Massenbach-Letter. NEWS 02.12.16

Massenbach-Letter. News

· Plans of Russian-Iranian Economic Cooperation in Caucasus could be undermined by Religious Tensions

· Russia—EU Relations at a Crossroads. Common and Divergent Interests

· A Tale of Two Economies: Russia and the US – Regionalization can reveal much about countries’ economic structure and relative power

· Anomalies in Russia – Are Russia’s banks failing or recovering?

· WSJ: China Struggles to Steady Yuan’s Decline * With traders going short, depreciation is speeding up

· WSJ: China Issuing ‘Strict Controls’ on Overseas Investment

· Joerg Barandat: WATERINTAKE 05/2016

· Five Myths About Landing a Good Job Later in Life -The conventional wisdom says it’s impossible. The facts say otherwise

Massenbach*Plans of Russian-Iranian Economic Cooperation in Caucasus could be undermined by Religious Tensions.

By Anton Chablin, freelance journalist, Stavropol, Russia

The capital of the North-Caucasian Federal districts created by Vladimir Putin in 2010, is Pyatigorsk. Here is the residence of the Plenipotentiary of the President in the North Caucasus and the North Caucasus offices of law enforcement agencies. Here are the most important humanitarian and scientific activities, which emphasize the vector of development of the North Caucasus.

November 15-16, Pyatigorsk hosted an international forum under the auspices of the Russian Ministry of foreign affairs, in which was attended by official delegations from Georgia, Armenia, Azerbaijan, Estonia, as well as the partially recognized states of the South Caucasus – South Ossetia and Abkhazia.

The forum was attended by experts and scholars in various humanities, heads of NGOs, business representatives and business associations. The main theme of the forum was cross-border cooperation.

This topic is very important for the North and South Caucasus, which is currently complicated relations between states and between different provinces within Russia.

Over the past 25 years here was the bloody local wars (Ossetian-Ingush, Russian-Georgian, Georgian-Abkhazian, Armenian-Azerbaijani). The geopolitical consequences of these conflicts are not resolved so far, e.g., not solved political and legal status of Nagorno-Karabakh.

After the so-called «five-day war» between Russia and Georgia in August 2008, the two states broke off diplomatic relations. Bilateral meetings in Europe spend the special representative of the Prime Minister of Georgia Zurab Abashidze and Deputy foreign Minister of Russia Grigory Karasin. After the election in November 2013, the President of Georgia Giorgi Margvelashvili of the Georgian-Russian relations began to improve significantly. Russia has officially opened its market for Georgian wine and mineral water, is currently being discussed by the permission of export of agricultural products from Georgia.

For the development of economic cooperation between the two countries must direct transport links.

Before the Winter Olympics in 2014, Georgian Airlines has launched charter flights between Sochi and Tbilisi. In addition, currently, began the restoration of the Abkhazian railway, with a length of 101 km along the Black sea coast. This is the only railway linking Georgia and Russia and partially recognized Abkhazia. The road operated until the beginning of the Georgian-Abkhazian war in 1992, but now is partially ruining and not functioning.

The forum also discussed the prospects of recovery road through Tskhinvali (Transcaucasian highway or so-called Transkam), which connected the territory of Armenia and Russia (North Ossetia). This road was closed to traffic after the Russian-Georgian war of 2008. Currently the main flow of goods from the territory of Armenia, which is on the territory of Russia, is the only working Georgian Military road, which is constantly blocked due to descent from mountains avalanches and debris flows.

The need to restore traffic on the road Transkam is very large, because the flow of transit of goods from Armenia to Russia is constantly growing. In 2013 it was imported by a Georgian Military road in the territory of Russia is 120 thousand tons of cargo from Armenia and from the beginning of 2016 this figure amounted to almost 270 thousand.

Participation in the international forum in Pyatigorsk under the auspices of the Ministry of foreign affairs took a large delegation of representatives of Iran. Arrived in the capital of the North Caucasus teachers of Tehran public University. Currently, this university is the largest not only in Iran but also in the Middle East, it trained more than 50 thousand students. In the structure of the University established the Institute for the study of the Caucasus.

Representatives of Iran spoke about the joint cultural and economic projects. Iran is developing the transport corridor "North-South", which must link the Black and Caspian sea in the North and Oman and Persian Gulf in the South. In July in Sofia, an agreement was signed between the five countries (Armenia, Georgia, Iran, Bulgaria and Turkey) for the creation of this transport corridor "North-South".

In the Caspian sea Iran already operates six ports and was recently launched the most modern of them under the name of Astara. The authorities in Tehran unveiled plans to build three port facilities on the Caspian sea under the names Cumhal, Kiashahr and Chaboksar. Through these ports, Iran will actively trade with Russia, and to ensure the flow of transit cargoes, which are then passed through the territory of Russia will be sent to East and Central Europe.

In the Gulf of Oman is developing one of the largest in the water area of the Indian ocean is the Iranian port of Chabahar, the capacity of which as a result of modernization must be much larger.

In addition to port infrastructure, Iran is developing a land transport route that will allow it to strengthen trade and economic ties with neighbouring states – Russia, Kazakhstan, Turkmenistan, China, Afghanistan, Armenia.

In particular, in December 2014, was opened by Eastern-European railway linking Kazakhstan, Turkmenistan and Iran.

Iran supports the construction project of the South-Armenian railway, which will pass through the towns of Meghri, Vayots, Dzor and Yeraskh. On the border of Iran and Armenia will create a free trade zone.

Iran is interested in increasing natural gas supplies to Armenia, which will be delivered in exchange for electricity from the Yerevan and Hrazdan thermal power plants.

The Iranian experts who came to the international forum in Pyatigorsk, talked about the need for strengthening cultural ties between Iran and Russia. Strengthening the ties will help to combat the spread in the Caucasus, radical forms of Islam (Salafism), which are not native to this area.

Traditional republics of so-called Eastern Caucasus (Chechnya, Ingushetia and Dagestan) is a branch of Islam, like Sufism. At the same time that Persia is the ancient homeland of several Sufi brotherhood, a Sufi manuscripts written in Persian language.

