Industrial Policy Comes Out of the Cold by * Justin Yifu Lin

One of the best-kept economic secrets was strongly reconfirmed in 2010: most countries, intentionally or not, pursue an industrial policy in one form or other. This is true not only of China, Singapore, France, and Brazil – countries usually associated with such policies – but also for the United Kingdom, Germany, Chile, and the United States, whose industrial policies are often less explicit.

Given that industrial policy broadly refers to any government decision, regulation, or law that encourages ongoing activity or investment in an industry, this should come as no surprise. After all, economic development and sustained growth are the result of continual industrial and technological change, a process that requires collaboration between the public and private sectors.

Historical evidence shows that in countries that successfully transformed from an agrarian to a modern economy – including those in Western Europe, North America, and, more recently, in East Asia – governments coordinated key investments by private firms that helped to launch new industries, and often provided incentives to pioneering firms.

Even before the recent global financial crisis and subsequent recession, governments around the world provided support to the private sector through direct subsidies, tax credits, or loans from development banks in order to bolster growth and support job creation. Policy discussions at many high-level summits sought to strengthen other features of industrial policy, including public financing of airports, highways, ports, electricity grids, telecommunications, and other infrastructure, improvements in institutional effectiveness, an emphasis on education and skills, and a clearer legal framework.

The global crisis has led to a rethinking of governments’ economic role. The challenge for industrial policy is greater, because it should assist the design of efficient, government-sponsored programs in which the public and private sectors coordinate their efforts to develop new technologies and industries.

But history also tells us that while governments in almost all developing countries have attempted to play that facilitating role at some point, most have failed. The economic history of the former Soviet Union, Latin America, Africa, and Asia has been marked by inefficient public investment and misguided government interventions that have resulted in many “white elephants.”

These pervasive failures appear to be due mostly to governments’ inability to align their efforts with their country’s resource base and level of development. Indeed, governments’ propensity to target overly ambitious industries that were misaligned with available resources and skills helps to explain why their attempts to “pick winners” often resulted in “picking losers.” By contrast, governments in many successful developing countries have focused on strengthening industries that have done well in countries with comparable factor endowments.

Thus, the lesson from economic history and development is straightforward: government support aimed at upgrading and diversifying industry must be anchored in the requisite endowments. That way, once constraints on new industries are removed, private firms in those industries quickly become competitive domestically and internationally. The question then becomes how to identify competitive industries and how to formulate and implement policies to facilitate their development.

In developed countries, most industries are advanced, which suggests that upgrading requires innovation. Support for basic research, and patents to protect successful innovation, may help. For developing countries, Célestin Monga and I have recently developed an approach – called the growth identification and facilitation framework – that can help developing-country governments increase the probability of success in supporting new industries.

This framework suggests that policymakers identify tradable industries that have performed well in growing countries with similar resources and skills, and with a per capita income about double their own. If domestic private firms in these sectors are already present, policymakers should identify and remove constraints on those firms’ technological upgrading or on entry by other firms. In industries where no domestic firms are present, policymakers should aim to attract foreign direct investment from the countries being emulated or organize programs for incubating new firms.

The government should also pay attention to the development by private enterprises of new and competitive products, and support the scaling up of successful private-sector innovations in new industries. In countries with a poor business environment, special economic zones or industrial parks can facilitate firm entry, foreign direct investment, and the formation of industrial clusters. Finally, the government might help pioneering firms in the new industries by offering tax incentives for a limited period, co-financing investments, or providing access to land or foreign exchange.

Our approach provides policymakers in developing countries with a framework to tackle the daunting coordination challenges inherent in the creation of new, competitive industries. It also has the potential to nurture a business environment conducive to private-sector growth, job creation, and poverty reduction.

As economies around the world struggle to maintain or restore growth in 2011, industrial policy is likely to be under a brighter spotlight than ever before. Given the right framework, there is no reason for it to remain in the shadows.

