Islamic Finance - With SEDCO and our Erik van Dijk

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On page 115 of this magazine of the Italian Ministry of Foreign Affairs an interesting interview with various Islamic Finance specialists including our own Erik van Dijk and Hasan al Jabri, the CEO of SEDCO from Jeddah (Saudi Arabia), one of the best Islamic investors in the world.

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Islamic Finance - With SEDCO and our Erik van Dijk

  1. 1. Sovereign debt solutions – Europe’s financial fringe Longitude #41e Italian Monthly on World Affairs Posteitalianespa-spedina.P.-Dl353/03art1,comma1,DCBVerona Borders €12.00 in italy eu €18.50 - us$ 26.00 Featured Briefing Jeff Bezos, tracing new directions august/september 2014 Mapping our changing world
  2. 2. taking care of energy means creating new energy, together to you, it is an energy-saving light bulb. to us at eni, it is a commitment to train future generations with greater awareness and respect for energy. Lab4Energy is a training project that, from January to June 2014, will involve schools from 10 or more countries in which we work. via a social network and streamed classes, students will attend lectures on technical, environmental and social issues regarding energy, given by experts, internationally renowned opinion leaders and lecturers from of one of the most prestigious research centers in the world, the Massachusetts Institute of Technology in Boston. At the end of the course, students will present their own projects and be ready to build a more sustainable future. eni Lab4Energy: teaching energy culture to new generations eni.com highly scientific content through prestigious partners such as the MIT virtual classroom connected via a social network students from 4 different continents watch the commercials on rethinkenergy.eni.com/en
  3. 3. cover story 27 The messy business of borders by lanfranco vaccari 32 The end of the Sykes-Picot line by lorenzo vidino, andrea plebani, and stefano torelli 38 A snapshot of ISIS in the Middle East map by marie joveneau 42 Nightmare sans frontières by stash luczkiw 48 A visual history of borders in Europe map by marie joveneau 50 Creeping encroachment, China’s western surge by raffaello pantucci and sarah lain 56 China’s alluring neighbors map by marie joveneau 58 Bordering on Utopia by frank jacobs 65 A new world disorder by stefano stefanini europe 73 Sovereign debt in turbulent times by domenico lombardi and skylar brooks 78 Europe’s financial fringe by moreno zani 84 Spurring venture capital by fernando napolitano featured briefing 93 The Grand Disruptor by stefano cingolani 98 Amazing Amazon - graph by marie joveneau 100 Playing with Fire by christopher caldwell 102 The Empire of Flying Pizzas by francesco galietti finance 110 Banking minus the interest, or so it seems by maurizio stefanini 115 Sharia-compliant Europe by enrico verga Longitude #41 leaders 4 The stagnant dilemma by pialuisa bianco widescreen 8 Sialkot, where the balls come from by marco mona charted territories 16 Her Majesty’s frozen slice of pie by frank jacobs talking heads 18 Politics on and off the pitch by carmine finelli world money 20 Money’s architectural shifts by paolo savona smart thinking 22 Lessons from failure by danilo broggi the orientalist 40 Lines in the sand by maurizio molinari berlaymont 86 Don’t do today what you can put off till tomorrow by adriana cerretelli potomac watch 106 The wealth of nations by renzo cianfanelli warming bloopers 122 China’s clean technology by carlo clini chosen words 124 Here’s my story, vote for me by maurizio stefanini numbers 126 Something fishy going on by federico bini published by Longitude Via Bruxelles 67 00198 Rome, Italy editor-in-chief Pialuisa Bianco editor-in-chief@longitude.it senior editor Lanfranco Vaccari senior_editor@longitude.it managing editor Stash Luczkiw managing_editor@longitude.it associate editor Giancarlo Loquenzi associate_editor@longitude.it art director Ettore Festa photo editor Marco Mona photo@longitude.it layout Valentina Porretta ufficio.grafico@longitude.it maps & charts Marie Joveneau advertising director advertising@longitude.it subscriptions info@longitude.it printed by Amilcare Pizzi SpA Cinisello Balsamo (MI) distributed by Press-Di Distribuzione Stampa e Multimedia Srl Segrate (MI) Registrazione presso il Tribunale di Roma n. 3/2011 del 20/01/2011 photo credits cover: Marco Mona /GMP – Cover illustration commissioned by Longitude. header strip: Joe Klamar/AFP/GettyImages – Jeff Bezos CEO of Amazon introducing the new Kindle Paperwhite in Santa Monica, California. Go to press date: July 21, 2014 august/september2014
  4. 4. Leaders 4 - longitude #41 Leaders T here is a recur- ring sense of déjà vu in Europe this summer. Echoes of a pre-crisis world are mounting and Europe is in deep trouble. The economy is stumbling. As the May elections showed, the continent’s voters are increasingly averse to the original European project. And the Ukrainian conflict, as well as the renewed fighting all over the Middle East, have drawn attention to the glaring lack of foreign policy. The consequences of all of this are hard to predict. But the ripple effect of a geopolitical crisis will have huge implications on an already wavering economy. The European Union complains about not being taken seriously in the world, while its leaders are painfully entangled in their embarrassing failure to settle upon how to distribute the top jobs. Called to- gether in mid-July to choose two of the most senior po- sitions in the Brussels hierarchy, EU leaders decided to postpone their decision until the end of August. The summit was meant to identify who would preside over EU summits after Hermann Van Rompuy steps down as president of EU Council, and who would succeed Catherine Ashton as the bloc’s next foreign policy rep- resentative. But negotiating who would do what job, backroom maneuvers prevailed over political and eco- nomic urgencies. The resulting delay inflated the chronic a lack of effective leadership. As disorder in the world increases and the stabili- ty of a large part of Europe is at stake, the EU can’t even pick the bloc’s new foreign policy chief. This at a mo- ment when what is needed is a leader who is not afraid to take initiatives and can build political consensus for effective conflict prevention and rapid conflict man- agement.Yet such an option seems unlikely.While the job has considerable powers, it is considered the least weighty of the triumvirate of EU leadership posts, which include the presidents of the European Com- mission and the European Council, the body which represents member states. Representation in Europe seems purely a formal, not a political affair. Member states are determined to preserve sway in foreign pol- icy. London, Paris, Berlin, and other capitals won’t like to be muscled out by a powerful foreign policy chief. The High Representative for Common Foreign Policy and Security must ensure he or she doesn’t get too far ahead of national capitals.Whoever gets the nod will be rate, economic growth comes to a standstill – it stag- nates. And yet, if familiar secular stagnation concerns are relevant to our current situation, there are obviously profound policy implications. A few points seem to stand out clearly. First, that the recovery – while un- derway – is following a lower and feebler trajectory than customary, even in the United States. Second, this likely reflects restraining factors of a longer-term nature – even though they are not necessarily“secular.” Third, that in such a setting, the risks are asymmetric: they are much more pronounced on the downside, with a high probability of mishaps. Fourth, that eco- nomics is often prone to determinism. But policy must set aside any fatalism, precisely because the forces to be countered are deeply rooted, there is a need for greater decisiveness and activism. The current debate has offered various remedial proposals, among which two stand out. First, direct more resources toward public infrastructure and tech- nology investment, to build for the future. Second, ac- cept a higher level of inflation in order to generate negative real interest rates, so as to spur demand – starting with a more resolute reaction to halt the slip- pery slide into deflation. In Europe, both of these in- dications require changes in common policies that now seem out of reach. But there is also a third, in- escapable, and unanimously obvious ingredient for countries with an anemic growth potential: the im- perative of structural reforms. The eurozone’s leaders have repeatedly underesti- mated the risks of crisis. They promoted austerity measures without recognizing the degree to which this would compound unemployment.They ignored warn- ings of likely contagion in 2010, at a time when they should have moved quickly to negotiate a debt re- structuring, which wasn’t achieved until 2012. Reviving growth requires investments. But crucial- ly important for investor sentiment is a sense that na- tional leaders in the eurozone are finding ways to revive public confidence in their ability to restore stability and pursue a path to growth.They have to improve a robust banking union; they should strengthen the mecha- nism they have put in place to provide essential cred- it to countries in trouble; and they should revive seri- ous thinking about a fiscal pact that commits all gov- ernments to budget stability. The longer they wait, the tougher the problems will become, increasing the risk of serious if not lethal shocks to the system. The stagnant dilemma longitude #41 - 5 chosen only to ensure gender, geographic and party po- litical balance within the EU leadership. Even more dangerous is the impasse on economic roles. The leaders also have to decide on the next pres- ident of the Eurogroup, who presides over regular meetings of eurozone finance ministers. The Interna- tional Monetary Fund’s latest report on eurozone con- ditions should be a wake-up call. It describes the root causes of pervasive weakness in growth as “persistent financial market fragmentation, weak bank balance sheets, low demand, and creeping uncertainty as well as structural weakness.” The President of the European Central Bank, Mario Draghi, recently suggested that there were some signs of economic improvement in the eurozone, but he, like the IMF, admitted that the downside risks were substantial, as indeed they are. The yo-yo forecasts for the eurozone as a whole mask a grave situation in some of the most troubled economies and beg the question: Is the European econ- omy expanding, or is it in recession? Are we really in a recovery phase, albeit a slow one? Or are we bogged down in a new normal of prolonged anemic growth? We have to understand why the economic situation seems so perilous in Europe, even though its economy isn’t shrinking. To say the acute phase of crisis has passed, is not to conclude that the euro has been fixed. A long public argument around rules versus flexibility would be as futile as the earlier debate between aus- terity and growth. In both cases, the euro zone re- quires both. Finding an equilibrium requires above all else the establishment of truth. Technically, overall growth in the eurozone has been faintly positive since early last year, with growth of just under 1% from early 2013 to early 2014. The eurozone grew at an annual rate of 0.7% in the first quarter of 2014. The ECB forecasts that the bloc will grow 1% this year, 1.7% in 2015, and 1.8% in 2016. The IMF reports euro- zone GDP declining for a second year in 2013 by 0.6% and then recovering modestly with a growth of 0.9%. Despite the overall movement forward, economic output shrank in eight eurozone countries in the first quarter, including the Netherlands and Finland. Growth was zero in France, which has the second largest economy in the eurozone after Germany. Joblessness is 11.7%, just below the record. Annual inflation is 0.5%, well below the ECB’s target of 2%, and many economists have expressed alarm about the risk of deflation. And while investors have flocked back to the re- gion’s government debt and European stocks have re- bounded from crisis lows, output in the 18 countries of the eurozone has still not recovered to the level of 2008, when the financial crisis began. The real issue is not about slight oscillations in the economic indicators. It resides rather in the question of the phase that we are going through and of the long- term perspective. Many analysts consider that what may be underway is not a recovery, but rather a stretch of breathing space in the recession. In other words, if the European economy keeps growing and eventually accelerates, then it will turn out that the first quarter of 2013 was the trough of a reces- sion that began in the third quarter of 2011. However, if there’s a renewed dip, it is just a single prolonged re- cession. It means that economic times in the eurozone are bad. They are bad if we are still in recession, but they might be worse than we feared if this is what expansion looks like in the eurozone. Recessions are miserable, but at least they end. If this glacial growth is the new continuing reality for Europe, it is terrible news in its own right. Larry Summers called it the “secular stagnation.” The term originated with Alvin Hansen, a Harvard economist, in the late 1930s. Hansen was worried that slower population growth and slower rate of techno- logical progress would result in less investment and re- duced economic growth. Hansen’s prediction did not come true – the baby boom eliminated worries about population growth, and technological progress re- mained strong. However his definition explains a con- dition of negligible or no economic growth in a market- based economy. The new normal of secular stagnation, together with the disquieting example of Japan – where GDP to- day is less than two-thirds of what most observers pre- dicted a generation ago – point to a basic inability of the economy to self-recalibrate. When per capita income stays at relatively high lev- els, the percentage of savings is likely to start exceeding the percentage of longer-term investments that are nec- essary to sustain future economic growth.The absence of such investments and consequently of eco- nomic growth, leads to declining levels of per capita income and consequently of per capita savings.With the reduced percentage savings rate converging with the reduced investment by pialuisa bianco 40°E40°W 80°E80°W 120°E 160°E120°W160°W
