G8 Business

The authoritative magazine for VIPs, delegates and diplomats

THE EXCLUSIVE G8 BUSINESS PUBLICATION FOR THE G8 SUMMIT

Camp David United States - May 2012

Table of Contents

The Year of Business Diplomacy 10

Welcome Note 12by Governor of Illinois, Pat Quinn

EDITORIAL 14

Publisher’s Note 16

B8: On the Cusp 18By Chrisella Sagers, Managing Editor

Giving American Companies a Competitive Edge 22By David Chavern

Filling the Values Vacuum 26The Role of Western Business in Emerging Markets By James P. Cain, U.S. Ambassador (Ret.)

The Case for Transatlantic Geo-Economics at the G8 30By Tyson Barker

Greek Entrepreneurs to the Rescue: 34How to Reinvent the Greek Economy After the Sovereign Debt Crisis By Nasos Mihalakas

Rebuilding the Silk Road: 40China’s Vision for a New Kashgar By Paul Nash

Multinational Enterprise Expansion: 46Considering Corruption By Robert Higgins

Food Deserts: 50Community Food Security for the 2012 Farm Bill By Ashley Edgette

How Business Can Help Vaccines Reach the Last Mile 54By Dr. Orin Levine and Lois Privor-Dumm

Arab Spring: The Next Wave 58of Democratization in the Middle East By Elisabeth Jessop

The Economic Consequences of Security 62By Jared Rowley

Pakistan Remains a Question Mark 76in Lead Up to NATO Summit By Boris Maguire

G8 Business

The authoritative magazine for VIPs, delegates and diplomats

THE EXCLUSIVE G8 BUSINESS PUBLICATION FOR THE G8 SUMMIT

Camp David United States - May 2012

The Year of Business Diplomacy

For the past 16 years the producers of the publication you hold in your hands have sought to bring the leaders of the Group of Eight (G8) authoritative opinions on policy as they relate to the most important items of the G8 Agenda. But this year, our editorial focus has shifted to reflect opinions and features on the ever-important subject of business policy, or how we have coined within our editorial team: Business Diplomacy.

In today’s global marketplace, business is regularly affected by the political landscape in which it operates. This landscape is shaped not just by governments, but also consumers, civil society, the media, and political events. And understanding this landscape and how to navigate it is the difference between success and failure. That’s where business diplomacy comes in: just like governments appoint ambassadors to represent them and negotiate political and legislative matters in another country, businesses are doing the same by appointing key leaders from the their community to represent them during important leadership meetings such as the G8.

This year, for the first time, we are proud to bring you a business policy publication that marries the concepts of public and private policy and how the two sectors can learn from each other. From security to vaccines to food, in this edition our readers will find that the issues tackled before the G8, transcend political lines and are part of both the political and business agenda.

The first G8 Business Summit was held in Berlin, Germany in 2007. Since then, the group of organizations representing the private sector in the countries that make up the G8, have been meeting in advance to discuss and agree on recommendations to be presented to political leaders.

The voice of this group has become increasingly significant in the G8 structure and for good reason. The governments of the G8 ever more rely on the private sector to help shore up jobs and ailing economies. This year, the U.S. Chamber of Commerce, the U.S. host, is leading the B8 group. We are grateful to have David Chavern, Chief Operating Officer of the U.S. Chamber of Commerce, pen a timely editorial on how American companies can compete in a global environment.

At the first meeting, under the theme of Growth and Responsibility, G8 Business recommended that G8 political leaders address challenges to the trading system, the international investment regime, the structure and rules for enforcement of intellectual property protection, and global environmental conditions. These issues continue to be top priority for the group even though the G20 and B20 (the Business mirror summit of the G20) are also taking an increasingly proactive role in tackling these and other issues with the G20 political leaders. It will become ever important this year to see not only how the G8 and G20 collaborate to tackle similar agenda items but to see how these two business groups, the most significant on a global scale, can pool resources to bring their agenda forward to the political leaders of the G8 and G20. So far, these Business Diplomats have found that they indeed have a seat at the table for this is the year of Business Diplomacy.

Editorial Note: G8 Business is a group of organizations representing the private sector in the countries

that make up the so-called G8 plus the European Union. Canada is represented by the Canadian Chamber

of Commerce, France by Mouvement des Enterprises de France (MEDEF), Germany by the Federation of

German Industries (BDI), Italy by the Confederation of Italian Industry (CONFINDUSTRIA), Japan by Nippon

Keidanren, Russia by the Russian Union of Industrialists and Entrepreneurs (RSPP), and the United States of

America by the U.S. Chamber of Commerce, the U.S. Council for International Business, and the Business

Roundtable. The European Union is represented by BUSINESSEUROPE.

Ana C. RoldEditor-in-ChiefG8

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by Governor of Illinois, Pat Quinn

Welcome Note

EDITOR-IN-CHIEF

Ana C. Rold

MANAGING EDITOR

Chrisella Sagers

EXECUTIVE EDITORS

Kirk L. Jowers

Courtney H. McBeth

Rochelle M. Parker

CONTRIBUTORS

Tyson Barker

James P. Cain

David Chavern

Lois Privor-Dumm

Ashley Edgette

Robert Higgins

Elisabeth Jessop

Orin Levine

Boris Maguire

Nasos Mihalakas

Paul Nash

Jared Rowley

Chrisella Sagers

GRAPHICS DIRECTOR

Henri de Baritault

LEGAL

The G8 Summit Magazine is a yearly publication independent of political affiliations or agendas published by

The CAT Company. The articles in the G8 Summit Magazine represent the views of their authors and do not

necessarily reflect those of the editors and the publishers. While the editors assume responsibility for the

selection of the articles, the authors are responsible for the facts and interpretations of their articles. Authors

retain all legal and copy rights to their articles. None of the articles can be reproduced without the permission

of the editors and the authors.

EDITORIAL

Publisher

The CAT Company Inc

G8 Summit Magazine Company Ltd

The CAT Company Inc

President

Chris Atkins

Advisory Board

Peter Atkins

Chris Atkins

Jennifer Latchman

Graphic Design and Art direction

Henri de Baritault

Founder intro60.com

President of Sales

Mike Nyborg

Sales Executives

Chris Atkins

Guy Furl

John Armeni

Don Stauber

Mike Nyborg

Ray Baker

Bill Beadles

Hinckley Institute of Politics - University of Utah

Director

Kirk Jowers

Intern Manager

Courtney McBeth

Communication and Outreach Coordinator

Rochelle McConkie

Thanks To

Ana Carcani Rold

Diplomatic Courier

Hinckley Institute of Politics

intro60.com

Dear Summit Readers,

I would like to take this opportunity to thank all those involved for their dedication in helping make this a successful 16th issue of the G8 Summit publication.

The CAT Company is the only enduring publishing company in the field, having published a G8 Summit publication for 16 consecutive years, continuing the tradition and continuing to get great recognition as the Summit’s foremost publisher.

The CAT Company continues to increase the exposure of the magazine with help from the massive growth of digital technology, using Scribd.com, Android and iPhone apps.

As a result of the high quality of our publica-tions, we are truly honored to be chosen as the exclusive publisher of the official G20 Business Summit 2012 in Los Cabos Mexico and to have also been recently recognized by Worldwide Who’s Who business directory.

Since our first edition of the G8 Summit publication, our company has grown exponentially and we are proud of our ability to bring together important stakeholders in the global business, diplomatic, and policy leadership through the pages of the G8, G20, and APEC CEO Summit publications. We hope you will enjoy reading the editorial we have selected for you and we look forward to seeing you at the next leadership summit.

Yours Sincerely

Chris AtkinsPublisher and Founder, CAT Company Inc.

Chris Atkins

Publisher’s Note

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B8: On the CuspBy Chrisella Sagers, Managing Editor

The past four years of economic crisis—wherever the epicenter is located at any given time—have brought into stark relief the interdependence of the business and political sectors in maintaining the health of modern developed nations. No longer can political solutions be effective on the global stage alone; yet, nor can inter-national trade be lucrative without the political hand of diplomacy to calm the waters.

Thus the B8, the group of business leader represen-tatives from each of the G8 countries, seeks to lead the way back to global economic stability and prosperity. In its 2011 statement to the G8, the group seemed to see global economic fortunes slowly turning back toward the light. If they are correct, then the world is on the cusp of a great opportunity, even if challenges and risks still remain. The fact still remains that the old ways of conducting business have been disrupted, and now is the time to establish new models. Finding ways to organize a more sustainable, efficient, and secure yet innovative global marketplace must be the goal of the G8 economies.

A sustainable marketplace is not one that operates with only the environment in mind, but rather, it is a strategy to deal with market volatility. The B8, in its

2011 statement, addressed the need to gear the global business environment toward a more long-term focus when it called for “an international monetary system that is more stable, predictable, and resilient.” Much can be done to ensure that a series of commodity bubbles does not wreak havoc by diversifying. By promoting recycling and the use of environmentally sustainable materials, the B8 argued, global markets can ensure continued free access to in-demand goods. By di-versifying energy supplies, not only is innovation and competition encouraged in all of the energy markets, but a more stable supply chain is ensured, lowering risk and the cost of international trade as well as potentially leveling out unfavorable trade imbalances. The B8 called on the governments of the G8 to create an environment that encourages technological innovation in the “green economy,” which could not only lower energy costs in the G8 countries, but also create jobs in developed economies as the technologies are in turn sold to rising markets.

A highly efficient marketplace is not only good for a globalized economy, facilitating trade and commerce, but it is also now a necessity in an age of austerity. With risks mounting every day, there is no longer any margin for wasted resources or delays in transactions. Badly

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needed infrastructure projects cannot get underway without access to credit or insurance, and bureaucratic delays at any point in the process can be highly costly. The B8 called on governments to work to improve the global economic systems of governance, the availability of credit particularly to SMEs, and form more public-private partnerships in order to reduce and streamline government spending.

Finally, the B8 called on the G8 to find a balance between the unsecured, free flowing forum of ideas that has marked the development of Internet and Com-munications Technologies (ICT) and security standards needed to prevent against growing cybercrime and possible terrorism. This issue is quickly growing to be one of the more important government vs. business issues today. On one hand, open technology and un-

restricted speech on the internet contributes to a marketplace of creativity and innovation unlike any the world has ever seen, creating a dynamic and rapidly growing industry as well as hundred of thousands of well-paying jobs. On the other hand, the disruptive nature of this industry has created security issues, ranging from obnoxious cybercrime to profit-cutting piracy to potentially destructive cyberterrorism.

Considering the consequences of poor policy, both the public and private sectors will need to take a step back to reconsider options. Last year, the B8 suggested ratification of ACTA and other steps that led to the SOPA and PIPA bills in the United States. From consumers to developers to Google CEO Larry Page discontent with Internet limited legislation is rising, and the B8 and G8 would be wise to consider an approach to Internet security that does not stifle one of the greatest engines of innovation ever created by humanity.

As the governments of the G8 countries seek to rebuild their economies and pursue job-creating policies, there is no better group to partner with than the B8. Our global economy is on the precipice of a transformation on the scale of the Industrial Revolution—everything in our daily lives has either changed or is in the process of changing. The challenges of such a change are great, but the opportunities they provide are also enormous. The B8 leaders must approach these opportunities mindfully, but optimistically.

