Sunday, October 26, 2014

Tycoons Under Tyranny - From Hong Kong to Moscow


One often imagines that the life of a tycoon, even under a totalitarian government, is a life brimming with excitement and glamour, jetting off on a moment’s notice on their amenity-laden customized private jet to close a deal, then spend lunch or dinner with friends and associates at a Michelin rated eatery overseas before returning back the same night to one of their many worldwide starquitect-designed penthouse condos. However a tycoon’s life under a totalitarian regime is, as the saying goes, “Is complicated.”

In order to operate, even exist under such a regime, a tycoon must be pro-government. It’s the government that guarantees them sole source lucrative, contracts and shelters them from mutual enemies. It’s a Faustian bargain in which the government secures the tycoon’s silence to their brutal practices of pacifying the population in order to loot the country’s riches. Despite their billions, non-conformance to government policies can result in imprisonment, even execution. The government controls the security apparatus and broadly ‘interprets’ or breaks the law of the land with impunity.

On the street the citizens decry the tycoon’s silence on discriminatory economic and humanitarian matters. The citizens can’t materially harm him because he manages the monopolistic industries that manufacture and provide the basic goods and services that the citizens need. As a result only the tycoon’s public image takes a hit, not their bottom line.

As a result a tycoon is caught in the middle.  He’s nothing more than a wealthy pawn of the government who can easily replace him on a whim with the preferred next choice. The government conveniently uses a tycoon as a front to implement unpopular economic policies. And should the citizenry violently oppose these policies, government media-run propaganda can placate the citizenry by using the tycoon as a convenient scapegoat.

The most demanding role of a tycoon is to endlessly curry favor with the right governmental inner circle of power and influence. Like any large and powerful organization regardless of their political or ideological belief, these organizations operate on a particular logic. Tyrannies are not monolithic. Like any large group they’re composed of layers of various groups within and peripheral to the inner circle who are constantly jockeying for influence. Sometimes there are mini-coups in which today’s inner circle is suddenly replaced which may find the tycoon now on the outside looking in.

In a worst case scenario, his personal bank accounts can be frozen, passport confiscated and mini-empire dismantled through an arm-twisting merger at below market price for no reason whatsoever. The tycoon is nothing more a wealthy working stiff whose assets can vanish overnight. For him it’s a perpetual effort to placate the right group of the political Rubic cube and is subject to the same blackmail as corporate drones whose superiors demand unwavering exclusivity of their services and loyalty.

Through equally ruthless and brutal methods of his own, he’s made a choice to sell his soul to achieve fame and fortune. The cleverer of this breed less bound by ego, already have options to flee the country, squirrel away their assets overseas, and even purchase foreign citizenship.

This proves that tycoons have far less influence on political power and government policy that is perceived. Just because you’re a tycoon, you’re still answerable to a higher, more powerful authority. That’s why it’s the concept of becoming a dictator rather than a tycoon is much more appealing to those who crave total control. Politically power trumps money.

Copyright Indo-Brazilian Associates LLC 2014. All rights reserved.



Indo-Brazilian Associates LLC is a NYC-based global advisory service and think tank with connections at the highest levels specializing in international investment, political and security risk assessments. International business is increasingly complex featuring a highly mobile professional class in all corners of the globe. We provide you the tools to successfully negotiate cross-culturally in your global business endeavors. Tell us about your challenges.  We'll get on the "Short List".

Available for speaking engagements and workshops. Contact us at:

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Wednesday, October 22, 2014

Cuba: Exporting Good Will or Good Business?


Sometimes it takes a humanitarian crisis to reveal the extent to which a foreign country with significant business investments is committed to improve the well-being of the community. Recent news reports indicate that China is contributing 170 doctors to tackle the Ebola crisis. Despite China’s tremendous investments in Africa, Cuba, which has almost none, is providing 460 doctors, almost three times as many as China. Cuba’s population is equivalent to the Chinese city of Shenzhen and half that of Shanghai.