*Justin Yifu Lin is Chief Economist and Senior Vice President for Development Economics at the World Bank.

Istanbul talks: A Move Forward? by *Mohammad Reza Kiani

One month ago, Iran and the five permanent members of the United Nations plus Germany met for the first time in 13 months in Geneva to move negotiations further—a proposition which was offered by Iran. After the negotiations drew to an end, Iran and the six world powers agreed to meet again in Istanbul, although the wording of the agreement was disputed within hours.

In another remarkable move, a letter was recently made available by senior Iranian envoy Ali Asghar Soltanieh, in which Iran has invited Russia, China, the EU, and its allies in the Arab world and developing world to tour its nuclear sites, an apparent move to gain support before the fresh round of talks with six world powers. Some diplomats and Western officials view such developments pessimistically; however, such actions and reactions means that Iran, affected by domestic and international pressures, was bitterly forced to step up efforts to achieve a comprehensive rapprochement with the West concerning continuation of its controversial nuclear activities. Iran’s leaders are aware that in such a critical situation, particularly in the field of its domestic economy which is seriously affected by UN crippling sanctions and those enforced by the West, at least within the short term they should avoid any further actions which could frustrate the new momentum created for negotiations.

Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran and close ally of Ahmadinejad, who has been named caretaker foreign minister, is also a key variable for understanding new directions in Iran nuclear policy. Salehi has significant experience with life abroad. He studied at the American University in Beirut and at the Massachusetts Institute of Technology (MIT). After he fired Manouchehr Mottaki and appointed Salehi in his place, Iranian President Mahmoud Ahmadinejad said on state television that the negotiations in Geneva with the P5+1 countries had been “very good”, adding that it was time to move from the “politics of confrontation to the political agreement.”

This is the first time a possible continuation of negotiations beyond the Istanbul meeting scheduled for late January was discussed. “I hope we are moving toward understanding and cooperation. The people of Iran welcome cooperation with the great powers,” the president added. The current situation is quite appealing for negotiations, and could benefit all parties involved. In other words, the so-called crisis situation not only provides European countries with an opportunity for entering into ongoing negotiations but also for the Obama administration to resume previous diplomatic efforts for rapprochement—which were made before the disputed presidential election in Iran. American political realities strongly suggest the need for a comprehensive approach to US–Iranian diplomacy, just as mounting Iranian strategic concerns do.

Should this process proceed, it can be a prelude to further cooperation on common grounds and regional security, including the Arab–Israeli conflict, Iraq’s stability and Afghanistan, plus curbing terrorist threats and nuclear proliferation and ensuring an adequate long-term flow of oil and natural gas to international energy markets. Otherwise, and in the long-term, if the prevailing crisis condition continues, stubborn policies and radical measures will likely lead to outbreak of war in the region.

* Mohammad Reza Kiani is final year PhD candidate at Islamic Azad University, Science and Research Branch. 6 January 2011 

The Seduction of the Knowledge-Based Society by *Jeff Gates

The most promising trend in geopolitics is the transition from hydrocarbon-based economies to knowledge-based societies. Leadership for that change is emerging from Arab nations.

The appeal of the Knowledge Society is apparent. Who could object to nations preparing their citizens for the 21^st century? Yet unless knowledge is changed, the result could worsen an already dangerous situation.

The sharing of values and knowledge has long been the best way to bridge cultures and promote peace. That strategy is now essential to counter the success of those promoting The Clash of Civilizations.

Bahrain, Egypt, Jordan, Morocco, Qatar and the United Arab Emirates are breaking new ground with education models that build on state-of-the-art information and communication technologies.

This is the inevitable path for the Middle East and North Africa. Yet despite the best of intentions, if knowledge itself is not changed, the impact on Arab societies could aggravate trends that undermine progress.

Just consider the costs when knowledge is corrupted….

How Zionists Corrupt Knowledge

Those who induced the U.S. to war in the Middle East deployed knowledge like a weapon. With lengthy pre-staging, a narrative emerged that made it appear plausible—even desirable—to invade Iraq in response to the provocation of 911.

