TERRORISM AND DETERRENCE POLICY WITH TRANSNATIONAL SUPPORT 1

This study provides an explanation of terrorism by examining interactions between the terrorist group with a minority as a potential pool of recruits and the government supported by a majority. A hawkish deterrence policy makes it more risky for terrorists to launch attacks, but heightens the anti‐government feeling of the terrorist group. In addition, the payoff for the government depends not only on the payoff loss associated with the level of terrorism, but also on the political payoff from the action itself of adopting a hawk policy due to its politicians’ vested interests. We first show that whether the deterrence policy should be ‘hawk to ‘dove is closely dependent on the relationships among the risk associated with terrorism, the anti‐government feeling of the terrorist group, and the political payoff for the government. This study then introduces transnational support enhancing the capability of a terrorist group to intensify its activity and shows that the emergence of transnational support may cause the government to reform its deterrence policy from ‘dove’ toward ‘hawk,’ with terrorism intensified in the society.     

Does Geopolitical Risks Predict Stock Returns and Volatility of Leading Defense Companies? Evidence from a Nonparametric Approach

Abstract

We use the k-th-order nonparametric causality test at monthly frequency over the period of 1985:1 to 2016:06 to analyze whether geopolitical risks can predict movements in stock returns and volatility of 24 global defense firms. The nonparametric approach controls for the existing misspecification of a linear framework of causality, and hence, the mild evidence of causality obtained under the standard Granger tests cannot be relied upon. When we apply the nonparametric test, we find that there is no evidence of predictability of stock returns of these defense companies emanating from the geopolitical risk measure. However, the geopolitical risk index does predict realized volatility in 50% of the companies. Our results indicate that while global geopolitical events over a period of time is less likely to predict returns, such global risks are more inclined in affecting future risk profile of defense firms.     

Neglected but affected: voices from the oil-producing regions of Ghana and Uganda

The ‘resource curse’ is the paradoxical theory frequently used to explain how a seemingly desirable asset, such as oil, can actually pervert an economy, erode governance, perpetuate conflict, and ruin local communities to the extent that it becomes a curse. New oil discoveries in western Ghana and western Uganda have raised concerns for the democratic prospects and future stability of these countries and their surrounding regions. Based on field interviews in these oil-producing regions, this report summarises how local communities have been affected thus far and their concerns for the future. The authors assess the extent to which each country is vulnerable to oil-induced instability, and identify groups or communities that would be most likely to perpetuate it. Lastly, it provides some assessment of the future trajectory of each country.     

政府适度负债规模的研究——从欧洲主权债务危机到中国地方政府负债风险谈起

在现代经济环境下政府倘若仅依靠自身财力,既无外债又无内债的发展经济已显不足;但凡经济发展较快的国家无不举债,依靠举债借助外力不仅能促进且能加快经济发展。然而近年西欧爆发主权债务危机,我国中央地方两级负债暗藏隐性风险,地方政府融资平台风险甚是暴露,也从另一个角度警示政府负债是一把双刃剑。而根据自身实力与未来发展预期适度负债才是最佳选择,负债不足与过度负债都是不可取的。本文通过对政府适度负债标准的研究,为各级政府提出一个适度负债标准或控制临界点,同时也为各级政府根据此标准对自身负债水平提出相应的预警及对策,从而保持经济的稳定发展。     

A Nonlinear Model of Military Expenditure Convergence: Evidence From Estar Nonlinear Unit Root Test

The paper builds a model to empirically test military expenditure convergence in a nonlinear set up. We assert that country A chooses a military strategy of catching up with the military expenditure of its rivals, subject to public spending constraints on public investments, including health and education, leading to decrease in long-term economic welfare. This implies nonlinear convergence path: only when the military expenditure gap between countries reaches the threshold level, will it provide incentives to catch up with rival’s military expenditures. We test this nonlinear catching up hypothesis for 37 countries spanning from 1988 to 2012. Results from individual nonlinear cross-sectionally augmented Dickey–Fuller (NCADF) regression indicate that 53% of countries converge to world’s average military expenditure: where 39% of countries converge to Germany; 33% of countries converge to China; 22% of countries converge to the USA, and 11% of countries converge to Russia. Interestingly, USA does not exhibit nonlinear military expenditure convergence toward world’s average level. For panel NCADF regression, the result suggests that on average, there is evidence for countries converging to USA’s military expenditure at 10% significance level. For the convergence to the world’s average, the statistical significance is at the 1% significance level.     