Outside of the U.S., the other countries with substantial political or business investments in Africa include Brazil, India, Japan, Russia, South Africa and France. Most of them just wrote checks. Only Russia and France are sending medical assistance, 8 virologists and 15 medics respectively.

Cuba doesn’t engage in external activities unless there’s a tremendous upside. Decades ago Cuba exported armed revolution to Africa with soldiers to fight the apartheid South African government. Years later they changed tactics and exported doctors to Venezuela (with a smattering for security specialists for the late Hugo Chavez) and continue to do so in exchange for preferred oil prices.

Now Cuba is exporting doctors to Africa to combat a more implacable foe than the armed forces of apartheid era South Africa. However their humanitarian efforts thousands of miles away in another continent are actually aimed for political benefits a mere 90 miles from their coast. Cuba’s political profits are derived from exports.

The announcement of exporting doctors to West Africa was cleverly politically timed with Fidel Castro’s publicly released statement requesting the US to restore diplomatic relations and lift the decades old embargo. Although the contribution of 460 doctors is needed and will be well-received in West Africa, it’s exceptionally unusual for a poor country to send medical personnel to an even poorer country that’s not even a neighbor.

Cuba is putting a human face on a dictatorship with their version of “soft power” through a medical assistance contingent for the purposes of receiving favorable political considerations. This export of good will to save lives runs contrary to their domestic practice of torture and deprivation to their political prisoners and other refusniks who criticize the Cuban government’s policies.

Interestingly both the US and Cuba are over-stretched in these disciplines. Cuba’s long-time medical and security advisory service presence in Venezuela secures cut-rate price oil. The long-term US military presence in the Middle East secures and insures additional oil supplies at cut-rate prices. The question is to what extent is their participation overseas draining their military and medical resources domestically and for how long will their respective citizenry tolerate it?
Copyright Indo-Brazilian Associates LLC 2014. All rights reserved.


 
 Indo-Brazilian Associates LLC is a NYC-based global advisory service and think tank with connections at the highest levels specializing in international investment, political and security risk assessments. International business is increasingly complex featuring a highly mobile professional class in all corners of the globe. We provide you the tools to successfully negotiate cross-culturally in your global business endeavors. Tell us about your challenges.  We'll get on the "Short List".

Available for speaking engagements and workshops. Contact us at:

http://www.indobrazilian.com

Shadow Market Guardians - The Valkyrie of the Federal Reserve


Painful as it might be, think back to the near economic apocalypse of 2008 when we were at the brink of a worldwide economic collapse. The catalyst to our fears was not just the rapid stock market downfall, it was that no one knew the values and relationships of exotic financial instruments like derivatives. Even in a reasonably transparent financial environment this lack of hard information to explain the warp-speed market downdraft exacerbated the crisis. In turn, the inability for any of the economic or financial brain-trust to pinpoint the causes to the stark downward movements to employ a stop-gap or even a “kill switch” to halt the fall early in the crisis was unsettling.
Nowadays, the shadow market, unregulated, off-the-books and legal, is the Federal Reserve’s dark angel that is propping up economy around the world. The shadow market has a positive purpose even in good economic times if it’s limited in size and scope because containment is much easier. But once it grows to the size of 800 lb gorilla you have problems. Today we’re dealing with King Kong.
Shadow markets are everywhere, notably China because of its dominant size relative to the regular economy. Then again, because of conflicting economic data, China’s economy is one large shadow market equally mysterious to the Chinese and more developed foreign financial markets. Remember that we could barely get a handle on what was going on with our own transparent market. So imagine the reaction when a similar scenario occurs in the Chinese market. You can’t control what you don’t know. Shadow markets are not “too big to fail.” They’re just too big. The shadow market is like a scud-running (flying at low altitude), fully-loaded, fully-fueled A-380 jet in heavy fog with no radar and unable to climb higher than its current altitude. The eventuality is an economic fireball.
This brings us to the post-economic crash, crowd-control. Once the markets crash, the Fed’s financial Blackwater group called the militarized police, now a permanent presence - legal and in plain sight, could be used to literally quell panic in the streets – chiefly Main Street. Their suspiciously, unfettered and rapid development has occurred during the lowest violent crime period in decades since, ironically, 2008.
Now compare this 21st century law enforcement armament growth to the period after the Vietnam War.  Then during the 1970s surplus military equipment was never donated nor assigned to local law enforcement despite record high violent crime. Today, the armed-to-the-teeth militarized police are pre-positioned with several years experience to effectively pacify the citizenry when all hell breaks loose in the financial markets again.
This development is an unsettling parallel to “Operation Valkyrie” established by Nazi Germany to insure that there is a “continuity of government” in case of a general breakdown. The operational responsibility for this was the Nazi’s Reserve Army. The 1944 plotters who attempted to overthrow Hitler, successfully modified the policy earlier. With this modification, assuming the successful assassination of Hitler, a situation was created so that it appeared as if the assassination was a SS plot and that the Reserve Army would unknowingly support the plotters.
Perhaps we should take a closer look as to what government branch ultimately controls the militarized police (jump to minute # 32 to listen) during an emergency. Supposedly as the guardians of a free society they may be ordered to suppress rights legally instead of uphold them under a policy that may remain in place indefinitely. You’ll need more than umbrellas to protect yourselves.
Copyright Indo-Brazilian Associates LLC 2014. All rights reserved.

