The day’s drama, which will be replayed on twenty-four hour news channels for the next twenty-four hours, involves President Obama’s slip up yesterday at the Nuclear Security Summit in Seoul, South Korea. The summit is the second iteration of a conference held in Washington in 2010, and it was reported that 80% of the commitments agreed to by the 47 countries at the first summit had been reached. Although that’s a surprisingly high success rate for an international initiative with no coercive levers or material incentives, that certainly wasn’t the story. Rather, Obama leaning in to President Dmitry Medvedev of Russia and saying with remarkable candor that his hands were tied on missile defense this year because of national politics is, apparently, the real story. In case it wasn’t clear, he was unaware that the microphones could pick up what was meant to be an off-the-record statement. Here’s the video:

Naturally, Republicans pounced on the issue. Hey, if Newt Gingrich was willing to call the president’s brief remarks on the Trayvon Martin case “disgraceful,” what would make one think they’d bite their tongues here? Mitt Romney gave the following response on CNN’s Wolf Blitzer. At 0:39, he calls Russia, “without question, our number one geopolitical foe.”

Romney also mentions that he disagrees with the “New START“ nuclear arms reduction agreement between the US and Russia signed by Obama. The agreement, if anything, does not go anywhere near far enough in reducing armaments, largely a reflection of increasingly partisan politics following the passage of the Affordable Care Act. Romney then backtracks some when Blitzer presses him on the point, asking him where North Korea and Iran fall on that list if Russia is number one. However, he reiterates the basic point, that Russia is still in our crosshairs, and if he were president he would act with that in mind, rather than making chummy small talk and offering explanations to the Russian leadership.

First, what is this missile shield that’s suddenly back in the news? A quick recap from Bloomberg News:

“Under President George W. Bush, the U.S. withdrew in 2002 from the Cold War Anti-Ballistic Missile treaty that had restricted U.S. and Soviet missile defense programs for 30 years. In 2007, the U.S. started preparations for a missile defense system — ostensibly against an Iranian attack — with its front legs in Europe. The forward radar for the system was to be in the Czech Republic, and Poland would host the missiles that would shoot down any long-range ballistic missiles Iran might let fly. Russia, however, saw the shield as a naked Cold War power play by the U.S. and was mad as hell…

… The early stages of the new plan don’t include Poland or the Czech Republic. The forward radar is now located instead in eastern Turkey, and the initial anti-missile batteries would be put on ships and in Romania. But by the fourth and final phase, Poland would be back in the picture.”

The idea is that this new system will be cheaper to set up, expandable depending on the extent of the threat from the Middle East (which is currently around zero), and avoids putting equipment on Russia’s border for now. Russia still wants an effective veto over its use, demanding a legal treaty promising that the system will never be used against it. Given that treaties won’t have much sway if the countries do go to war, that does not seem an absurd prospect. But of course the US loathes the prospect of any international or foreign actor telling it what to do, even on paper. Look at its refusal to join the International Criminal Court if you need an example.

President Obama is absolutely correct in that legislative agreement on missile defense is not something that could get through Congress this year. It couldn’t even get through Congress in a non-election year in the midst of the debt ceiling debate. As the parties draw ever deeper trenches between their positions for the 2012 campaign, there is no way Republicans would hand Obama such a major policy victory.

In all fairness, this is not due strictly to political calculations. As much as Republicans would love to make the White House look like they’re fumbling our national security, there are also real differences in how Republicans and Democrats would like to address missile defense, and relations with Russia more broadly. There are also differences between the hawkish and isolationist wings of each party, differences between the Pentagon and State Department’s approaches, differences among our allies who support the program, differences among the countries that would host the missile shield, and differences among military commanders themselves. It is a complicated issue that, due to practical and political concerns, is not on the docket for this year. Consider it another gift to “future-Congress” from present-Congress, along with the looming cuts in defense and social programs, rewriting the tax code, and dealing with the consequences of an unstable Afghanistan once we leave.

Clarifying the exchange later, President Obama pointed out that his comment reflected the prevailing political wisdom about the realities of an election year. The media would pounce on anything that smelled of controversy, and, as he said to reporters, “I think the stories you guys have been writing over the last twenty-four hours is pretty good evidence of that.”

My favorite part of the whole episode was President Medvedev’s response to Romney. Watch him tell Romney to watch his mouth before Russia slaps the taste out of it. Okay, not to that extent, but still a thorough rebuke of Mitt’s sabre rattling.

I agree with Romney that Russia has blocked numerous US and international initiatives, chief (in my mind) being a coordinated response to the humanitarian crisis in Syria. That being said, calling Russia our “number one foe” does not do much good for bilateral relations, nor does it make them more likely to support such initiatives in the future. It was pure political pandering, which is fine. I tune into MSNBC and CNN and Politco on a regular basis to watch such horse races and machismo contests, for entertainment more than information. The Russian Foreign Ministry later dismissed the “emotional statement” as being dictated by “the particular demands of political battle.”

It’s good that Medvedev, his United Party, and the Foreign Ministry reacted soberly to what otherwise could have been interpreted as a serious affront to a proud nation still coming to terms with its drastically decreased geopolitical importance. It’s a response I wouldn’t particularly expect from Vladimir Putin, whose bombastic anti-American stances are as much a part of his popularity as his cold tough-guy  demeanor, when he returns to the presidency later this year. However, it is generally believed that Russia’s leaders, whether Putin or Medvedev, would prefer to work with Obama as opposed to Romney, so toning down the significance of the comment may be a conscious decision to avoid embarrassing the White House. President Medvedev in particular has had a great rapport with Obama, with both viewing themselves as a new generation of leader that does not view the world strictly through Cold War-era lenses.