Official representatives of the Tehran state University offered to conduct bilateral trade fairs, cultural weeks, conferences, producing joint films (including documentaries).

However, unfortunately, the cooperation of Iran and Russia in religious and humanitarian sphere is not always productive. 17 November (the day after the forum) in one of the largest cities of Dagestan, Kaspiysk, held a private screening of the Iranian film "Muhammad – the Messenger of God."

This film was produced by renowned Iranian Director Majid Majidi, nominated for Academy Award. Financed a film from Iran, the state budget, the cost was $ 55 million. The film tells about the first 13 years of life of the Prophet Muhammad, that the least studied by theologians.

In many Muslim countries now have forbidden to be shown as Sunni Islam prohibits any images of the prophet Muhammad. However, Iran is not profess Sunni Islam, and the other branch of Islam – Shi’ism.

The film was shown in several European countries, e.g. Sweden and the UK. The film "Muhammad – the Messenger of God" was shown in several cities of Russia, which is the largest state in Europe by number of Muslims (according to various estimates, Russia is home to 30 million Muslims).

The screening of the Iranian film sparked protests among a large number of Muslims in Dagestan who profess Salafism. The Chechen mufti Salah Mezhiyev, who professes Sufism, has banned Iranian film "Muhammad – the Messenger of God" to be shown in his republic.

These examples illustrate the fact that economic and trade cooperation between Iran and Russia will involve a large number of social differences associated with the peculiarities of mentality in the various provinces and sub-regions.

Unfortunately, even the most advanced economic projects need to sacrifice for the sake of preserving social and political stability. And most often it comes to such compound, mosaic regions of the planet as the Caucasus.

Anton Chablin, candidate of political sciences, political analyst and observer


From our Russian news desk:see attachment.

Russia—EU Relations at a Crossroads. Common and Divergent Interests


A Tale of Two Economies: Russia and the US

Regionalization can reveal much about countries’ economic structure and relative power. –

By Jacob L. Shapiro

Power is a relative concept. To say that one state is powerful means nothing. Power only derives meaning if it is evaluated in comparison. Two of the states whose powers we constantly re-evaluate are Russia and the United States. Much of our analysis is driven by just how weak we believe the Russian Federation is.

When we look at its moves in Syria or Eastern Europe, we keep in mind Russia’s relative strengths and weaknesses compared to its neighbors and the United States. There are many different ways to evaluate this discrepancy, but comparing the regional economies of the U.S. and Russia is particularly striking.

The first element of this analysis must be to recognize how much larger the U.S. economy is than the Russian economy. Russia is the largest country in the world in terms of area – almost 11 percent of the world’s landmass is sovereign Russian territory – but Russia’s economy pales in comparison to the U.S.’ According to 2016 first-quarter figures from the U.S. Department of Commerce, U.S. GDP is around $18.1 trillion.

Russia’s economy is roughly a tenth the size of the U.S.’ (the World Bank stated that Russia’s GDP in 2015 was $1.3 trillion.) According to the Stockholm International Peace Research Institute, U.S. military expenditures in 2015 were 3.3 percent of GDP, and Russia’s were 5 percent of its GDP. That still puts Russia among the top five military spenders in the world, but in absolute terms it means Russia’s military expenditures add up to roughly 10 percent of U.S. military spending.

(click to enlarge)

One of the results of Russia’s physical size is a highly regionalized economy, as the map above shows. Russia is a federation, or a collection of 85 different federal subjects that range in structure from autonomous regions and republics to individual cities. But for bureaucratic and governing purposes, Russia divides these 85 regions into nine larger districts.

The above map shows what percentage of the economy each of Russia’s disparate regions contributes. The figures are noteworthy. According to the latest available data from the Federal State Statistical Service, the Central Federal District accounts for 35 percent of the entire Russian economy. Located in this district, Moscow alone accounts for 21.7 percent of the entire Russian economy. That means that Russia’s capital city accounts for more of the Russian economy than any individual region in the U.S.

Geopolitical Futures subscribers likely have noticed that our daily Watch List recently has sharply focused on regional economic problems in Russia.

The above map helps explain why. Russia’s economy has been severely hurt by the drop in oil prices, and as a result, the Russian government is instituting spending cuts on social services across the federation.

The first place those cuts will manifest will not be Moscow, but rather poorer and more isolated districts such as the Far East or Siberia. Small protests in an oil-producing region in the Ural Federal District last week attracted our attention precisely because we expect Russia’s economic issues to manifest in these areas first. The regime that rules from Moscow possesses a great deal of wealth in absolute terms, but it is not enough to govern the rest of Russia without a firm grip that will have to tighten as Russia burns through reserves and cuts more social spending.

The U.S. is roughly half the size of Russia in area, but still is a very large country relative to most. The U.S. is also a federation of 50 states with different economic interests.

The union of these states was not always a foregone conclusion: The U.S. first briefly existed as a confederation, and a Civil War was fought before the union of states was truly solidified. Even so, the states that make up the union have always been more interconnected than Russia’s disparate regions.

Russia’s population clusters along its western border with Europe and its southern border with the Caucasus, and all of Russia’s rivers and infrastructure point west, which is why so much of its economy is concentrated in one area.

The U.S. population is increasingly concentrated on coasts and in urban centers, but the country’s internal circulatory system since 1803 has been the Mississippi River; its vast and navigable water system explains why the economies of various states have developed as they have.

(click to enlarge)

Like Russia, the U.S. Department of Commerce also divides the U.S. into nine discrete regions for bureaucratic purposes. What stands out in the map above is that while the U.S. certainly has regions that account for a greater share of the U.S. economy, overall, economic activity is much more spread out.

The Southeast region, even without Texas, actually contributes the most to total GDP. The Mideast and the Far West are not far behind. New York City is the U.S.’ largest, and its greater metropolitan area comprises about 7 percent of the country’s total GDP. But that pales in comparison to the outsized role Moscow plays in the Russian economy.