 
Indo-Brazilian Associates LLC is a NYC-based global advisory service and think tank with connections at the highest levels specializing in international investment, political and security risk assessments. International business is increasingly complex featuring a highly mobile professional class in all corners of the globe. We provide you the tools to successfully negotiate cross-culturally in your global business endeavors. Tell us about your challenges.  We'll get on the "Short List".

Available for speaking engagements and workshops. Contact us at:

http://www.indobrazilian.com


Ebola - Bad Social Medicine


As the real and imagined threat of Ebola increases daily so is the temptation for psychologically unhinged lone wolves and hate groups to exploit these fears. Already there’s a sense of inevitability that more cases will occur outside of West Africa particularly due to the ease of international travel and less than perfect border controls. It’s easier to smuggle in a virus than a box of Cuban cigars. The timing of this outbreak couldn’t be worse because of start of flu season during which the early symptoms of the Ebola virus are similar to the flu.

Our society consists of millions of law-abiding citizens who are over-medicated, de facto hypochondriacs with legitimate prescriptions living in a bubble world with no lethal communicable diseases. Suddenly Ebola is looming as a psychological dagger poised to burst this bubble.

Working in tandem with Ebola is another virus that has no cure: discrimination. This ancient virus has adversely affected humankind more than all the plagues combined throughout history. People-to-people eradication are known as pogroms. Virus-to-human eradication is known as a pandemic. We’ll eventually find a vaccine or cure for Ebola well before we find a cure for discrimination, a virus that may be permanently incurable.

The Ebola events are playing out like one of those far-fetched, sci-fi movies but with real-life, day-to-day psychological casualties. Because Ebola originated in Africa, African immigrants who live outside the affected regions are significantly more at risk to verbal and physical attacks. The scenario is inflamed by the high media profile and “less enlightened” celebrity types who unabashedly use Ebola as a reason ratchet up public fear of immigrants and justify closing the borders.

To take this further, it could result in the return of that despicable period when people of color and other “undesirables” based on their origin, couldn’t enter or use certain public places. Closed minded people may not physically post signs exclaiming, “No Africans allowed”, however it’s equally insidious and evil relative, the “soft” discrimination, may manifest with deliberately surly service. Or they could be subjected to a Gestapo-style interrogation with respect to where and when they’ve traveled and with whom they associate.