As far as his statement that “reason never hurt a presidential candidate,” President Medvedev is clearly not familiar with American politics. Just sit tight, enjoy the show, and watch us prove you wrong, Dmitry.

As in so many cases of systematic oppression, no one is neutral in this conflict. Refusing to engage means, at best, uncritically arming the Israeli occupation with our tuition dollars, and indirectly ensuring that Middle East conflict will continue to stagnate.

As students, the kinds of change we can effect are indirect. Stanford’s endowment is valued in the top five among universities, and any decision to follow SPER’s call to divest would raise the symbolic and economic costs of occupation for Israel.

I approach this issue as a Jew, and as a citizen and supporter of Israel. I feel it is my obligation to defend Israel the best I can, and I see no better way than honestly recognizing its faults and urging it to improve. By continuing to engage in rights-violating practices, Israel is distancing itself from the international community and failing to solve its real problems – chief among them the so-called “demographic threat.”

It is clear that Israel cannot continue indefinitely on its current track of allowing illegal settlements and legislating ethnic and religious discrimination. However one slices the demographic data, Israel cannot count on Jews remaining a majority in the coming years. As Michael Oren, the Israeli ambassador to the United States, put it: “Israel, the Jewish State, is predicated on a decisive and stable Jewish majority of at least 70 percent. Any lower than that and Israel will have to decide between being a Jewish state and a democratic state.”

Divestment from the U.S. ally may be ‘tough love,’ but being a friend to Israel entails not accepting its behavior as given. Any student of history knows that disenfranchising a population from a minority position is not a strategy that can survive the long term.

Today, anyone seeking a better future for Palestinians will likely hear, “Why focus on Israel? Aren’t there other nations, even in the region, that violate rights?” This response is undeniably true, but it misses the point.

The Baker-Hamilton report on Iraq expresses the near-consensus position that no end to the Middle Eastern conflicts can be imagined without resolving the situation in Israel. As the report states, “The United States cannot achieve its goals in the Middle East unless it deals directly with the Arab-Israeli conflict.” Among other consequences, the centrality of Israel has meant that many regional regimes have been able to redirect attention away from their own repressive practices toward the conflict.

Moreover, Israel is itself singled out by American policy. Consider that the United States gives approximately a third of its aid, more than the combined total of aid to Latin America and Africa, to a country with under one thousandth of the world’s population and a relatively high GDP per capita.

Asking the University not to throw its substantial financial and symbolic weight behind companies that directly support human rights abuses, SPER’s petition urges divestment only from companies that engage in four criteria of practices in the occupied territories: (1) facilitation of acts of collective punishment (home demolition, land confiscation, and military action against civilians), (2) operation within occupier-only settlements, (3) maintenance of a “separation barrier” and (4) institutional discrimination against any people of a certain race, ethnicity or religion.

These criteria are universal in scope and can be applied to other conflicts as foundational principles of ethical investing. This approach does not come down on any side of the issue; calling for a principled divestment from rights-abusers is no more pro-Palestinian than refusing to deal with unethical diamond companies is pro-Congolese. Supporting divestment commits its supporters to no “side” except the right side of history.

As students, we can act when we sense injustice. The call for divestment is not “radical”; this form of grassroots, non-violent action has extensive precedents both on this campus and on others like it. Stanford’s own Statement on Investment Responsibility pledges to divest from any companies that “cause substantial social injury.” Students for Palestinian Equal Rights’ petition demands only that Stanford commit in practice to the values it claims to uphold.

The writer is a member of Students for Palestinian Equal Rights (SPER).

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As he was being arrested, he was pepper sprayed (the orange color on his face in the video) and his head hit the bumper as he was pushed into the vehicle. This was on February 23rd, Fadi’s 24th birthday. Fadi is, to the best of my limited knowledge, currently being held in Ofer military jail under “administrative detention,” the process by which Palestinians can be held without charge. If he is charged, it will be on counts of pushing an Israeli soldier, which the video does not show and which is contrary to Fadi’s reputation as an advocate of nonviolence.

A second video, brought to my attention from the page of Robert Wright, a senior editor at <em>The Atlantic</em> magazine, seems to confirm that Fadi did not physically engage the Israeli border police, a contention Wright <a href=”http://www.theatlantic.com/personal/archive/2012/02/new-video-evidence-in-the-fadi-quran-case/253611/” target=”_hplink”>appears to agree with</a>.

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The argument occurs when the border police bark at Fadi to move back, which he refuses to do since they are on what is universally recognized as Palestinian land in the West Bank. When Fadi challenged their authority to give orders outside of Israel, they arrested him in the violent manner seen above.

Professors, students, friends, and fellow activists have begun a concerted effort to demand his immediate release and are circulating this <a href=”http://www.freefadi.org/” target=”_hplink”>petition</a> to that effect.

Fadi grew up in the West Bank and graduated from Stanford with a double major in physics and international relations. He returned to the West Bank after graduating to work in the clean energy sector there and to continue his activism. He has always been an unyielding advocate of nonviolent resistance in the vein of Martin Luther King and Ghandi, and spent three weeks in India at Ghandi’s ashram to learn the actual tactics and strategies of a nonviolent resistance campaign. <a href=”http://images.huffingtonpost.com/2012-02-28-Fadi.jpg”><img alt=”2012-02-28-Fadi.jpg” src=”http://images.huffingtonpost.com/2012-02-28-Fadi-thumb.jpg” width=”452″ height=”285″ /></a>

In addition to doing interviews with the <em>New York Times</em>, Al Jazeera, <em>The Guardian</em>, and other news outlets, Fadi’s activism was the topic of a March 2011 <em>Time</em> magazine story that described him as “the face of the new Middle East.”