In retrospect, we now know that the knowledge on which the U.S. relied was false. All of it.

Iraqi WMD. Iraqi ties to Al Qaeda. Iraqi meetings in Prague with Al Qaeda. Iraqi yellowcake uranium from Niger. Iraqi mobile biological laboratories. All false, all traceable to pro-Israelis and all portrayed as true by media outlets dominated by pro-Israelis.

The Knowledge Society holds great potential to connect the Arab world globally. And to build with the West cross-border understanding and empathy. That is the Knowledge Society at its best. At its worse, knowledge can be exploited to manipulate behavior.

The ongoing manipulation of thought and emotion in the U.S. typifies the danger. When Arab nations grasp the common source of the false knowledge that brought war to the region, both the perils and the promise of the Knowledge Society will become apparent.

Yet even the risk of being seduced to war understates the threat. In the modern era, psychological operations (“psy-ops”) are routinely deployed to create consensus opinions and generally accepted truths—akin to the truth of Iraqi WMD.

Mindset Manipulation

The modern-day battlefield is the shared field of consciousness. Where else could consensus opinions reside? Or generally accepted truths. There too are found “field-based” phenomena such as credibility and celebrity that are also deployed to exploit thought and emotion.

When waging field-based warfare, the power of association ranks near the top as effective weaponry. For example, with global public opinion the target, Zionists arranged for U.N. testimony in February 2003 by Secretary of State Colin Powell who vouched for intelligence showing that Iraq had mobile biological weapons laboratories.

When the U.N. Security Council and a global television audience watched the testimony of this former four-star general, what they saw was his reputation for honesty. By the power of association, his credibility “bled over” to grant legitimacy to phony intelligence.

General Powell was only a celebrity prop in an elaborately staged play meant to enhance the plausibility of a global war on terrorism. That war began six weeks later.

Where other than in plain sight could such duplicity succeed? You can be watching field-based warfare and still not see it.

Even now, Powell may not yet grasp how two field-based properties (credibility and celebrity) were key to the psy-ops that seduced the U.S. to war for an Israeli agenda.

Freedom from Deceit

Mental and emotional exploitation lie at the heart of how knowledge is corrupted to catalyze conflicts, manipulate behavior and influence affairs from afar.

With a solid grasp of the methodology of deceit, the Knowledge Society can expose and, by design, displace those complicit in this cunning form of combat.

In preparing for the 21^st Century, Arab nations have an opportunity to free their citizens from the exploitation of those who for centuries have abused knowledge for their selfish ends.

Much of that abuse now proceeds through the unfettered freedom allowed finance. Educated over decades in a “consensus” mindset, lawmakers worldwide now believe in financial freedom as a proxy for personal freedom—regardless of the real-world results.

For the Knowledge Society to realize its potential, modern-day information and communication technologies must make these various forms of duplicity apparent and the perpetrators transparent.

Only with widespread knowledge of how facts can be displaced with false beliefs can the Knowledge Society be protected from such treachery.

Jeff Gates is author of Guilt By Association—How Deception and Self-Deceit Took America to War. See www.criminalstate.com

Uncertain World: Political Responses to Economic Challenges in the Next Decade by *Fyodor Lukyanov

The world is preparing for the worst in the next decade, and indeed the next few years promise to be rocky. The old world order has grown obsolete, and the leading countries have yet to forge a new order in its place.

 

Relations between the United States and China – which both define the global economy and are defined by it – will be the main collision point, determining the future trajectory of the world. 

The profound interdependence of these two countries – with the United States as borrower and consumer and China as lender and producer – has long been a burden on both nations. And as the global financial crisis has shown, an economic system based on U.S.-Chinese interdependence is unstable and capable of wreaking havoc around the world. Ideally, the two countries should join forces to diversify the sources of their growth and development, but first they must fundamentally change their economic policies.

