October 23, 2005
Posted in Strategy at 17:23 by Graham King
Although there is no judiciary or policing capability at the international level (aside from the limited actions and powers of the United Nations), there is a still an influential body of international law, respected almost all the time by almost all nations. The times when they don’t usually make the news.
A key point of procedure to bear in mind when dealing with international law, which means the law of the United Nations, is that decisions are voted upon by the fifteen members of the Security Council. To pass, a decision must have at least nine votes, including the votes of all five of the permanent members (China, France, the United Kingdom, the United States and the Soviet Union). This means the five permanent members may veto any decisions and are hence exempt from UN sanctions. This decision was taken in 1945 in San Francisco at the conference where the UN was created. Any attempt to police the behaviour of the permanent members of the Security Council would almost inevitably lead to major conflict and the destruction of the United Nations.
The composition of the Security Council permanent members and their veto powers means that the UN was largely incapacitated for the duration of the Cold War.
Day to day international law
International law ensures that day-to-day interstate relations proceed in a regular and ordered fashion. Like all good law, it is designed not to prohibit those actions which states (or individuals in a domestic setting) would normally choose to undertake, but rather to codify accepted modes of behavior; good law is facilitative, not prohibitive. It is a mechanism through which societies seek to achieve political objectives, particularly that of maintaining order.
The difficulty in setting down international law is in it being sufficiently conservative as to be of benefit to the powerful nations that will enforce it (and that would suffer limited consequences in breaking in), and sufficiently broad that most smaller states will deem it in their interest to abide by it.
States obey international law for several reasons:
- Reputation: States seek to avoid acquiring a reputation as a law breaker (‘rogue state’) as they will then find it difficult to enter into legally binding agreements with other states. They will be cut of from the interactions of world trade and diplomacy.
- Inherent value: States obey laws whose underpinning political rational is clear and which they agree with. For example rules on territorial integrity and inviolability of borders are of benefit to all nations.
- Functional value: States obey the law because its overall contribution to maintaining international order is considered to be of value.
- Interia: States become use to behaving in a fashion enshrined by law. Governing elites and bureaucracies becomes socialized into behaving in that way. Often principles of international law also feature or are incorporated into domestic law. In countries where those that formulate policy are answerable to wider public and media scrutiny policies that violate international law may be perceived as non-viable.
Even when states dis-obey international rules, they often maintain that they are acting within the law. Hitler entered Czechoslovakia in the name of self-determination; the USSR invaded Afghanistan claiming to be invited in by a newly established regime; the United States used force against the Dominican Republic claiming to be acting on behalf of the Organization of American States; and the United States attacked Iraq in 2003 claiming to be enforcing a UN resolution.
Repeated violations of international law can only undermine an order in which both the strong and the weak have a vested interest. For the former it en-shrines their dominant position although it often limits the blatantly self-interested policies they may pursue. For the weak it preserves their very existence since their survival is dependent not on defensive military capabilities but on the acquiescence of others. Given its dominant economic and military position it is remarkable not how often the Unites States of America exercises its influence on others, but how rarely.
International law and the use of force
The laws of armed conflict can be separated into jus ad bellum (the law towards war) which seeks to avert or limit the use of armed force in international relations, and jus in bello (the law in war) which governs and seeks to moderate the actual conduct of hostilities.
The jus ad bellum is founded primarily on Article 2 and Chapter VII (articles 39-51) of the United Nations charter. This insists that All Members shall settle their international disputes by peaceful means (Article 2(3)) and that All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any State (Article 2(4)). It allows for the inherent right of individual or collective self-defense (Article 51).
Many states claim that humanitarian intervention constitutes an exception to the prohibition on the use of force. However a 1973 study on humanitarian interventions found that most have occurred in situations where the humanitarian motive is at best balanced, if not outweighed, by a desire to [...] reinforce socio-political and economic instruments of the status quo. Thus ‘humanitarian intervention’ is often used as cover for a breach of Article 2(4).
The jus in bello does not seek to diminish or obstruct the efficacy of fighting forces (which would be impossible), but to limit the barbarity of the conflict. Wars occur within the context of international relations, and a more ‘humanely’ conducted war will give the victor: An enemy that is less afraid of surrender, better relations with other states after the war and an easier task in the reconstruction of the disputed territory. However it should be obvious that a law of war can be no more than mitigatory in effect.
A criticism commonly leveled at the jus in bello is that in its attempt to humanise war it encourages it. This argument has a major flaw; the inherent cruelty of war does not prevent its occurrence. If this were so it is difficult to imagine how war could be contemplated after the carnage of Verdun, the Somme and Passchendaele. That war continues to occur is a reflection of the fact that rarely do those who start wars have to fight in them or otherwise become their victims. To deny humanitarian mitigation to those who find themselves engaged in combat would be cruel logic indeed.
The jus in bello is also called international humanitarian law. A division is often seen between Geneva law and Hague law. The Geneva is concerned with the protection of the victims of armed conflict. It is based primarily on the four 1949 Geneva Conventions. Hague law is concerned with the methods and means of warfare. It is based primarily on the 1899 and 1907 Hague Conventions.
Steps were taken in Rome in 1998 to setup an International Criminal Court, whose primary function would be the prosecution of crimes against the Geneva and Hague laws. The United States of America has indicated that it does not recognise the authority of this court, so it’s future is uncertain.