  5. 5. WidescreenWidescreen Sialkot, where the balls come from by marco mona Cricket-mad Pakistan might not have much of a football team, they’re 159th in FIFA’s world rankings, but it has a proud history of manufacturing top-class balls. Located at the foot of the Kashmir hills near the Chenab River in the northeast of Pakistan’s Punjab province, Sialkot, which once housed British India’s first bagpipe works (there are now 20 pipe bands in the city), is today a major source of sports goods for international sports events. It also produces dental and hospital instruments, leather garments, musical instruments, sportswear, gloves, badges, walking sticks, cutlery, hunting knives, air guns and let’s not forget shotguns. In fact, it seems as though they make practically everything here, but if you had to pick the one main industry in Pakistan’s third richest city, well then, balls it is. In fact, it’s probably no coincidence that there is a veritable who’s who list of prominent national cricket and hockey champions that hail from here. Nowadays, with the notable exception of grabbing the contract for production of the Brazuca ball for the FIFA World Cup in Brazil, because Adidas factories in China couldn’t keep up, things have slowed down a little. But at one time Sialkot was the unassailable soccer ball production capital of the world, exporting about 30 million balls a year, an estimated 40% of global production. Not bad for a city that still has to deal with load shedding and water shortages and the odd rocket or two fired from across the border. AAMIRQURESHI/AFP/GETTYIMAGES longitude #41 - 98 - longitude #41 SARAFARID/REUTERS TT SS PP May 28, 2014, Pakistani workers glue a design onto a soccer ball at a factory in Sialkot ahead of the FIFA World Cup 2014 in Brazil. Forward Sports produces match balls for Adidas for some of the world’s top football competitions including the Champions League, the German Bundesliga and now the World Cup. AAMIRQURESHI/AFP/GETTYIMAGES
  6. 6. longitude #41 - 11 WidescreenWidescreen 10 - longitude #41 QQ Workers pack soccer balls into sacks before they are dispatched for sale. TTSialkot gained international celebrity status when it produced the “Tango” ball for the 1982 World Cup in Spain, kicking off a lucrative industry and Pakistan’s foreign exchequer. The town manufactures sports equipment sold all over the world. Over the last decade, Pakistan exported on average 40 million balls worth $210 million produced annually by some 60,000 highly skilled laborers. MIANKURSHEED/REUTERS MIANKURSHEED/REUTERSAAMIRQURESHI/AFP/GETTYIMAGES AAMIRQURESHI/AFP/GETTYIMAGES PP Ramzan Ahmed, 70, stitches a soccer ball at a factory in Sialkot. SS Pakistani villager Zainab Bibi is surrounded by her children as she stitches a soccer ball at her home in Sialkot.
  7. 7. WidescreenWidescreen longitude #41 - 1312 - longitude #41 MIANKURSHEED/REUTERS PP Rizwan Ahmed, 18, stitches leather around a spherical core to form a cricket ball at a factory in Sialkot. SSA worker looks over cricket balls ready for packing. MIANKURSHEED/REUTERS QQ Safder Ahmed, 45, applies paint to a field hockey stick in one of Sialkot’s many makeshift factories. SS Mohammad Shabir, 31, files the edges of cane sticks to form handles for cricket bats. MIANKURSHEED/REUTERS MIANKURSHEED/REUTERS
  8. 8. longitude #41 - 15 WidescreenWidescreen 14 - longitude #41 QQPakistani rangers take positions at the Tahir Joian border village near Sialkot on October 24, 2013 after Indian troops had increased firing on Pakistani areas and targeted civilian populations. TTSS Pakistani villagers point to damage caused by mortar shells allegedly fired by India across the border at Tahir Joian. XINHUANEWSAGENCY/EYEVINE KATHRINHARMS/LAIF KATHRINHARMS/LAIF ss SS UU Images of the production process at Talon Sports, the factory where Karma Chakhs are made in Sialkot. KATHRINHARMS/LAIF KATHRINHARMS/LAIF XINHUANEWSAGENCY/EYEVINE AFPPHOTO/ARIFALI
  9. 9. longitude #41 - 17 Charted territoriesCharted territories overlap, as is the case with Chile and Ar- gentina’s. Both also overlap with the BAT. Needless to say that Chile, Argentina and the UK do not recognize each other’s claims. Hence the FCO’s rush to point out that naming part of the BAT after Queen Elizabeth did not affect the validity of the British claim, nor alter the status quo. Queen Elizabeth Land, at 437,000 square kilometers, is twice the size of the UK, and comprises the southern, narrowest third of the pizza slice. Its northern bound- ary is the frozen coastline, where the main- land touches the massive Filcher-Ronne Ice Shelf; and to the west thereof a latitudi- nal line separating it from Coats Land to the north. Its main geographic feature, apart from lots of snow and ice, are the Pensaco- la Mountains, running from north to south across its middle. Henceforth, the name Queen Elizabeth Land will appear on all official British maps. It’s highly unlikely that Chile or Argentina will mark the territory asTierra Reina Isabel. Argentina especially has a bone to pick with Britain – and names are an important ele- ment in the dispute. For 2012 also was the 30th anniversary of the short, sharp war between both coun- tries over a group of islands north of the BAT, and east of Patagonia. To the British, these are the Falklands, while the Argen- tines know them as the Malvinas. The naming of Queen Elizabeth Land prompted Argentina’s Foreign Ministry to lodge a formal complaint with the British, expressing Argentina’s “firmest rejection” of the UK“naming an area of the Argentine Antarctic sector,” which was a reflection of “anachronistic imperialist ambitions” – as well as an infringement of the spirit of the Antarctic treaty. So what is all this aggravation for? Com- pared to coastal Antarctica, home to pen- guins, seals, and most of the continent’s research stations, the BAT’s hinterland is a sterile waste, landlocked and covered in a mile of ice. Even in summer, the ther- mometer struggles to reach -20˚C. Nothing lives here, and nobody survives there for very long. Robert Falcon Scott, who lost the race to the South Pole to Roald Amundsen 102 years ago, died en route back to the by Frank Jacobs Yet another chunk of territory has been named after a British monarch. Now Queen Elizabeth II has a gelid wasteland named after her. But even the nether reaches of Antarctica breed territorial disputes. Her Majesty’s frozen slice of pie Frank Jacobs is the author of Strange Maps – An Atlas of Cartographic Curiosities. Blog: Strange Maps (bigthink.com/blogs/strange-maps) Blog: Bordelines (opinionator.blogs.nytimes.com) W hat do you get someone who is as close as anyone to having every- thing? You spread the risk, and get her two presents.That’s what the British cabinet did on December 18, 2012, when the Queen came round to visit: they gave her 60 table mats. And a chunk of Antarctica. Elizabeth II’s visit marked the end of her Silver Jubilee year. As she left, she was presented with 60 lacquered table mats, one for every year of her reign. She then vis- ited Foreign SecretaryWilliam Hague’s For- eign and Commonwealth Office (FCO) across the road. Hague presented her with a gift the size of a few billion table mats:“As a mark of this country’s gratitude to the Queen for her service, we are naming a part of the British Antarctic Territory (BAT) in her honor as Queen Elizabeth Land.” The Queen received a stone prised from the frozen wastes that constitute her newest territory, roughly equal to the southern third of the BAT. The BAT is situated south of 60˚S latitude and between 20˚W and 80˚W longitude, with those two meridians converging on the South Pole to give the territory its pizza-slice shape. It includes a handful of islands and the Antarctic Penin- sula as well as the deep-frozen interior. Measuring 1.7 million square kilometers, the BAT is the largest of Britain’s overseas territories, but arguably also its least sub- stantial: its main sources of income are a tax on the research scientists in the territory, and the sale of postage stamps. With half a dozen other countries claim- ing their own slice of the South Pole, the po- tential for exploration to escalate into con- frontation was huge. Hence the Antarctic Treaty of 1959, Article IV of which commit- ted all seven claimants to freeze their claims. The by now 50 signatories have the right to establish bases anywhere on the continent, but for scientific research only. The framework of the Treaty has kept Antarctica free from military bases, min- eral exploitation and nuclear weapons, and managed fishing and tourism. It has also al- lowed some signatories to recognize each other’s claims without upsetting the broad- er agree-to-disagree framework. Notably France, Norway, New Zealand, Australia and the UK. It helps that their claims don’t Australian sector of the frozen continent. And then there’s another Queen Elizabeth Range, also in Antarctica, named in 1957. She’s probably old and wise enough not to take any of it personally. As Klaus Dodds, professor of geopolitics at Royal Holloway, remarks: “Place-naming is one of the most powerful ways of reinforcing sense of your ownership of a territory.” According to Dodds, the naming is part and parcel of Britain’s assertion of its‘strategic presence’ in the most contested part of the Antarctic: “With the absence of an indigenous hu- man population, maps and charts have al- ways been instruments of power in the po- lar context.” The US has deployed most names in Antarctica – 13,000, according to the Com- posite Gazetteer of Antarctica – with Britain responsible for nearly 5,000. But even smaller players like New Zealand or Bul- garia take great care to mark their presence with hundreds of place names. Like the claims, those names sometimes overlap. Famously, the Antarctic Peninsula was Gra- ham Land to the Brits, Palmer Peninsula to the Americans,Tierra San Martin to the Ar- gentines and Tierra de O’Higgins to the Chileans. In 1964, the US and the UK agreed to apply the British name to the peninsula’s north, and the American one to its south. So there is room for compromise. But only if Her Majesty’s government is prepared to let Elizabeth II be Queen of a slightly small- er piece of the South Pole. coast, but not before exclaiming: “God, what an awful place!” It is so inhospitable that most of it was only charted from the 1950s onwards, from the air. Maybe the Queen was mildly insulted for having such a desolate place named af- ter her. Especially with so many nicer places bearing her name. Also in recognition of the Diamond Jubilee, the British parlia- ment renamed the Clock Tower housing the Big Ben the Elizabeth Tower. And around the Commonwealth and beyond, countless schools, hospitals, streets, squares, bridges, buildings and monu- ments are named after her. As for prominent geographic features, there are the Queen Elizabeth Range and the Queen Elizabeth Islands, both in Cana- da. Curiously, two segments of Antarctica already bear her name. In 1931, when her grandfather George V was still on the throne, a piece of Antarctica was named Princess Elizabeth Land. It is now in the 16 - longitude #41 QUEEN ELIZABETH LAND WITHIN THE BRITISH ANTARCTIC TERRITORY