Furthermore, almost every U.S. region has a major state economy. In Russia, the Central Federal District and a few far-flung oil-producing regions produce the country’s wealth. In the U.S., wealth is far more spread out. California, Texas and New York are the three biggest state economies, located about as far away from each other as they can be on a map. They are engines for regional economies as much as they are important contributors to the national economy. The situation is by no means perfect. The Rocky Mountains region is by far the least important in terms of the economy, representing just 3.4 percent of the country’s total GDP.

But compared to Russia, the U.S. economy is less dependent on government handouts from Washington than Russia’s various regions are dependent on money from Moscow.

All national economies are regionalized at some level. But the point here is to show how broad patterns of regionalization can reveal much about the economic structure and relative power of particular countries. In Russia’s case, looking through this lens allows us to see how concentrated wealth is in the Russian Federation, which puts a great deal of strain on one district, and the capital city in particular. As a result, Russia must find the right balance of carrot and stick to rule a vast territory at a time when its chief moneymaker – oil exports – is less profitable than Moscow expected.

Russia’s greatest problems are internal and will require more of the stick, because the carrots have run out. U.S. wealth, on the other hand, is spread out much more evenly between its various regions. That means the U.S. economy is far more dependent on regional economic centers than on decisions made in Washington, and this is a source of power for the country.

Anomalies in Russia – Are Russia’s banks failing or recovering?

By Jacob L. Shapiro

On Nov. 22, an economist wrote in a Russian-language newspaper: “To judge by the flood of complaints, guarantees on bank deposits are ceasing to operate. People are often paid a fraction of their deposits and are being told that before closing the bank destroyed its documents, and your copies of the contracts are not binding for us!” (Translation by the BBC.) The article was not about banks in particular, but rather about the potential for early presidential elections in Russia in the spring of 2017.

It was another in a series of speculative articles that have appeared on the same topic. But the line in the middle of the story about banks stands out and warrants further investigation, because it raises serious questions about the current state of the Russian banking system and, more broadly, the Russian economy.

The article appeared in Moskovskij Komsomolets, a well-known newspaper with a circulation of roughly 700,000, mostly in Moscow.

The author served in various political capacities, most notably as former chairman of the Rodina party’s ideological council from 2004 to 2006. The party, also known as the Motherland-National Patriotic Union, had many founders, but the most well-known is Dmitry Rogozin, Russia’s deputy prime minister since 2011.

The party’s slogan in the mid-2000s was “For Putin, Against the Government.” The article’s tone is consistent with that message. It is critical of forces in the Russian government that allegedly sabotaged President Vladimir Putin’s economic goals, and claims that fresh elections would shake up the system. That shake-up would leave Putin with a freer hand as elder statesman instead of president. The article also references comments made earlier this month by a political analyst working for the Moscow State Institute of International Relations, which suggested Putin may “have to be absent from the public space for several months” in 2017.

Russia’s Deposit Insurance Agency (DIA) was established in 2004, and while its primary function is to make payments to depositors following bank failures, it has in recent years added the responsibilities of overseeing bankruptcy proceedings to liquidate insolvent banks and serving as the system administrator of Russia’s mandatory pension system. Since late 2014, the DIA has insured deposits in Russian banks of up to 1.4 million rubles, roughly $21,000 at current exchange rates.

Many Russians don’t put savings of that size into bank accounts. A 2013 countrywide study sponsored in part by Russia’s Ministry of Finance found that of 6,103 households surveyed, only 45.1 percent reported having savings, and the average balance of a household’s bank accounts was about 218,000 rubles.

But that doesn’t make the potential destabilizing effect of a failure of the Russian banking system any less serious.

(click to enlarge)

The above graph was made with statistics from the DIA. The numbers correspond with what one would expect from an economy dependent on oil exports. Russia has been under severe economic strain since oil prices collapsed in 2014, and sanctions imposed by the United States and European countries have dried up foreign investment into Russia as well as important sources of capital. In the first decade of the DIA’s existence, 157 banks had what the DIA deems an “insured event.” In simpler terms, the DIA compensated depositors for losses 157 times. In roughly the last three years, that number has increased by 209. From 2004 to 2009, 72,400 people applied to the DIA for deposit insurance compensation. As of the beginning of this month, 2.7 million more depositors have applied since then.

According to the DIA’s website, a depositor is entitled to receive compensation in two situations. The first is when the Bank of Russia decertifies an individual bank’s license, which halts that bank’s ability to engage in banking transactions. The second is when the Bank of Russia introduces a “moratorium on satisfaction of creditors of the bank.”

This is where details of what really is happening become hard to discern, because Russian deposit insurance kicks in not just in cases of bank failure, but also in cases of bank decertification. Russia’s Central Bank has decertified 24 banks since the start of the year. Moscow-based Arksbank’s license was revoked on July 19 for what the central bank characterized as “aggressive policies to attract deposits,” as well as a lack of adequate capital provisions for current investments. DIA characterized Arksbank’s activities as “fraud,” and said in a Nov. 23 statement that of 39,810 depositors, 37,044 had been compensated.

Two other cases present similar difficulties for analysis. On Nov. 3, the central bank revoked the license of Kamskiy gorizont bank, located in the Republic of Tatarstan, in Russia’s Volga Federal District. The central bank said Kamskiy gorizont had violated laws related to money laundering, and bad practices led to the loss of the credit organization’s own funds. According to the DIA, it began distributing insurance deposits on this case on Nov. 17, though it is unclear when all depositors will be covered.

Peresvet Bank, headquartered in Moscow, is another example. The DIA announced on Nov. 3 that it would begin insurance compensation of the bank’s depositors by Nov. 7, because the Bank of Russia on Oct. 21 issued a moratorium on satisfaction of creditors’ claims. Peresvet, which is 49.7 percent owned by the Russian Orthodox Church, reappeared in the news a few weeks later when Kommersant reported on Nov. 15 that the central bank had presented a proposal to Persevet’s creditors to save the bank by providing it with 106 billion rubles ($1.62 billion). The plan also reportedly called for a bail-in mechanism, though the precise details at this point are unclear.

A police officer guards the entrance to the head office of Russia’s Central Bank in Moscow, on Dec. 17, 2014.