Chrisella Sagers is Managing Editor of the Diplomatic Courier and Contributor at the International Security Network (ISN) in Zurich, Switzerland.

FOCUS: GLOBAL ECONOMY

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Giving American Companies a Competitive EdgeBy David Chavern

Global competition begins at home. So it follows that companies will be more competitive around the world if their domestic government fosters a business-friendly environment.

Increasingly, U.S. companies are realizing that if they want to gain an edge in the global marketplace they cannot overlook the powerful role of public policy. Like it or not, the decisions made in Washington will profoundly impact businesses’ ability to be successful and competitive. That’s why the Chamber’s work to shape and influence legislative outcomes is such a

critical part of our mission.

There’s no secret to what companies need in order to compete and win at home and abroad. We need trade agreements that open markets to American goods and services around the world and provide a level playing field for U.S. businesses. We must adopt a competitive tax code that doesn’t undermine companies through double taxation of overseas profits. Our workforce must be supplied with top talent that comes from a world-class education system and commonsense immigration rules that attract and welcome the best and brightest from

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across the globe. Our energy supply must be abundant, affordable, and diverse. And we need a well-maintained infrastructure to keep commerce moving.

We have much work to do in each of these areas. First, 95% of the world’s consumers live outside the United States, and the competition among leading global economies for those customers is growing steeper. While some 100 separate trade agreements are under negotiation around the world, the United States is at the table in just one—the Trans-Pacific Partnership.

We need to move forward with a bold trade agenda so that companies can keep up with global competitors. That means expanding our commercial and trade re-lationships with existing partners, like the European Union, while laying the groundwork for new agreements with emerging economic leaders including Brazil, Egypt, India, and Indonesia. Businesses would also be well served by more bilateral investment treaties. We should welcome foreign investment, which supports five million American jobs, while encouraging U.S. firms to also invest abroad.

Next, comprehensive tax reform is critical if U.S. companies are to remain competitive. As of April 1st, the United States holds the dubious distinction of having the highest corporate tax rate in the world. That is exactly the wrong way to attract global capital. Additionally, we must stop double-taxing profits earned by multinational companies operating overseas. Instead of weighing down businesses with a complex, burdensome system, let’s simplify the tax code, lower and synchronize rates for individuals and corporations, move to a territorial system, and ease compliance.

U.S. companies will only be as competitive as their workers. That’s why we’ve got to develop a 21st century workforce, starting with smart reforms to our public K-12 education system and an overhaul of job training programs. We should also end the mindless practice of educating foreign nationals in top U.S. institutions, then sending them home to our competitors. High-skilled visa reform would ensure that the next generation of en-trepreneurs and innovators are contributing their ideas to U.S. firms and strengthening the health and produc-tivity of our economy.

Next, we must have a stable, abundant, and affordable supply of energy. To the greatest extent possible, we should leverage our own vast and diverse energy resources to meet our needs. Expanding

development of domestic energy—everything from oil and natural gas to coal and nuclear—would create American jobs, strengthen national security, pump revenue into government coffers, put downward pressure on energy prices, and make America an attractive place to manufacture again.

Finally, we need modern infrastructure to ensure the smooth flow of products, people, and ideas. The U.S. infrastructure system has dropped from first place in the World Economic Forum’s 2005 economic competitive-ness ranking to number 16 today. Put simply, we’ve failed to maintain our investment in American roads, bridges, and ports, which hampers productivity and economic growth. By making some smart investments, attracting global private capital, and encouraging pub-lic-private partnerships, we can begin to modernize the physical platform of our economy.

U.S. companies are already the most productive in the world, but key policy changes would help them compete globally. America is a natural economic leader because our system is built on the foundation of free enterprise. But competition is what gives free enterprise teeth. It’s what spurs innovation and constantly improves the quality of life for Americans. With smart government policies, we can give our American companies a real competitive edge.

David Chavern is Executive Vice President and Chief Operating Officer of the U.S. Chamber of Commerce.

FOCUS: GLOBAL ECONOMY

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Filling the Values Vacuum The Role of Western Business in Emerging MarketsBy James P. Cain, U.S. Ambassador (Ret.)

Dubai markets itself as the place where “the developed world and the emerging world meet”. Judging by the diversity amongst the almost 500,000 visitors to the Dubai Mall one recent April Saturday, the label appears to fit. Teeming with Asians, Indians, Eastern and Western Europeans, West Africans, neighbors from the Gulf and even a few Americans, the mostly under-30 crowds displayed the commercial frenzy that has been in short supply in the West in recent years. Exploring the ground level of the Mall, just across from the famous Dubai fountains and the 163-story Burj Khalifa, I was delighted to discover that the most popular and packed restaurant concept did not showcase a Mediterranean, Italian, or French moniker but a uniquely American one—Texas Roadhouse. Hand-cut steaks, Texas-size rib combos, and country dinners filled patron’s plates while the line-dancing wait staff that propelled this Ken-tucky-based chain to popularity in the U.S. a few years ago delighted hungry customers this April afternoon.

As growth, urbanization, and megacity development proceed in Asia, Latin America, the former Soviet states, the Middle East and even Africa, Western consumer and retail brands are being met with surprisingly robust popularity. At the recent Gulf Food show not far from the Dubai Mall, a medium-sized U.S. company was awarded “World’s Best New Halal Food”.

There is an immensely important lesson here: as Western governments curb spending on foreign aid, development assistance and commercial programs, a “values vacuum” is developing into which institutions, cultures and governments are stepping to promote

their own ideologies and cultural values, or lack thereof. Already the largest trading partner in many South American countries, China built and paid for a $105 million soccer stadium in Costa Rica, but only after government officials waived the country’s tough labor laws. Russian companies are gobbling up natural resources in Africa as well as energy, infrastructure and telecommunications assets in Ukraine and Kazakhstan. With influence from Venezuela and its ally Iran, the newly formed “Community of Latin American and Caribbean States” proudly excludes America and Canada.

Western governments, withdrawing from program-matic engagement just as economies in emerging markets are expanding, have an army of natural allies that can step into the vacuum: small- and medium-sized enterprises (SMEs). While multinational corpora-tions have been at this for a generation, Western SMEs are just discovering the global opportunities for their brands and products. European SMEs are generally better at this than their North American counterparts. Go into any high street or shopping mall in Singapore, Sao Paulo or Dubai, and European fashion, retail and food and beverage brands far outweigh the number of American ones. American companies, and the economies they are a part of, need the growth that such markets can provide. But there is an equally important reason for SMEs to expand into these markets: Western commercial enterprises, just like the governments they stand in for, exude values that are critically needed to compete against socialistic, authoritarian and religiously based ideologies prevalent in many emerging markets. Whether built on the tenants of extremist

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religion, Chairman Mao or post-Soviet autocracy, these ideologies rarely promote notions of transparency, rule of law, free expression, equality of opportunity, education for the masses, or private-sector growth.

The United Arab Emirates is America’s largest export market in the Arab world. America’s veteran diplomat there, Ambassador Michael Corbin, is a strong advocate of “commercial diplomacy”; aggressively pushing American SMEs to come to the region. “Although our competitors can often undercut us in terms of price, they don’t generally provide the training, transfer of systems and processes, targeted innovation, long-term support, corporate social responsibility programs and willingness to invest in partnership building.” These are hallmarks of American business, Ambassador Corbin notes, and they bring the right values to emerging markets.

The promotion of small business opportunity, with its concomitant focus on entrepreneurship, innovation and personal responsibility, needs to be a central theme of our Foreign policy. Like Ambassador Corbin, others in our professional diplomatic corps understand this. U.S. Mission Nigeria, led by Ambassador Terrence McCulley, recently helped a Massachusetts-based company obtain a contract to develop Nigeria’s first biometric driver’s license and identity card system. These efforts, and others like them within the State Department, need to be applauded and encouraged. The promotion of this “American Spirit”, even through the private commercial sector rather than official diplomatic channels, is the West’s best bulwark against competing ideologies; ideologies whose promoters appear these days to be better funded than the West’s.

Rather than complain of “outsourcing”, punish companies who invest abroad, or delay regional free trade agreements, our tax and trade policies should

provide incentives for SMEs who export the West’s values to foreign shores. Firms that prosper in emerging markets help the home front prosper—creating wealth, opportunity and jobs. And they also help fill that important values vacuum.

Ambassador James P. Cain served as U.S. Ambassador to Denmark from 2005 to 2009. Through Cain Global Partners, LLC where he is Managing Partner, and the law firm Kilpatrick Townsend and Stockton, LLP where he is Counsel, Ambassador Cain now provides legal and strategic assistance for firms expanding into emerging markets.

FOCUS: GLOBAL ECONOMY

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The Case for Transatlantic Geo-Economics at the G8 By Tyson Barker

When the G8 leaders meet on May 18th–19th in Camp David, they will face a transatlantic economic outlook that is increasingly diverging and fraught with long-term peril. Even as the U.S. experiences the first glimmers of recovery, the Euro-zone crisis continues to rumble beneath the surface. Spanish and Italian bond yields are climbing again, a reflection of lost competitive-ness, debt and anemic growth prospects. And even as the U.S. pivots to Asia and continental Europe continues to look inward, G8 leaders from the U.S. and Europe should seize the summit to re-ignite an overarching transatlantic economic agreement.

When looking at the state of transatlantic economic policy since the end of the Cold War, the Greek myth about Corinthian king Sisyphus is instructive. Cursed for his hubris, he was forced to roll a boulder up a large hill only to watch haplessly as the stone would tumble back down. He repeatedly had to begin his task again.

Integrating the transatlantic economy—after EU and NATO enlargement, the great post-Cold War strategic project between the U.S. and Europe—has been a Sisyphean endeavor. For decades, U.S. and European policy-makers have attempted to unlock the latent potential of the world’s two largest markets. Numerous initiatives have been launched with varied outcomes, but none proved to be the game-changer that ignited the push from the New Transatlantic Agenda (NTA) in 1995 to the Transatlantic Economic Council (TEC) in 2007. These initiatives, often with deep political undertones, have never sustained the internal logic long enough to yield the tangible strategic results. Today, for example, the TEC–the last major initiative aimed at regulatory har-monization across portfolios–is delivering some solid, if highly technical breakthroughs. But at its low point in 2008, the TEC had devolved into a cabinet-level talk shop about disinfecting processed chicken.

The G8 summit could offer the dogged Sisypheans in the transatlantic community another, perhaps fleeting, chance. In Washington, there is the sense that critical mass for joint action has been achieved. The business community on both sides of the Atlantic, from the U.S. Chamber of Commerce to BusinessEurope, united early to push the U.S. and Europe to move their timetable forward. On the Hill, a bipartisan coalition of advocates, from Congressman Gregory Meeks (D-NY) to Senator Rob Portman (R-OH), has been rallying support for a major push for a more imaginative economic agreement between the U.S. and Europe. And the transatlan-tic brain trust spent much of the spring churning out

reports, holding workshops in Washington and Brussels, and testifying before Congress.