China can do this, theoretically. Several years ago it initiated policies aimed at reducing its dependence on the U.S. market, but that goal cannot be achieved overnight and the risks involved are high. China needs to maintain the pace of its economic growth to ensure social and political stability. A major change in its economic policy could provoke the United States and the EU to take response measures that would not be in China’s interests.

The situation in the United States is even more complicated. There are deep political divides between the two political parties and in U.S. society at large, while a new economic strategy will require both national unity and substantial new investments. In this highly polarized political climate, there is little appetite for either. Washington will most likely have to search for a foreign policy solution to America’s economic challenges. In other words, it will have to wield its military and political influence to try to make China play by its rules.

Support for a hard-line approach to China could increase dramatically by the middle of the next decade, when a new political cycle puts a Republican back in the White House.

The difficulty for America is that its symbiotic relationship with China is more a domestic issue than a foreign issue for America, as it greatly affects both the unemployment level and the competitiveness of U.S. industry. 

The economic disagreements between the two countries are deep and global in nature, but it could very well be events in East Asia that cause an escalation. China, which has been acting cautiously on the international stage, has made its intentions in the region clear. China recently laid claim to almost the whole of the South China Sea, alarming its neighbors and Washington most of all, which sees this newfound Chinese assertiveness in the region as an unwelcome change. 

The countries in the region are looking on with concern. Most analysts agree that economically China has all but replaced the United States as the dominant power in East Asia. The question is: What will Washington do in response?

The United States has used the growing tension between the two Koreas as a pretext to build up its military presence in the region and to strengthen ties with its Asian allies: Japan, South Korea, the Philippines and Australia. However, if China continues to expand its influence in the region, some East and Southeast Asian countries may consider switching allegiance. To reverse this trend, the United States will have to flex its muscles. 

Territorial disputes, which China has with nearly all of its neighbors, could potentially lead to conflicts. The focal point is Taiwan, which could become an outpost of U.S. influence if U.S.-Chinese relations deteriorate significantly. Any U.S. actions regarding Taiwan could escalate tensions to the point of military conflict. An all-out war is unlikely, but a regional arms race and greater confrontation on all other issues are possible.

The United States and China have also started to butt heads in other parts of the world.

The Iranian nuclear problem will be resolved in the next decade, one way or another. If negotiations fail, the United States could use military force to neutralize Iran’s nuclear capabilities. But this show of strength will also be a message to China, the largest foreign investor in Iran, that the United States is not afraid to use force to reaffirm its authority. True, the outcome of a military strike on Iran is unpredictable, and it could very well backfire and weaken the United States, as was the case in Iraq.

U.S.-Chinese disagreements are unlikely to escalate to the point of armed conflict, if only because China is aware of its relative weaknesses. Washington could take measures to curtail China’s economic expansion across the world and to strengthen relations with its traditional allies in the region and with other countries that could be used to offset China, primarily the “neutral” Southeast Asian countries, India and, possibly, Russia.

Russia will have to review its international strategy if China’s role in global politics changes. The world is changing, and the era when the West was Russia’s reference point is coming to an end. The role of the West (and Europe in particular) in the world is decreasing, while China, with which Russia shares the longest land border, is surging to the fore.

It was believed before that Moscow would never accept the role of Beijing’s junior partner. But now things are not so black and white, and Russia may have to get used to the idea in the next decade. 

This, of course, is only one of many possible scenarios, and efforts could be made to prevent this from happening. One thing is clear, though: As the U.S.-Chinese confrontation grows, Russia will be forced to choose a side.

The underlying problem in today’s world is that the global economy has outgrown national policies. This fact is clearly seen in U.S.-Chinese relations, problems in the European Union, and the vastly different national responses to the global economic crisis. Initially, it was believed that this problem could be overcome if political processes were modeled after economic ones – through the trans-nationalization of politics, which is just what the EU intended. But there is another option: To return to more traditional economic processes, which would require gradually scaling back globalization.

