have also thinned, has remained steady.

For many struggling Juarenses, whose livelihoods have been tied to American patterns of consumption, that’s meant they must go where the jobs are, namely the huge drug industry, one of the few flourishing industries on the US-Mexico border. Last month I traveled to the El Paso-Juarez area to work on a piece on the economics of the drug trade. For a primer on the actors and market forces of this illegal economy, listen here:

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Monica Villavicencio drugs, Economy, Latin America, Mexico

Leaders representing 85 percent of the world’s economic output will be in Pittsburgh for the two-day summit to discuss how to promote recovery from the recession and prevent another financial crisis. The Group of Twenty (G-20) was established in 1999 to bring together major industrialized and developing economies to discuss key issues in the global economy. Among the topics to be discussed include trade, climate change, tightening financial regulations and the banking system.

Many people blame the unrestricted and unfettered banking system for causing the collapse of the financial markets. The deterioration of business practices in large banks in the US and Europe, the lapse in risk management, underwriting standards, transparency and inappropriate compensation all contributed to the crisis. G-20 summit leaders will consider imposing new restrictions on bonuses in the finance industry and other regulatory measures. From GlobalPost:

As other countries have reproached the US for minimal proposals to address climate change issues, they are likely to expect some traction on the regulatory front, including reining in risk-taking by big financial institutions and controlling compensation for their top performers. One of the items for the discussion at the G20 is also going to be how to get banks to fatten their capital cushions and limit leverage of that capital.

David Wessel, Economics Editor for The Wall Street Journal sat down with Charles H. Dallara, Managing Director, Institute of International Finance at the Council on Foreign Relations to discuss the G-20 meeting and its mandate to prevent a repeat of global recession.

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On the agenda for the G-20 is the role they should or can play, both as a group and individually, with regard to affecting world financial systems. The expansion from the original G-7 to the 20 countries reflects a shift in economic power and the importance of these countries to future global economic growth.

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Watch the full exchange from the Council on Foreign Relations.

Javier Barrera Economy

With the US imposing tariffs against the import of tires from China, the World Trade Organization will be taking center stage as China brings its case to the WTO panel for a ruling on the issue. US tariffs of up to 35% on Chinese-made tires runs “counter to relevant WTO rules” and “is a wrong practice abusing trade remedies,” an official Chinese statement said.

The White House says President Obama acted under a provision in the US-China agreement on Beijing’s WTO membership that lets Washington slow the rise of Chinese imports to give American industry time to adjust. From UPI:

The Chinese mission in Geneva said it hoped “all sides will understand its determination to firmly fight against trade protectionism so as to commonly safeguard the multilateral trading system by respecting WTO rules.”

The WTO is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. In November 2001 the conference in Doha, Qatar, provided a mandate for negotiations on a range of subjects concerning the implementation of the present agreements, namely the Doha Agreement.

But what is the status of the Doha Agreement and the current state of the WTO during a global financial crisis? The Carnegie Endowment for International Peace recently hosted a panel of speakers who gave their input on the economic crisis, protectionism and the future of the WTO.

Uri Dadush, Director of the Carnegie International Economics Program:

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Steve Charnovitz, Associate Professor of Law, George Washington University:

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Gary Clyde Hufbauer, Reginald Jones Senior Fellow, Peterson Institute for International Economics:

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Arvind Subramaniam, Senior Fellow, Peterson Institute for International Economics:

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Javier Barrera Economy, International Politics

At the recent “Strategic and Economic Dialogue” in Washington, DC, high-level Chinese and American officials met for two days of talks on a range of important issues. The meetings, led by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, covered a variety of hefty topics including climate change, counterterrorism, and global economic recovery. And as is often the case when high-level meetings between American and Chinese officials take place, many were listening for mention of one issue in particular—human rights. Here’s what President Obama said in his opening remarks:

Just as we respect China’s ancient and remarkable culture, its remarkable achievements, we also strongly believe that the religion and culture of all peoples must be respected and protected, and that all people should be free to speak their minds. And that includes ethnic and religious minorities in China, as surely as it includes minorities within the United States.

Support for human rights and human dignity is ingrained in America. Our nation is made up of immigrants from every part of the world. We have protected our unity and struggled to perfect our union by extending basic rights to all our people. And those rights include the freedom to speak your mind, to worship your God, and to choose your leaders. There are not things we seek to impose— this is who we are.

Raising the issue of human rights with China was a delicate task at an event designed to strengthen US-China cooperation on a range of important issues, and especially at a time when China is the world’s largest shareholder of American debt. As a result, President Obama was careful not to seem to be imposing American ideals upon the Chinese. But many had hoped the President would take a tougher line. Congressman Frank Wolf (R-VA) was among those disappointed with the level of attention paid to human rights during the talks:

I think the Obama Administration is AWOL on human rights. And with all do respect, I think the Congress, maybe both political parties, are actually AWOL on human rights. But the conditions in China for human rights or religious freedom are worse today than they have been in the last ten years…And the Obama Administration, if you looked at the report that came out the other day, they just had this joint meeting with Secretary Clinton and Secretary of the Treasury Geithner with the Chinese – it was economics, economics, economics. And no real discussion on human rights, religious freedom. And so I think it’s perhaps the debt that we have where we’re so indebted to the Chinese, they’re buying our paper, our currency, but the Administration doesn’t talk very much about human rights, doesn’t do anything with regard to it and I think there’s less interest unfortunately in the Congress than I’ve seen for a long, long while.

A press release issued at the end of the two days of talks said that both sides “discussed ways to enhance mutual understanding and positive cooperation on human rights issues through our Human Rights Dialogue and other initiatives on the basis of equality and mutual respect” and that they would seek to hold the next Human Rights Dialogue before the end of the year. But to some human rights advocates, the fact that human rights were not afforded the same prominence as the other issues discussed at the “Strategic and Economic Dialogue” was still a disappointment.

Monica Bushman China, Congress, Economy, Human Rights, International Politics, Religion, State Department

I didn’t get far into the New York Times Magazine interview with President Obama today before a quote jumped out at me:

We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design.

This is the crux of a story I produced for America Abroad’s January 2009 program: Power Shift. The program explored the question of whether the US is in decline – either on a relative or absolute basis – in the world today. In my segment, I explored America’s lead in innovation and high-tech economy. And what President Obama said in the New York Time interview was something I heard repeatedly: that plenty of Americans are graduating with degrees in science and engineering, and they are more than capable of going into tech fields, but they tend to choose finance, or law, or other professions where the economic prospects are (or were) better. As a result, US grad schools and tech companies have to rely heavily on foreign-born students and workers.

That’s not a problem if the supply remains constant, but that is one of the open questions – will Chinese students continue to come to the US if economic and educational opportunities improve in China?

One other dynamic of this story that the president alluded to, and economist Richard Freeman addressed directly in my story:

I’ve been struck by students at Harvard in particular, who would all be rushing off to the big finance firms, ‘oh, I’m going to Lehman Brothers,’ uh oh, Lehman Brothers doesn’t exist. ‘I’m going to Bear Sterns,’ uh oh, doesn’t exist. And these are pretty smart folks who could easily study science things and would if they had better career prospects, so there a negative event will be moving more kids into these areas.

It will be interesting to watch that dynamic to see if more Americans go into science and engineering careers instead of finance, and what that means for America’s innovation economy.

Sean Carberry Economy, Technology