Why might this time be different? First of all, this spring has already seen a great deal

of positive momentum in the U.S.-EU economic rela-tionship in what U.S. Ambassador to the EU William Kennard calls “putting points on the board.” Three high-profile cases stand out in particular. In February, the U.S. and EU signed an agreement on organic food certification that will ease market access for U.S. and EU producers in the entire transatlantic organic market (90% of the world market, or approximately $50 billion). Negotiators have also made significant progress on relaxing a complex series of 20-year-old bans on beef imports. Moreover, the U.S. and EU (and Japan) have followed their WTO dispute settlement victory on raw materials with a joint dispute settlement case against China on its restrictive rare-earths export policy. Rare earths, a cluster of materials used in the most advanced technology from green tech to smart phones, are what Senator Kay Hagan (D-NC) has called “the building blocks of next generation manufacturing.”

Second, in November 2011, the Obama administra-tion and its counterparts in the European Commission established the High Level Working Group on Jobs and Growth. The Working Group differed cleverly in two key ways from earlier iterations. First, it has a limited one-year mandate to assess the areas in which the conditions are right for progress—from public procurement policy to the foreign-direct-investment (FDI) climate to regulatory barriers to trade to aligned digital and privacy standards in the commercial realm—and chart a course toward a more deeply enmeshed transatlantic marketplace that touches on issues beyond tariffs. The Working Group also avoided creating false expectations of what can be accomplished at the outset, focusing rather on a sober analysis of 17 fields. Results are to be presented in June 2012.

Finally, interest in a deepened transatlantic economic agreement is gaining traction in Europe. German Chancellor Angela Merkel called for an overarching transatlantic trade agreement at this year’s World Economic Forum annual meeting in Davos, as did British Prime Minister David Cameron, most recently during his March 2012 state visit to Washington DC. Perhaps most surprising has been Paris’ tacit acquies-cence to a more comprehensive agreement, even in the midst of a tough campaign season that has highlighted French ambivalence about globalization. With the

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political elements in the most powerful European mem-ber-states coalescing, the European Commission—the EU’s executive arm—seems to be moving aggressively toward negotiations on a big initiative with the US.

For the U.S., the G8 summit is the last high-profile opportunity for the Obama administration to outline its vision for the transatlantic economic relationship before the presidential election. The Working Group should fast track the results of its internal assessment and use the spring G8 summit in Camp David as the platform to launch such a big-think initiative. The Camp David summit is long enough before the election to avoid being clouded by the political morass that will certainly engulf any initiatives launched in the summer. It will also send a powerful signal that the Obama administration is committed to bolstering the U.S.’s economic profile in-ternationally in a manner that is constructive and market oriented. At the same time, such a move would signal to Europe the U.S.’s continued dedication to the trans-atlantic strategic relationship, which has been doubted in recent years. It will also provide a glimpse into the in-ternational economic priorities of a second-term Obama administration.

The challenge will be for the U.S. and EU to find a Goldilocks initiative that manages expectations and provides a durable vision for the transatlantic market place in 10 years’ time. Overreaching at its outset risks inviting interests groups to pick apart the agreement. Thinking small will not ignite the imagination of political leaders, especially in Congress and in European parliaments. This has been the case in plurilateral U.S.-EU cooperation in the Obama administration. While tangible headway has been made on regulatory standards from e-vehicles to commercial refrigeration to secure cargo safety standards, these victories have not led to an overarching internal logic that provides the transatlantic economic relationship the geopolitical weight it deserves.

In finding that middle path, the Obama administration and its EU partners should think about the long game rather than the big bang. Leaders should announce a comprehensive roadmap dotted with a litany of short- and long-term benchmarks—some publicly declared, some behind the scenes—that will knit together an overarching narrative for a deep transatlantic economic compact.

At the G8 meeting itself, leaders from the U.S. and Europe can begin the process with a package

of short-term deliverables that will set the tone for a long-term strategy. First, the leaders and their Japanese counterparts should announce that the Doha Round of WTO negotiations has reached an inconclusive stalemate and increasingly obstructs greater global trade and investment liberalization. By moving to a plu-rilateral nucleus, the U.S. and Europe can regenerate global economic integration while leaving the door open to re-centering negotiations in a multilateral format when the time is right. Second, the partners could immediately agree to a U.S.-EU investment agreement that would subsume the bilateral investment agreements that the U.S. has with many EU member-states in a manner that is consistent with the Lisbon Treaty. Third, the U.S. and the EU could establish principles for market access for jointly engaging rising economic powerhouses like China and India. Fourth, they can announce that legislators should be incorporated into and take ownership of the legislative implementation early in the process. This is equally true for Congress as for the European Parliament. The U.S. administration should work with Congress to set up a task force within the Ways and Means Committee to mirror the transatlantic working group of the European Parliament’s Trade Committee under Chairman Vital Moreira. This group could serve as the core of the Congressional delegation that will meet with its European counterparts in Copenhagen this summer and could become a bipartisan hub for legislation in Washington.

There is an increasing sense that the U.S.-European economic predominance is on borrowed time. Today the U.S. and Europe comprise 50% of global GDP (41% in purchasing power). That number is projected to diminish to 31.6% by 2030. There are centrifugal forces pulling at the transatlantic relationship. The G8 summit should take advantage of this window of opportunity to lay out how the transatlantic economic relationship can continue to shape the global economic order.

FOCUS: GLOBAL ECONOMY

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Greek Entrepreneurs to the Rescue:How to Reinvent the Greek Economy After the Sovereign Debt CrisisBy Nasos Mihalakas

The Current Crisis. The Greek dimension of the EU sovereign debt crisis is by now well known to all. Investor anxiety over excessive national debt throughout the EU, led to demands for higher interest rates from several governments with higher debt levels, and current account deficits. This in turn made it difficult for some governments to finance further budget deficits and service existing debt. Unable to pay for its public debt, the Greek government turned to the EU for financial assistance.

The first bailout package was approved on May 2010, which provided the Greek government with a three year €110 billion loan. On February 2012, the lending troika (EU, IMF and ECB) eventually agreed to provide a second bailout package worth €130 billion. This second package included an agreement with banks to “voluntarily” accept a 53.5% write-off of (some part of) Greek debt, the equivalent of €100 billion, to reduce the country’s debt level from €340 billion to €240 billion or 120.5% of GDP by 2020.

So far, all the reforms forced upon Greece center on how to reduce the government budget. These reforms include reducing the minimum wage for public sector employees by 22%, cutting benefits to pensioners and health-care recipients, reducing the government payroll by laying-off 150,000 public sector employees by 2015, privatizing government companies, and opening-up some industries that were closed to competition.

For now, Greece was brought back from the brink of bankruptcy. Though safe for now, the country could find itself struggling to meet the strict conditions outlined in the second bailout agreement, if key structural reforms don’t take place. It’s not too late for the crisis to serve as an opportunity.

From Crisis to Opportunity. It is obvious that Greece needs a new set of rules that will allow for the smooth transition from the informal to the formal economy, through the simplification of processes and the deregulation of markets. The country will need a simple and fair taxation administration system that would be more efficient and would create a friendlier business environment. Also, Greece will need to simplify judicial services and enforcement of rules and laws. Furthermore, it will need to apply quality control on goods and services, eliminate organizations with overlapping mandates and rationalize the public sector.

The most recent OECD Economy Survey of Greece for 2011 also argues that the authorities should continue this vigorous reform process and their efforts to convince markets of their capacity to implement fundamental economic adjustments. Overall, the Greek government should:

• Continue deficit reduction to halt and then reverse the rise in public debt, by strengthening tax collection and ensure fair sharing of the burden and the benefits of reforms.

• Boost privatization and the development of public assets to reduce the debt burden and associated debt-servicing costs.

• Reinforce structural reforms in the labor and products markets to enhance competitiveness and raise welfare and incomes.

What these reforms have not included was a growth strategy. The country desperately needs to switch from deficit reduction to economic growth, and pursue reforms that will promote entrepreneurship that generate new business ideas. With Greece under a continues threat of bankruptcy, the country desperately needs to generate sustainable growth and lift competitiveness if it is to ever pay down its debt and disengage itself from a chain of international bailouts.

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A New National Growth Model. According to McKinsey’s ‘Greece 10 Years Ahead’ report, published in November 2011, Greece needs a new National Growth Model. Primarily, this new growth model requires that the economy becomes much more outward, focusing on foreign markets both for producing export goods and services and for importing foreign capital. Along with traditional tradable sectors like tourism, agriculture, and manufacturing, business services should get a large share of resources and investments.

Fundamental to this new growth model, according to McKinsey, is transitioning the funding of the economy from public debt to private sector equity and debt. This will require higher levels of foreign and domestic investment. Therefore, Greece needs to construct a business-friendly environment that will attract local and foreign investment, to generate new jobs and the economic growth required to gradually reduce the country’s reliance on debt.

According to the World Bank, net inflows of foreign direct investment (FDI) in Greece was last reported at $2.25 billion in 2010, down from $5.3 billion in 2008. In 2008, when the global recession started, net inflows of FDI in Greece were 1.55% of the country’s GDP. By comparison, 2008 FDI net inflows in Israel were reported at $10.8 billion (or 5.38% of Israel’s GDP), according to the World Bank.

Greece will desperately need more foreign investment if it is to achieve any meaningful economic

growth. Already, foreign investors from China, Germany and elsewhere are looking for bargains in the Greek economy, including in the tourism industry (which accounts for a third of GDP) and in the shipping business (which is very lucrative and growing fast).

However, for a country like Greece which lacks the major export sector that would allow it to raise capital through exports, there is only one way to get new money into the economy: direct transfers. Be it for en-tertainment (tourists), education, or health-care, direct transfers of money by foreigners visiting the country and spending locally could be the only way to jump-start the contracting economy.

Risk-takers Needed. In order to achieve that Greece will need risk-taking entrepreneurs. According to an article by Joshua Chaffin of the Financial Times, many Greek entrepreneurs believe that the growth of the state over the past 30 years and its all-embracing nature may have blunted young people’s appetite for risk. For many students, due to their parents cuddling and risk-aver-sion, the dream remains a cushy government job with a regular paycheck—not a business career.

However, Greeks are not that risk-averse, and per capita they have the largest number of small and medium size enterprises (SME’s) than any other EU country. Half the economy is dominated by SME’s while the other half is ‘safely locked’ under government control.

Furthermore, the Greek Diaspora is prosperous and legions of Greeks have thrived working abroad. While the government may be broke, private wealth is still plentiful. Just consider that by some estimates, the Greek treasury is deprived of €50 billion each year due to tax evasion. This coincides with the estimated €60 billion that have been withdrawn from Greek banks since the crisis began at the end of 2009.

One of the positive unintended consequences of this over-protective, risk-averse, obsessed with higher education parents, is that Greece has an abundance of young people with college education—English speaking, highly educated young adults with degrees in science and technology, medicine and health-care, and of course hospitality and tourism.

The ‘Silicon Island’ of Europe. In theory, Greece should be able to duplicate at least some of the success

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of Israel, another small Mediterranean country that has managed to become a technology powerhouse. By investing in research and development (R&D) Israel was able to leverage its educated workforce, its financially affluent and well-connected Diaspora, and its strategic location to become one of the better technology exporters in the world. All of the underlying elements are present in Greece as well.