The next decade of the 21st century will likely be a period of political responses to economic challenges. Globalization was once a beneficial process, especially for the leading economies that acted as its driving force. The West may now benefit from curtailing globalization, as China and India are becoming increasingly dependent on the global market. It is China and India, not the West, that stand to benefit most if globalization continues at the present pace.

Scaling back globalization would be no mere change in policy but rather a paradigm shift requiring great political will and skills and a clear understanding of the end goal. But the emerging powers will not sit idly by; they will try to maintain the current trajectory of the global economy.  

Neither politicians nor the public are ready for such a drastic change. But, if nothing else, the last 20 years have shown us that the improbable is far from impossible. 

Uncertain World: U.S.-Russian alliance cannot be ruled out

Uncertain World: A troubled year across the former Soviet Union

Uncertain World: Arguments against Russia joining NATO

Uncertain World: Lukashenko set for re-election, not surprisingly

Uncertain World: WikiLeaks document dump to undermine Obama’s clout in Moscow

Uncertain World: Unfinished business - Asia’s troubles rooted in a disputed past

Uncertain World: A quarter-century of going in circles

Uncertain World: The disputed Kuril Islands and Russia’s broader Asian strategy

Uncertain World: Talking Afghanistan without schadenfreude

Uncertain World: Russia’s Asia challenge

*

Is Russia unpredictable? Perhaps, but one shouldn’t exaggerate – its randomness often follows a consistent pattern. But is the world at large predictable? The past two decades have seen all forecasts refuted more than once and have taught us only one thing – to be ready for any change. This column is on what the nations and governments are facing in the era of global uncertainty.

*Fyodor Lukyanov is Editor-in-Chief of the Russia in Global Affairs journal – the most authoritative source of expertise on Russian foreign policy and global developments. He is also a frequent commentator on international affairs and contributes to various media in the United States, Europe and China, including academic journals Social Research, Europe-Asia Studies, Columbia Journal of International Affairs. Mr. Lukyanov is a senior member of the Council on Foreign and Defense Policy and a member of the Presidential Council on Human Rights and Civic Society Institutions. He holds a degree from Moscow State University.

Faith in a Globalized Age by *Tony Blair

For years, it was assumed, certainly in the West, that, as society developed, religion would wither away. But it hasn’t, and, at the start of a new decade, it is time for policymakers to take religion seriously.

The number of people proclaiming their faith worldwide is growing. This is clearly so in the Islamic world. Whereas Europe’s birthrate is stagnant, the Arab population is set to double in the coming decades, and the population will rise in many Asian Muslim-majority countries. Christianity is also growing – in odd ways and in surprising places.

Religion’s largest growth is in China. Indeed, the religiosity of China is worth reflecting on. There are more Muslims in China than in Europe, more practicing Protestants than in England, and more practicing Catholics than in Italy. In addition, according to the latest surveys, around 100 million Chinese identify themselves as Buddhist. And, of course, Confucianism – a philosophy rather than a religion – is deeply revered.

There is a huge Evangelical movement in Brazil and Mexico. Faith remains for many in the United States a vital part of their lives. Even in Europe, the numbers confessing to a belief in God remain high. And, of course there are hundreds of millions of Hindus and still solid numbers of Sikhs and Jews.

Those of faith do great work because of it. Around 40% of health care in Africa is delivered by faith-based organizations. Muslim, Hindu, and Jewish relief groups are active the world over in combating poverty and disease. In any developed nation, you will find selfless care being provided to the disabled, the dying, the destitute, and the disadvantaged, by people acting under the impulse of their faith. Common to all great religions is love of neighbors and human equality before God.

Unfortunately, compassion is not the only context in which religion motivates people. It can also promote extremism, even terrorism. This is where faith becomes a badge of identity in opposition to those who do not share it, a kind of spiritual nationalism that regards those who do not agree – even those within a faith who live a different view of it – as unbelievers, infidels, and thus enemies.