<blockquote>“He is a Palestinian who has returned home to start an alternative-energy company and see what he can do to help create a Palestinian state. He identifies with neither of the two preeminent Palestinian political factions, Hamas and Fatah. His allegiance is to the Facebook multitudes who orchestrated the overthrow of Hosni Mubarak in Egypt and who are organizing nonviolent protests throughout the region.”</blockquote>

I had met Fadi in my first months at Stanford, but I doubt he would remember – at the time I was still a freshman struggling to get my footing in the brave new world of college while he was an established and vocal activist on campus. He came in to speak to a class I was in, International Human Rights Documentaries, on the Palestine-Israel conflict (an Israeli student also came to speak from the other perspective). I also saw him at several other events, some were Palestine-related, others were not; sometimes he was on the stage and sometimes in the audience.

Despite the fact that ours was a vague and perhaps one way acquaintanceship, I feel comfortable making the following assertion: Fadi would not want there to be an international outcry over his detention if there were not a similar – in fact, greater – outcry over the detention of the 4800 other Palestinians languishing in Israeli prisons after being denied trials in civilian courts, and the 300 who are imprisoned and not even charged with any crime. He happened to be an alumni of an institution prestigious enough and his work was prominent enough that his story caught fire in a way most Palestinian detentions would not.

However, Fadi’s detention is not an exception, as some reports imply. The implication is not overt, but rather by the omission of certain facts – that Palestinians are regularly arrested for participating in demonstrations; that Israel’s military occupation of what little is left of Palestine has been ongoing for nearly 45 years; that Israel can and does deprive Palestinians of due process by detaining them without charge (as the US can now do under Title X of the National Defense Authorization Act); and that the colonial expansion of settlements is widely recognized as illegal under various international laws.

These omissions have had the effect of limiting much of the activist work after Fadi’s arrest to simply freeing Fadi. That is, of course, not in itself a bad thing – freeing one detainee is better than freeing none, and Fadi’s unshakeable commitment to nonviolence make him particularly worthy of our attention. But this atmosphere of increased political awareness resulting from Fadi’s arrest could be harnessed to make a broader impact. The fact that <a href=”http://www.bbc.co.uk/news/world-17112804″ target=”_hplink”>a 66-day hunger strike by Khader Omar, a Palestinian detained without charge, ended in Israel agreeing to let him loose next month</a> shows that the state is susceptible to the influence of bad publicity. The key is to use that strategy to affect change at the policy level, rather than on a case-by-case basis.

Fadi has done an excellent job of leveraging the clout his hard work has earned him for the cause of peaceful coexistence – brought about by nonviolent means – between Israel and Palestine. He is an important piece of the movement for a free and independent Palestine, and as such deserves any and all efforts we can muster to release him. I encourage you to visit <a href=”http://www.freefadi.org” target=”_hplink”>www.freefadi.org</a> to sign the petition calling for his release, and to “like” the <a href=”http://www.facebook.com/free.fadi.quran” target=”_hplink”>Facebook page</a>, “Free Fadi Quran” to be kept abreast of his situation. The best place for real time updates on his condition and case will be <a href=”http://www.policymic.com/articles/4656/free-fadi-quran-palestinian-nonviolent-youth-activist-fadi-quran-arrested-and-assaulted-by-israeli-army/headline_story” target=”_hplink”>this page</a> curated by his friend and fellow alum Jake Horowitz.

As important as it is to get him back outside so he can continue the struggle, we must not forget that he is not fighting for his freedom, but the freedom of all Palestinians. Our work should not be limited to releasing Fadi, but must include leveraging this attention so that the freedom to peacefully protest is protected in Occupied Palestine.

What emerged were activist groups such as www.engineadvocacy.org and www.americancensorship.org that aimed not just to spread public awareness, but to build some sort of infrastructure that helps to change things in more tangible ways in Washington – an infrastructure that puts the government’s internet policies under greater scrutiny by generating sustained discourse and getting its network right to extend its sphere of influence. In politics, money matters; but knowing the right people who can speak up for you is just as important, and navigating through that complicated mesh of relationships can be a real difficulty. In this case, a strong chorus was generated, powerful enough to have forced SOPA and PIPA (Protect IP Act) proponents to cave in. For the “undecideds” in Congress who didn’t know what to make of SOPA, it became politically disadvantageous to support it in the face of the strong opposition both on line and off.

Why did SOPA pass through the Congress as far as it did? One can take the more cynical view that congressmen who backed SOPA did it merely under pressures of lobby groups from the music and movies industry, but one may also think of them as generally good souls who are well intentioned, but lacking in understanding of how the Internet works or how piracy can be effectively combated. An individual who wishes to remain off the record once commented that SOPA made it as far as it did partly because there was a discernible knowledge gap between congressmen and the wider Internet community – a very plausible claim.

Regardless, here is a rare instance where democracy worked to stop a bad policy in its tracks – by the sheer force of people (though this did not happen in the absence of big corporations’ backing), where freedom of expression has allowed players outside of the establishment to change the minds of people inside the establishment. And that’s a feat. It took the right mix of disruptive innovators compelled to serve causes that are not being served by the incumbents, to figure out a way to work around the lumbering establishment crowded with clamoring lobbyists, to finally make themselves heard and taken seriously. But stopping something bad is far from enough; true victory comes from building the right infrastructure that can get good things done. It’s entirely likely that SOPA would re-emerge like a phoenix from the ashes in other forms, and when that time comes let’s hope that the tech community can do more than boycotting, but chip in and help those congressmen (many of whom are old enough to be your grandfather) figure out something that actually works.