According to the ‘Invest in Greece’ Agency, Greece offers a favorable environment for Information and Com-munication Technologies (ICT) investment, with strong market fundamentals, availability of superb talent pool, leading R&D activity, a welcoming ITC ecosystem, and rewarding public and private sector projects. The avail-ability of ICT talent and its required low compensation (by comparison to other places) should make Greece a particularly desirable destination for international information and communication technology firms.

The specific model is something along the lines of ‘Sophia Antipolis’, the ‘Silicon Valley of the French Riviera.’ This science park is set in the hinterlands of Nice, attracting information technology and communi-cations companies whose researchers and engineers community from nearby hilltop villages and picturesque harbor towns. It is no coincidence that technology innovators and entrepreneurs have made California their home—location, climate, and quality of life play a major motivating factor.

On the other hand, Greece needs to restructure its higher education (currently one of the ‘closed sectors’ of the economy) and create ‘University Innovation Zones’ (modeled after Free Trade Zones). With the right regulatory reforms and with some government assistance, foreign Universities and research companies could be encouraged to set-up campuses in Greece, an ideal location for students to study and innovate. These will be University towns, where student innovators, venture capitalists and producers can come together and start-up technology driven companies that will be protected from the rest of the market.

Of course, you need start-up capital and a government commitment to either not interfere with the information technology sector, or provide the regulatory and legal framework that would accommodate the creation, attraction, and growth of technology information/services driven companies, and interna-tional research and education institutions. Usually, the hardest part is the people, and not the infrastructure, and Greece definitely has the people.

The ‘Florida of Europe’. Another objective for Greece coming out of the sovereign debt crisis would be to cater to the health-care and retirement needs of Northern Europeans. Greece has an army of well-edu-cated doctors and nurses, most of which are practicing their medicine abroad (because of the closed nature of the industry at home) as well as a very pleasant environment (physical and lifestyle) for retirement.

Healthcare, like higher education, is a sector under severe government control and ‘financially’ very inefficient, thus contributing negatively to the govern-ment’s debt. However, all this government subsidization of the healthcare industry has created a large number of well educated well trained doctors, nurses, profes-sionals and academics. The challenge should not be to ‘dismantle the system’ so it’s not a financial burden to the government; rather it should be to harness the people and grow the clientele—to import patients and elderly, and profit from providing services to them.

Greece should aspire to be the ‘Florida of Europe’, where the young go to attend college and stay for the summer to enjoy the weather and the beaches, and the old go to retire and receive quality healthcare and nursing coverage. Transforming the healthcare (and education) sectors to cater to the retirement needs of other Europeans will not be easy, but the current crisis presents the once in a lifetime opportunity to fundamen-tally restructure the way the society and the economy operate.

If You Build it They Will Come. The next eight years will not be easy for the Greek people. Bankruptcy might have been averted, but if the economy does not grow the government will be in need of new money in no time. Temporary solutions focusing on tourism and exports could keep the country limping for a while, but only a fundamental restructuring of the economy focusing on technology innovation, education, and healthcare services can provide lasting growth.

If the Greek government can create the necessary infrastructure for ICT start-ups, for higher education growth, and for retirement healthcare, then Europeans will come and invest in Greece. If the right conditions were present, who would not want to run their ICT firm from a Greek island, or retire by the Greek coast?

Nasos Mihalakas is a Washington DC-based foreign policy expert and contributing analyst for Wikistrat. To contact him email: nasos.mihalakas@gmail.com.

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Rebuilding the Silk Road: China’s Vision for a New KashgarBy Paul Nash

Kashgar, a dusty city of 3.4 million in China’s remote north-western corner, at the edge of the Taklimakan Desert, is only a few hours’ drive from the Afghan border.

Many people are unaware that Afghanistan and China even connect; but they do, geographically speaking, just below the snow-capped Pamir Mountains to the west of Kashgar, and just above Pakistan. There is a long, narrow stretch of Afghan territory that reaches out like a tentacle to touch the People’s Republic. The Wakhan Corridor, as it is now called, runs about 140 miles. The invisible lines that mark it on a map were drawn in the nineteenth century to create a buffer zone between the British and Russian empires. The corridor’s tip forms a jagged frontier with China 47 miles wide, which has been largely closed off for more than a century.

Today, visitors are likely to travel from Kashgar to see the Afghan border on camels, camping out at night under a dome of stars obscured elsewhere in China by heavy smog. Guided excursions following in the

footsteps of a bygone era, along the fabled Silk Road, have long been a staple of Kashgar’s tourism industry.

The city’s romantic mystique goes back some 2,000 years. Once a bustling oasis town, Kashgar was a way station for merchants like Marco Polo on a caravan route that carried Chinese silks, spices and porcelain across the northern reaches of Central Asia as far west as Athens and Rome.

Kashgar now belongs to the Chinese Uygur Autonomous Region of Xinjiang, which translates from Mandarin as “new frontier”. In many respects, little has changed in this arid wasteland. The shifting sands of the Taklimakan, China’s largest desert, dwarfing the Gobi, are as old as time. They shape the Tarim Basin’s character and set it rhythms, as they have done for centuries. The desert expands measurably each year, subtly reasserting itself over the landscape and reminding locals that its name derives from the Arabic words tark (“to leave alone”) and makan (“place”).

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But Beijing has no intention of leaving it alone. It plans to transform Kashgar into a new industrial centre and trading hub linking Xinjiang to Afghanistan and Pakistan.

The Wakhan Corridor represents a backdoor from Western China into Afghanistan. As a logistical route, it has been eyed not only by China’s Ministry of Commerce. In 2009, the Afghan foreign minister asked Beijing to allow U.S. and NATO forces to use it in their campaign against radical Islamic militants. China refrained and continued its policy of closely restricting movement in the area to hamper growing insurgency by its own ethnic minorities.

Kashgar’s populace is mostly Uighur. Men sport long tunics, sheepskin hats and beards; women wear patterned burkhas. You see Uighur street vendors from time to time in Beijing. They arrive by train—a journey that takes several days—with small cartloads of raisins, figs and almonds to sell in the capital and other cities. Those who stay longer, to find work or to study, complain that they never truly fit in. They speak a Turkic tongue and most are Muslim, a world apart from the majority of China’s ethnic Han.

Beijing has tried to assimilate Xinjiang to Han culture, but its efforts have stirred considerable resentment. After 9/11 and the U.S.-led invasion of Afghanistan, the government intensified its propaganda campaign to brand Uighur separatists as terrorists, claiming that they have close links to the Taliban. In 2008, a few days before the Beijing Olympics, a series of bloody attacks on Chinese soldiers in Kashgar was attributed on the East Turkestan Islamic Movement (ETIM), a group that wants to forge an independent Muslim state called East Turkestan, which would include Xinjiang.

The group was also implicated in a series of deadly random attacks in 2011, which Uighur activists say were in retaliation for Chinese security forces opening fire on unarmed demonstrators protesting police oppression, leaving at least 197 dead. ETIM’s founder, Hasan Mahsum, was born in Kashgar. After turning radical, he began training terrorists in camps inside Afghanistan. He was shot dead by the Pakistani army in 2003 in an anti-terrorism raid along the border of Pakistan and Afghanistan, but others have risen to take his place.

China clearly has a stake in resolving the regional conflicts that have spread from Afghanistan to Pakistan and to its own doorstep. To find a way forward, however, it looks back in time. For thousands of years, the Pamir passes were China’s gateway to trade with Asia and onward to Europe. With the Western occupation of Afghanistan now drawing to a close, Beijing wants to rebuild the Silk Road as a means of strengthening economic ties with Afghanistan and Pakistan. By doing so, it hopes to bring greater stability to Central and South Asia, a region rich in energy and mineral resources.

Soviet geological surveys in the 1960s suggested that Afghanistan holds sizable oil and natural gas reserves, in addition to untapped copper, gold, iron and lithium deposits. The U.S. Geological Survey in 2010 confirmed that Afghanistan could be sitting on $1 trillion in exploitable natural resources.

In December 2011, China’s State-owned National Petroleum Corporation inked a deal worth at least $700 million with the Afghan government to explore for oil in the Amu Darya River Basin. The company believes that the area contains far more than the 87 million barrels estimated by the Russians. The deal makes China the first foreign company to secure access to Afghanistan’s oil and gas. China became the largest foreign investor in Afghanistan in 2007 when Metallurgical Corporation won a 30-year lease to develop the country’s largest copper deposit, south of Kabul, for $3 billion.

China has also participated in Afghanistan’s infra-structure and human resource development. It has helped build telecom, road and rail links, in addition to providing grant assistance for medical, health and educational projects, including the Jomhuri Hospital and a Confucius Institute in Kabul.

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In March, 2012, China voted through the United Nations Security Council in favour of extending the UN Assistance Mission in Afghanistan (UNAMA) for another year, until March 2013, beyond which it advocates an Afghan-centred and Afghan-led transition and recon-ciliation process. In return for supporting Afghanistan’s sovereignty and territorial integrity, President Hamid Karzai has pledged to recognize the one-China policy and side with Beijing on issues concerning Taiwan, Tibet and Xinjiang, a notable concession considering that Turkey’s Prime Minister in 2009 characterized China’s treatment of Xinjiang’s Muslim Uighurs as a “kind of genocide”. Pakistan’s Prime Minister Yousuf Raza Gilani, seeking Chinese aid for a gas pipeline from Iran, affirmed a similar understanding with China’s Vice Premier Li Keqiang during the Boao Forum for Asia on April 1, 2012.

Over the long run, Beijing plans to build a strategic partnership with Pakistan and Afghanistan that it hopes will underpin peace and prosperity in the region. Earlier this year, foreign affairs representatives from the three countries held the first ever trilateral dialogue in Beijing to explore ways to form a “Pamir Group”.

China’s vision for a Pamir Group is a modern-day Silk Road, an extensive new network of roads, energy pipelines and electrical grids linking the three countries.

Kashgar would be a key trade and logistics hub, as well as an emerging manufacturing centre. Plans are already underway to transform the city within the framework of the Western Development Project into a special economic zone comparable to Shenzhen, complete with industrial parks, export factories and logistical infrastructure oriented to Central and South Asia. The government has been allowing more Uighurs to take up civil service jobs, and it has also set up a research centre in Beijing to stimulate ideas for reform and map out possibilities for regional cooperation.

But transfiguring Kashgar, one of the poorest cities in China, into a bustling model of “socialism with Chinese characteristics” will not be an easy task. As Beijing unfurls banners proclaiming “In the east is Shenzhen, in the west is Kashgar”, it must be mindful of reconciling itself meaningfully with local Uighurs, who still see their culture and heritage as under attack.

Opening Kashgar to Afghanistan and Pakistan could also open it to further dissent and radical Islamic

influence. The city’s former party-secretary, a quasi-warlord whom locals referred to as “the king of Xinjiang”, only made matters worse with a heavy-handed approach that included the bulldozing of Old Kashgar, the city’s historic centre with winding alleys and smoke-filled tea houses, because he saw it as a hive of clandestine separatist activity.