And amazingly there still remains a cadre of so-called top medical experts who exhibit professional hubris by claiming that it’s difficult to transmit Ebola and that developed countries can easily contain the virus. I can’t help thinking that perhaps these professionals are descendants of the scientific and religious brain-trust centuries ago who insisted that the earth was flat despite overwhelming evidence to the contrary. Often the most lethal pandemics are the ones that infect the psyche and are more damaging than the actual pandemic itself.
 
Copyright Indo-Brazilian Associates LLC 2014. All rights reserved.
Indo-Brazilian Associates LLC is a NYC-based global advisory service and think tank with connections at the highest levels. International business is increasingly complex featuring a highly mobile professional class in all corners of the globe. We provide you the tools to successfully negotiate cross-culturally in your global business endeavors. Tell us about your challenges. We'll get on the "Short List".

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Monday, October 6, 2014

The Dragon’s New Crowd Control Playbook


Hong Kong (HK) law enforcement, undoubtedly with explicit direction from the mainland Chinese government, applied savvy, soft containment tactics during the students’ weeklong demonstrations.
Firstly, there was no militarized police whose presence would have seriously aggravated the problem despite facing far more demonstrators than in Ferguson, MO.
Secondly, they did not apply kettling tactics which are designed to keep groups of people confined in one area for extended periods of time. The purpose of kettling is to tire out demonstrators and identify any agitators in the group. Instead, protestors were able to rotate, go home, shower, rest, eat and then return later. Although this enabled the protestors to prolong the demonstrations, this tactic was a safety valve to keep violence to a minimum. The young student protestors already feel restricted by China’s unethical and illegal application of the governance agreement, and being physically restricted as well could be the spark fuel for the demonstrations to spiral out of control. Remember, Hong Kong is one of the world’s most densely populated cities. It’s the equivalent if all 7.2 million Hong Kong residents were to occupy only Manhattan, an island measuring a mere 13 miles long and 2 miles wide.
Thirdly Hong Kong law enforcement was aided by the students’ strategy of demonstrating specifically in the business district and not marching elsewhere or demonstrating in multiple areas of Hong Kong. A mobile crowd or one which occupies multiple venues simultaneously would have posed an ominous challenge for HK law enforcement by stretching their resources and control crowd ability.  A mobile crowd can easily spawn smaller, possible more violent crowds.  Thus it was to HK law enforcement’s advantage to engage a static crowd.
Permitting a prolonged mass demonstration and letting it take its course is unusual for a totalitarian regime. China’s handling of this particular situation may be perceived as a new chapter for China in its crowd-control playbook, “kinder and gentler”. This is an illusion.
Many have compared the HK demonstrations to those in Tiananmen Square in 1989. There are critically distinct differences between them. Tiananmen Square is located near the heart of the Chinese government to which the demonstrations represented a direct challenge. Any concessions or conciliatory gestures by the Chinese government would have been tantamount to a humiliating loss of face. Remember that during period globalization didn’t exist and China still had a relatively small economy with hopes of entering the world stage.
HK democracy has been a highly transparent democracy many years. Today globalization rules and HK, far wealthier than mainland China, is geographically far from Beijing but occupies a critical post in China’s access to global business. In both instances the demonstrators were a narrow demographic: young people and students, which doesn’t worry Beijing all that much. Beijing would be far more concerned if the demonstrations were composed of a broad-based coalition of working class and all age groups which would signal far deeper problems for them. As a result, Beijing can more easily isolate one group, one class and unleash their propaganda machine to discredit this “ungrateful” troublemaker group. For Beijing if they control the media, they control the people.

Copyright Indo-Brazilian Associates LLC 2014. All rights reserved.

Indo-Brazilian Associates LLC is a NYC-based global advisory service and think tank with connections at the highest levels specializing in international investment, political and security risk assessments. International business is increasingly complex featuring a highly mobile professional class in all corners of the globe. We provide you the tools to successfully negotiate cross-culturally in your global business endeavors. Tell us about your challenges.  We'll get on the "Short List".

Available for speaking engagements and workshops. Contact us at:

http://www.indobrazilian.com