  10. 10. longitude #41 - 19 Talking heads 18 - longitude #41 Talking heads by carmine finelli Sports have often played a role in international relations. It is a chance for countries to display power and prowess. But sports events all too often translate into crises or tension in the political arena. During the ColdWar, both the 1980 Olympics in Moscow and the 1984 Olympics in Los Angeles suffered boycotts by the hosts’ respective ColdWar adversaries. The FIFAWorld Cup, while less prone to geopolitical machinations, nevertheless has its own superpowers and is regularly an outlet for displays of unbridled nationalism. In this light soccer has proved to be one of the favorite fields in which politics and athleticism reflect the performance of a country. The BrazilianWorld Cup of 2014 has shown that there are many similarities between the way one country acts on the international scene and the way it plays on the pitch. The contradictory Brazil, which was able to go undefeated until the semi-final, also revealed the contradictions between wealth and poverty visible in the country. The defeated Argentina, which is on the brink of a new economic crisis, and the powerful Germany, which has risen again from the tumult and burden of unification to once again claim its traditional place as a soccer superpower. Finally, there is the ever-present Netherlands. Often among the first four national teams in the world and a great country in the north of Europe.What the pitch shows us is that soccer, as von Clausewitz might have put it, is the continuation of politics by other means. Politics on and off the pitch carmine finelli is an analyst at the Università degli studi del Molise department of law. Germany’s panzers are once again the champions of the world. They de- served the cup by playing with cruelty and cynicism overwhelming the hosts Brazil 7 to 1 in the semi-final match. German pow- er has spread not only in politics and the European economy but also in football. Actually, Germany has been long been a powerhouse in football, but it has also re- emerged as a political power after re-uni- fication in 1990. Angela Merkel is a product of such reunification and she is leading her country towards an impressive series of successes. Nowadays, Germany is the leading pow- er of the European Union and it has post- ed a very impressive economic perform- ance with high growth rates and a low deficit. The policy of austerity endorsed by Angela Merkel has avoided the dismantling of the European Union by imposing sacri- fices to undisciplined states of the south. As a result, the European Union has almost overcome the economic crisis. Unemploy- ment is at the moment the most urgent problem to be tackled, but the economic in- dicators are moving in a positive direction. GETTY “Germany is the world champion. The peo- ple of our country are proud of this team. Congratulations.” Angela Merkel Leo Messi’s team was not able to bring the cup to Argentina. Defeated by Ger- many in the final match, many economists have referred to the match as a match be- tween dissipation and austerity to reaffirm the thesis that discipline is the right way to success. Is that true? If we look at econom- ic indicators, that is undoubtedly true. After the default of early 2000s, Argentina recov- ered its economy by using devaluation and pinning the peseta to the dollar as its bench- mark on the currency market. But the risk of a new default has never been overcome. When Cristina Kirchner took office in 2007 a new default seemed to be very far from Ar- gentine shore, but the emergence of the economic crisis and the structural weak- ness of a fragile economy are exposing Ar- gentina to new risks of deterioration. In the first months of 2014 a new eco- nomic crisis began for Argentina. President Kirchner was forced to take unpopular de- cisions, cutting wages and reducing wel- fare in trying to solve problems. As things are, the outlook for Argentina is not very positive. It needs strong leadership to push the country beyond the crisis, and it is not clear if Kirchner is up to the task. GETTY “I didn’t see any single match of the World Cup.” Cristina Kirchner The Netherlands has never won the World Cup. Often in the history of the tournament the Netherlands was among the semi-finalist, but it has never managed to raise the cup. Since the“total-football” of Johan Cruijff, the Netherlands has been among the best national teams in the world. But the Netherlands’ national team lacks the pitilessness of Germany and the inspiration of a South American national team.This is not a detail: this features make the difference between winner and loser in soccer. However, on the pitch the Nether- lands is always hard to beat, and puts in a good performance. On the political and economic side Netherlands reflects the features it shows on the pitch. It is a developed country with a dynamic economic system due to a huge range of freedom granted in the country. It realizes good economic performance and the outlook is very positive for the future. It has a regular path towards growth and has not suffered a lot because of the economic crisis that spread in world since 2007 and the government, led by Prime Minister Mark Rutte was able to grant the Nether- lands a good way of life. GETTY “The Netherlands and Belgium are highly motivated and capable of hosting a top World Cup tournament in 2022 or 2026.” Mark Rutte TheWorld Cup in Brazil has enlightened the weakness of the country. With its star attacker injured and best defender dis- qualified, the perennial favorites showed a surprising lack of bench depth. The “B” of the so-called BRICS countries was one of the favorites to win the cup, but on its way Brazil met Germany and was absolutely thrashed in the semi-final match: 7 to 1. On the pitch, Brazil was unable to generate any sort of at- tack and its defense fell apart. It also lost in the third-place game against the Nether- lands: 3 to 0. If we assume football as a metaphor of a country’s political and economic per- formance we could find many similarities. Under President Lula, Brazil experienced high growth rates.With Dilma Rousseff the path towards a complete development seems to have slowed down. Rousseff, who was Lula’s chief of staff, has not been able to solve the contradictions of her country. Many people still live in the shantytowns known as favelas. The World Cup has in- deed shone a light over a country that tries to overcome difficulties with no apparent success. GETTY “In their turn, the investments expected for the World Cup and the Olympics will be made in such a way as to achieve permanent gains in quality of life for those in all the re- gions involved.” Dilma Rousseff
  11. 11. longitude #41 - 21 World money 20 - longitude #41 World money As we all know, the result has been that gold was stored in official reserves, silver values fluctuated on its market and paper banknotes became by rule of law the most convenient instrument to make payments and pay off debts. Gresham’s law that “bad money drives out good” was therefore proved. It is not a coincidence that the pa- per dollar (the “greenback”) as well as de- posits and other dollar denominated fi- nancial instruments are the very backbone of the global financial system. This is why markets are all together good but nervous. If we look at the problem from an ab- stract point of view, the euro could resem- ble the “bad” money which drives out the “good,” but the euro is not backed by a na- tion-state having the power to induce oth- er states to voluntarily accept its currency as a medium in international payments as the dollar to-day (what the economists call “fiat money”) and to impose it by law. At present, the ECB is much similar in its in- stitutional architecture to the “Issuing In- stitution” of our past, mainly private as in Italy (the National Bank of the Kingdom of Italy, theTuscan National Bank,TheTuscan Bank of Credit, The Bank of Naples and the Bank of Sicily) which were centralized everywhere as “central banks” (in Italy the Bank of Italy) whose power of issuing cur- rency is regulated by law. In the current set of geo-economic and geopolitical relations, the dollar could be compared to gold, the Renminbi to silver and the euro to paper money. If this repre- sentation gives us a fair view of the current international monetary system, the euro should be the money that drives out the others as it was at the beginning of the cri- sis before the market became aware of its main institutional weaknesses: being a cur- rency without a state, a crown without a king.Without saying that the renminbi will surpass the dollar, as it is unlikely it will dethrone the dollar from its dominant po- sition in the short term, we cannot exclude such a possibility in the future if China, as announced many times, will allow the full convertibility of its currency. Since the euro is recovering its credibility, the tri-polar monetary system will experience new and greater imbalances. We have already experienced a severe monetary crisis as we believed that finan- cial markets were perfect, i.e. able to regu- late themselves and the breakneck growth of derivatives. Perhaps we are committing the same mistake again with the interna- tional currency market when we purpose- ly overlook the ambitions of each of the three currencies. If all factors impeding the dollar from maintaining its central posi- tion within the international currency mar- ket were to be removed and its stability were to be questioned along with the euro capacity to resist institutional pressures, China’s hesitation to make its currency ful- ly convertible could force global markets into a period of currency imbalances with their relative side effects on the real econ- omy. Some sort of political or economic impediment, whether coming from the in- side or the outside, will always prevent the three major players from reaching an in- ternational monetary agreement such as the one reached at Bretton Woods in 1944 and therefore impede the creation of new jobs in the entire world. We should turn back to the Interna- tional Monetary Conferences repeatedly held during the past two centuries which brought monetary stability and growth and created independent national banks where they were still unknown. At present, the debate takes place outside democratic in- stitutions and behind the closed doors of by paolo savona Although the international economy is still wholly dominated by the dollar, the future will no doubt see the balance altered by both the euro and the Chinese renminbi. Money’s architectural shifts paolo savona is Emeritus Professor of Political Economy. the Basel Bank for International Settle- ments where representatives from central banks all over the world gather monthly. Their decisions are taken without involve- ment of the democratic institutions and with the passive acceptance of the auto- cratic ones. Since this central bankers’ fo- rum was not able to stop the recent severe global financial crisis, it should be noted that despite its role, it cannot offer a solu- tion to the lack of a world monetary agree- ment among nation-states that character- izes the monetary architecture in the cur- rent era of globalization. E conometricians and scholars in eco- nomic history will tell us in the future if the Federal Reserve Chairman Janet Yellen’s strategy of tapering has had some impact on the slowdown of United States GDP growth and if the opposite re- action of the European Central Bank led by Mario Draghi is the reply to some mod- est tightening of US monetary policy or the consequence of fears that the weakness of the eurozone will hamper the euro and its banking system while they are still suffering from the world crisis. At present, observers of global mone- tary policies agree that the ECB will take over the Fed’s role in injecting liquidity into the global markets. Wall Street responded by registering a new record with the Dow Jones closing at 17,000 points while Frank- furt, albeit disturbed by a nonlinear debate on the future of European Union fiscal pol- icy, followed at a moderate pace the positive trends of stock exchange values across the Atlantic. All at once we have been informed that the BRICS decided to implement their IMF bank and that China and South Korea reached an agreement to expand the yuan- renminbi on their foreign exchange trans- actions but no one has ever put this agree- ment in relation with current trends of monetary policy in the eurozone and in the US. China will give $41 billion to the BRICS Bank taking another step towards the internationalization of the renminbi. The renminbi has taken another step to- wards its internationalization thus adding complexity to the functioning of the glob- al monetary system which instead calls for simplification and freedom from the hege- mony of a single national currency. In fact, we are moving forward a tri-po- lar global currency system which ends the duopoly between the dollar and the euro without having reached a proper agree- ment on how do manage the international monetary system. In some ways, the cur- rent international monetary regime is be- coming similar to the one operating during the late 19th and early 20th centuries, when it was difficult to find a balance between gold, silver and national paper moneys partly or fully convertible in metallic coins. JOHANNESEISELE/AFP/GETTYIMAGES The former Saudi Arabia Pavilion from the 2010 World Expo next to the proposed site of the headquarters of the BRICS development bank in the Pudong development zone in Shanghai, July 17, 2014.