Democracy in America is still pretty hopeless, but occasionally a faint stray beam of light streams in and that should bring the starry-eyed idealist some temporary comfort.

In protest of last month’s crackdown and a subsequent university resolution authorizing police to enter the campus, the students have called for the university to remain closed until the university’s director Sidiq Haiati resigns due to his “administrative collusion” which allowed police forces to raid the campus. The students’ demands also include an apology from the ministry of the interior and the police, and compensation for those students affected.

Two students, Mohammed Idris “Gedu” Mohammed and Taj al Sirr Jafar remain in custody without charge. Over 70 were arrested, and dozens were injured in the raid.

The demonstrations began on Thursday, December 22nd when students of the Manasir ethnic group, supported by the Darfuri student association and pro-democracy campus groups, organized to protest the building of the Merowe Dam north of Khartoum. The central government promised to pay the Manasir to resettle out of the dam area, but many claim they have received no such compensation.

The protesting students, estimated at about 700, marched through nearby streets throughout the evening. After they had retired to their dormitories, they were awoken after midnight when police fired teargas into the dorm. Some students retaliated by throwing rocks, at which point the police entered the buildings.

The police proceeded to empty out the dorms floor by floor and building by building, corralling the students into the courtyard before sending them off to police stations to be processed, photographed, and then either released or held for questioning.

This more or less standard operating procedure was supplemented by threats, beatings, theft, and, once detained, torture. All of the students interviewed gave accounts of police officers walking out of dorm rooms with laptops and cell phones.

A third-year economics student gave her account of the initial raid. “I was awake but my roommate was sleeping when they broke the door to our room. Almost immediately they began smashing my desk with their batons and demanding I give them any cell phones and cameras – they had already taken my laptop off of my desk.”

Another student elaborated on the thinking behind the thefts. “They told us that they were taking our electronics to make sure we didn’t have anything undesirable on them. Of course, what they most wanted was to see who had been involved in planning the protests so they knew who should be punished most harshly.”

Police sources confirmed that they are interested in locating the epicenter of the protests. “We are battling three armed movements [in South Korofan, Blue Nile, and Darfur], so if any student is found to have connections to these rebels, they need to be jailed. These students should be supporting their government under these circumstances instead of wasting time with protests,” said one officer on condition of anonymity.

Publicly, the chief of police in Khartoum State said in the week after the protest that police forces are ready to enter the university again.

Others dismiss the notion that there was any premeditated reasoning behind the confiscations. “I heard two officers arguing over who would take the best mobile [phone]. When the government is run by thieves, why should its security forces not steal?” asked a student who had his laptop and two phones taken.

In addition to the broadly acknowledged confiscation of students’ personal effects, many students complained of police brutality during the raid. Seventeen students were taken to hospitals with broken arms, legs, and cracked skulls.

Many students refused to go quietly, however. Mohammed, a first year student, recalls asking an officer, “How much is your salary, and how much does the government steal,” suggesting that he is doing the work while his bosses reap the rewards.

The officer, according to Mohammed, replied, “I don’t need a salary, I’d do it for fee,” before smashing his baton into the student’s hand.

Khalid, a student from El Fasher in North Darfur also pointed to the “racist line of thinking” of the officers. One of the key questions asked of all the detained students was what tribe they came from. “When they found someone not from the Manasir, they would beat him double,” said Khalid.

This may in fact be more indicative of government fears of inter-ethnic political cooperation than racism on the part of the officers. The central government has for decades used preferential treatment of certain groups to increase animosity and keep opposition to their rule fractured and disorganized.

After this protest and raid on December 22nd, students refused to take exams the following Sunday, instead organizing a 5,000-person strong march in protest of the university’s decision to allow police onto the campus.

The university responded by closing the dormitories and evicting all of the students. Those that do not live in Khartoum were forced to sleep with friends’ families or rent rooms until they could get transportation to Darfur, Kordofan, Kassala, or other faraway provinces.

The students are insisting their list of complaints be addressed before reopening the school, but administration officials have so far given no indication that they are willing to respond positively to any of the demands.

Some have suggested that the regime, through the school administration, wants to send the message that earning a degree and participating in demonstrations are mutually exclusive. According to a student not linked to the protests, “If they reopen in three months, the political problems will still be there. But those who started [the protests] will have learned that it will cost them three months of their education and housing, so they won’t do it again.”

Mustafa, a 29 year-old intimately involved with activist organizations believes that the cause of the Manasir can breathe life into attempts at shoring up public support for anti-regime demonstrations on the scale of Sudan’s neighbors.

“There are plenty of good causes that I believe in. But when the government can say, they are terrorists, they are guerrilla fighters, it takes away the moral high ground. Like the Darfuris before them, now the Nuba people are being bombed by government planes, but at the same time their militias are shooting at Arabs. Not many Arab Sudanese will support their cause under those circumstances. But the Manasir have universally committed themselves to only peaceful means. That is what Sudanese people want, and that is what Sudan needs.”

See Shadi’s report on the first Arab Spring-inspired protests in Sudan in early 2011 at “Democracy’s Domino Effect: Protests in Sudan”

(Carlos Latuff/ Wikimedia Commons)

Over the past months, the Arab League has incrementally stepped up pressure on Syria’s Bashar al-Assad, culminating in the imposition of diplomatic and economic sanctions. Since then, the League has been showered with admiration from Western governments, media outlets, and political analysts for stepping up to protect Syrian civilians and their democratic aspirations. However, it may be more accurate to comment the League for its shrewd political calculations of how the crisis could best serve its interests.