To a degree, this has always been so. What has changed is the pressure of globalization, which is pushing the world’s peoples ever closer together as technology advances and shrinks the world. Growing up 50 years ago, children might rarely meet someone of a different cultural or faith background. Today, when I stand in my ten-year-old son’s playground or look at his friends at his birthday party, I find myriad different languages, faiths, and colors.

Personally, I rejoice in this. But such a world requires that mutual respect replace mutual suspicion. Such a world upends traditions and challenges old thinking, forcing us to choose consciously to embrace it. Or not.

And there is the rub: for some, this force is a threat. It menaces deeply conservative societies. And, for those for whom religion matters, globalization can sometimes be accompanied by an aggressive secularism or hedonism that makes many uneasy.

So we must make sense of how the world of faith interacts with the compulsive process of globalization. Yet it is extraordinary how little political time or energy we devote to doing so. Most of the conflicts in today’s world have a religious dimension. Extremism based on a perversion of Islam shows no sign of abating; indeed, it will not abate until it is taken on religiously, as well as by security measures.

This extremism is, slowly but surely, producing its own reaction, as we see from Islamaphobic parties’ electoral gains in Europe, and statements by European leaders that multiculturalism has failed.

Of course, throughout time, religion has often been part of a political conflict. But that doesn’t mean that religion should be discounted. On the contrary, it requires a special focus. I see this very plainly spending so much time in Jerusalem, where – East and West – there is an emphatic increase in religiosity.

I started my Faith Foundation precisely to create greater understanding between the faiths. My reasoning is simple. Those advocating extremism in the name of religion are active, well resourced, and – whatever the reactionary nature of their thinking – brilliant at using modern communication and technology. We estimate that literally billions of dollars every year are devoted to promoting this view of religion.

So my Foundation has a university program – now underway in nine countries – that is designed to take religion out of the sole preserve of divinity schools and start analyzing its role in the world today. We have another program – in 15 countries, with others set to join – that links high school students across the world through interactive technology to discuss their faith and what it means to them. And we have an action program through which young people work with those of another faith to raise awareness of the Millennium Development Goals, the United Nations-led program to combat world poverty.

We are just one organization. There are others starting. But governments should start to take this far more seriously. The Alliance of Civilizations, begun by Spain and Turkey, is one example. The King of Saudi Arabia has also shown great leadership in this sphere. Yet this is not just about bringing high-level people together. It has to be taken down into the grassroots of nations, especially into the media of their young people.

Finally, religious leaders must accept a new responsibility: to stand up firmly and resolutely for respecting those of faiths different from their own. Aggressive secularists and extremists feed off each other. Together, they do constitute a real challenge to people of faith. We must demonstrate the loving nature of true faith; otherwise, religion will be defined by a battle in which extremists seize control of faith communities and secularists claim that such attitudes are intrinsic to religion.

This would be a tragedy. For, above all, it is in this era of globalization that faith can represent reason and progress. Religion isn’t dying; nor should it. The world needs faith.

*Tony Blair is a former Prime Minister of the United Kingdom. Project Syndicate, 2010.

Commonsense Money by *Jeff Gates

Since 1913, debt has been the only way that we in the U.S. have known to create money. Choking on debt yet short on money, Americans are reeling from too much monetary theory and too little commonsense.

Those who sold us the theory also ensured recurring recessions. Each debt-induced cycle features rich-get-richer booms followed by debilitating busts. We designed our way into this mess. We can design our way out.

As yet, there’s no sign that policy-makers know a way out. Nor do their advisers. Over the past century, every economist has been educated the same. They are unable to see the real problem because the theory they were taught is the source of the problem.

The U.S. Federal Reserve model of central banking was one of America’s key exports. Every nation now “monetizes” pretty much the same way—with debt. 

Good news is on the horizon from major exporting nations. Many of them are Islamic and flush with money. Much of that money originated as debt in industrialized nations.