  12. 12. Smart thinking bankruptcy is the new religion of the New Economy, you could also say that it is its “goose that lays the golden eggs.” Just con- sider the growing success of the FailCon conference which has become an annual event in San Francisco. The basic principle behind FailCon is a bit like that of Alco- holics Anonymous meeting: if you want to overcome your failures, you must first ad- mit them and share them with your peers. Because failures, along with unexpect- ed successes, often belong to the sphere of unpredictability of events, and they spur the desire to want to plan and control everything, including errors or failures. One book that has been around for a while, Whoever Makes the Most MistakesWins: the Paradox of Innovation by Richard Farson and Ralph Keyes, illustrates the concept well: companies often fear and punish fail- ures though, especially in an era charac- terized by discontinuity and complexity, experimentation with new services, prod- ucts and business models has become a practical imperative for survival. That is obviously a serious mistake; just to give one well-known example, a blockbuster like 3M’s Post-it came from the experi- mentation of a glue that failed for the ap- plication it was designed for – but not for a new product that was totally non-existent. In short, you can often learn more from the worst practices than you can learn from the best practices. In order not to repeat something that has proved ineffective, but also to learn about how to handle errors the maxim of ThomasWatson, the founder of IBM, might be instructive: he said that the best way to succeed is to double your rate of failure. Even more so today, with a rapidly changing world, where moving for- ward is necessary and unavoidable, as is the ability to deal with the two sides of the same coin: success and failure. Because while failure is a negative element, it also represents an opportunity to develop new solutions and strategies. Only when we abandon the practice of“second chance” is the crisis is real. And there is no doubt that he was right to try again. by danilo broggi e high-tech industry is a perfect example of the need to fail, even often, in order to finally achieve the success that all new entrepreneurs dream of. In fact, we may be seeing the rise of a culture of failure. Lessons from failure danilo broggi is the Chairman of Poste Assicura. I n 2003, three students of the Helsinki University of Technology took part in an online contest sponsored by Nokia and Hewlett Packard. They won it by pre- senting a real-time multiplayer video game and founded a company, which they called Relude. In January 2005, the company re- ceived its first round of funding from an angel investor and Relude changed his name to Rovio Mobile. In early 2009, Rovio Mobile was on the verge of bankruptcy. The 51 projects de- veloped by the company had proved un- profitable, if not outright failures. In December 2009, Rovio released An- gry Birds, its 52nd game, and after six months it reached the number one spot in the Apple App Store. The game since then has been downloaded over one billion times, making it one of the bestselling of all time, as well as a gold mine for its inventors. Angry Birds, of course, is not the only example of a success after a series of fail- ures: even companies like Apple, Microsoft, Danone, Amazon, Facebook and Pinterest, commonly referred to as “innovation driv- en companies” have racked up errors be- fore finding the right path. CB Insight recently carried out a survey based on about 160 technology companies financed at the seed stage by American venture capitalists. What were the main findings from this research? It reveal what has come to be called a “venture capital funnel”: After the first round of funding, 54% of the companies got to a second round; 9% of startups got at least 5 rounds of funding; 75% of new initiatives failed or were left to die; 21% got an“exit” through a sale or merger (not always profitable). And what about the remaining 4%? Only in this case are we talking about a real “rising star,” those who become best cases to be studied in business schools. In fact, most of the failures teach best practices. In some cases, the celebration of failure has even become the “ground zero” of an increasingly common cultural trend, particularly in Silicon Valley. And if Smart thinking longitude #41 - 2322 - longitude #41 Hence, it is crucial to have the right mental attitude – in business, as in life. A lesson comes to us from the Swiss tennis player Stanislas Wawrinska, who has al- ways lived in the shadow of his superstar compatriot Roger Federer. This year Wawrinska was the surprise winner of the Australian Open and jumped to number three in the world ranking. On his arm, the tennis player has tattooed a maximum of Samuel Beckett:“Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.” Stanislas Wawrinka of Switzerland with his tattoo on his forearm during the 2014 Australian Open at Melbourne Park on January 21, 2014 in Melbourne, Australia. MICHAELDODGE/GETTYIMAGES
  13. 13. LET’S LOOK FORWARD Industry, agriculture, art, design, engineering, fashion, food, science, filmmaking, sport. There’s no field where Italy hasn’t been outstanding. Now it’s time to do even better. It’s time to truly shine. Let’s build, write, invent, produce. Let’s do something new we can be proud of now. Not through nostalgia for our past glories. But through all the energy we now have inside us. Together with the energy of a leading, integrated player in electricity and gas. A group that started in Italy and today provides power to 60 million customers in Europe and Latin America. Together with enel.com
  14. 14. 26 - longitude #41 Cover story longitude #41 - 27 Borders O ut of the 195 independ- ent states and 71 de- pendencies, areas of special sovereignty, and other entities listed in the CIA Factbook, 175 are involved in bilateral or multilateral territorial disputes.The world’s 325 international land boundaries, stretching over 250,000 kilometers, and the 430 maritime boundaries, of which only 209 have been agreed upon, give plenty of opportunities for historical and cultural confronta- tion; legitimize, at least in the petitioner’s view, any sort of claims based on religion, language, ethnicity; foster competition over water, oil and gas, minerals, fish, arable land and other resources. Conflicts affect every- one – long-standing allies such as Canada and the US and warring enemies such as Israelis and Palestinians – and reach everywhere – from deep into the African jungle, where several islands along the Congo are con- tested between the two states bearing the river’s name, to the barren glaciers of Antarctica, where seven coun- tries assert overlapping rights. Intensity varies from managed or dormant quarrels to violent or militarized crises. Even in Europe, a continent where in the last 14 centuries wars have been fought over and over again to conquer or defend territory, 28 disputes are currently going on and 22 recognized sovereign states and states with limited recognition are involved (secessionist movements are not taken in account). Borders are a messy business. The confusion starts with terminology. Technically, the term for “the line in sand” is boundary: it comes from “bound” and, ac- cording to the late Ladis Kristof, a political geographer who taught at Portland State University, means terri- torial limits and separation, and suggests an inward ori- entation. The term border is often used as a synonym, but in reality it refers to the region contiguous with the boundary: either side of which, in neighboring states, is a borderland. Finally, frontier refers to the process of territorial expansion in what are deemed, most of the time incorrectly when not plainly falsely, as“empty” ar- eas. From a geopolitical perspective, the entire zone of the frontier constitutes the border, it’s a buffer zone supposed to smooth out interstate conflicts – Afghanistan being a good historical example: it was cre- ated to divide the British and Russian Empires’ zones of influence – or to contain particularly restive indige- nous populations – the Afghanistan-Pakistan border- land was called North-West Frontier Province before being labeled as Federally Administrated Tribal Areas. “Perhaps the most palpable political geography phenomena,” according to the classical definition for- mulated back in 1963 by Julian Minghi, professor emeritus at University of South Carolina, borders, their rise and fall, their construction and deconstruc- tion, intertwine with the entire history of human civ- ilization. The Romans had in Terminus, an attribute of their paramount god Jupiter Optimus Maximus, the protector of boundaries that were not to be trans- gressed by any foreign foe. The original Terminus, a consecrated stone to which every year sacrifices were offered, stood between the fifth and the sixth milestone towards Laurentum, near a place called Festi. As the The messy business of borders by lanfranco vaccari MARCOMONA Idealists believe a borderless world is a better world. Pragmatists recognize that there are no good or bad boundaries, they are just conventions that allow for more civil relations between different peoples. Over time, it seems the more we wish to get rid of borders, the more they crop up.