The Arab League’s activism comes amid widespread exasperation with Damascus. The West, once warily optimistic about the younger Assad’s prospects as a reformer, has intensified pressure with ever stiffening sanctions from the United States, Canada, and the European Union, Syria’s largest trading partner. France has even hinted at using militaries to establish “humanitarian corridors” for civilians inside Syria, a sentiment echoed by Turkey. Assad’s numerous broken promises to his erstwhile friend Prime Minister Recep Erdogan soured the gradually improving relationship between historical enemies. Now, Turkey hosts thousands of refugees, as well as defected military officers who claim to be leading the armed opposition.

The trend is not limited to traditional enemies or regional rivals. China and Russia have held the UN Security Council at bay, but continue to call for engagement with the opposition and faster implementation of reforms to stave off civil war. Even Iran, which provides Syria’s government with arms and aid, has begun vacillating in its support for Assad. Iranian government officials have metwith the National Coordinating Body for Democratic Change, a more Iran-friendly opposition group than the larger Syrian National Council. Because of Syria’s role as a transit point for Iranian material and financial support to Hezbollah and Hamas, Tehran is more concerned with its long-term interests than its relationship with one regime.

It is against this backdrop, where both antagonists and allies of Assad have pushed the regime to ease the oppression, that the Arab League was forced to act. Once the dominant members of the League calculated that, sooner or later, Assad would fall, they opted to act on the side of the opposition. But that does not mean that they did so out of concern for the Syrian people. Rather, the League acted out of concern for its image and its influence.

The Arab League has long been described as a “club of dictators,” but seems to be tiring of the running joke. With that in mind, some governments have decided that promoting democratic values in other countries is a decent enough foil for criticism that they repress such ambitions at home. Qatar, for example, does not allow political parties or a national legislature but trained and armed the Libyan rebels, and is now leading the push for Syrian sanctions. Support for political inclusion is no longer an ideal, but rather a weapon to wield against one’s rivals and a shield against scrutiny.

Many of the Arab League countries are also worried about a prospective civil war spilling over Syria’s borders. Syria’s diverse and fragile neighbors, Lebanon and Iraq, voted against the latest sanctions resolution in part to avoid Syrian retaliation that could stoke their own sectarian troubles. The Gulf members, hundreds of kilometers away, calculated that leaving Syria to its own devices would only draw out and intensify the inevitable violence. So, the Arabs decided to punish Syria in the hopes that it will contain the conflict and protect their own borders.

Perhaps the greatest factor in motivating the Arab League to act was the fear of being outmaneuvered by the rising regional powers, Turkey and Iran. Syria’s importance — as a transit corridor, a trading partner, a military power, a bulwark against Israel, and a key to stability in Lebanon, Israel and Iraq — is difficult to overstate. The two non-Arab powers are staking their own positions in the conflict, with Turkey strongly pushing Assad to either reform or leave, and Iran hedging its bets by maintaining ties to the opposition and the regime. The Arab powers are particularly keen to hurt Iran by ensuring a Sunni government comes to power in Sunni-majority but currently Shiite-dominated Syria. Were the Arab League to simply sit on the sidelines, it would give either Iran or Turkey a dominant position in a post-Assad region.

All of this does not amount to a condemnation of the sanctions’ substance, but rather of the motives behind them. I believe, unequivocally, that Assad must go, and the League’s actions are a step in the right direction. However, it is worthwhile to pause the praise and note that the same Arab leaders have acted similarly towards their own people or stood idly by while their neighbors have done so. Sanctioning Assad was not a humanitarian decision, but one motivated by calculated self-interest on the part of the Arab governments.

Since Issue XIII, global risk assets fell, as the optimism around the most recent European Union (E.U.) summit faded, and policymakers from the Federal Reserve (Fed), the United States (U.S.) central bank, did not hint at further economic stimulus. As we enter the second of the final ten trading sessions of 2011, many assets have work to do if they are to finish the year higher. As of the end of trading yesterday, the Standard and Poor’s 500 Index (S&P 500), the most commonly used benchmark for U.S. stock market performance, was down just over 4% year-to-date (YTD). Against the U.S. dollar (USD), the euro (EUR) was down a little more than 2.5% YTD. If a risk-on rally materializes, we could see U.S. stocks, the EUR, and other risk assets, finish the year higher. However, I see no catalysts on the horizon for such a rally, as global leaders appear unlikely to mitigate European debt crisis fears in the near future.

Two assets that have performed well in 2011 are Treasuries, or U.S. government bonds, and GOLD. 10-year Treasuries have returned more than 13% YTD, and gold more than 11% YTD. In general, investors consider gold a hedge against inflation, a phenomenon typically bad for bonds. Bonds oblige their issuer, or the borrower, to pay the lender certain amounts of money over a specific time schedule. If inflation rises, the bond loses value, because the money being repaid loses purchasing power. The reverse also is true. Hence, in theory, bonds perform poorly when gold appreciates. Years like 2011, when benchmark 10-year Treasuries and gold return approximately the same amount, are fairly uncommon. So why did 10-year Treasuries and gold perform so similarly this year?