Two distinct possibilities could explain the situation. It is possible that Russia is cleaning up its banking system by shutting down banks engaging in illegal or irresponsible activity. This could be taken as a sign of health for Russia’s banking system and might justify some of the optimism in recent statements by the International Monetary Fund and Russian government that the country will return to growth in 2017.

The central bank’s governor has said the banking sector may have an aggregate profit of 500 billion rubles ($7.9 billion) by the end of 2016. But it is also possible that underneath the rules and regulations, Russia’s banks are hurting far more than Putin and the Russian government want to admit. Relying on deposit insurance could be seen as an extreme measure of last resort. It would make the fact that the resources of the DIA’s Mandatory Deposit Insurance Fund have decreased by over 75 percent in the last two years particularly concerning. That some are complaining about not receiving payments of guarantees on bank deposits would be even more ominous.

Our model says Russia’s economy will continue to struggle, and there is no relief coming next year. The one thing Russia needs is higher oil prices, and it does not appear it will get them. If Russia’s banking system is in more serious distress than authorities are admitting, it puts Putin in a very difficult position, and perhaps explains some of the rumors of political machinations and early elections. Russia could theoretically print more rubles, but this time last year inflation in Russia was at 15 percent.

Russia has worked hard to get that figure down to 6.1 percent as of last month. A further weakening of the ruble is not something Putin wants in the lead-up to elections, whether they happen in 2017 or 2018, as planned (and as Kremlin spokesmen have steadfastly insisted). A string of bank failures is no more appealing. Ultimately, it is necessary to conclude that while we have our suspicions, there isn’t enough evidence yet to prove them. That isn’t normally how we do things, but this issue is important enough to raise the possibilities, and to inform our readers that we will continue to look closely for evidence in coming weeks and months to ascertain what is true.

Dmitri Trenin
Carnegie Moscow Center

Now that the U.S. presidential election is over and President-elect Donald J. Trump prepares to take office on January 20, governments and other experts are anticipating what his foreign policy will look like.

In a new article, Carnegie experts examine what governments all over the world expect from Trump’s victory and explain the potential implications of his presidency for the world order and the global economy.

As one of the contributors to the article, I argue that for Russia, Trump’s election is a chance to pull relations with the United States out of the danger zone and make deals on issues such as Syria and Ukraine.

Russia: Cautious Hope

Dmitri Trenin

The Kremlin did not anticipate Trump’s electoral victory. It was preparing for Hillary Clinton and the prospect of U.S.-Russian relations continuing to deteriorate, with a not-too-trivial chance of a kinetic collision between Russian and U.S. forces—such as through the imposition of a no-fly zone in Syria, which Clinton supported.

For Russian President Vladimir Putin, Trump’s election is a chance to pull relations with the United States out of the danger zone and make deals on issues such as Syria and Ukraine. Trump’s comment that “wouldn’t it be nice” to get “along with Russia,” his offer to join forces with Moscow to fight the self-proclaimed Islamic State, and his comment on Crimea’s people being happier now than under Ukraine’s rule have not gone unnoticed by the Kremlin.

Putin sees Trump as a fellow leader who cares more about his country’s national interests than about ideologies. In Moscow’s view, a United States that is largely focused on itself is far more welcome than a United States that seeks to dominate the world and aggressively promote its values, norms, and principles in a borderless environment.

That said, the Kremlin is fully aware of a myriad of uncertainties linked to the outcome of the U.S. vote. Who will occupy top positions in the Trump administration? Where will its ideas about U.S. foreign and security policy come from? Will Trump stick to his guns when it comes to Russia or will he eventually succumb to the existing anti-Russian consensus, thereby making peace with the political establishment?

Yet, for the first time in years, there is hope in Moscow that U.S.-Russian relations can be improved in a way that is acceptable to Russia. In particular, this would entail Washington leaning on Kiev to implement the Minsk II agreement while easing the sanctions regime on Moscow, as well as the United States and Russia resuming diplomatic collaboration in Syria and starting a joint military effort against extremists there.

This is a hope, not an expectation, and this hope may well be dashed. In the bigger scheme of things, however, the Trump phenomenon suggests to the Kremlin that the United States is becoming concerned with its global overextension. If this is confirmed, Russia is ready to play along.

Israel: A Honeymoon of Uncertain Duration

Ariel (Eli) Levite

On the face of it, U.S.-Israeli relations seem headed for a dramatic improvement once Trump takes office. Notwithstanding the broad and extensive collaboration between the two countries throughout Obama’s two terms in office—including Israeli deference to Washington on numerous security issues and massive U.S. security assistance to Israel—Obama and Israeli Prime Minister Bibi Netanyahu enjoyed no personal chemistry. Substantial policy differences repeatedly surfaced, particularly over Iranian and Palestinian issues, and each leader suspected the other of conspiring politically against him on his home front.

Given Trump’s attitude toward the two-state solution and the Iran nuclear deal and his repeated assurances of support for Israel, professed eagerness to work closely with Putin, vocal hatred toward the old establishment and the “left-leaning media,” and even his Jewish family connections, the new president-elect can expect to find a kindred spirit in Jerusalem. Moreover, he will meet an able and willing partner on a broad bilateral and regional agenda of checking Iran’s ambitions, confronting terrorism and religious extremism, and collaborating with Russia, as well as on other regional issues (which Trump has hardly addressed to date), ranging from the search for a peaceful settlement in Syria and stabilizing Lebanon to rebuilding closer ties with Egypt and Saudi Arabia. Yet, to date, Trump’s honeymoons have neither proven lasting nor been immune to distractions. Will things be very different in U.S.-Israeli relations once he becomes president?

Viewed from Jerusalem, the answer is uncertain despite favorable signs. Might Trump, once he enters the Oval Office, adopt an agenda that deviates from his campaign statements? Might his key appointees who deal with Israel be less enthusiastic about a renewed relationship, given that they may come from outside the traditional talent pool of the Republican (or Democratic) Party and hence not be accustomed to a close working relationship with Israel? Could some of his other foreign policy decisions undermine U.S. capacity to lead the free world, thereby weakening its capacity to provide Israel with a political and strategic umbrella?