  15. 15. longitude #41 - 29 Borders 28 - longitude #41 Cover story empire expanded, walls and fortifications were built to protect against the “barbarians” and to control trade. But there was no such thing as a definite line to mark the sovereignty of the state. Boundaries were porous: sovereignty was conceived as jurisdiction over subjects rather than an exclusive authority over a territory. This concept came along only in 1648, when the Peace ofWestphalia ended 30 years of ongoing war all over Europe. The politically centralized state was seen as the solution for addressing the chronic lack of sta- bility that characterized much of the medieval era, es- tablishing the principle of mutually exclusive sover- eignty over territories delineated by borders. But the contemporary nation-state idea emerged only in the wake of the French Revolution, when state, territorial sovereignty, group identity, and borders coalesced. From then on, according to Anssi Paasi, professor of Geography at the University of Oulu, Finland,“a nation- state is understood as a country inhabited by a group of people who see themselves as one distinct commu- nity.” Boundaries separate different distinctive com- munities bound together by the merger of two con- cepts: political territoriality, as expressed in the insti- tution of the state, and ethnic and cultural identity, as expressed in the idea of nation. The state formation processes in Europe after the Congress of Vienna in 1815, following the defeat of Napoleon, follow a repetitive script. The state claimed to include everybody living inside its borders; people switched from being the subjects of the ruler to being citizens in a territory administrated by a sovereign state that claimed to represent them directly; the na- tion-state gave them a nationality based on their ter- ritorial residence; the state territory became the terri- tory of the nation itself; the boundaries of the state be- came the borders of the nation; and interstate bor- ders became international borders. As Gabriel Popes- cu, associate professor of Geography at Indiana Uni- versity-South Bend, writes in Bordering and Ordering the Twenty-first Century: “This territorialization of identity materialized in the nation. The institution of the state gave the nation its political expression. Bor- ders served to bind it all together.” Not everything was solved, tough. A territory is a bounded space and, according to Jean Gottmann, the 20th century French geographer who invented the ne- ologism Megalopolis,“a state’s claims to the monopoly of power within its territorial borders have been codi- fied in the modern principle of territorial sovereignty.” Within the borders marking the formal extension of its territorial power, the state is sovereign – that is, has a right to a territorially exclusive practice with borders imposed to control access and regulate mobility. How- ever, no nation-state has been built from scratch and, arguably with the exception of Japan, usually different groups share the same territory. There is no such thing as a sizeable chunk of territory hosting an ethnically pure and culturally homogenous community of people. Moreover, according to Ben Anderson, reader in Ge- ography at Durham University, in the UK, “there is lit- tle agreement to what exactly the mix of language, his- tory, ethnic background, political institutions, and at- tachment to a particular territory should be; who de- cides when a group of people achieves the status of a nation; and where to establish the borders.” As a result, the number of nations in the world varies widely from several hundred to several thou- sand, but the number of states is just under 200. So the nation-state appears a theoretical impossibility. Two centuries ago, the ideology of nationalism came to the rescue. States used it in a process of nation building, seeking to create an identity based on bounded space. As professor Popescu writes, “Borders played a crucial role in the creation of myths and symbols to produce and enforce a clear division between the‘superiority’ of the nation’s domestic‘us’ and the‘inferiority’ of its for- eign ‘them’.” In the process, national borders became sacrosanct to the nation-state, they were considered the guarantor of the very existence of the nation: violating them represented an offense to the people themselves and a cause for war. The more so after the Paris Peace Conference in 1919, at the end ofWorldWar I, when the principle of national self-determination became the cornerstone of European political order. At its best, na- tionalism has allowed the emancipation of certain groups of people from the domination of tyrannical rulers. At its worst, nationalism is responsible for out- rageous forms of violence, as demonstrated in the 1990s with ethnic cleansing in the former Yugoslavia. At the end of day, borders are about power. And power is not distributed once and for all. Throughout the ages, major shifts of power between countries have been frequent and rarely peaceful.“What made war in- evitable was the growth of Athenian power and the fear which this caused in Sparta”: from Thucydides on, it has always been the same old story. Rising pow- ers are nationalistic, seek redress of past grievances, and want to claim their place in the sun. Usually, their first step is advancing territorial claims against their neighbors and asking for some border adjustment. And, as with the balance of power, boundaries are not fixed, they change in space and in time: who belongs where, who is an insider and who is an outsider, who is part of“us” and who is part of“them” – nothing is de- termined once and forever. The map of Europe has been radically redrawn three times during the 20th century, more often than not in blood. Old people from Carpathian Ruthenia, a small region between Ukraine and Slovakia carrying such a convoluted his- tory that has been known over time with a dozen of dif- ferent names, like to tell a joke: it’s about having lived in four states (Austro-Hungarian Empire, Czechoslo- vakia, USSR and Ukraine) without ever having left one’s native village.The Polish state disappeared three times in the course of its history – and Alfred Jarry, a French writer and dramatist, at the end of the 19th century set his play Ubu Roi“in Poland; in other words, nowhere.” In their scramble for the world, even before capi- talism and the nation-state, Europeans exported bor- ders.The first notable colonial border dates from 1494, when Spain and Portugal decided how to divide their rights to colonize lands across the Atlantic they bare- ly knew. In the Treaty of Tordesillas, they agreed to a north-south line along the 46°37’W meridian to sepa- rate their future colonial domains. This never hap- pened. When better maps became available, the Por- tuguese realized that their share of South America was much smaller than the Spanish one, and they pushed beyond theTordesillas line.The lasting consequence of this dividing line consists in the principle it inaugu- rated. From then on, everywhere (again, with the lone- ly exception of Japan) boundaries were either imposed by European colonialists or borrowed from them.With decolonization, the new states usually retained the territorial borders they had as colonies. First, the bor- ders between different European colonial domains be- came interstate borders: for example, the border be- tween French Niger and British Nigeria became the border between independent Niger and independent Nigeria. Second, the administrative borders between the subdivisions of a colonial domain became the new interstate borders, as in the case of the Spanish provinces in South America. And state borders kept emerging. At the beginning of the 20th century there were 55 independent states. At the beginning of the 21st century, there were 195. This came around in three major rounds that shaped the current world political map. The first took place at the end ofWorldWar I, when the disintegration of the Aus- tro-Hungarian, German, Russian and Ottoman Em- pires resulted in a dramatic increase of European states as well as in territorial alterations to already existing ones and in the occupation of the Middle East by France and Great Britain. The second, between the end ofWorldWar II and the 1960s, when 120 new states coincided with the termination of the supremacy of Eu- ropean powers, the decolonization era and the emer- gence of two superpowers. The third, after the col- Banquet of the Amsterdam Civic Guard in Celebration of the Peace of Munster, 1648. Rijskmuseum. Amsterdam. Netherlands. The Tordesillas Treaty, signed on June 7, 1494 between Spain and Portugal. Seville, Indian archives. Spain. ALBUM/ORONOZ ALBUM/PRISMA
  16. 16. longitude #41 - 31 Borders 30 - longitude #41 Cover story lapse of Soviet Union that ended the bipolar ColdWar order in the 1990s: in the last two decades, more than 26,000 kilometers of new borders have been added worldwide, mainly in Europe and Asia.This happened in the same period when globalization brought about an unprecedented flow of people, goods, diseases, and ideas. The end of both history and geography was en- visioned as near, borders were seen as doomed, and humanity was forecast to live in a global village, a post- modern and deterritorialized hyperspace. The likes of Francis Fukuyama, Kenichi Ohmae andThomas Fried- man propagated the “borderless world” theory, si- lencing and even befooling David Harvey, the British- born professor of Anthropology and Geography at City University of New York, who in 1989 observed, “far from fading away, it seems that the more territorial borders fall apart, the more various groups around the world cling to place, nation, and religion as markers of their identity.” Of course, Harvey was right and the ul- tra-globalists were dead wrong. Globalization did however have its effects. Contemporary borders are becoming more dif- ferentiated and their meaning is changing. In an increasingly in- tegrating Europe, for instance, there is now a distinction be- tween inside, or secondary, bor- ders and outside borders, the former having been softened and the latter hardened. As pro- fessor Popescu says in his book, “In the 20th century, bordering was about securing state terri- tories. In the 21st century, it ap- pears to be about securing mo- bility.” Borders now have to al- low mobility while simultane- ously protecting against their side effects: they help manage major societal risks, such as mi- gration, economic flows, terror- ism and organized crime. Se- lective permeability, the new catchphrase, tries to solve the intrinsic conflict between mo- bility and security, both en- hanced by globalization, and at the same time to find a balance between the territorial state as the exclusive form of political organization in the world and the unsatisfied (at the moment) need for global governance. Meanwhile, the classic dis- tinction between “good” and “bad,” natural and artificial borders, has been left be- hind. In the present debate, as Henk van Houtum, pro- fessor of Political Geography at Radboud University, The Netherlands, writes in a paper, The Geopolitics of Borders and Boundaries,“the argument is made that all political borders are human-made products.” During most of the 20th century, the overall view was that “good” were generally those borders that were seen as natural, that is, made by nature in terms of its physio- graphic variation (seas, mountains, deserts) and bor- ders were generally seen as “bad” when they were ar- tificial, that is, human-made. In the real world, all bor- ders are artificial – and arbitrary. They may be bad (most of them are), but it’s a seemingly impossible task to find better ones. The Middle East’s borders are a case in point. They were carved after the demise of the Ottoman Empire, followingWorldWar I, by two diplomats, Sir Mike Sykes from Britain and François Georges-Picot from France. They didn’t have the best of intensions, of course: to de- fine the respective sphere of influence