Those nations are staggering under immense debt. Much of that debt is owed to nations where they must buy oil and gas to fuel their economies and generate funds to…repay debt. 

Yet the creditors too are in a bind. Where can they prudently invest their vast pools of debt-backed money? Do they buy more U.S. government debt? Euro bonds? Do they hold their reserves in dollars, euros or pounds sterling—all debt-based? 

Invest instead in commodities and they just bid up the price. That may be good news for speculators but it is not a sensible risk management strategy. So what to do? When all else fails, commonsense may yet find its way into this debate.

Tomorrow’s Commodity Today

The safest commodity is one you can control. Look at China’s control over rare earth metals. However control of that sort is a beggar-thy-neighbor approach, akin to investing in precious metals like gold or silver. Such investments miss the point—and the opportunity.

The commodity hedge for the foreseeable future is clean energy, particularly solar power due to its abundance and ease of collection. Clean energy is also what must be monetized—not debt but electrons captured by solar panels and converted to useable energy.

Monetization comes with an implied promise. To maintain value, currencies must be backed by productivity—the capacity to generate real goods and services. Productivity is what makes a financial security truly secure.

Those who designed America’s central banking system assured us that debt-based “monetization” would be backed by real productivity. That thin tether to reality was severed in 1971 when backing for the U.S. dollar shifted from precious metals to a candid slogan now stamped on U.S. currency: “In God We Trust.”

Federal Reserve Chief Alan Greenspan not only trusted Wall Street’s “financial creativity,” he also enabled it with cheap credit. Layer upon layer of cross-collateralized debt produced little more than more money for financial sophisticates. Meanwhile real people living in real communities witnessed the dismantling of the U.S. economy.

Ask around. Would those with commonsense prefer their money secured with debt or with clean energy? Which is more secure? 

Those who propose we reform central banking miss the point. Why reform it when, by design, it can gradually be displaced? 

Instead of relying solely on debt-backed money, why not also issue asset-backed currencies? Why not complement centralized money with decentralized monies? Instead of one-size-fits-all money, why not tailor currencies to the diverse needs of communities?

Rather than trust in God, why not put your faith in money secured by clean energy?

Commonsense Money

Total assets in sovereign wealth funds now exceed $8.1 trillion. China has reserves approaching $2.4 trillion. Oil exporters have considerably more including $1 trillion held by the United Arab Emirates and $510 billion by Norway. 

As an energy exporter with large currency reserves, Russia is revisiting the wisdom of investing in other countries those funds generated by the sale of its natural resources.

With increasing frequency, political leaders are looking at the global financial crisis as an opportunity to reconsider what they monetize—and for whom. That suggests commonsense may yet find a way.

An alternative is known, available and viable with energy-backed “complementary currencies” designed to operate parallel with national currencies.

Do not expect leadership from the U.S. Those who sold us the current system retain too much control—for now.  Their interest lies in more money secured by more debt. Or backed by nothing at all.

Look for this overdue innovation to emerge from cultures long wary of those who collect fixed interest regardless of the debtor’s condition. The Quran forbids it as “riba.” The Bible forbids it as “the pound of flesh.” 

The source of this common malady is now coming sharply into focus—as is the cure.

*Jeff Gates is author of Guilt By Association – How Deception and Self-Deceit Took America to War. See www.criminalstate.com

The Collapsing Hegemony of the West by *Kourosh Ziabari

In its path towards becoming a major regional and international player, Iran is achieving remarkable breakthroughs in science and technology which have started to flabbergast the rivals around the world, including the United States, once an economic and scientific leader and the neighboring countries in the Persian Gulf region that are years from reaching self-sufficiency in meeting their domestic needs.

Historically, Iran has been known as a cradle of civilization and home to a number of leading scientists and scholars in various fields of knowledge and academic endeavor. Many of the world's prominent scientific accomplishments and discoveries were first brainstormed, proposed and realized in Iran and the international community owes to the Iranian scientists its familiarity and acquaintance with a number of outstanding scientific achievements.