Ironically, though, the biggest challenge for Netanyahu resides in the possibility that Trump might actually stick to his electoral platform and reverse Obama’s policy on the Palestinian issue, applying more pressure on the Palestinians to meet certain conditions for peace while holding back from condemning Israel’s settlement activity. Were he to do so, he would help incentivize the Palestinians to do more for peace but risk removing the single most important lever Netanyahu has employed in reining in the unbridled ambition of his extreme, right-wing coalition partners to destroy any remaining hope of eventually setting up a two-state solution. This possibility would force Netanyahu to choose between endangering his current governing coalition and mortgaging Israel’s future as a liberal democratic Jewish state.


Policy= res publica

Freudenberg-Pilster* Five Myths About Landing a Good Job Later in Life

The conventional wisdom says it’s impossible. The facts say otherwise.

There’s a stereotypical view of job opportunities for older workers, and it’s not pretty.

It goes something like this. If you’re past 50 and thinking of a career switch, forget it. The opportunities for older workers in the new economy are pretty much nonexistent. And you’re in even worse shape if you’re in your 50s or 60s and retired but want to get back into the workforce in a job that is both challenging and financially rewarding. The only spots available are low-skilled and low-paying—whether that’s burger flipper, Wal-Mart greeter or Uber driver.

Boy, have a lot of people have been misinformed.

The numbers make it clear that the nightmare scenario simply isn’t true. The 55-and-older crowd is now the only age group with a rising labor-force participation rate, even as age discrimination remains a problem for many older job seekers. Workers age 50 or older now comprise 33.4% of the U.S. labor force, up from 25% in 2002. And more than 60% of workers age 65 or older now hold full-time positions, up from 44% in 1995.

In addition, a large part of the long-term increase in employment growth has come from skilled jobs in professional-services industries, according to a 2013 academic paper. Another study found that from 1996 to 2012, just 1.4% of job seekers in their early to mid 50s landed in “old person” occupations—typically “low-paying, low-status” jobs in which older hires outnumber younger hires by at least 2 to 1.

“These are good jobs,” says Nicole Maestas, an economist and associate professor of health-care policy at Harvard Medical School and a co-author of the 2013 study. Moreover, she adds, older workers with experience and education “are competitive for these jobs, especially with their greater work experience.”

Still, the myths persist despite all the evidence to the contrary. Here are five prevalent misconceptions about working in later life—along with recent research that dispels those misconceptions.

Myth 1: I’m not going to find a good job.

REALITY: Baby boomers are getting jobs with better pay, status and working conditions than prior generations of older workers.

Older workers are benefiting from a number of trends—in the economy, the workforce and their own profile. For one thing, many boomers are living longer and staying healthier than prior generations. So they’re able to take on more demanding work and are better able to keep pace with younger peers.

Moreover, as the U.S. economy shifts from manufacturing to services, it’s creating more positions in which cognitive skills matter more than physical ability. That means more opportunities for older workers.

“We have more older-worker-friendly jobs now than we used to,” says David Powell, an economist at the nonprofit policy-research organization Rand Corp. and a co-author of the 2013 study with Prof. Maestas.

Then there’s a critical factor that may give older workers a leg up on younger ones: experience. At a time when many employers are grumbling about a shortage of skilled workers, older Americans have much more work experience than younger ones and may even seem like better prospects to many employers.

“The labor-demand study simply shows that when there is a shortage of skilled workers, older workers get jobs,” says Prof. Maestas.

Baby boomers are also better educated than previous generations of older workers, making them much better able to compete for positions. According to Harvard economists Claudia Goldin and Lawrence Katz, in 1990, 65-year-olds had an average of 11.5 years of schooling, or 1.8 years less than the 13.3-year average for 25-year-olds.

By 2010, Prof. Maestas calculates, older adults had 12.6 years of education, on average, versus 13.9 years for 25-year-olds. She and a co-author project the 1.3 year gap will shrink to just six months by 2030.

“Increasingly, older workers’ qualifications look almost the same as [those of] their younger counterparts,” says Matthew Rutledge, research economist at the Center for Retirement Research at Boston College and a co-author of the paper on people in “old person” occupations. In fact, he adds, they “may even look better because they have experience.”

Myth 2: You can’t take time off, or you’ll never get back into the workforce

REALITY: About 40% of people who retire take a break and then return to work, typically within two years.

Those findings come from Prof. Maestas, who used data from the Health and Retirement Study funded by the National Institute on Aging and conducted at the University of Michigan, which has tracked thousands of people over the age of 50 over the past two decades. About 60% of the study participants who took career breaks between 1992 and 2002 moved into new professions, according to Prof. Maestas.

“Many people reboot and do something new,” says Prof. Maestas, who says data from research published in 1990 indicates only 25% of older workers who retired in the 1970s took time off and returned to work.

Why the increase? One explanation is that the breaks may not be as harmful to a career as they used to be, given the shift toward service work. “Blue-collar work is typically more demanding and physical skills probably deteriorate faster than the interpersonal and knowledge-based skills that are more prevalent in services and white-collar work,” says U.S. Bureau of Labor Statistics research economist Michael Giandrea.

Another surprise from the research into retirees who take breaks and then return to working: Economic necessity doesn’t appear to play a big role in the decision. “It is not the poorest who return to work,” says Prof. Maestas. “It is the better off. It isn’t the lower educated. It is the highest educated. Every way you look at the data, it correlates with choice rather than economic necessity.”

Mr. Giandrea says that many people are interested in the “nonmonetary benefits of continued employment,” including “mental stimulation and continued social networks.” Plus, he adds, “I think it’s the case that many people like their jobs. We think people are revealing what they prefer through their actions. If they are continuing to work in later life, it’s certainly possible that they like their work.”

Still, older workers who take time off should be aware that the odds of becoming re-employed decline with age. According to a biennial survey sponsored by the U.S. Department of Labor, 73% of 25- to 54-year-olds who lost jobs between 2013 and 2015 that they had held for three or more years were re-employed by January 2016. For 55- to 64-year-olds, in contrast, the figure is 60%.