Rising Tide,Dispersing Waves: Opportunities and Challenges for Chinese Seapower Development

Abstract

This article surveys China’s current naval forces and considers key dynamics and possible Chinese naval futures to 2020, the projected end of Beijing’s ‘strategic window of opportunity’, the idea that a peaceful external environment for economic development, globalization, and integration of China into the global economy allows China to benefit from diversion of US attention to countering terrorism. It considers broad possibilities through 2030, the general limit of public US government projections, and by which time multiple factors will likely slow China’s growth and compete for leadership focus and resources.     

The future of the defence firm in small and medium countries

The Western European defence industry used to be characterized by numerous constraints, especially in the small countries, subject to uneconomic defence production policies. It faces, since the end of the Cold War, a succession of new challenges such as budget restrictions, armament reductions and geopolitical upheavals. The EU is pushing in the direction of a cohesive foreign policy, including security and defence. Today, the emergence of a more consolidated European defence industry and the presence of oligopolistic European companies imply the definition of new roles for the EU and for its European Security and Defence Policy (ESDP). The solution is not protectionism, but more co‐operation to ensure effective defence production at a socially acceptable cost. In the framework of this co‐operation, defence companies in small and medium countries have a role to play as part of the supply chain to major weapon system integrators.     

Indian and Chinese espionage

India and China both have powerful spy networks; completely different in their approaches to espionage; both effective against their perceived enemies. China focuses first on internal threats, on Taiwan and Hong Kong, and then the US and Japan. India’s defense policy focuses on Pakistan and internal terrorist threats, and then on China. In reality, however, when it comes to spying on each other, both China and India suffer from incompetence and apathy – which endangers both their own security and regional stability. This article looks at how they spy on each other, and asks why and how they need to improve. The narrative also touches upon some of the individuals who are waging the spy war, from India’s wily spymaster Ajit Doval down to junior Chinese agents such as Wang Qing and Pema Tsering. The two countries are not friends. They have the largest territorial dispute in the world on their hands, covering an area the size of North Korea, and they have large armies facing each other along 4000 kilometers of frontier. But they also lay claim to the world’s two oldest and richest civilizations, with a rich history of exchange, and now with a combined population of 2.6 billion people and more than a quarter of the world’s economic output. If they cooperated, they could solve many of the world’s problems; but if they lurch into conflict, the potential consequences are terrifying to contemplate. Unfortunately, despite their geographical closeness, they do not know much about each other. They have few cultural interchanges, little diplomacy, few trade missions. They do not watch each other’s films, read each other’s books or listen to each other’s music. Chinese tourists would rather fly to New Zealand for their holidays than cross the border to India, and Indian students would rather study in Europe than China. China and India are neighbors that barely talk to each other. Most significantly, they do not spy on each competently. For countries that do not interact socially, defensive understanding is important for security – but China prefers the glamor of facing up to its Pacific and other maritime rivals such as the US and Japan. India, for its part, does talk a great deal about the China threat, but its resources and expertise are wrapped up in controlling its security threat from Pakistan and the Islamic world. When China and India do try to spy on each other, it is often without the benefit of a long-term focus or understanding. India has some very skilled operatives within the Research and Analysis Wing, but few that specialize in China. China has an enormous pool of resources spread across several government departments, including the Ministry of Public Security, and also has extensive facilities and manpower in the Joint Staff Department of the Central Military Commission (the JSD) and the new Strategic Support Force (the SSF). However, China’s intelligence services generally behave as if India is not worth spying on. Given that the two countries do not have the cultural or political machinery in place to understand each other, espionage and intelligence gathering is vital to ensure that miscalculations do not take place. This has been apparent over the last few years in stand-offs in the Himalaya, as well as top-level suspicions on each side about a variety of subjects including terrorism, covert operations in Sri Lanka and Burma, and the two countries’ nuclear weapons programs. Both countries do occasionally make efforts in espionage against each other, especially during sensitive periods such as the mountain stand-offs of 2014 and 2013 and during policy developments in nuclear warfare. In this article the author looks at actual spying incidents between the two countries, their methodologies, their staff, their technical capabilities, and how the act of spying, which is usually viewed as intrinsically adversarial, can be a force for good. The article relies on interviews with actual participants in intelligence from both countries as well as extensive use of contemporary online sources, and secondary analysis by both military and academic experts from China, India and NATO countries.     