once the Triple Entente had won the war, was all they wanted. So they famously drew a line in the sand, mostly across deserts, and marked with an “A” what was going to be French, and with a “B” what was going to be British. Then the British joined the separate provinces of Mosul, Bagh- dad, and Basra to form Iraq because it was a territory often treated as a coherent economic and military area by the Ottoman government. To the West, Mount Lebanon had been carved out as a special administra- tive unit following religious violence there in 1860 as a compromise between the Sublime Porte and the Great Powers: the French transformed it into a sovereign state, even tough the Syrian regime has always con- sidered it, with some reason, its own territory.The only completely“artificial” state was Jordan, invented by the British to give something to be king of to one of their staunchest allies, Abdullah. It has also, ironically, been far and away the most peaceful country of the entire lot. Could Sykes and Picot have done a better job? Nick Danforth, a PhD candidate in Turkish history at Georgetown University, Washington DC, explored the alternatives in two articles, for the World Policy Insti- tute and for The Atlantic magazine. His conclusions are not encouraging. In Iraq, creating smaller independent states along the Ottoman administrative lines would only have prefigured the conflicts dividing Iraq today. A predominantly Kurdish state built around the old Ot- toman province of Mosul would almost inevitability have become ensnared in the conflict between Turkey and its own Kurdish minority. A small Shiite state based on the province of Basra would have proved a constant temptation for Iran. A state base on the central province of Baghdad would have be left without oil deposits, an obvious recipe for disaster. “At best, creating more countries would have just meant more borders to fight over, while fewer large countries would have turned regular wars into civil ones,” Danforth writes. No better results would have come endorsing the logic of pan-Arabism. A large Sunni state encompass- ing the whole area would have struggled with Shiite, Kurdish, Christian, and other minorities bringing re- gional politics back to square one (a smaller experi- ment, the United Arab Republic between Egypt and Syria, failed miserably after three years). Had the Eu- ropeans left to the locals to sort things out themselves, the most likely scenario would have been what the Balkans underwent in the 1990s. And finally consider this: the bloodiest war in Middle East history, between Iran and Iraq 30 years ago, was fought over a border that had remained largely unchanged since the 16th centu- ry conquests of Suleiman the Magnificent; Saddam Hussein invaded Kuwait claiming that the British had unjustly separated the territory from Iraq only to bru- tally repress, immediately after, the Kurds in defense of lanfranco vaccari has covered globalization for Italian dailies Il Corriere della Sera and Il Sole 24 Ore. Map of the Sykes-Picot Agreement showing Eastern Turkey in Asia, Syria and Western Persia, and areas of control and influence agreed between the British and the French. Royal Geographical Society, 1910-15. Signed by Mark Sykes and François Georges- Picot, May 8, 1916. THENATIONALARCHIVES-UNITEDKINGDOM an equally high-handed British decision to attach Kirkuk to Iraq. Colonial borders are not the main culprit of the turmoil affecting the Middle East or other parts of the world. According to Danforth, theWest deserves to be blamed for other reasons:“Our collective fixation with the Middle East’s borders has drawn attention away from the truly pernicious policy of divide-and-rule that the French and British used to sustain their pow- er.” They cultivated the Alawite minority against the Sunni in Syria, the Turks against the Greeks in Cyprus, the Muslims against the Hindu in India, and so on – fos- tering future disasters. Straight lines appear suspi- cious, but in the Middle East they mostly reflect the presence of large swaths of flat, barely-inhabited land. When Soviet anthropologists in the 1920s tried to cre- ate scientifically accurate borders in a dizzyingly mul- ti-ethnic region of Central Asia, the result was absurd and equally contested by Uzbekistan, Tajikistan and Kyrgyzstan (only once they won independence, of course). As discouraging as it may seem, there are no“good” or natural borders waiting to be identified on the ground and to be put over a map. Borders work like a marriage – they are good only and if both sides decide that they are better off with them. TAJIKISTAN Source:Longitude KYRGYZSTAN UZBEKISTAN KAZAKHSTAN Tashkent 150 km50 1000 Fergana BORDERS AMONG KAZAKHSTAN, UZBEKISTAN, KYRGYZSTAN AND TAJIKISTAN
  17. 17. longitude #41 - 33 Borders 32 - longitude #41 Cover story L ast June the blitzkrieg launched by the Islamic State in Iraq and the Levant (ISIS) took the world by surprise. Within three weeks, annihilating the weak defenses posed by the Iraqi army, the group seized a swath of land that goes from the city of Mo- sul to the outskirts of Baghdad. The media-savvy or- ganization accompanied its military feat with a prop- aganda barrage on Twitter and other social media out- lets. It started with the launch of the hashtag #Smash- ingSykesPicot, which surprised occasional observers but not those who had long monitored ISIS and oth- er Islamist groups. The names of François Georges-Pi- cot and Sir Mark Sykes, in fact, are all but forgotten in the West but have long been a rallying cry for Middle Eastern Islamists. At the height ofWorldWar I the two diplomats had negotiated a secret deal on behalf of, re- spectively, France and Britain in which the two pow- ers divided among themselves the spoils of the mori- bund Ottoman Empire.These designs, which fit the in- terests of the colonial powers and largely overlooked historical, ethnic and religious dynamics on the ground, formed the basis of the territorial order that grew out of the war and that has since characterized the region. Islamist narrative has long argued that the Sykes-Picot borders are artificial machinations de- signed by colonial powers to serve their interests by di- viding the ummah, the global community of Muslim believers which, by its very nature, should know no in- ternal boundaries. On June 29, in an audacious move that surprised the jihadist group’s supporters and detractors alike, ISIS sought to reverse another early 20th century his- torical event that has long plagued the Islamist psyche by declaring the formation of the Caliphate in the ter- ritories it controls, a block that also includes sections of northern and eastern Syria.The 1924 abolition of the Caliphate had also been seen by Islamists as a diabol- ical plot by secular Muslim leaders who, in order to gain power for themselves, had caved in to Western impe- rialist interests and sold out the God-mandated unity of Muslims. Islamists long argued that all the region’s problems are spawned by this unnatural and exter- nally-imposed status quo and only its demise would re- store the ummah’s pride, welfare and global primacy. This narrative was clearly stated by ISIS’s chief Abu Bakr al-Baghdadi in his first speech as self-declared caliph:“Indeed the Muslims were defeated after the fall of their caliphate.Then their state ceased to exist, so the disbelievers were able to weaken and humiliate the Muslims, dominate them in every region, plunder their wealth and resources, and rob them of their rights. They accomplished this by attacking and occupying their lands, placing their treacherous agents in power to rule the Muslims with an iron fist, and spreading daz- zling and deceptive slogans such as: civilization, peace, co-existence, freedom, democracy.” And in the wake of the announcement ISIS (which for the occasion an- nounced its change of name into Islamic State, IS) is- sued an official video by the title The End of Sykes-Pi- The end of the Sykes-Picot line The borders drawn up at the end of World War I in what was left of the Ottoman Empire have often been accused of being arbitrary. Islamists, however, see them as a colonial imposition that must be rectified. ISIS militants show off a tank along the streets of Syria’s northern Raqqa province, June 30, 2014. by lorenzo vidino, Andrea Plebani, and Stefano Torelli
  18. 18. longitude #41 - 35 Borders 34 - longitude #41 Cover story cot whose narrator, in keeping with the group’s global profile, was a Norwegian convert of Chilean descent, BastiánVásquez (Abu Safiyya).Walking amidst the ru- ins on an Iraqi border post,Vásquez stated of the bor- der: “We do not recognize it and we will never recog- nize it.” IS’s post-Westphalian vision could appear, at first glance, pathetically utopian. And there are reasons to hypothesize that its project could quickly crumble. Even though IS is the first jihadist group to declare the caliphate, over the last few years others had estab- lished de facto Islamic states in territories they had con- quered: theTaliban in large parts of Afghanistan before the American invasion, al-Shabaab in Somalia, and, more recently, various al-Qaeda-linked groups in Iraq, Yemen and Mali. In all these cases the local population, which had initially welcomed the development as a so- lution to the anarchy and violence that had plagued their life, came to reject the brutality and extremism the jihadist groups had brought. Without fail they turned against them and, often in conjunction with Western military intervention, overturned them. IS, which has all along displayed a remarkable tac- tical flexibility and ability to learn from the mistakes of other jihadist groups, seems to be adopting a slightly different approach and cultivating the local population through gifts of primary needs, goods and social ac- tivities.Yet its brutal imposition of laws and morals that are at odds with those of even the most conservative cross-sections of Syrian and Iraqi populations is al- ready alienating the masses. IS’s swift advance in northwestern Iraq cannot be understood if not related to the deep political crisis that has affected the country since the end of 2010.While al- Baghdadi’s forces demonstrated their prowess on mul- tiple occasions, humiliating their opponents in Syria and Iraq alike, they could have never been able to extend their control over roughly a third of the“land of the two rivers” with- out local backing or – at the very least – acquiescence. It is a re- sult as important as IS’s mili- tary victories, particularly if considered that the Islamic State of Iraq (ISI), a forerunner of the recent endeavour found- ed by the group in 2007, was de- feated merely a year later thanks to the efforts of Sunni tribal militias coalesced under the banners of US-supported sah- wa councils (known in theWest mainly as “Sons of Iraq”). This u-turn was the result of diverg- ing interests and agendas that ultimately severed the ties holding together Iraqi Sun- ni insurgents and their (mainly foreign) ISI“brothers in arms,” who were accused of exploiting the Iraqi crisis for their own purposes and imposing their control over the population without considering interests, religious practices and autonomy of local actors (in particular tribes). ISI remnants were forced to regroup to north- western Iraq (especially in and around Mosul) but promised vengeance for what they considered a be- trayal. Since IS is widely known for its brutality and for keeping its promises, how is it possible that the very ac- tors which expelled the group from Iraq in 2008 ac- cepted its return, deciding even – in some cases – to side with it? The answer lies mainly in the sectarian policies adopted by Iraq’s Shiite Prime Minister Nouri al-Mali- ki against the Arab Sunni community since the begin- ning of his second term in 2010. Despite the agree- ment reached in Erbil at the end of that year, which was instrumental in confirming al-Maliki as the head of the government, the prime minister did not comply with the pact reached