Myth 3: I’m not going to make as big of a contribution as I did in the past.

REALITY: Older workers can play a more vital role than ever.

When it comes to productivity, most academic studies show little to no relationship between age and job performance, says Harvey Sterns, director of the Institute for Life-Span Development and Gerontology at the University of Akron. Already, that shows that the popular view of older workers as dead wood simply isn’t true. But some research goes even further: In jobs that require experience, these studies show that older adults have a performance edge.

In a study published in 2015, economists at institutions including the Max Planck Institute for Social Law and Social Policy, a nonprofit research organization in Munich, examined the number and severity of errors made by 3,800 workers on a Mercedes-Benz assembly line from 2003 to 2006. The economists determined that over that four-year period, rates of errors by younger workers edged up, while the rates for older workers declined. Moreover, the frequency of severe errors decreased with age.

A new study by some of the same authors looked at a large German insurance company, and found no overall link between age and productivity. But in “more demanding tasks,” says co-author Matthias Weiss, a professor at the University of Applied Sciences Regensburg, productivity rises with age. Experience offsets “physical and cognitive decline in the more demanding tasks,” the study says.

There may be deep neurological factors at play. Academics have found that knowledge and certain types of intelligence continue to develop in ways that can offset age-related declines in the brain’s ability to process new information and reason abstractly. Expertise deepens, which can enhance productivity and creativity. Some go so far as to say that wisdom—defined, in part, as the ability to resolve conflicts by seeing problems from multiple perspectives—flourishes.

Wisdom doesn’t just help basic job performance: It makes older workers into valuable role models for younger employees. Older workers who spend time mentoring, lecturing, consulting, advising and teaching can make a “huge contribution,” says Brian Fetherstonhaugh, chairman and chief executive of digital and direct-marketing agency OgilvyOne Worldwide, and author of “The Long View: Career Strategies to Start Strong, Reach High, and Go Far.”

Older workers, he adds, are in a position to teach “the trickiest things younger workers need to learn, including sound judgment and how to build trust” with colleagues and clients.

Myth 4: The only type of work available to older applicants is part time.

REALITY: Since 1995, the number of people age 65 or older working full time has more than tripled.

That increase compares with just 56% for part-timers in the same age group. In all, 62% of workers 65-plus are now full-time workers, up from 44% in 1995, according to BLS statistics. “The rise in full-time employment among older workers tells us there are opportunities for them,” says Mr. Giandrea.

What’s more, not many part-timers—just 5%—would prefer to work full-time, he says. “Not only has full-time employment grown, but among those who usually work part-time, almost all want to work part time,” he says.

Why the shift to full-time jobs? Once again, the answer may come down to experience. “Older individuals may find that their job skills continue to be valuable in the service and white-collar work that is becoming more prevalent, thereby enabling them to extend their work lives,” Mr. Giandrea says.

Myth 5: The chance to be an entrepreneur has passed me by.

REALITY: Americans in their 50s and 60s make up a growing share of entrepreneurs.

According to the nonprofit Ewing Marion Kauffman Foundation, individuals between the ages of 55 and 64 represented 24.3% of the entrepreneurs who launched businesses in 2015, up from 14.8% in 1996.

In contrast, despite their reputation for having an entrepreneurial bent, Americans ages 20 to 34 launched 25% of the startups in 2015, down from 34% in 1996%.

The data indicate “the United States might be on the cusp of an entrepreneurship boom—not in spite of an aging population but because of it,” writes Dane Stangler, vice president of research and policy at Kauffman.

Experts say that with years of experience and savings to back their ideas, the baby boomers typically have advantages that younger adults lack when it comes to launching new ventures. Perhaps as a result, older entrepreneurs have higher success rates.

According to a 2008 report by researchers at City University of London’s Cass Business School, 70% of startups founded by people age 50 or older last longer than three years, versus 28% for those younger than 50.

In a 2009 study of more than 500 successful U.S. technology and engineering startups founded between 1995 and 2005, academics at Duke, Cornell and Harvard universities found that twice as many of the companies were launched by people over 50 as under 25. (The authors defined success as the company having at least $1 million in revenue, among other things.)

“Experience really counts,” says co-author Vivek Wadhwa, now a fellow at Carnegie Mellon University.

What’s more, for most, finances aren’t the main driving factor in the decision. “For many people, entrepreneurship is a choice they make,” says Arnobio Morelix, a senior research analyst at the Kauffman Foundation.

The trend, he adds, “seems to have very little to do with boomers being forced into” starting their own businesses. Indeed, according to Kauffman, just 16% of the oldest entrepreneurs report being unemployed before starting a business, the lowest rate among all age groups.

According to a 2015 Gallup Inc. poll, 32% of baby boomers who launched businesses say that they did so because it allows them to be independent. Another 27% say that it’s to “pursue their interests and passions.”

“It’s easier to pick your own hours if you are your own boss,” Mr. Morelix says.

In contrast, about one-fourth (24%) of baby boomers say that they started a business to supplement their income, while just 4% say they made the move because there are “no jobs available in my area.”

****************************************************************************************************************** Politics: From Vision to Action

Barandat* Joerg Barandat: WATERINTAKE 05/2016



September – Oktober – November


World Toilet Day 19 November

… 19 November, is about taking action to reach the 2.4 billion people living without a toilet. The theme of World Toilet Day 2016 is ‘toilets and jobs’, focusing on how sanitation, or the lack of it, can impact people’s livelihoods …


United Nations Climate Change Conference (COP 22)

Video from COP22 water event

07.11.2016 … looked at how to bridge the gap between the producers and users of hydro-climate services, between water and climate communities, and between science and policy-makers and negotiators …

-àmore see att. pdf.



Middle East

Wie erwartet (UvM):

Egyptian pilots flying Russian choppers in Syria.

DEBKAfile Exclusive Report November 26, 2016, 6:29 PM (IDT)

Egyptian President Abdel-Fatteh El-Sisi’s secret decision to intervene militarily in the Syrian war on the side of the Syrian President Bashar Assad is revealed here by debkafile’s military and intelligence sources. The precise details of that intervention vary from source to source.