As I have discussed in the past, arguably the most important driving force of the world economy today is debt deleveraging. Leading up to the financial crisis, consumers, primarily in the West, accumulated unsustainable debts. The debt manifested primarily in the form of mortgages, and the excessive leverage and credit growth in the real estate sector drove housing prices to unsustainable levels. When home prices began their descent, many banks and financial institutions, Fannie Mae, Freddie Mac, and Lehman Brothers to name a few, suffered significant losses on their mortgage loans. The losses rendered many firms insolvent, and in some cases, governments guaranteed the obligations of troubled parties. In essence, debt was transferred from the financial institutions exposed to bad mortgages to the governments.

The problem is debt only can dissipate via deleveraging, which is a painful, but I emphasize necessary process. The only ways to clear bad debt from an economy are for borrowers to repay less than they owe (default), and sometimes for borrowers to have a solvent party repay their debt for them (bailout). Please note, for simplicity, I define default to include borrowers inflating away their obligations and using other methods to decrease the value of the money they owe. Of default and bailout, bailout sounds like an easier way to deleverage, because the borrower’s friend picks up the tab.

The problem is, as I alluded to before, bailouts only sometimes qualify as deleveraging. Imagine having a friend, who would pay off your credit card whenever you could not afford the bill. How your friend obtains the bailout money is important. If your friend uses cash to pay off your credit card, then your debt is repaid and deleveraging occurs. But, if your friend swipes their credit card to pay your credit card bill, then your debt is repaid,  but you effectively have stuck your friend with your original problem. Unfortunately, in the West, relatively few nations log consistent current account surpluses, and governments had few reserves to bail out their economies in 2008. Sovereigns swiped their credit cards, or issued government bonds, to pay off the debts of the financial system. The crisis seemingly abated, because markets viewed governments as more creditworthy or able to manage the debt than banks. In fact, three years ago, most people considered government bonds risk-free assets. But as time passed and obligations grew, debt burdens became too large for some of even the world’s most creditworthy borrowers to manage. Iceland, Dubai, Greece, Portugal, Ireland, and you know the rest, all lost control of their debt levels.

As we have witnessed in Europe over the past almost two years, large debt levels crimp economic growth, and efforts to deleverage crimp growth even further. As growth slows, inflation eases, and disinflation often occurs. In some cases, deflation can occur, as the Fed reported happened in short instances in the U.S. following the financial crisis. The tendency toward slower economic growth and disinflation benefits bonds, which usually suffer in inflationary environments. As we saw this year, growth concerns in the U.S. during the summer, and in Europe today, have caused Treasury bond prices to soar.

If gold’s tendency is to rise during periods of inflation and to fall during periods of disinflation, why would the yellow metal rally alongside Treasuries this year? In my view, the answer lies in the distinction between price and monetary inflation. Price inflation refers to cost of living increases that result from too much demand and/or too little supply. On the other hand, monetary inflation results when central banks create money, diluting the value of their currency and elevating asset prices. Central banks control the size of the monetary base, or the amount of currency and bank reserves, and thereby influence the extension of credit and the growth of the broader money supply. The monetary base also is known as the M0 money supply, which is the narrowest commonly used measure of the money supply.

As shown in the chart to the left, the U.S. monetary base has ballooned since the financial crisis. The Fed’s quantitative easing (QE) programs and its decision to keep the benchmark U.S. short-term interest rate near 0% for the foreseeable future have fueled a record boom in the size of the monetary base. From a historical standpoint, monetary inflation is off the charts. Today, gold, a real asset, serves more as a safe haven from monetary inflation than from price inflation. Because all goods are denominated in currency, monetary inflation affects the values of all goods, especially of real assets. Real assets include raw materials, land, and other items that can be found in nature.

Assuming the aforementioned is true, gold price appreciation roughly should mimic growth in the monetary base. Since the second half of 1999, when the current secular gold bull market began, the U.S. monetary base has multiplied more than 4.5 times. Over the same timeframe, the price of an ounce of gold has more than quintupled from $300* to today’s price of about $1,600. So though not exactly correlated, the size of the monetary base and the price of gold have a close relationship.

In summary, Treasuries and gold have been top performing assets this year, because the disinflationary effects of debt deleveraging have been fought by the monetary inflationary effects of central bank stimulus. The former is bullish for U.S. government bonds, and the latter for gold. I am bullish on Treasuries in the near term, because disinflation is taking hold, and I expect inflation to decline for some time. I will discuss my views on Treasuries more in depth in the New Year.

As for my OUTLOOK on gold, I am bearish in the near term, because I do not expect central banks to respond to economic problems with QE and other monetary inflationary policies. Gold already has fallen more than 15% from its all-time high in August, as central banks have refrained from pursuing bold stimulus measures. You can see on the featured chart that the U.S. monetary base has not increased for several months. The Fed has indicated U.S. policymakers are unlikely to ease policy further for the time being. I suspect Fed officials will not launch QE III until spring of next year, unless a shock from the European debt crisis causes inflation to plummet. Similarly, the European Central Bank (ECB) appears unlikely to ‘print’ money, or create currency, to buy the bonds of overly indebted euro area governments for the time being. In theory, the ECB could cap the borrowing costs of indebted sovereigns by ‘printing’ unlimited amounts of money. But I am skeptical such a policy would succeed in saving the EUR in practice. In my view, gold is likely to fall further, as central bankers surprise markets with their will to maintain stable monetary bases, despite faltering economic growth.

In the long run, I am bullish on gold, because I believe the disinflationary forces of debt deleveraging eventually will present circumstances, under which central bankers feel comfortable increasing monetary inflation again. As I mentioned earlier, the growth of the monetary base roughly should mimic that of gold’s price. $300 times a little more than 4.5 would put a target entry range the yellow metal between $1,350 and $1,425 per ounce. Many technical strategists I have seen are eyeing $1,400, which likely means buyers will step in in mass in the low 1400s. The price at which I buy always is determined by the development of fundamental events. But I imagine if gold falls below $1,500, I will prepare to buy. If gold falls below $1,450, I probably will buy. And if gold falls below $1,400, I may buy aggressively.