On Government-industry Nexus and Indigenous Armed Resistance

This paper proposes a simple game-theoretic framework for analyzing the relationship between the government, industry and indigenous community, especially in the context of mounting violence surrounding displacement of indigenous communities by governments for the purposes of commercial use of their habitat. It specifically takes into account the possibility of alleged ‘nexus’ between the government and the industry and explores its implications on the level of allocation and utilities of the players. We find that the bias in allocation that occurs when the government and the industry enter a ‘nexus’ can be rectified when there is resistance from the indigenous groups. Moreover, rebellion is a dominant strategy of the indigenous community, irrespective of whether there is ‘nexus’ or not, and being in ‘nexus’ with the government is a best response for the industry. The unique SPNE occurs when there is ‘nexus’ between the industry and the government and resistance by the indigenous groups, corroborating the widespread allegations of ‘nexus’ and evidence of resistance worldwide. We also explore a few extensions of the basic model and present some narrative evidence in support of the theoretical model.     

The economic policy of acquiring foreign currency in wartime: The example of Croatia

This paper attempts to describe the methods employed by the Croatian government in order to acquire the foreign currency which was essential for strategic imports during the period 1991–1995. The starting point for this was the fact that foreign currency was in the hands of Croatian households, export companies, and Croatian companies abroad. The Croatian central bank gained access to households’ foreign currency principally by gaining their confidence. It gained access to companies’ currency by means of “export rights”, and perhaps also as a result of the integration of political and economic positions which was a relic of the former Yugoslavia.     

Military Spending and Growth: The Role of Institutions

Recent literature on whether military spending affects economic growth argues that the relationship may be a conditional one. We add to this literature by considering the role that ‘good institutions’ play in the effect of military spending on growth. Using data from a sample of over 100 countries from 1988 to 2010, our analysis suggests that the effect of military spending on growth is generally negative or zero at best, and this effect is mitigated in the presence of good economic and political institutions.     

Economic sanctions and official ethnic discrimination in target countries, 1950–2003

Conventional studies on the consequences of sanctions tend to focus on the target society as a whole without specifying how foreign economic pressures might affect the well-being of vulnerable groups within target countries – the same groups who often disproportionately bear the burden of sanctions. This study explores the extent to which sanctions increase the likelihood of discriminatory government practices against one of the globally most vulnerable groups, ethnic groups. It is argued that sanctions contribute to the rise of official ethnic-based economic and political discrimination through contracting the economy and creating incentives for the target government to employ ethnic-based discriminatory policies. Using data on over 900 ethnic groups from 1950 to 2003, the results lend support for the theoretical claim that sanctions prompt the government to pursue ethnic-based discriminatory economic and political practices in multiethnic countries. The findings also indicate that multilateral sanctions are likely to be more harmful to the well-being of ethnic groups than sanctions levied by individual countries. Further, the negative effect of comprehensive sanctions appears to be greater than that of sanctions with moderate and limited impact on the target economy. The regime type of the target state, on the other hand, appears to have a significant role only in conditioning the hypothesized effect of sanctions on economic discrimination. Overall, this study’s focus on a vulnerable segment of the target society – ethnic groups – offers a greater understanding of the consequences of sanctions. It also provides additional insight as to how, in multiethnic countries, political elites might domestically respond to external pressures to retain power.     

Witchcraft and African development

Impressive investment and growth figures and commercial write-ups enthusing about ‘Africa rising up’, ‘the continent of the future’, and so on, obscure the poverty, illiteracy, poor health and other hardships afflicting the vast majority of African people. Why has massive so-called development and technical ‘aid’ not created the expected dynamic, autonomous economic progress? A blind eye is delicately being turned to the decisive role of people – more specifically, the cultural element. Notwithstanding good intentions, outsiders seeking to promote development assume that black Africans think and act like they only need more education, training and finance in order to ‘catch up’. Outsiders easily forget that since time immemorial, Africans have developed and cherished worldviews and cultures of their own. While these are by no means immutable and do adapt to changing needs and outside influences, Africans refuse to cast off overnight the heritage that makes them the people they are. This paper examines the impact of witchcraft as an integral feature of traditional culture on African existence, notably community life, religion, politics, the law, and economic practice. It stresses the significance of traditional society's powerful egalitarian impulses as well as its profound conviction that all things – goods, wealth, well-being and life force – are in a strictly limited supply that cannot be increased, but can only be redistributed by force or through magical manipulation. While modern life gradually weakens the influence of witchcraft beliefs – in Europe these flourished well into the 18th century – the exasperation associated with Africa's headlong urbanisation actually bolsters these beliefs.     