1. According to one version, a group of Egyptian helicopter pilots – 18, according to one estimate – landed secretly a few days ago at the Syrian Air Force base in Hama and were pressed at once into service for strikes against Syrian rebel forces.

Some sources describe the Egyptian flight crews as taking over the cockpits of Russian attack/reconnaissance Kamov Ka-52 helicopters, with which they were familiar, having trained on them since the end of 2015.

2. Others say that the Egyptian airmen flew those helicopters from Egypt to Syria over the eastern Mediterranean.
3. There is also a claim that their arrival was preceded by a preliminary inspection of the Syrian front lines by two major generals from the Egyptian general staff operations division, who later submitted their recommendations to the Egyptian president. It is not clear if they met the Russian commanders in Syria during that trip.

4. Others say the Egyptian generals headed a military delegation, which has set up a permanent mission in Damascus.

But every one of those sources agrees that, one way or another, Egypt has secretly entered the Syrian war in support of the Bashar regime – a development which has raised a firestorm in Arab capitals.

Saudi Arabia is particularly incensed over El-Sisi’s move. For years, Riyadh granted Cairo billions of dollars in aid, hoping this was an investment for procuring the Egyptian army as the stalwart protector of the kingdom and the Gulf emirates against Iran.

But towards the end of last year, Riyadh was affronted when the Egyptian ruler turned down an appeal for ground troops to support the Yemen campaign against Iranian-backed Houthi rebels. An eye-opener came when Egypt showed sympathy for Assad’s fight against extremist Islamist groups in the rebel movement, especially those associated with the Muslim Brotherhood, which El-Sisi has outlawed in Egypt as the sworn foe of his regime. Then, when Cairo supported Russian pro-Assad diplomacy at the United Nations, Saudi Arabia abruptly cut off financial assistance to Egypt and discontinued its oil shipments.

Donald Trump’s election this month as the next US president has already become the catalyst of a major reshuffling of Middle East alliances and stakes.
Some of its rulers, including El-Sisi, see the landscape changing and may be gambling on Trump reaching a deal with Russian President Vladimir Putin for joint military operations in Syria against the Islamic State and other Islamic terror groups, including the Al-Qaeda affiliate, the Nusra Front. The new bandwagon about to roll appears to favor Bashar Assad and his army.

The US president elect’s take on the Syrian ruler is expected to be markedly different to that of outgoing President Barack Obama, who castigated Assad, but held back from fighting him on the battlefield.

debkafile reported exclusively on Nov. 21 that clandestine talks between Jerusalem, Amman and Damascus were afoot for the restoration of the demilitarized zone on the Golan and steps to stabilize their common borders in southern Syria.

Those talks are taking place with the knowledge of the Trump transition team and the Kremlin. They have already produced results in the return of UNDOF observers to their former posts on the Syrian Golan.

There are grounds to speculate now that the deployment of Egyptian aviators to Syria may be one more product of the secret inter-power diplomacy swirling in recent weeks over Syria’s bloody and intractable five-year war.


*Massenbach’s Recommendation*

WSJ. China Struggles to Steady Yuan’s Decline

With traders going short, depreciation is speeding up

China is facing an uphill battle to maintain an orderly depreciation of the yuan as investors pile up bearish bets against the currency outside the mainland.

The gap between the yuan’s value against the dollar in the domestic market and in what is known as the offshore market in Hong Kong, has been widening in recent days. On Wednesday, this so-called spread reached 0.0333, its widest since the beginning of October (apart from the day after the U.S. election), although it narrowed a touch on Thursday.

While the Chinese authorities strictly limit the way the yuan trades at home, it can be bought and sold more freely in Hong Kong. But its value against the dollar is usually about the same in both markets.

The widening gap now is complicating the central bank’s strategy of letting some air out of the currency at a pace Beijing dictates. The two yuan markets at home and in Hong Kong often feed off each other. Moreover, a weaker yuan offshore could encourage more Chinese businesses and individuals—the mainstay of the mainland market—to seek to convert their currency into dollars, potentially adding downward pressure on the domestically traded yuan.

China has tolerated a weaker yuan since early October, right after its entry into the International Monetary Fund’s elite group of reserve currencies, acknowledging that a cheaper currency is the price of using easy money to prop up the economy.

The pace of depreciation has quickened since Donald Trump’s surprise U.S. presidential-election win sent the greenback soaring and emerging-market currencies tumbling. The yuan is down 6.2% against the dollar this year in onshore markets, reaching 6.9152 against the dollar on Thursday, with more than a third of the drop in the past two weeks.

The People’s Bank of China is unwilling to let the currency slide too far, too fast, for fear that might lead to destabilizing capital flows out of the country.

Investors in offshore markets have, though, been pounding the yuan weaker, in the apparent belief that the central bank may struggle to control the pace of its decline.

Related Coverage

· Yuan Slides to Lowest Level in Nearly Eight Years

· China Marks Milestone With Yuan’s Entry Into IMF Reserve Basket

· Yuan’s Slide May Have More to Do With Economics Than Donald Trump

“The PBOC may intervene” to shore up the yuan, said Prashant Singh, a senior portfolio manager at Neuberger Berman in Singapore. But he said he expects the Chinese currency to fall further because of the gloomy outlook for global trade and the diverging economic trajectories in the U.S. and China.

“Central-bank-led interventions are typically temporary in nature,” Mr. Singh added. “The fundamental factors still point to weakness.”

Already, in the past week, some state-owned banks—which often act as proxy for the People’s Bank of China—have sold dollars to support the yuan after it dropped to its lowest level against the dollar in eight years onshore, traders say.

The central bank has also been setting the yuan’s daily official rate against the dollar, known as the “fix,” somewhat stronger than implied by the greenback’s strength against other global currencies in recent days, according to analysts, indicating its desire to avoid too sharp of a decline. The yuan hasn’t fallen as much against the dollar as have other currencies such as the yen, the euro and the Korean won recently.

The PBOC didn’t respond to requests for comment.