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© Copyright 2011 by The Opportune Time, LLC.  All Rights Reserved.

DISCLAIMER: The information, tools and material presented herein are provided for informational purposes only and are not to be used or considered as an offer or a solicitation to sell or an offer or solicitation to buy or subscribe for securities, investment products or other financial instruments, nor to constitute any advice or recommendation with respect to such securities, investment products or other financial instruments. This report is prepared for general circulation.  It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities mentioned in this report.

The information contained herein is not necessarily complete and its accuracy is not guaranteed byThe Opportune Time, LLC, its operating entity or the principals therein. If you have received this communication in error, please notify the author immediately by electronic mail. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase of any future or security referred to in this report.

The views expressed herein are solely those of The Opportune Time, LLC as of the date of this report and are subject to change without notice. Principals of The Opportune Time, LLC may or may not hold or be short of securities discussed herein, or of any other securities, at any time.

Author Name and Electronic Mail Address:   Lee Jackson | lee@theopportunetime.com

Like the U.S., Russia will hold presidential elections next year. Current Russian Prime Minister (PM) Vladmir Putin, depicted below, is the frontrunner for the Russian presidency. However, earlier this month, Russia held parliamentary elections, which in essence are the American equivalent of Congressional elections. United Russia, the party of PM Putin and current Russian President (Pres.) Dmitry Medvedev, suffered a significant setback, and saw its approximately two-thirds State Duma representation shrink to a slim majority. The State Duma contains 450 seats, and is the lower house of Russia’s legislative body the Federal Assembly of Russia. United Russia entered the election with 315 State Duma seats, and exited with 238.

The Russian parliamentary elections have created considerable buzz, because PM Putin’s firm grip on power has shown cracks in its armor. Not only did PM Putin’s party lose a large amount of support, but evidence of ballot stuffing and other corruption during the elections also has sparked demonstrations of thousands of people in Moscow. Thus far, a few hundred demonstrators have been arrested, and PM Putin has responded to protester pleas by promising to shake up his cabinet next year.

While the Western media has been creating a storm out of the parliamentary elections in Russia, I do not believe PM Putin soon will be forced out of or voted out of office. Many political analysts expect PM Putin to reinvent his public image and to make concessions, such as government expenditures, to maintain his popularity inside Russia. Despite demonstrations, PM Putin still is the frontrunner for next March’s presidential elections, and he faces little competition from other candidates. Even with the entry of Russian billionaire Mikhail Prokhorov into the presidential race, I feel PM Putin is more likely than not to win reelection. Prokhorov does not have the same political connections at PM Putin. Some political experts even suggest the former mining executive has entered the race as a ploy to mitigate social backlash against the frontrunner. For example, Boris Nemtsov, a deputy prime minister under former Russian President Boris Yeltsin, declared Prokhorov’s purpose is to help Putin return to the presidency:

“Prokhorov’s task is to help Putin get elected. A billionaire would never have taken such a risk if he hadn’t had an agreement with Putin.” — Former Russian Deputy Prime Minister Boris Nemtsov

Nemstov’s words may refer to Mikhail Khodorkovsky, the former Russian oil executive, who was imprisoned allegedly due to political reasons the last time PM Putin was president. I expect PM Putin to return to the presidency in March. And unless PM Putin announces another running mate, I suspect current Pres. Medvedev will reassume his previously held office of prime minister. In my view, markets are overestimating the political risk associated with this month’s and next year’s elections in Russia.

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© Copyright 2011 by The Opportune Time, LLC.  All Rights Reserved.

DISCLAIMER: The information, tools and material presented herein are provided for informational purposes only and are not to be used or considered as an offer or a solicitation to sell or an offer or solicitation to buy or subscribe for securities, investment products or other financial instruments, nor to constitute any advice or recommendation with respect to such securities, investment products or other financial instruments. This report is prepared for general circulation.  It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities mentioned in this report.

The information contained herein is not necessarily complete and its accuracy is not guaranteed byThe Opportune Time, LLC, its operating entity or the principals therein. If you have received this communication in error, please notify the author immediately by electronic mail. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase of any future or security referred to in this report.

The views expressed herein are solely those of The Opportune Time, LLC as of the date of this report and are subject to change without notice. Principals of The Opportune Time, LLC may or may not hold or be short of securities discussed herein, or of any other securities, at any time.

Author Name and Electronic Mail Address:   Lee Jackson | lee@theopportunetime.com

(Sunset Parkerpix/Flickr Creative Commons)

For some three weeks now, Occupy Stanford has been staging walkouts and rallies as part of the broader Occupy Movement that has swept across United States since mid September. These have been poorly received by a largely lukewarm student population with whom the “We are the 99%” protestations hardly resonates, despite a very committed student-run General Assembly that is still camping 24/7 in Meyer library at the time of writing. Some have called it a hypocritical movement (“We are the 1%, for god’s sake!), others have criticized as being a reactive jumping on to the national bandwagon with no real direction, and many simply don’t really care or know what to make of it – the Stanford bubble does insulate students from the outside world to our detriment sometimes.