A more temperate party-secretary was installed last year, who aims to mitigate the Han-Uygur divide and soothe tensions by encouraging economic and social development. In part, this involves fostering peaceful mainstream Muslim beliefs while trying to keep them from being infiltrated by militant teachings from adjacent countries or drawn to Wahhabism, an intolerant strain of Islam that originated in Saudi Arabia and was practiced by Osama bin Laden.

Integrating the Pamir region could pit the Taliban, Al Qaeda and other violent and extremist groups against China, which could be especially problematic if the more than seven million Muslims in Xinjiang grow disenfran-chised and radicalized.

In any event, China’s approach to settling tensions in Kashgar and building a Pamir Group has far-reaching political implications, both at home and internationally. After all, Beijing’s vote to extend the UN Afghan mission is not simply an endorsement of international efforts to reintegrate Afghanistan into the regional and global economy. It is also an endorsement by country that seeks to demonstrate its maturing diplomacy of the role that Afghan institutions must play in guaranteeing the rule of law, democratic governance, and human rights and fundamental freedoms.

Toronto-based Diplomatic Courier Correspondent Paul Nash is a China commentator and part-time doctoral candidate examining Western perceptions of China.

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Multinational Enterprise Expansion: Considering CorruptionBy Robert Higgins

Many, otherwise astute, businesspeople have made the mistake of letting the promise of big returns cause them to overlook or under research the risks posed by a particular national market. Only those with deep pockets or nationally diverse portfolios survive such a miscalculation.

According to Khanna and Palepu, in the June 2005 edition of the Harvard Business Review, most multina-tional enterprises (MNEs) employ “inappropriate global-ization strategies.” They contend that faulty thought processes, biases, and composite indexed-based indices “conceal more than they hide.” The reason is that indices do not report “institutional voids” within a nation. These voids include “institutionalized corruption,” in the words of Spencer and Gomez in the February 2007 edition of the Strategic Management Journal. Institu-tionalized corruption is corruption that is the permanent operating mode of a government—it is so endemic that little is not affected by it and that the significant portion

of government officials and bureaucrats partake in it.

The many types of corruption are imaginable; however, most upstanding MNE leaders unfortunately do not have the imagination to invent corruption like a fraudulent bureaucrat. This is partly because, in some nations, the corruption is so brazen and out of bounds, even in the context of that nation’s constitution and laws (which are selectively applied by the nation’s prosecutors, police and courts) that it strains credulity. For instance, in one nation, in an effort to gain testimony for a politically motivated prosecution of a rival, one man’s wife (who was a naturalized U.S. citizen) was held in pre-trial detention for two months in order to leverage his return to the country. Another egregious example is “raiderism,” through which a person closely connected to the government may use governmental institutions to pressure the legitimate owner of a business to relinquish that business. There are many examples of such practices and even researching a nation’s governmental corruption, bribery, and contract enforcement may only yield limited examples of a variety of ethical issues.

As an executive of an MNE, you may think that this does not apply to you. Yet, consider this—do you have partner companies and alliances within other countries? Are they managed by locals? If you do, you may be at a greater risk for corruption than you think, first from the pressure that a government can apply on a local company or investor and, second, from corruption by your partner.

A study, “MNEs and Corruption: The Impact of National Institutions and Subsidiary Strategy,” was conducted by Jennifer Spencer and Carolina Gomez and published in the February 2007 edition of the Strategic Management Journal which examined just how influential MNEs were in determining the behaviors of their subsidiaries in response to pressure to participate in corrupt practices. Their findings showed that MNEs are least effective in prohibiting participation in corrupt practices when a subsidiary is not/partially owned by the MNE and managed by a national. Obviously, a national owner/investor/manager exists within the environment of a corrupt nation. Besides being more susceptible to pressure, they are accustomed to operating within that environment and may consider it a natural part of “doing business.”

If an MNE is headquartered or has major operations in a nation that strives to limit corruption, and if it is known

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that it, or a subsidiary, participates in corrupt practices, its reputation may be damaged. Nike experienced a loss of prestige when it was reported that some of its production facilities appeared to use underage labor. If reputation in a major market does not capture attention, then the $450 million dollar fine that AG Siemens paid in 2008 because it violated the U.S. Foreign Corrupt Practices Act should.

The study found MNEs were most powerful in combating corruption in its subsidiaries when the home country has strong anti-corruption laws and regulations, as does the host country; the subsidiary is wholly owned and managed from the company’s headquar-ters; and the global MNE has a reputation for not par-ticipating in corrupt practices. Management by locals can be resistant to corruption if they have internalized the MNE’s anti-corruption values and policies married to monitoring. Also of importance, they found a correlation of corruption resistance to those nations that have ratified the OECD Anti-Bribery Convention.

Yet, corruption is not limited to governments. Trusted MNE partners may also be a source. According to the March 23, 2012, edition of the Kyiv Post, it was reported that 56 percent of all economic crime

in Ukraine in 2011 had taken place inside companies. Further, because the fraud was being perpetrated by senior management, 30 percent of the fraud was not detected by regular audits. It is common for companies in Ukraine to keep three sets of books—one for the tax authorities, one for investors and then the real one. This is not meant to single out Ukraine, but only to use it as an example of what, no doubt, are the conditions in some other nations. The end result is not only that the minority shareholders face possible fraud and the owners of the enterprise face stiff fines and imprison-ment, but also that the partner will risk being forced to close.

If your analysis of the risks of investing in, or expanding into, another nation fails to recognize “institu-tional voids” and partner fraud beyond what is knowable in an annual audit, you may be risking more than you think. Remember, big returns do mean big risks.

Robert Higgins is graduating with a Master of Arts

in International Affairs and Global Enterprise from the University of Utah. He is a Senior Fellow at the Inter-national Centre for Policy Studies in Kyiv, Ukraine. He has years of experience in banking, business, NGO management and politics.

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Food Deserts: Community Food Security for the 2012 Farm BillBy Ashley Edgette

According the United States Department of Agriculture (USDA), the 2012 Congressional Farm Bill contains most federal food and nutrition programs including SNAP, Supplemental Nutrition for Women Infants and Children (WIC), Temporary Assistance for Needy Families and the School Lunch and Breakfast programs. The Farm Bill also includes agricultural commodity programs, crop insurance, and international food aid and farm subsidies. It is the engine of all federal food policy in the United States.

A community-oriented approach to food security could shape the infrastructure of food systems in the U.S., increasing the accessibility and sustainabil-ity of healthy food to millions of Americans. While it is important to support extant federal food programs, these existing programs must collaborate with more innovative projects to create strong food infrastructure. For example, the USDA’s Community Food Projects (CFP) program funds two to three major community food security projects each year. Research conducted by the Community Food Security Coalition found that these projects support farmers’ markets, food security analyses, training programs, transportation infrastruc-ture and urban agriculture projects. CFP’s current budget is $5 million.

A USDA examination of CFPs over the last decade found that if Congress increased funding for CFPs to $100 million (less than 1 percent the cost of SNAP) and extended funding until 2025 they could fund com-prehensive community food security plans, training

programs and implementation grants in all 50 states. In 2010, the federal government spent $68.3 billion on SNAP and only $5 million on CFPs. Community Food Projects are a good economic stimulator and less expensive than federal food programs. Extending funding until 2025 would allow these projects to make a significant economic impact. According to the National Farmers Union, annual sales from U.S. farmers markets are up to $1 billion. The USDA reports that Community Food Projects could increase these profitable markets while supporting marketing and purchases by local businesses for small-scale farms.

Community Food Projects can help farmers and scientists partner in development, extension and outreach processes for a changing American food system. By supporting farmers’ networks and farm-er-to-farmer mentoring programs the U.S. can help implement knowledge gained from research to farmers’ local needs.

Community Food Projects can integrate within low-income communities through education and health partnerships. These projects can increase the availabil-ity of healthy foods for immigrant communities by col-laborating with Title 1 elementary schools, health clinics and food program assistance centers. For example, bringing Community Food Projects into Title 1 schools brings greater food access, food production, community gardens, grocery stores and farmers’ markets into low-income neighborhoods. Community Food Projects can support farm to school programs at the urban

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schools while helping low-income communities receive skilled training in food production, marketing, entre-preneurship and healthy eating. These projects can help systematically integrate food security issues into community planning, promoting public health and economic vitality for food insecure communities.

According to the Federal Food and Nutrition Services, the savings incurred from increased food security far outweigh the costs. For example, if improved community food security decreased SNAP participation from $32 million (2009 level) to $18 million (2002 level) the federal government would save $30 billion. The improved public health and local economic prosperity of Community Food Projects are undeniable. Research from the Journal of Immigrant Health recently found that increasing food security in at-risk neighbor-hoods promotes lawfulness and health care savings and decreases the need for government. Promoting community food security by increasing federal support for Community Food Projects and other communi-ty-based food infrastructure is a worthy investment because the United States needs food security to build economic and community stability.

Food aid programs and the need for food security are not particular to the United States —legislative equivalents of the U.S. farm bill exist all over the world. Community-based food projects are applicable interna-tionally. Examining food production and food access as two parts of the same picture can help nations create holistic food systems. Enabling communities to create projects that meet their food needs—whether that is more markets and groceries stores or farms and training programs—makes for strong food security and increased innovation.

Ashley Edgette is studying political science, en-vironmental issues, and French at the University of Utah. She was recently named a 2012 Harry S. Truman Scholar.

FEATURE: FOOD SECURITY

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How Business Can Help Vaccines Reach the Last MileBy Dr. Orin Levine and Lois Privor-Dumm

One thing that business and government leaders share in common is the search for smart investments. Whether termed “return on investment” in business or “value for money” in government, it’s a shared goal that both seek. With this ambition, one area both groups can benefit is global health, and vaccines and immunization in particular.

Vaccines are among the most successful and cost-effective investments in history. They provide long-term protection that saves lives, encourages healthy development, prevents medical costs and disabilities and helps to break the vicious cycle of poverty and illness. A recent analysis by our International Vaccine Access Center (IVAC) at Johns Hopkins Bloomberg School of Public Health, which appeared in the journal Health Affairs, showed how scaling up new and existing vaccines in this decade could prevent more than six

million child deaths and provide future economic benefits on the order of $150 to $240 billion.

While we have many successes from global immu-nizations to cite—eradication of smallpox, elimination of measles from the Americas, near eradication of polio—we still struggle to routinely deliver vaccines that require cold storage from the pharmaceutical factory to the last mile of the rural village. As a result, nearly one-fifth of all young children fail to get the full set of vaccines they need.

The tragic irony, of course, is that businesses routinely reach the same villages where vaccines or essential medicines do not. In 2008, singer Annie Lennox made the pointed observation that we can distribute Coca-Cola all around the world, but we can’t achieve the same with medications for children. Soft drink companies have already cracked the distribution code; wherever you are in the world, you can always find a Coke or Pepsi. Think about how many people could benefit—and how much innovators might stand to gain—if we could achieve the same penetration of life-saving vaccines to the last mile villages of Africa.