Posted in Strategy at 17:22 by Graham King
Strategy is the art of distributing and applying military means to fulfill the ends of policy – Lidell Hart
Strategy must now be understood as nothing less than the overall plan for utilizing the capacity for armed coercion – in conjunction with economic, diplomatic, and psychological instruments of power – to support foreign policy most effectively by overt, covert, and tacit means. – Robert Osgood
Strategy is the theory and practice of the use, and threat of use, of organized force for political purposes. – Colin Gray
This section is sourced from Strategy in the contemporary world, An Introduction to Strategic Studies by John Baylis, James Wirtz, Eliot Cohen and Colin S. Gray. It is a book I highly recommend. Any miskates are my own.
Relevance
Strategic Studies is the bridge between military means and political goals; it is a sub-field of Security Studies, itself a sub-field of International Relations which is a sub-field of Political Science. From the 50’s to the 80’s it was the dominant sub-field of International Relations.
The Berlin Wall fell in 1989, but the NATO powers had barely had time to start re-appraising their military needs when Iraq invaded Kuwait in August 1990, followed by a decade of Somalia, Rwanda, Bosnia and Kosovo, leading straight into the attack on World Trade Center, then the American invasions of Afghanistan and Iraq. The end of the Cold War has not brought peace to everyone, nor given strategic planners much more sleep.
Mind-set
The philosophical viewpoint of contemporary strategists is what they call Realism.
Realism is a clear recognition of the limits of reason in politics: the acceptance of the fact that political realities are power realities and that power must be countered with power; that self-interest is the primary datum in the action of all groups and nations – Gordon Harland
Realism has a pessimistic view of human nature, subscribing to the views of Thomas Hobbes that people are inherently destructive, selfish, competitive and aggressive, and that these destructive traits can never be eliminated. Strategists attempts to minimise the likelihood and severity of international violence, but do not believe in the possibility of permanent peace.
Strategic studies focuses on the relationships between states. Unlike domestic society, there is no authoritative government to create justice and the rule of law. Realists note that states reserve the right to use lethal force to achieve their objectives, a right that individuals living in civil society have given up to the state. Who wins in international relations does not depend on who is right according to some moral or legal ruling but purely on the balance of power.
Realists see a limited role for ‘reason’, law, morality and supra-national institutions in world politics. As there is no ‘world government’ to enforce international law, to promote a universal moral code, or even to enforce the decisions of organisations such as the United Nations, states will agree with the law, moral code or decree when it suits them and disregard it when it threatens their interests. Realists see supra-national organisations not as truly independent actors but as agents set up by states to further their national interest.
Criticism
If you have read this far, you may well be thinking that the field of Strategic Studies is obsessed with conflict and force, insufficiently concerned with ethical issues, part of the problem, not the solution, and state-centric. These are the main points of criticism of Strategic Studies.
They respond by saying that yes they are interested in conflict and violence, in fact that is what they study, in the same way that computer programmers are interested in computers. They recognise that their field of study is only a sub-field of International Relations.
On the second point, they claim that they cannot let ethics interfere with their morally neutral scholarly detachment.
The third point, that strategists are part of the problem, not the solution, can be translated as: viewing military power as a legitimate instrument of policy helps to perpetuate a particular mind-set among national leaders and the public which encourages the use of force. Strategists respond that they reflect, rather than create, the reality of international relations. That most policymakers and elected officials tend to share their assumptions is because of the threats and challenges presented to them, not because of the strategists mind-set. They believe that conflict cannot be permanently avoided, but that effective strategy can mitigate it.
On that final criticism, that they are state centric, they say that they do concern themselves with intra-state conflict (Kosovo, Bosnia, Chechnya), but as the state is the main actor in world politics, that continues to be their main focus.
Posted in Finance at 17:19 by Graham King
Commodities
Commodities are anything that you can take physical delivery of, such as sugar, coffee, wheat, etc. Many have heard the story of the trader who bought a pork belly future, intending to sell the contract at a profit. He forgot about it and when the contract expired a lorry full of pigs arrived at the bank to deliver the pork bellies he had agreed to buy !
Financial commodities are bullion (gold) and energy.
LIBOR
London Interbank Offered Rate. The rate at which banks lend / borrow from each other. The rate depends on how long the loan is for, so it is usually quoted as 3m LIBOR (if borrowing for 3 months), 6m LIBOR, etc. If the currency is not sterling then it is quoted as well – for example 3m $ LIBOR or 6m EUR LIBOR. Investments typically have to pay more than LIBOR because otherwise we could simply lend the money to another bank at LIBOR. Hence LIBOR is a reference rate.
Liquidity
How easy it is to convert an asset into cash. Government bonds and equity in large companies are very liquid because there are many buyers and sellers constantly active in the market. An option on the currency of a small country or a very exotic, highly structured, bond would be illiquid because it would be hard to find someone to buy them from you.
Making Money
Banks make money from:
- The bid / offer spread: The difference between what they buy something at and what they sell it for. This is the same as the buy / sell on high street foreign exchange boards.
- Fees: Most investments made through a bank incur a fee – the bank makes money whether the investment does or not.
- Time value of money
Over The Counter (OTC) / Exchange traded
An instrument traded OTC is negotiated directly between buyer and seller. An exchange traded instrument is bought and sold in a specific physical location where buyers and sellers meet. Most financial business used to be conducted in exchanges by open outcry (buyers and sellers stand in a circle and shout out what they are selling and buying). The traditional image of a trader in a colorful jacket shouting and waving his arms is open outcry. Nowadays computer networks mean buyers and sellers do not have to be in the same physical location, and most business is OTC.
Vanilla
The most popular and ‘ordinary’ flavor of ice-cream. Used to mean the simplest most common type of a financial instrument. The opposite of ‘exotic’.
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