with Iyyad Allawi, the leader of a Sun- ni-backed party sidelined after obtaining a plurality at the 2010 elections. Al-Maliki’s offensive was not limit- ed to political brinkmanship but was accompanied by a prolonged campaign targeting prominent Sunni politicians: in December 2010 Iraq’s vice presidentTariq al-Hashimi was accused of having been involved in terrorist activities and was sentenced to death in ab- sentia after some of his bodyguards (allegedly tortured) confirmed the accusations; a year later, the Minister of Finance, Rafi al-Issawi, was targeted with similar meas- ures and resigned amid popular protests; in December 2013 it was the moment of Ahmed al-Alwani, a politi- cian hailing from the restive province of al-Anbar who supported local protests. The pressure was not limited to politicians alone, but affected growing strata of the Sunni community, targeted by controversial judicial measures (that resulted in thousands of arrests under the aegis of anti-terrorism and de-Bathification laws) and neglected by Baghdad. Starting from the end of 2012, a series of protests exploded in the whole Sunni “heartland” – from al-Anbar in the west to Diyala in the east – paralyzing huge swaths of territory and prompt- ing the stiff response of Iraqi security forces.The result was a new wave of arrests and hundreds of victims – as happened in Hawija in 2013, after Iraqi security forces clashed with local protestors. It is in this framework that IS made its comeback in Iraq, building on the new capabilities it acquired in Syr- ia and on Iraqi Arab Sunnis’ hostility towards a central government perceived as sectarian, aligned with Tehran and inherently anti-Sunni. Al-Maliki signifi- cantly underestimated the risks stemming from a po- tential rapprochement between IS and disgruntled Arab Sunni insurgents. He preferred to stick to his un- compromising agenda, focusing on presenting himself as the protector of the nation and especially of his Arab Shia constituency. Doing so, he hoped to secure stunning victories at the provincial (2013) and nation- al (2014) elections, in order to support his bid for a ma- jority government not impaired by improbable al- liances with rivals and political opponents. Despite losing Baghdad and Basra, al-Maliki’s coalition fared well at the 2013 voting, strengthening its hold over the Iraqi system. National elections reflected this trend. Though obtaining only 92 of the 328 seats in parliament and falling well short of a majority, the coalition led by al-Maliki secured many more seats than its main op- ponents, de facto strengthening the aspirations of the incumbent prime minister for a third term. The re- sults were particularly critical for Sunni aspirations, whose hopes were hindered by deep internal frag- mentation as well by the disillusion nurtured by a sig- nificant part of the community towards the political arena. Building on this situation, IS stepped up its opera- tions in northwestern Iraq, extending its influence over growing swaths of territories and scoring major victo- ries between the end of 2013 and the beginning of 2014, when it succeeded (with the fundamental help of local actors) in ousting Iraqi security forces from Ra- madi and Fallujah. From that moment on, the group in- creased its operations dramatically, succeeding in es- Iraqi Christians leave Saint-Joseph church after a mass on July 20, 2014 in Erbil, the capital of the autonomous Kurdish region of northern Iraq. Hundreds of Christian families fled their homes in Mosul on July 20, 2014 as a jihadist ultimatum threatening their community’s centuries- old presence in the northern Iraqi city expired. Abu Safiyya, a Norwegian convert of Chilean descent and member of ISIS declares the end of the Syria-Iraq border. STILLFROMISISVIDEO SAFINHAMED/AFP/GETTYIMAGES
  19. 19. longitude #41 - 37 Borders 36 - longitude #41 Cover story gic importance for the Iraqi Kur- dish people. Here is concen- trated almost half of the oil ex- ported abroad by Iraq and here all the nodes of the country’s future stability are interwoven. In fact, since Saddam Hussein was ousted, arguably the single most important unresolved is- sue has been the status of Kirkuk: the KRG wants to annex it to its own territory, while the central government in Baghdad wants to keep it under its sov- ereignty. Article 140 of the 2005 Constitution provided for a ref- erendum in order to decide un- der whose sphere of influence the city should fall, but so far this has always been delayed to avoid throwing more fuel on the fire in an already heated envi- ronment. After the capture of Kirkuk, many have wondered whether Iraqi Kurdistan could finally achieve the independence it coveted for decades. While the rest of Iraq seems destined for the worst, between the Caliphate proclaimed by ISIS and the bloody fitna between Sunnis and Shiites still in progress, could Kurdistan achieve its final victory? KRG President Masoud Barzani has tellingly raised the pos- sibility of a referendum on independence. Yet things seem much more complicated and there are a number of historical, economic, political and social factors in- dicating that the prospect of an independent Kurdish state might not be imminent. First of all, the historical factor. As already noted, the Middle East’s boundaries were designed during and af- terWWI.When the winning powers gathered in Paris to decide the region’s fate the creation of an independent Kurdistan (not only in Iraq, but throughout Kurdis- tan’s historical region) seemed very near. Neverthe- less, a trend was immediately apparent: the perennial internal division within the Kurdish nationalist front, which eventually contributed to the project’s abor- tion. If it’s true that history tends to repeat itself, what we are seeing today in Kurdistan is division rather than unity. After the first Gulf War and the liberation of Kuwait by US and allied forces, the creation of a no-fly- zone over Northern Iraq had in fact allowed the for- mation of a Kurdish autonomous region, even within the borders of a united Iraq. Nevertheless, this event, far from being a moment of unity within the Kurdish front, suddenly created a do- mestic competition, which soon escalated into full-fledged civil war between the two main Iraqi Kurdish parties: the Kurdistan Democratic Party (KDP) of Mas- soud Barzani and the Patriotic Union of Kurdistan (PUK) of Jalal Talabani. That intra-Kur- dish conflict caused the death of about 5,000 people and peace was achieved only in 1998 thanks to the mediation of the United States. Today, these two men are respectively the Presi- dent of the KRG and the Presi- dent of Iraq. Even today, the question of the independence from Baghdad still manages to divide them, with the KDP (cur- rently governing in Erbil) favor- ing it and the PUK opposing it. Moreover, by taking control of part of the border between Iraq and Syria fol- lowing the ISIS coup, the Peshmerga have drawn crit- icism and hostility from Syrian Kurds. The latter, rep- resented by the Democratic Union Party (PYD), are considered a sort of Syrian branch of the Turkish PKK, a group notoriously inimical to the Turkish govern- ment. And since Ankara has recently embarked on a policy of rapprochement and support for the KRG, it is clear that the interests of these different Kurdish actors diverge. Thus, given this framework, is it possible to imagine an independent Iraqi Kurdistan without a re- balancing of the whole area and the eruption of another conflict – even within Kurdistan itself? Economic and external factors similarly lead us to believe that the time has not yet come for independ- ence. First of all the economy: what would an inde- pendent Iraqi Kurdistan stand on? Oil resources could ensure a certain degree of autonomy, especially when considering the area of Kirkuk.That said, there is an in- adequacy of infrastructure and there are still prob- lems in the relationship with Baghdad, which has threatened sanctions against anyone purchasing oil from Kurdistan without first having entered into an agreement with the central government. The KRG has started to export oil through the pipeline linking Kirkuk to the Turkish port of Ceyhan. However, the cargos are still there waiting for potential buyers and only one has moved – according to some sources, intended for the Israeli market.To date, 17% of the revenues from oil ex- ports (approximately 400,000 barrels per day of oil would pass by the Kirkuk-Ceyhan pipeline by the end of the year) that Baghdad should pay to Erbil was blocked and Baghdad has cut the KRG budget. If we add that Turkey, probably the biggest investor in Iraqi Kurdistan, is contrary to independence, we under- stand that this possibility is unlikely to be pursued. Finally, we have the external actors. Turkey oppos- es Kurdish independence mostly for out of fear of such development’s impact on its own Kurdish population. Iran similarly does not seem to welcome an inde- pendent Kurdistan. And the US, the architects of the current situation in Iraq, have always supported the idea of a united Iraq. Israel remains the only actor that would welcome a secessionist choice by Iraqi Kurds, but its support is not enough to balance the opposing positions. Under these conditions, what Iraqi Kurdis- tan could achieve will be greater bargaining strength against Baghdad, not least by virtue of its role as an anti-ISIS bastion in the north of the country. IS has demonstrated an unforeseen ability to cap- italize on the weaknesses and divisions of local actors and the unwillingness of the US and international community to act. It is likely that IS’s state project, given its intrinsic aggressive and expansionistic na- ture, will soon come into further collision with many of these actors, possibly resulting in additional territori- al gains or in its demise. In either case, these develop- ments are clear indications of the need by the region’s populations and power players alike for a new way of interpreting the concepts of state and citizenship un- dermined by the deep ethnic and sectarian divisions that have plagued the modern Middle East. tablishing an arc of instability affecting much of the Arab Sunni heartland and threatening the hold of the government on the territories surrounding the capital. The fall of Mosul and the creation of the Caliphate were then the result of a process with deep socio-po- litical and security roots. But the current partition of Iraq must not to be considered irreversible. IS’s hold over northwestern Iraq is far from absolute and it is possible only thanks to the acquiescence of relevant lo- cal actors, whose stance is related more to their hatred of al-Maliki than to their adherence to the IS agenda and modus operandi. There is still room to maneuver in order to divide the IS-insurgents ticket and to regain the support of the Arab Sunni community. This rift is Baghdad’s only hope to disrupt IS schemes and re- store the unity of the country.Without these conditions even the defeat of IS forces risk being just another Pyrrhic victory, especially if considered in the frame- work of the new geopolitical dynamics unleashed by the fall of Mosul in northern Iraq. A few days after the capture of Mosul by ISIS mili- tants, the Peshmerga forces of the Kurdistan Regional Government (KRG) entered the city of Kirkuk, taking de facto control of it. The city has been dubbed as the “Kurdish Jerusalem” because of its symbolic and strate- Map of the Caliphate as envisioned by Al Baghdadi, distributed through the internet and intended as a threat to the included countries. Members of Kurdish security forces take up positions during an intensive security deployment and a patrol looking for militants of the Islamic State of Iraq and the Levant (ISIS), on the outskirts of Mosul, June 22, 2014. REUTERS/AZADLASHKARI Lorenzo Vidino is a fellow at the Center for Security Studies, ETH Zurich. Andrea Plebani is a fellow at ISPI (Istituto per gli studi di politica internazionale). Stefano Torelli is a fellow at ISPI.