Obviously, vaccine vials and soda pop bottles are not exact equivalents. Vaccines require careful handling and a cold chain that soft drinks do not. In order to determine what the public sector could learn from consumer package goods companies, IVAC, in partnership with McKinsey & Company, conducted a systematic analysis of the two types of systems and their products. This report illustrated the costs of current health system inadequacies and potential areas where public-private partnership could provide solutions.

Our analyses indicate that up to 30 million doses of vaccine—and $80 to 160 million—could be saved annually with better vaccine distribution systems alone. This figure does not even begin to include how huge the market could be for other improvements to the cold chain. Annual pharmaceutical sales in Africa already exceed $1 billion. Potential buyers include countries and foundations from rich and poor countries alike, and the consumer market is exploding in the most populous continents on earth.

Our analysis also shows that the skills and systems that help companies avoid stock outs are notably absent in many public sector systems. Specifically, we identified

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four key areas where partnerships between the public and private sectors can help improve distribution of vaccines and essential medicines: 1) Sharing knowledge; 2) Sharing infrastructure; 3) Developing monitoring metrics; and, 4) Investing in product innovation.

For example, when DHL brought their commercial shipping talents to UNICEF Kenya, it helped lead to a 10-fold increase in the number of children sleeping under bed nets, a rise in immunization rates from 59 to 90 percent, and a 44 percent reduction in the deaths of children under age five from malaria.

Over the past few years, millions of children’s lives have been saved thanks in part to the dedication of companies to develop vaccines and devices tailored to specific regions of the world, financial experts devising new funding mechanisms, and countries and foundations continuing to fund this life-and-death work despite difficult economic and political environ-ments. But this is only the beginning of what business can contribute to improving global health. Transitioning business know-how to public sector delivery systems represents the next great opportunity in global health, and one that will bring tremendous rewards to everyone involved.

In 2012, we urge industry to increase their contribu-tions and involvement in global health, and especially to vaccines. Direct contributions make a big impact, and your know-how is equally important. Industry can apply

its visionary leadership to global health by partnering with one or more developing countries in need, and sharing skills and expertise in infrastructure-building and product distribution to benefit their health system. With these investments, the ROI will be measured in lives saved, and new business opportunities just might open themselves up along the way.

Dr. Orin Levine is professor of international health at Johns Hopkins Bloomberg School of Public Health and executive director of the International Vaccine Access Center (IVAC) and Lois Privor-Dumm is director of Alliances and Information at IVAC.

FEATURE: GLOBAL HEALTH

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Arab Spring: The Next Wave of Democratization in the Middle EastBy Elisabeth Jessop

On December 17, 2010, Mohamed Bouazizi set himself on fire, humiliated by local officials and unable to find employment—this moment officially began the Tunisian Revolution. A day later, protests began to overthrow President Ben Ali. Tunisia, Egypt, Libya and Yemen have ousted their political leaders, all of whom had served for decades. Additionally, civil uprisings broke out in Bahrain, Syria, Algeria, Iran, Jordan, Kuwait, Morocco and Oman, as along with other minor protests. Today, these countries are on a rocky road to establish-ing stable, democratic governments.

One of the world’s leading experts on revolutions, Jack Goldstone, writes that revolutions rarely succeed, except for revolutions against corrupt and personalist “sultanistic regimes.” The rebellions during the Arab Spring were caused by government corruption, extreme poverty, increasing human rights violations and authori-tarian regimes. Each revolt followed a different pattern and demographic. In Tunisia, the revolutions began in the more neglected areas of the country and spiraled

toward the capital. Ben Ali was ousted after 23 years in office. Egyptian youth in urban areas, particularly Cairo, organized the uprisings primarily in response to high levels of unemployment. President Hosni Mubarak resigned after 30 years as President of Egypt. In Libya, bands of armed rebels in the eastern parts of the country ignited the protests, revealing tribal and regional disparities that have inundated the country for decades. After 41 years in office, Muammar Gaddafi was killed by the National Liberation Army (NLA) of Libya following months of significant resistance.

The uprisings have also been influenced by increased populations of literate youth who are dissatisfied with the levels of unemployment, threats to food security and insufficient transparency.

Prime Minister Karim Masimov of Kazakhstan claims the lack of educational opportunities and social mobility contributed to the revolutionary sentiment in the Arab world. Social mobility and technology are also

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key players in the Arab Spring. Activists used these sources, like Facebook and Twitter, to share their ideas and tactics.

The Arab uprisings have been good for democracy, but not for the stock market. The lack of security has scared away foreign investors who are withdrawing from the stock markets of Arab countries at rapid rates. In the economies of Arab nations, inflation is on the rise; unemployment rates are staggering; there is a shortage of foreign currency; and tourism is nearly depleted. Many hotels in Tunisia and Egypt remained closed, even a year after the initial protests. Because the Middle East has depended solely on limited natural resources for their economic strength, there exists a very weak private sector and the lack of economic diversification. The greatest concern is that while the population is evolving in the Middle East, the economic structure is unresponsive to the needs of its changing and growing populations.

What does this mean for the global economy? The ongoing efforts to create democracy in the Arab world have had a serious economic impact in Europe, including increasing military support of the Arab Spring movements, costs of illegal immigration, and costs of supporting other nations that are impacted by the influx of immigrants. The military costs to France alone totaled approximately $450 million.

The unrest has certainly caused a rise in oil prices and food prices. The World Bank estimated reduced growth in the Middle East region by 1 percent; and Egypt and Tunisia record 3 or more percentage points lower than they were expected to be, had the uprisings not occurred. However, it has also created more potential for growth to become more inclusive and sustainable because of the impact of democratic principles supporting economic freedom.

Several researchers found another common factor in the Arab Spring countries: dependence on foreign governments. Their dependence on aid is said to have encouraged extreme poverty. In late May 2011, after the initial uprisings, UK Prime Minister David Cameron

announced the support of the revolutions in the Middle East and pledged to provide aid to “establish democracy, greater freedom, greater civil rights.” In February, U.S. President Barack Obama announced more than $800 million in economic aid for Arab Spring countries, while continuing U.S. military aid to Egypt.

Receiving aid may not be the answer however. Aid revenues, much like oil, have often stifled economic and political incentives. Many countries question the intentions of foreign governments in giving aid. To create economic stability in the Middle East, trade is perhaps a better way to support Arab countries. Many economists have suggested that Arab countries look to regional integration as a viable solution to promote growth and economic stability. They must also promote effective and transparent decision-making.

Joseph Torbey, chairman of the World Union of Arab Banks, suggested that private financial institu-tions should create an emergency fund to support the revolutions, in case of the collapse of regional banks. This will also capitalize on intra-regional trade. It will also be essential to further privatize industry, an option once reserved for the elite class, particularly because of resource constraint. Already, Egypt and Tunisia are beginning to build the private sector by giving capital to small-business owners and listing more companies on the local stock exchange. Some experts say that the new leaders of these Arab nations lack the credibility and expertise they need to build the economy.

There is much potential for economic growth in the Middle East. Egypt has a huge consumer market and Libya has the world’s eighth-largest oil reserves. In the years to come, Arab countries will continue to face political and economic challenges as they establish democracy and encourage economic growth though the private sector. International actors must confront the situation to address the overall effectiveness of foreign aid and the important role each nation plays in inter-national trade, particularly within this oil-rich region, a resource on which many other nations heavily rely. There could potentially be more revolutions throughout the region if jobs are not created and living standards don’t improve. The Arab Spring is an ongoing revolutionary wave and could continue to impact the entire world.

Elisabeth Jessop is a senior at the University of Utah studying International Relations and Political Science with a minor in French. She is a social activist and aspires to become a social entrepreneur to empower women worldwide, particularly through education.

FEATURE: ARAB SPRING

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The Economic Consequences of SecurityBy Jared Rowley

Whatever the virtues of the War on Terror may be, strengthening the economy is not one of them. As many countries across the world currently face serious economic difficulties this point should weigh more heavily in the cost-benefit analysis of the war.

G8 countries have spent well over $1.5 trillion since the beginning of the War on Terror. Martin Feldstein believes this enormous sum of money is actually a great way to help stimulate an economy. He argued that increased government spending will help pull a country out of a recession and claims that because the military can create so many jobs, and it is only a one-time spending as opposed to ongoing spending, it should receive a significant amount of any additional government spending as well.

While there is serious debate over his basic premise that government spending stimulates any economy, few people would disagree with the notion of Feldstein’s conclusion that putting more money into military spending, specifically, is an effective means for the growth of any economy. Logical problems aside, research shows that the idea of military spending as the best use of taxpayers’ money to stimulate an economy is dubious at best.

The idea that pouring money into military production boosts the economy rests on the

assumption that all forms of economic growth are equal. There are two types of economic growth: one that improves everyone’s quality of life and/or contributes to future economic growth and the other being one that depletes resources and human capital without improving the quality of life for anyone. Putting money to war for the sake of economic growth safely falls into this second type of economic growth. Satis-faction is not derived from the production of a bomb that will be used to destroy; therefore their quality of life is not improved in any way.

Seymour Melman termed these two types of production productive growth and parasitic growth. At the crux of the average person’s economic concerns is really just a concern about his or her quality of life. To say that we should put more money toward military spending because it strengthens the economy is to miss the point of why a strong economy matters at all. Military spending that is strictly used for the increased safety of a nation is one thing. Military overspending with the end of improving the economy is a poor use of funds.

Even when looking solely at job creation, disregard-ing productive and parasitic growth, military spending still falls short. In a study done by Robert Pollin and Heidi Garrett-Peltier, military spending was shown to be inferior to other types of government spending in regards to job creation. They took the amount of jobs created by

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putting $1 billion into military and compared it to if that same amount of money had been used in another way. For example, they found that military spending created 8,555 jobs; but if the government had allowed the taxpayers to keep that same amount of money, then 10,779 jobs could have been created. Other good examples include education spending, which could have created 17,687 jobs, and mass transit, which could have created 19,795 jobs.

Clearly the idea of job creation doesn’t merit the spending, so what about World War II— didn’t military spending pull the United States out of the Great Depression? Doesn’t that prove that war is good for the economy? Robert Higgs confronted these questions in an article he wrote for The Journal of Economic History. He points out that, in fact, there was a major drop in GDP after the war ended in 1945. This drop in GDP

exceeds that of the worst year of the Great Contraction. Though Higgs calls into question the validity of these

official measurements, they do demonstrate that even on the terms of those touting military spending military spending did not end the depression. He argued that what pulled the country out of the downturn was how quickly the government turned the controlled market back over to free market forces.

To be clear, money must be spent on the military. A strong military is an essential part of government. Without it, people have to spend more time concerning themselves about personal safety instead of the things that make life worth living, like family, working and enjoying life. The problem arises when people look to military spending as an economic savior rather than as simply a means of protection.

People around the world are concerned about the economy and if they will be able to attain or maintain the quality of life they desire. While there are many paths for productive growth like cutting taxes, putting money into education and infrastructure, military spending is not only an ineffective means for true growth, but the very concept is counterintuitive—military spending ends in not only a depletion in the quality of life, but the loss of life all together.

Jared Rowley graduated from the University of Utah in the spring of 2012 with a B.S. in Political Science and a minor in Campaign Management. He currently runs and writes for the website LibertyScholars.org.