In the contemporary age and since the victory of Islamic Revolution in 1979, a growing tendency towards scientific activities and scholarly research began to appear in Iran and the country's scientific developments attracted international attention ever more. Since the victory of Islamic Revolution, a number of high-ranking, prestigious universities were established in Iran and the number of university students increased dramatically. According to the statistics, the number of university students in the year 1978 would not exceed 150,000; however, as of 2009, there are more than 2.5 million students studying in the universities of Iran.

The statistics released by the researchers who investigated Iran's scientific developments over the past 30 years also indicate that the country has seen an unbelievable advancement in terms of producing knowledge and scientific data. The Institute for Scientific Information (ISI) has announced that Iranian scholars and researchers have published a total of 60,979 scientific papers in major international journals during the past 19 years.

Mohammad-Hassan Aboutorabi Fard, the First Deputy Speaker of the Parliament of Iran has announced that the total number of scientific articles published by the Iranian scientists in the international journals during the first 50 days of the current Iranian year (starting March 21, 2010) outnumbers the total scientific articles published in Iran over the years leading up to the Islamic Revolution.

Iran's advancements in science and technology have been so notable and outstanding that even the most hostile enemies of the Islamic Republic have admitted the country's prominent position as a scientific hub in the Middle East and Persian Gulf region.

In terms of motor vehicle production and nationalized automobile industry, the statistic of the International Organization of Motor Vehicle Manufacturers indicate that Iran is currently the 12^th largest automaker in the world, surpassing powerful economic and industrial powers such as the United Kingdom, Sweden, Italy, Russia and Australia. This simply shows that Iran is currently the largest automaker among 57 Islamic countries.

In terms of aeronautic capabilities, Iran is among the world's 9 countries which are scientifically capable of placing satellites into orbit and have the independent capacity to produce the necessary launching vehicle for it. Powerful economies such as Germany, Canada, Italy and Australia are not among these 9 countries.

In terms of scientific knowledge production, Iran has made dazzling breakthroughs in the recent years and in some cases, surpassed its most powerful rivals to the surprise of international community.

According to Ja'far Mehrad, the President of the Islamic World Science Citation Center, Iran is among the world's top 25 countries in term of science production. According to Mehrad, Iran qualified to the 22^nd rank in the year 2009 and surpassed countries such as Scotland, Austria, Denmark, Greece, Finland, Mexico and Norway and snatched the first berth among the Islamic countries in term of scientific papers published in the international journals.

As to the production of medicines and drugs for the chronic diseases, Iran ranks the first among the Middle Eastern countries, the Minister of Health and Medical Education says.

Overall, Iran is currently competing with the world's most powerful countries in terms of scientific activities and is not far from becoming an incontestable scientific hub in Asia.

Iran's nuclear program is in line with the country's long-term objectives for becoming a scientific superpower in the world and this is what the Western countries cannot tolerate. Nuclear energy is the only arena in which the bullying powers can employ political leverages to pressure an independent nation such as Iran to hinder its scientific progress. If Iran achieves the complete cycle of nuclear energy production, it can meet its needs in electricity, medicine and agriculture and then will be needless of Western states, so this self-sufficiency will be harmful to the long-run interests of the West and that's why they try restlessly to prevent Iran from fulfilling its nuclear program.

However and so forth, the world should accept that Iran is a new scientific power which has the capability to stand on its own feet and even help the other independent nations of the world in their scientific projects. Nuclear energy, Information and Communication Technology, nanotechnology and all of these areas of scientific endeavor are today dominated by the Iranian researchers and scientists and nobody can put a barricade on this path toward progression and supremacy.

*Kourosh Ziabari is an Iranian freelance journalist and media correspondent. His articles and interviews haveappeared on a number of media outlets and news websites including Tehran Times, Press TV, Global Research and Foreign Policy Journa.