  20. 20. THE TIGRISTHE EUPHRATES SYRIA TURKEY JORDAN IRAQ IRAN 01 02 03 0605 04 07 09 08 10 14 11 12 01 02 03 04 05 06 08 07Tharthar Lake TIGRIS Buhayrat al Asad Razzaza Lake EUPHRATES ISIS CONTROL Source:TheNewYorkTimes ISIS ATTACKS 01 | Tal afar Less than a week after the fall of Mosul, ISIS captured this city after a two-day battle with the Iraqi Army. Qaiyara Air base Dujail Balad Air base 02 | Mosul The rout in Mosul was humiliating for Iraq’s security forces. Within days of taking over the city, ISIS issued edicts laying out the strict terms of Islamic law under which they would govern, and singled out some police officers end government workers for summary execution. 03 | Hawija ISIS exploited disenchantment among Iraq’s Sunnis to align with other Sunni militant groups, who have been critical in helping ISIS capture so much territory so quickly. Al Bab Minbij Sarrin Ain Issa Tebni Mouhasan 08 | Baghdad ISIS has pledged to march on Baghdad, but seizing and controlling the sprawling Iraqi capital, with its large population of Shiites, will be much more difficult than advancing across the Sunni heartland. Large sections of Baghdad and southern Iraq’s Shiite provinces have been swept up in a call to arms. The Shiite supreme leader, Ayatollah Ali al-Sistani, called for all able-bodied Iraqis to join militia units to fight beside the army against ISIS. 10 | Rawa ISIS captured this town and neighboring Ana after Iraqi troops fled. 09 | Qaim ISIS took control of this crossing on June 22 after Iraqi troops, sent to reinforce the border, fled. 11 | Haditha Dam With the nearby towns of Rawa and Ana under ISIS control, officials are concerned that the group could capture Haditha Dam, Iraq’s second largest, and wreak havoc. When ISIS fighters seized the Falluja Dam in April, they opened it, flooding crops as far as 100 miles south. 12 | Ramadi In December, Iraq’s prime minister, Nouri al-Maliki, ordered security forces to dismantle a protest camp – an outlet for disenchanted Sunnis angered at their treatment by the Shiite-dominated government. The action ignited days of violence and created the opening ISIS needed to seize parts of the city, the provincial capital. 13 | Falluja Just days after the raid on the camp in Ramadi, ISIS fighters destroyed the police headquarters, planted their flag on government buildings and decreed the city to be theirs. 14 | Abu Ghraib ISIS received an influx of recruits after a prison break in July 2013 at the detention center here. The escapees, who were imprisoned by the Maliki government or during the American occupation, are now among ISIS’s leaders and foot soldiers. 01 | Jarablous After being pushed out of Aleppo, ISIS moved east, attacking rebel bases and taking over towns like this near the border with Turkey. 02 | Aleppo In 2013, ISIS emerged from the remnants of Al-Qaeda in Iraq and began to operate in Syria. Syrian rebel groups initially welcomed ISIS as an ally, but ISIS was more interested in forming an Islamic state than topping the Syrian government. These tensions culminated in a revolt against ISIS. The group was driven out of Aleppo, Syria’s largest city, in January by the other rebel groups. 03 | Deir Hafir ISIS has inspired a new generation of jihadists with its emphasis on creating an Islamic state and its willingness to kill Shiites and even rival Sunnis, like when it recently crucified eight rebel fighters in the town square here for being too moderate. Al-Qaeda, severed ties to ISIS in February. 04 | Maskama ISIS may practice a seventh-century version of Islam, but its public outreach is thoroughly modern. It has used Facebook as a death-threat generator; the text-sharing app JustPaste to upload book lengthy tirades; and YouTube and Twitter to post gruesome videos and photos to terrify its enemies. 05 | Tabqa Dam Seizing infrastructure In addition to targeting cities and towns, ISIS has also sought control of major pieces of infrastructure, including dams, oil fields and a refinery. 06 | Raqqa In keeping with its goal of creating an Islamic state, ISIS has instituted strict rules in most of the towns it has seized. In this city, which is now ISIS’s de facto capital, smoking and music are banned, women must cover their faces and shops must close at prayer time. The punishment for not complying: execution in the main square. 07 | Deir el-Zor While ISIS holds sway over much of the oil-rich province of which this city is the capital, control of the capital itself has been split among other rebel groups and the Syrian government. ISIS took control of a bridge leading into the city, creating a partial blockade. 08 | Abu Kamal ISIS seized the Syrian side of this border crossing on June 30 after brutal clashes with a Syrian insurgent group. Now, with both sides of the crossing under its control, ISIS can move men and supplies easily between Iraq and Syria. It is also another step closer to achieving its goal of creating an Islamic state across the two counties. 06 | Samarra ISIS, which has made no secret of its intention to incite another sectarian war, has been trying to attack a sacred Shiite shrine here. An attack on the shrine in 2006 set off a wave of sectarian violence across the country. 07 | Baqubah About a week after capturing Mosul, ISIS militants took control of several neighborhoods here but were pushed back by security forces. The next day, the bodies of 44 Sunni prisoners were found in a government-controlled police station in Baqubah, about 40 miles north of Baghdad. 05 | Tikrit The day after seizing Mosul, ISIS captured Tikrit, another major Iraqi city and the hometown of Saddam Hussein. ISIS boasted on social media that it had executed 1,700 members of the Iraqi military here. 04 | Baiji Once dependent on Persian Gulf donors, ISIS is becoming independently wealthy. The group started building a bankroll after seizing oil fields in Raqqa, from which it sells much of crude. If captured, Baiji could provide ISIS with another potentially lucrative source of income. Baquba Mayadeen Burwana Hit Habbaniya 13 longitude #41 - 39 BordersCover story A snapshot of ISIS in the Middle East 38 - longitude #41
  21. 21. manages to keep Israel in check, might raise its profile to become a rival of Al-Baghdadi’s Caliphate under the banner of a holy war for the “liberation of Jerusalem.” While Is- rael does not have many alternatives, it must prevail on Hamas to bring peace to its citizens and demonstrate the ability to ap- ply the new “castle strategy” against the ji- hadists, a system made up of physical pro- tection, intelligence gathering and targeted operations keep areas of growing instabil- ity along its borders at bay. The Orientalist longitude #41 - 41 The Orientalist A s the Middle East reels from two wars threatening to change the map of the region, the Israeli Defense Force has embarked on yet another incursion into Gaza in order to quell the volley of Hamas rockets that have been launched into Israel. Any talk of a two-state solution has been hushed under the din of explosions. With the Sykes-Picot Agreement of 1916, Britain and France laid the founda- tions of a colonial order in the Middle East, based on the creation of an Arab national state to protect the interests of London and Paris in opposition to Berlin and Ankara. For a century this system of international relations has held together, but now Abu Bakr al-Baghdadi has blown it away with the creation of a contiguous geographical state united by the Sunni faith of those live there, the jihadist convictions of those who guide them, and a general hatred of Shiites. With the Islamic State of Iraq and the Lev- ant (ISIS) declaring a Caliphate and the conquest of geographical areas in Syria and Iraq, threatening even Jordan and Saudi Arabia, we are witnessing a reorganization of the Middle East along tribal lines. What counts are not the boundaries of territories, but the identity of the clan. From here we get the scenario of three new entities rising from the ashes of the Middle East’s old na- tion-states: a Sunni region, a Shiite region and a Kurdish region. It’s as if the borders of Sykes-Picot have fallen apart, bringing out the identity of original populations. It is also interesting to note that the Sun- nis, Shiites and Kurds live in different his- torical periods, behaving accordingly. The Sunnis have been hardest hit by the implo- sion of the Syrian regime and the Iraqi state. They feel that the states with which they have identified have slid into the Shia orbit, so now they must reproduce the bonds of solidarity among the tribal populations that are now reemerging between the Persian Gulf and the Mediterranean Sea. There are no longer states, presidents or prime min- isters, but rather an indefinite constellation of families, clans, and other groups led by lo- cal micro-leaders whose only wish is to stop the advance of the Shiites. This is a re-re- lease of Osama bin Laden’s 1998 manifesto “Against Jews and Crusaders”; but instead of a holy war against the infidels it is the reaf- firmation of the fratricidal feud with the heretical Shiites. Driving the behavior of the tribes from Iraq’s Anbar Province, Jordan and east-cen- tral Syria is not a project for a new state, but one based on a ethno-religious alliance in- tended at first to recover useful resources, and then to raid and loot and the Shiites. It’s as if history were accelerating backwards and carrying the Sunni tribes back to the when the Ottoman Empire fell apart and the Arab tribes, seeking the protection of their own interests, found the solution in submitting to the British crown. In this case, the submission is to the jihadist idea that Sunni Islam is the only true belief. This is why Abu Bakr al-Baghdadi is the litmus test for a wider phenomenon that could lead to the affirmation of multiple leaders, with different political agendas, but united by the challenge to reignite the historic and bloody rivalry with the Shiites. Hence the focus on what is happening in the Shiite camp, where tribal aggregation has been occurring around an already ex- isting state: Iran. Shiite groups, parties and movements from Lebanon toYemen, fight- ing for various ethnic populations with the same faith, all have in common the fact that they orbit around Tehran. There is therefore an asymmetry in what is hap- pening between Sunnis and Shiites. The former exceed their national states, the lat- ter are found around a nation-state giving rise to cross-border alliances. This stems from the fact that the Islamic Republic of Iran, since its creation in 1979, has me- thodically and determinedly invested in strengthening ties with Shiites throughout the Middle East, coming to use public fi- nances and instruments of national secu- rity organs – such as the Quds Force – to in- filtrate resources into Shiite populations. Shiite rebels inYemen, Hezbollah militants in Lebanon, who have become the major allies of Bashar al-Assad in Syria, and groups of Shiite dissidents in Bahrain and Saudi Arabia are all actively supported by Tehran, creating a network of religious and financial relationships whose epicenter is Tehran.This is possible because the Shiites have coalesced around the Khomeini rev- olution, allowing them to gain space and re- sources at the expense of the Sunnis. Finally, the third piece: Iraqi Kurdish leader Massoud Barzani wants to give birth to a new nation-state through a referen- dum that will mark their aspiration for in- dependence. Iraqi Kurds are entrusting him with the task of reuniting with their broth- ers living in Syria, Turkey and Iran. The birth of an independent Kurdistan, a dream of the Kurds since the 1920s, is a grassroots process of national self-determination such as had already occurred in Europe. So the Kurds are coming to build a new “European” nation-state. The Shiite camp around Iran in confrontation with the Sun- nis has given rise to a great tribal pact. These are pieces of a Middle East in which anything can happen because Israel and Turkey – mutual adversaries – are the only ones to support Barzani. The Saudi royal family is attracted to the mirage of a Sunni uprising, while Shiites see this thawing as an opportunity for a momentous achieve- ment, such as uniting the Iraqi holy cities of Kerbala and Najaf with Iran. The unpredictability of events is assured and the Arab League is the only one to fear. Perhaps this is because it is an interna- tional organization that reflects a division of the region into states whose strength is only on paper. It remains to be seen how these sce- narios will affect the Middle East conflict between Israel and the Palestinians, espe- cially in Gaza and the West Bank. Hamas’s struggle with Israel offers Palestinian Pres- ident Mahmoud Abbas the opportunity to return as a protagonist on the scene in Gaza if he can facilitate a truce. But Hamas, if it by maurizio molinari The Middle East is not unfamiliar with territorial disputes. For the past 60 years the borders between Jews and Arabs have been the cause of wars. Now the entire region seems to be redrawing its boundaries. Lines in the sand 40 - longitude #41 Israeli tanks sit positioned next to a gap in the wall separating Gaza and Israel, July 18, 2014, near Sderot, Israel. ANDREWBURTON/GETTYIMAGES maurizio molinari is the chief correspondent in the Middle East for Italian daily La Stampa.

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