Geopolitical Risks and Movements in Islamic Bond and Equity Markets: A Note

This study applies a non-parametric causality-in-quantiles test to examine the causal effect of geopolitical risks on return and volatility dynamics of Islamic equity and bond markets. Geopolitical risks are generally found to impact Islamic equity market volatility measures, rather than returns. However, geopolitical risks tend to predict both returns and volatility measures of Islamic bonds. Interestingly, causality, when it exists for returns and/or volatility of Islamic equities and bonds, is found to hold over entire conditional distributions of returns and volatilities, barring the extreme ends of the same.     

Guns and butter? Military expenditure and health spending on the eve of the Arab Spring

We examine the validity of the guns-versus-butter hypothesis in the pre-Arab Spring era. Using panel data from 1995 to 2011 – the eve of the Arab uprisings – we find no evidence that increased security needs as measured by the number of domestic terrorist attacks are complemented by increased military spending or more importantly ‘crowd out’ government expenditure on key public goods such as health care. This suggests that both expenditure decisions were determined by other considerations at the government level.     

Warlords as alternative forms of Governance

Warlord is a label that currently besets us on all fronts. The 2001–2002 military action in Afghanistan is illustrative of the West's ambivalent view of armed factions in the developing world in general. The demonisation of the Taliban and the elevation of the former ‘warlords’ of the opposition to the rather more grandiose sounding ‘Northern Alliance’, at once formalising the hitherto informal nature of the warlord system, implies that the term ‘warlord’ is synonymous with anarchy, violence and a breakdown in civilised values. ‘Warlord’ has become an ugly, detrimental expression, evoking brutality, racketeering and terrorism. Analysts referring to violence across developing countries routinely refer to ‘new wars’ and ‘post-modern’ conflict, and yet the language used to describe these phenomena is usually pre-modern (medievalism, baronial rule, new feudalism). This article outlines some examples of historical warlords and draws out the common issues. In particular it emphasises the fact that warlords have been present for centuries and have periodically emerged whenever centralised political-military control has broken down. All that has changed through history is the technology available to each generation and the relative economic base. The article concludes with a series of implications for policy-makers currently considering intervention in warlord-based economies.     

Combating Islamist radicalisation in South Africa

Is radical Islamism spreading in South Africa? The answer has to be an emphatic ‘yes’. When discussing issues of radicalisation in Africa, commentators often examine the case of Somalia's al-Shabaab or al-Qaeda's North African franchise, al-Qaeda in the Islamic Maghreb (AQIM). Very little attention is paid to radicalisation amongst South Africa's Muslim population. Yet, there is growing evidence that South Africa has come to play an important role in global jihadi networks, from the provision of safehouses and identity documents to the movement of funds and the existence of paramilitary camps for local and foreign jihadis. This paper aims to briefly examine radicalisation and its attendant sources in the country, as well as seeking ways to combat it utilising lessons learned from other countries. ‘Institutional socialisation’ by means of the sources of radicalisation, as well as the concept of what could be termed ‘the democratisation of jihad’ are discussed. The author also proposes ways to combat radicalisation in South Africa utilising lessons learned from other countries, concluding that issues of radicalisation and deradicalisation have to be dealt with on the part of both government and the South African Muslim community.     

Morts pour la France: Demographic or Economic Factors?

This article offers a comprehensive analysis of the database ‘Mémoire des hommes’, which is a record of more than 1 million French soldiers officially recognized as dead during the World War I (WWI). Integrating this source with the 1911 census, we evaluate the potential numbers of recruits by French regional department. From this, a model identifies the factors affecting the number of deaths. While demographic factors are the principal determinants, adding significant economic, political and spatial factors reduces the unexplained variance between regions and significantly improves the explanation of the disparity in the number of deaths by region.     

俄罗斯等国对军警遂行反恐任务中权益的保护及启示

俄罗斯等国对军警遂行反恐任务中的权益作出五点保护：遂行反恐任务身体受到伤害、牺牲者,国家给予补偿金赔偿;因遂行反恐任务人身安全受到恐怖威胁,提出整容要求者国家予以解决;遂行反恐任务期间的军龄优惠计算;处置恐怖事件造成的损害免于法律追究;处置恐怖事件损失的个人财产由国家赔偿。俄罗斯等国对军警遂行反恐任务中权益保护的做法,对我国有两点启示：要进一步完善保护遂行反恐任务的武警官兵生命权等权利的法律;要进一步完善保护遂行反恐任务的武警官兵经济权利的法律。