FEATURE: ECONOMY & WAR

Source: “From Central

Planning to the Market:

The American Transition,

1945-1947,” September

1999 (Vol. 59, No. 3) issue

of The Journal of Economic

History, Cambridge

University Press.

Drug-Resistant Tuberculosis

A Global Emergency Requires an Innovative Response TB: A Global Overview

Tuberculosis (TB), often thought of as a disease of the past, continues to plague the world’s most vulnerable people. The World Health Organization (WHO) estimates there were 9.4 million new cases of TB globally in 2009; in the same year, 1.7 million people died of TB – equal to about 4,700 deaths each day.

The WHO estimates that of all new TB cases in 2009, about 3.3 percent of these were the drug-resistant form of TB, called multidrug-resistant tuber-culosis, or MDR-TB. These findings by the WHO mark the highest rates ever of MDR-TB. In some settings in the former Soviet Union, these rates peaked at about 28% of new TB cases.

These dire statistics are even more dismal considering that TB and MDR-TB are treatable and curable. The real problem lies in the fact that TB – in all its forms – is a complex disease, one which is not only a medical problem; it is also a social and economic problem.

A Multi-Pronged Approach to MDR-TB

The Lilly MDR-TB Partnership is a public-private initiative that encompasses global health and relief organizations, academic institutions and private companies, and is led by Eli Lilly and Company. Its mission is to address the expanding crisis of MDR-TB. Created in 2003 to address the growing challenge of MDR-TB, the Partnership has adopted a 360-degree approach, and mobilizes over 25 global healthcare partners on five continents to share resources and knowledge to confront TB and MDR-TB.

To drive the Partnership, Lilly is contributing US$ 120 million in cash, medicines, advocacy tools and technology to focus global resources on prevention, diagnosis and treatment of patients with MDR-TB; and an additional US$ 15 million to the Lilly TB

Drug Discovery Initiative to accelerate the discovery of new drugs to treat TB.

Empowering Local CommunitiesIn order to prevent the spread of the

disease and effectively care for those infected, the Lilly MDR-TB Partnership has implemented community-lev-el programmes to raise awareness about MDR-TB, increase access to treatment, ensure correct completion of treatment and empower patients by eliminating the stigma of the disease in communities and workplaces.

The Partnership also trains healthcare workers to recognize, treat, monitor and prevent the further spread of MDR-TB. These training materials and courses have been designed to ensure that the knowledge learned is passed on to peers, furthering the quality of patient care.

A Global Approach for Global Results

While community and coun-try-based activities empower local populations to fight MDR-TB, global change requires a global view. With this in mind, the Partnership works with policymakers to raise awareness about the toll that TB takes on the global population and encourages new initiatives that curb the spread of MDR-TB. Additionally, the Partnership promotes adherence to the World Health Organization’s standards on TB treatment and supports national TB programs that have been developed using these standards.

Sustainable Access to Medicines

One of Lilly’s many goals is to increase the supply of high-quality, affordable medicines to the people who need them most. To do this, Lilly has partnered with manufacturers in countries hardest hit by MDR-TB, providing both knowledge and financial assistance to create sustainable, local sources for MDR-TB drugs. These locally produced drugs enable access to medicines at affordable prices for MDR-TB patients, while supporting

local economies and ensuring high-quality manufacturing.

New Drug Discovery InitiativeWhile access to medicine and care

help patients significantly, MDR-TB treatment remains a long, isolated process. To encourage patients to complete treatment and avoid even more drug-resistant strains of TB, research and development are necessary to discover faster-acting medicines. To address this need, Lilly has created the Lilly TB Drug Discovery Initiative, which is a not-for-profit pub-lic-private partnership that will draw on the global resources of its partners, including medicinal libraries donated by Lilly, to pioneer research.

A Public-Private Partnership for Those in Need

Lilly and its Partners work together closely, sharing knowledge, expertise and research in the quest to contain and conquer MDR-TB, a disease that disproportionately affects impover-ished populations. The initiatives of the Lilly MDR-TB Partnership all have one thing in common: improved care for some of the world’s most vulnerable people, delivered in a manner that is sustainable and builds capacity within the communities where it is needed most.

www.lillymdr-tb.com

Email: mdrtb@lilly.com

Phone: +41 22 306 0333

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Pakistan Remains a Question Mark in Lead Up to NATO SummitBy Boris Maguire

After a decade of war in Afghanistan, world leaders will arrive at May’s NATO Summit in Chicago having finally articulated a plan to transfer control of security to Afghan forces. There has also been increasing pressure on President Obama and the alliance’s leaders to use the summit to announce a timetable for the second stage of the endgame process – the actual extraction of NATO forces. But Pakistan, which has perhaps the greatest stake in NATO’s exit and the endurance of a negotiated settlement with Taliban, has yet to publicly articulate a clear and unified position on the process.

Instead, Pakistan has initiated a “strategic pause” in relations, appointing a parliamentary committee on national security to review the country’s official engagement with the United States and NATO. Until the results of the review and the status of U.S.-Paki-stan relations are clarified, President Obama and NATO leaders will be severely restricted in their ability to formulate a realistic withdrawal timeline.

Transition and Withdrawal TimelinesIn the summer of 2011, the Obama administration

announced a broad time frame for the end to the war in

Afghanistan. The schedule called for the initial withdrawal of the 30,000 “surge” troops in 2012, reducing the In-ternational Security and Assistance Force (ISAF) to 68,000 by year’s end. The remaining NATO forces were then expected to begin transferring combat operations to the Afghan National Security Forces (ANSF) before ultimately withdrawing by the end of 2014.

This February, Secretary of Defense Leon Panetta announced that the U.S. and its NATO partners had advanced the deadline for the transition phase by a full year. General John Allen, ISAF commander, elaborated, explaining that four of five geographic “tranches” will complete transition by the end of summer 2013. The fifth and final tranche will then move into transition in fall of 2013. At that point, NATO will technically “be in support of the ANSF as they move into the lead for security across the country.”

However, despite a detailed timeline for transition, NATO leadership have yet to determine a more specific schedule for the removal of the remaining 68,000 NATO troops. Panetta has said only that some NATO troops will remain in Afghanistan in a “training, advise, and

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assist role” through 2014. How many and for how long remains to be determined; in response to speculation, the White House has denied NATO will formulate further plans at the Chicago Summit, insisting that leaders intend to focus exclusively on the transition strategy.

For his part, General Allen has said he will reassess the situation in the fall once the surge troops have been removed, and only then will he advise the administra-tion on further withdrawals. Whatever his assessment, NATO must first reestablish relations and negotiate for sincere cooperation from Pakistan before a decision can be announced – a process which will require deft diplomacy and compromise beyond a basic “wait-and-see” approach.

Pakistan’s Perspective According to Dr. Marvin Weinbaum, a former

State Department intelligence analyst for Pakistan and Afghanistan and a scholar at the Middle East Institute, Pakistan is “in a strange position,” with conflicting domestic and security interests in NATO’s withdrawal from Afghanistan. “The narrative internally [in Pakistan],” Dr. Weinbaum told the Diplomatic Courier, “is that when foreign forces leave the region, things will get better,” because the Pakistani insurgency will lessen. At the same time, the government of Pakistan is extremely uneasy about a withdrawal in which foreign forces leave too quickly. “They don’t want chaos.”

A preferable outcome for Pakistan would be an Afghan government that includes the Taliban while maintaining a strong role for the northern elements that allied with NATO in 2001. Shuja Nawaz, a political and strategic analyst and Director of the South Asia Center at The Atlantic Council of the United States, gives a similar assessment, telling the Diplomatic Courier that the Pakistani government is looking for a “finely tuned arrangement” for post-war Afghanistan that includes some level of Taliban representation.

Pakistan’s biggest fear, according to Weinbaum and Nawaz, is an Afghan civil war. A war could split the country, leaving the Taliban with control of the largely Pashtun border region with Pakistan. Such a split could result in “reverse safe havens” for the Pakistani Taliban and other anti-government insurgent groups, says Nawaz, undermining Pakistani national security.

Yet while a negotiated power sharing arrangement with the Taliban is in Pakistan’s interest, their cooperation with NATO is far from assured. Throughout the war, Pakistan has maintained dueling loyalties to NATO as well as the Taliban and other insurgent groups. Fearful of being left out from a reconciliation process, Pakistan

appears to be taking a similar dual approach to initial discussions between the U.S. and the Taliban.

Pakistan’s LeverageNegotiations between the U.S. and the Taliban

appeared to be on the horizon in January when Taliban representatives traveled from Pakistan to Qatar to meet with U.S. officials and discuss preliminary trust-building measures. According to a former Taliban minister and member of the Afghan High Peace Council in the New York Times, Pakistan “definitely supported this and is also helping.” Otherwise, Pakistani security forces could have arrested the delegates in Pakistan as they did a Taliban official who began secret talks with the Afghan government in 2010.

Instead, Pakistani Prime Minister Yousaf Gilani and former spy chief General Shuja Pasha took trips to Qatar in February to meet with negotiators, seeming to suggest willingness to support the talks. But a recent report by the International Crisis Group (ICG) suggests that Pakistan is also encouraging the increase in insurgent attacks in Afghanistan to “hasten the pace of the international troop withdrawal” and ensure “a central role in shaping the post-transition political order.” Taken together, this seemingly contradictory approach is likely intended to highlight Pakistan’s ability to undermine or lend credibility to the reconciliation process and thereby increase pressure on the U.S. to reserve a seat at the negotiating table.

In late March, the Taliban suspended the talks entirely, stalling whatever progress was made towards while further strengthening Pakistan’s position and complicating the development of a withdrawal timeline. Resumption of talks is “the only feasible way to wind down the war and achieve the 2014 deadline,” former Pakistani Ambassador to the U.S., Dr. Maleeha Lodhi wrote in a recent op-ed. With time running out, “the pace of the Afghan reconciliation effort will need to quicken if the aim is to align this with the transition that is just two years away.” Underscoring Pakistan’s sig-nificance, Lodhi writes that getting the process back on track will require “cooperation between Kabul and Islamabad and normalization of the uneasy relationship between Pakistan and the U.S.”

The prospect of normalization remains distant, however, as recommendations begin to emerge from Pakistan’s parliamentary review. As expected, the committee has taken a hard line against U.S. counterin-surgency tactics in Pakistan, which will be major hurdles for U.S.-Pakistan cooperation on an exit strategy for Afghanistan. The committee has called for a complete

FOCUS: GLOBAL SECURITY

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halt to U.S. drone strikes and special operations raids within Pakistani borders, as well as a requirement for all foreign security contractors and their activities to be “transparent and subject to Pakistani law.”

The issue of drone strikes, the Obama administra-tion’s preferred weapon against insurgents in Pakistan, could be the major point of contention and leverage for Pakistan. According to reports of a January meeting between CIA director David Petraeus and General Pasha, Pakistan is unwilling to negotiate on the issue. Petraeus reportedly offered to give advance notice of attacks and impose new limits on permissible targets, but Pasha flatly refused to accept the concessions, insisting on a complete halt to the strikes.