It is also not uncommon to overhear conversations about the movements at dining tables, which often end a dismal laugh-off, “Occupy Stanford is a joke!” And it’s in some sense true – there is no real protest in Stanford – Stanford certainly don’t share the enthusiasm of our neighbor UC Berkeley and Davis, whose student-led Occupy movements have gone so far as to ignite violent police crackdowns. But joke or no joke, protest or no protest, I think there are strong reasons for a school-wide conversation on a movement that is a symbolic expression of profound inequality that pervades American society today. Let me begin with a few observations on campus that has set me thinking over the past weeks:

“We are the 1% – why should we care?”

This is, to my mind, the most disturbingly snobbish statement I have heard around campus with reference to the Occupy movements. Sure, Stanford is a “billionaire university” and most graduates do go on to do very well, many even eventually becoming the “1%” in the economic hierarchy. But to say that this gives Stanford students a pass to ignore the problem of inequality, or that they are no in any position to make noise about it betrays a sense of arrogance and myopic indifference. In fact, I would argue that it is precisely because they are seen as the 1% that they should make a statement about the untenability of the status quo: that inequality on this works to society’s great detriment and should not be tolerated, that there are systemic flaws that has allowed corrupt corporate culture to take a strong foothold that needs to be corrected, that American government cannot yield itself to becoming a “Wall-Street government”.

The whole “percentage” metaphor that has captured public imagination has been the key way by which the movement has been framed, and if we look deeper one realizes that it is not mere rhetorical flourish. On some levels, it does capture the essence of the gross inequality that protestors are railing against today – the fact that the top 1% of the American populace possess wealth equivalent to 50% of Americans (that’s a whopping 55%) should trouble anyone with genuine concern about the health of our society and any care for the ideals on which this country was founded.

Yet ultimately, it should not matter which income percentile students come from. As much as this protest has been characterized as a class war in which the have-nots run up against the well to do, it is at its root a protest against broader, systemic failures of a system that has failed to deliver equitable outcomes to the people. Stanford students, whether they like it or not, are part of this system and there are more reasons than one to care about the future of this system.

Seen in this light, Occupy Stanford – despite largely failing to gain traction on campus – is not a mere show of solidarity of the “XX percent” of Americans; it is a movement that vocalizes and acknowledges that the economic inequality is a serious problem that cannot be underestimated. The General Assembly has not attracted a huge array of students, but it is also a reassuring sign that Stanford students are not completely enclosed within a bubble of indifference towards the tempestuous world outside.

“They don’t know what they’re protesting for!”

A common criticism about the Occupy movements – here in Stanford as in elsewhere – is the seeming lack of concrete objectives and focus. Some cities’ Occupy movements have tried to dispel the appearance of vagueness by proposing concrete lists of explicit demands – such as tax reforms for the wealthy, limits on contributions to political campaigns, abolishment of corporate personhood, while others – such as Occupy Wall Street – have no such concrete litanies. Occupy Stanford likewise seems to lack a list of specific reforms or demands.

My sense is that this “vagueness” and lack of clear direction of Occupy movements is to be expected. One reason is this: no one really knows how to fix the system. Embroiled within the protests is a complex panoply of problems, many of which are the same problems that caused the financial crisis in the first place: lax regulation of the financial industry, an amoral corporate culture that is not confined to Wall Street alone, the hijacking of public political discourses by corporate power and lobbyists. All of these are intricately intertwined so that it is almost impossible to proclaim that any litany of solutions can effectively fix such a thoroughly messed up system.

As a result, protests that have proffered specific goals often present “solutions” that create the false impression that the systemic problems plaguing America are easily solved by particular “silver bullets” (say, abolish corporate personhood!), some of which are not well-considered in the first place. The people can hardly be expected to hold the solutions to the myriad of exceedingly complex problems that continue to frustrate policymakers, puzzle academics and confuse politicians.

How, for instance, do you solve the problem of unbridled greed? It is naïve to expect that the solution can be easily summarized in a statement of demand, which I think explains why, unlike past civil rights movements where the people are rallying for clear demands such as universal suffrage and racial equality, the Occupy Movement is at best seen as one that vocalizes dissatisfaction, drawing national attention to a problem instead of a concrete demand. And that is just as important – the first step to solving a problem is acknowledging that it exists and merits attention.

“Occupy The Future”: the start of a meaningful and calibrated discourse in Stanford

Occupy Stanford, despite its feeble attempts at rallying the larger student body, has at the very least proven that some Stanford students are concerned about the glaring inequalities that characterize American society. Recently, Stanford saw the emergence of a new coalition of faculty, undergraduates and graduates under the name “Occupy The Future,” which kick-started a series of events with the film-screening of Charles’ Ferguson academy award-winning documentary Inside Job, one of the most incisive analyses of the events that precipitated the 2008 subprime crisis and its aftermath.

With student and faculty essays posted daily on the Boston Review and Stanford Daily, discussions and roundtables, Occupy The Future looks like a promising movement that can hopefully inspire a school-wide conversation on the Occupy movements that have transpired and the underlying issues concerning inequality, corporate power and government. It’s a movement that rings with a sense of pragmatism, one that reminds Stanford students about the common future that has to be shaped not tomorrow, but today.

I end with a quote from Noam Chomsky’s recent article:

“…if you want to change the world you’d better try to understand it. That doesn’t mean listening to a talk or reading a book, though that’s helpful sometimes. You learn from participating. You learn from others. You learn from the people you’re trying to organize. We all have to gain the understanding and the experience to formulate and implement ideas.”

The Occupy Movement is an unprecedented opportunity to overcome America’s current hopelessness, and – even for non-American Stanford students – a great live lesson on how people can change the world for the better. It seems vague because the problem is complex and far from easy to pin down, but give it time and something constructive might just come out of it – if people care enough.