Earlier this year, when the gap between the yuan’s value at home and in Hong Kong also widened, the Chinese central bank directed state-owned banks to buy large quantities of yuan in the Hong Kong market, sending overnight borrowing costs to elevated levels that effectively prohibited investors from wagering against the currency.

This time around, however, short-term overnight borrowing costs in Hong Kong have remained around levels that analysts consider normal, suggesting little intervention offshore.

One factor that might have limited China’s ability to intervene more aggressively, analysts say, is its shrinking foreign-exchange reserves. The stockpile, still the world’s largest of its kind, fell to $3.12 trillion last month, its lowest since 2011. That compares to a record $4 trillion in June 2014.

Some analysts within China, including prominent economist Yu Yongding, are now urging the central bank to adopt a more flexible exchange-rate regime to help the yuan find its true market level.

The costs of intervention, they say, have become too high and could encourage capital flight. They have called on Beijing to take the step before Mr. Trump takes office in January: The New York businessman has pledged to label China a currency manipulator and to slap higher tariffs on Chinese goods.

“We have capital controls as the last line of defense,” Mr. Yu wrote in an article published in state media this week. “We don’t need to worry too much about the short-term depreciation of the yuan.”


WSJ: China Issuing ‘Strict Controls’ on Overseas Investment

Government to announce new measures intended to curb capital flight

Updated Nov. 26, 2016 6:54 a.m. ET

BEIJING—China plans to clamp tighter controls on Chinese companies seeking to invest overseas, intensifying efforts to slow a surge in capital fleeing offshore amid tepid growth and an uncertain economic outlook.

The State Council, China’s cabinet, will soon announce new measures that subject many overseas deals to reviews of “strict control,” according to people with direct knowledge of the matter and documents reviewed by The Wall Street Journal.

Targeted for particular scrutiny by the pending measure are “extra-large” foreign acquisitions valued at $10 billion or more per deal, property investments by state-owned firms above $1 billion and investments of $1 billion or more by any Chinese company in an overseas entity unrelated to the investor’s core business.

While the government has been plugging holes to keep more money at home in recent months, the new measures are the first to go after big deals by China Inc.

In doing so, the controls underscore Beijing concerns about capital flight and a weakening currency. They also come amid an overseas buying binge by Chinese companies.

Total overseas direct investment rose more than 50% to $145.9 billion in the first nine months of this year from the same time a year earlier, according to official data.

Chinese companies have been moving to scoop up needed technology and management expertise—much of it at Beijing’s blessing. Headline-grabbing deals include petrochemical giant China National Chemical Corp.’s pending $43 billion acquisition of Swiss pesticide maker Syngenta AG, and a bevy of real estate, finance and other investments by Anbang Insurance Group Co., a recently obscure company that has emerged as global deal maker.

In all, Chinese buyers have announced $212.7 billion of overseas acquisitions in 2016, a year in which announced global deal volume has reached $3.28 trillion.

Concerns have grown among officials that the investment splurge may in some cases serve as a cover for getting around capital controls and sending money overseas. “Greater caution definitely is warranted when it comes to what kind of overseas direct investment is allowed and which ones aren’t,” said a senior government adviser in Beijing.

The State Council’s information office did not immediately respond to a request for comment on the new measures. The new controls will apply to deals yet to receive approval from China’s top economic planning agency, the people familiar with the matter say.

The new controls, once in place, are to remain in effect until the end of September and thus are intended as a temporary tool to stabilize outflows ahead of a major reshuffle of the top echelon of the ruling Communist Party late next year, the people familiar with the matter said. That’s in keeping with other efforts by Beijing to try to keep the economy on an even keel before the leadership change.

China has been a magnet for foreign capital in recent decades, bolstering the economy. In the past couple of years, however, money has been flowing out as the long economic boom ebbs and the consumerism and services expected to drive new growth have yet to gather momentum.

A steady depreciation of the Chinese yuan, after years of overall strength, has ensued, and as businesses and individuals try to take more money out, the pressure for further weakening is piling on. In the past week the yuan has fallen to its lowest level against the dollar in eight years.

The country’s foreign-exchange reserves plunged $45.7 billion in October from September to $3.12 trillion. The Institute of International Finance, a Washington-based group of financial institutions world-wide, estimates that net outflows doubled to $207 billion in the third quarter from the previous three months. That figure is just shy of the estimated record $226 billion in outflows in the third quarter of last year.

Since then, authorities have sought to buttress the country’s financial borders, mostly by curtailing options for individuals to invest overseas. Those measures included a suspension of a quota-based program intended to allow more Chinese to buy foreign stocks and bonds and a ban on purchasing most types of foreign insurance policies with domestically-issued credit cards.

Attention on outbound investments has broadened recently. Officials at China’s foreign-exchange regulator warned in September that some companies as well as individuals may have fabricated deals as a way to circumvent capital controls and move money offshore.

Earlier this week, the central bank announced it will use a new risk-control system to monitor capital flows through Shanghai’s much promoted free trade zone, which previously was hailed as a bold experiment to liberalize China’s financial markets.

A five-page action plan released by the Shanghai branch of the People’s Bank of China stresses efforts to ensure that currency inflows exceed outflows in the zone—a backhanded suggestion that more money may be moving out of the zone than coming in.

The soon-to-be announced controls empower the Commerce Ministry and the top economic planning agency to take a closer look at larger deals, the people familiar with the matter said.

Under the current rules, companies trying to undertake many of the targeted transactions in foreign markets only need to register with the authorities and don’t have to go through any lengthy approval process.

Aside from the major transactions, other deals covered by the pending rules are: overseas direct investments made by limited partnerships, investments in overseas-listed companies that are less than 10% of those firms’ total equity, and Chinese capital trying to participate in the delisting of overseas-listed Chinese companies.



see our letter on:

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*



11-25-16 U.S. Allies and Rivals Digest Trump’s Victory – Carnegie Endowment for Inter.pdf

11-24-16 WATERINTAKE 05_2016.pdf

11-29-16 Russia-EU Relations at a Crossroads – Italy.docx