U.S. officials have said they will not consider ceasing the drone program, but the demand could still directly influence the timeline for withdrawal from Afghanistan. The U.S. has greatly increased the volume of strikes in the last three years and killed thousands of insurgents, but much of the Pakistani population are furious at what are seen as repeated violations of Pakistani sovereignty and the reckless killing of Pakistani citizens. According to Weinbaum, if Pakistan continues to insist on a ze-ro-tolerance drone policy, the long-term situation in Afghanistan could become even less tenable, pushing NATO towards a more rapid withdrawal.

A second major issue between the U.S. and Pakistan is the use of supply routes through Pakistan, which until November transported nearly half of all non-lethal NATO supplies into Afghanistan. In response to the NATO border raid in November however, Pakistan’s government closed the routes and called for a “total reset” in relations. Since then, the review committee has recommended a “thorough revision” of the agreement governing the 1,000-mile supply route and the imposition of tariffs.

With billions of dollars of NATO equipment and soldiers spread throughout one of the most isolated regions in the world, the reopening of this logistics network will be critical to a successful withdrawal. As Weinbaum points out, denying access to the supply routes will only slow the withdrawal process down, but if Pakistan can tolerate a slower the withdrawal, the supply routes provide yet another critical point of leverage.

In light of these obstacles, together with the suspension of Taliban talks and the continuing parlia-mentary review, the diplomatic distance to be covered is still vast if the U.S. and NATO are to consider suc-

cessfully withdrawing in 2014, and the likelihood of that distance being covered before by the NATO Summit is remote.

Expectations for NATO 2012 and BeyondThe good news for NATO going into the Chicago

Summit is that the U.S. and Pakistan have begun talking again. This March, in the highest-level meeting in the year since the raid on Osama bin Laden’s compound in Pakistan, Obama and Gilani met briefly in Seoul where they vowed to restore the damaged alliance. The following day, General Allen, CENTCOM commander General James Mattis, and Pakistani Army chief General Ashfaq Kayani, met for the first time since a NATO air raid in November killed 25 Pakistani soldiers and further devastated relations.

There is also some possibility that Pakistan will have a presence in Chicago, wherever the review stands at that point. As an official “NATO non-member ally,” Pakistan could not participate in the NATO talks, but a delegation to engage in sideline negotiations is “desirable” nonetheless, according to Nawaz.

Nawaz also believes that talks between the U.S. and the Taliban could resume prior to the summit. Pakistan has a strong interest in the resumption of talks, and U.S. officials have expressed confidence that the suspension is a tactical play in response to the burning of Koran’s by NATO forces and the killing of 16 Afghan civilians by a U.S. soldier. The Taliban has not dismissed the possibility of resuming talks or suggested the suspension is permanent.

However, the reality remains that until Pakistan fully reengages with the U.S. and NATO and makes its position on withdrawal clear, there will be a significant strategic blind spot restricting the development of a realistic timeline for a comprehensive endgame in Afghanistan. This remains unlikely to be resolved before the summit, as Pakistan’s opposition parties have stalled the debate in parliament. Currently, there is very little political value in pushing for negotiations with Washington.

The U.S. will thus continue awaiting the results of the parliamentary review before the troubled partners can begin negotiating in good faith and a timeline can be determined. The success of that endgame will then depend on a negotiated agreement with the Taliban, which will also require a clearly articulated policy from Pakistan. To withdraw without a Pakistan-approved negotiated settlement would risk continued Afghan civil strife that all parties hope to avoid and will struggle to prevent long after NATO’s Chicago Summit.

FOCUS: GLOBAL SECURITY

RIU Hotels & Resorts in Los Cabos Where meetings combine with pleasure

Los Cabos, located in tip of the Baja California peninsula in Mexico, is one of the most beautiful and exclusive destinations in Mexico. Thanks to its exceptional attractions as the beautiful beach sceneries, a varied life of leisure, water sports and the sight of gray whales, one of the most spectacular natural sights in the destination, RIU Hotels & Resorts opted for this exotic destination 7 years ago, opening its first hotel in Los Cabos: the Riu Palace Cabo San Lucas.

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The elegant Riu Palace Cabo San Lucas belongs to the most sophis-ticated range of the hotel chain, the RIU Palace and is the best option for the most demanding clientele. The luxurious hotel, which features 642 junior suites and suites, offers an elegant palatial architecture with sophisticated decor and beautiful facilities, 24 hour room service, several swimming pools for adults and children, live entertainment shows, water sports, spa, a wide gastronomic offer and the Krystal Restaurant, that combines the

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DHL – The Future of LogisticsAdvertisement

by Roger Crook, CEO DHL Global Forwarding, Freight

The Future Happens NowSpanning the globe, the

logistics industry influences and affects the world in which we operate. But logistics companies are equally affected and influenced by trends and developments around the world, such as global-ization or scarcity of resources, as well as the changing expectations of customers and employees.

Global trends and develop-ments in the political, economic or social area directly affect the conditions DHL works under and significantly shape the daily business we pursue. The logistics industry in general and DHL in particular thus not only drive economic growth but are a business barometer at the same time. DHL therefore attaches highest importance to all factors that shape our future. By investigat-

ing them, we learn about the future of logistics as well, which is the future of our company.

Go Sustainable – GoGreenAccording to a recently-

released study, the pursuit of sustainability will transform the logistics industry, both in terms of its business model as well as the range of advanced solutions and technologies that will be used by logistics service providers. Similarly, many people from all over the world are concerned about the threatening consequences caused by the climate change and refer to these when being asked for the number one challenge of our times.

Sustainability and, first and foremost, environmental protection are an integral part of our corporate strategy. In this area, we have been pioneers in two respects: as the first

logistics company that has set and pursues a concrete CO2 efficiency goal – 30 per cent improvement by the year 2020 compared with 2007 – and as the first supplier of CO2-neutral mailings, using the mark “GOGREEN”. Imagine: the Deutsche Post DHL group delivered around a billion CO2-neutral GOGREEN shipments in 2010 – a third more than in the previous year.

Change of PerceptionAccording to the study, our

industry will be key to compre-hensive carbon reduction efforts in most sectors due to its unique expertise and positioning along the supply chain. We have an enormous potential of helping other industries on their way to becoming low-carbon economies. Some 63% of business customers believe that logistics will become a

strategic lever for CO2 abatement. Therefore, in addition to its strategic economic importance, logistics will increasingly be seen as essential to achieving lower carbon emissions across the economy.

As customers, policy-makers and companies begin to realize that logistics services and expertise are key to providing sustainable solutions, logistics will no longer be viewed as a commodity, where offering the cheapest solution rules. The leading logistics companies will be those that possess the unique value proposition of providing sustainable services.

DHL – A Good Corporate CitizenWe recognize that we have

a special responsibility to use our global presence, as well as the knowledge, experience and commitment of our employees in local markets around the world, to

benefit society. As anchored in our corporate strategy, we aim to make a positive contribution to society, and support the long-term success of our company through sustainable and credible social engagement.

GoHelp: Disaster ManagementWhen a natural disaster strikes,

communities and organizations around the world mobilize to send relief goods to the affected area. We provide the ideal global network for helping people impacted by major natural disasters. Our support focuses on global programs in two core areas: Immediate disaster response after natural disasters and disaster preparedness.

In addition, our company and our employees are contributing time and donations to deliver help to affected communities around the world.

GoTeach: EducationWe support education and

equality of access to education worldwide. As a large organi-zation with a high demand for qualified employees, we cannot afford to ignore the difficulties in education today and leave the responsibility to others. We are aware that our continued success as an organization is reliant upon well-educated employees across the whole range of educational qualification levels. This is why we promote and support initiatives that improve equality of access to good education and empower children to find their place in society.

In addition, GoTeach gives our employees the opportunity to get involved by volunteer-ing in educational projects and thus expand their own horizons and contribute to the objective of minimizing educational inequality.

Technology – Challenges and Opportunities for the Logistics Industry

Sustainable future logistics depend on innovative technolo-gies. Forward-looking solutions significantly help the logistics sector reduce its carbon emissions, as shown in the example of RFID, Radio Frequency Identification. RFID organizes supply chains in the most efficient way without detours and with a minimum use of fuel and energy only, which saves valuable resources and protects our environment. Importantly, RFID is not a stand-alone solution. The more stakeholders in the supply chain make use of it, the greater is the benefit it brings along.

Another future-oriented example is multi-modal transport, which combines different modes of transport for a more efficient shipment and supports the greening of supply chains. Our respective

services move goods by ocean from Asia to a connecting transit hub in Dubai, Vancouver, or Los Angeles, then transferring to flights into Europe, Middle East, Africa and Latin America. By switching modes, customers can often cut their CO2 emissions in half. Moreover, multi-modal services make use of state-of-the art technology, such as GPS track and trace, and the “e-Lock” device, as well as a sur-veillance camera system to capture data while loading and unloading.

Manage CO2 emissions more easily

The Carbon Dashboard, a new service developed by DHL Global Forwarding, Freight helps customers better understand the main drivers of carbon emissions from the various transport modes involved including pickup and delivery emissions in their supply chain. It helps account for and manage carbon emissions, including third party emissions, with detailed and reliable CO2 mapping available instantly from a web-based hub.

The Carbon Dashboard ensures a standard calculation approach and treats CO2 as an integrated business parameter, putting it into relation with other supply chain parameters such as volumes shipped, product density and trade lane efficiency. It also enables them to dry run various carbon reduction scenarios using real data and explore the effectiveness of different optimization levers.

Still, there are further challenges the future of logistics will have to overcome. Just think of the increasingly complex structures and demands of growing cities, for example. By 2050, 70% of the world population will live in cities, and in many areas, the modes of street transport common today will only be possible to a limited extent.

With City Logistics, we develop integrated, one-stop solutions that are fit for the future. By combining similar shipments, e.g. for gastronomy, hospitals or

hotels, traffic is regulated more efficiently in order to promote the economic growth of a city as well as to improve the quality of life. The cooperation with and support from municipal and state authorities enables the creation of innovative system solutions. An initial pilot project has already been started in Dubai.

Green GrowthWhile many still see a contra-

diction between economic growth and environmental protection, sustainable business strategies can actually enhance profitability, and will even be a prerequisite to long-term success for most companies in the future. Carbon pricing mechanisms will accelerate a market based dynamic towards more sustainable solutions. Once there is a real price tag attributed to carbon emissions, the environment will be an integral part of investment decisions.

Moreover, sustainability has become a major reputation factor for every company, whatever industry it might come from. As a result, shares of companies who are known as “good corporate citizens” perform better than the shares of those who pursue no sustainability strategy, which has become even clearer ever since the latest financial crisis.

According to the vision statement of the APEC CEO Summit 2011 – “The future. Redefined” – we firmly belief that the future does not simply happen but that we can shape the world of tomorrow collectively in the present. There is no reason to wait any longer. Let’s contribute to jointly shaping a sustainable future.

DHL in Asia Pacific• Network: 120,000 destina-

tions served in more than 220 countries and territories

• Over 586,000 customers• Approx 60,000 employees• 10,300 vehicles • Over 1,500 locations• Approx 350 daily commercial

flights