Was the Danish cartoon controversy manufactured by a Russian intelligence agency?

As you may or may not have heard, tomorrow is Everybody Draw Muhammad Day, which has pissed off half the internet and even got Pakistan to block Facebook. I think the most recent trigger was a (double) episode of South Park that either displayed or mocked the image of the prophet, but I'm not really sure. What I have found interesting about this whole controversy is its possible origin: more than one former Russian spy has claimed that it's a ploy by the Russian secret services to drum up anti-American resentment, as part of a broader campaign of active measures dating back to Soviet times.

This all sounds pretty outlandish, but here is what Thomas Bogart, a historian at the International Spy Museum and Oxford Ph.D. recipient had to say:

Contemporary active measures are not confined to Russian soil. In fact, the recent controversy over cartoons depicting the Prophet Mohammad may well have been choreographed by the SVR, Russia’s foreign intelligence service. The evidence is circumstantial but compelling. For one, Kalugin says, the KGB has a history of using Danish journalists to plant disinformation in the Western press. And Flemming Rose, the Jyllands Posten cultural editor who commissioned the cartoons in 2005, happened to serve for several years as a correspondent in Moscow where, Kalugin observes, he published a spate of obviously government-sponsored, anti-Chechen articles. According to Litvinenko and journalist Adlan Beno, Rose also happens to be married to the daughter of an ex-KGB officer. This does not per se make Rose a Russian agent, of course, but Russian intelligence may well have availed itself of this “in-house” connection to influence the Danish journalist. “This guy may have been used,” Kalugin says.

As the cartoon controversy spread across the globe, scores of brand new Danish flags turned up mysteriously all over the Middle East just in time to be set ablaze by enraged demonstrators at internationally televised protests. Predictably, Muslim anger quickly turned toward the West at large. “Some obscure Danish newspaper [prints these cartoons], and all the sudden across the Western world, everybody knows what’s it all about. Who organized it? Who ignited the process?” asks Kalugin, identifying a top suspect himself: The SVR. It wouldn’t have been the first active measure of this kind. When a Jewish militant went on a rampage at Al-Aqsa Mosque in Jerusalem in 1981, the KGB planned to stage an anti-American Muslim rally in New Delhi, says Kalugin. At 5,000 rupees, the proposed operation was ridiculously cheap.

Kalugin is not alone in suspecting Moscow’s hand behind the recent cartoon controversy. Says Peter Earnest, a former senior CIA clandestine service officer who served in the Middle East: “As a way of fueling anti-western feelings among Muslims, publishing of cartoons ridiculing the Prophet Mohammad in an obscure Danish journal was a no-brainer, if it was done deliberately, particularly if you are prepared to use resources elsewhere to keep the controversy alive and pulsating.” And what’s in it for Moscow? The Kremlin seeks to compromise and undermine the United States and “make Russia look [like] an alternative” international partner to Middle Eastern nations, says Kalugin. Emphasizing the continuity between Soviet and Russian active measures, he concludes: “It’s a tradition, it’s not something new. That’s important to see the pastprojected onto the present—and the future.”

That's one former American spy (Peter Earnest, director of the museum), one author (Adlan Beno), and two former Russian spies. One of those spies was Alexander Litvinenko, who was assassinated (almost certainly by the Kremlin), and the second was Oleg Kalugin, a very well known former FSB director who supported Boris Yeltsin against the hardliners' attempted coup early in the '90s and later turned against Vladimir Putin and is now a well-known critic of the regime and its secret services. And while the article doesn't directly quote Litvinenko and he died before the article was published, a Salon article written posthumously article also cites his claims of Russian involvement.

While this would be disturbing in and of itself if true, I think the bigger worry is that this is a resurgence of the Russian secret services. They mostly fell into disarray immediately after the collapse of the USSR, but the rise of Putin (himself a former FSB director) has signaled to many that the KGB is back.

How Basel regulations fucked over both American real estate and Southern European governments

A blog dedicated to explaining the causes of the financial crisis has an excellent summary of the argument that Basel regulations doomed us all, both Americans and Europeans.

Basel regulations essentially tells large banks and institutions (and only them) precisely how much risk they can take with certain asset classes. Under Basel I, adopted in the West in 1992, banks were allowed to take huge risks in mortgage-backed securities and small risks in vanilla business loans. Basel I is in the process of being phased out in favor of Basel II, which went into effect in Europe in 2006-07. The second incarnation allows institutional investors to plow all of their clients' money in certain classes of sovereign debt (which at the time included Greek or Portuguese government bonds) without leaving a cent left over in case the bonds default. Obviously, it was precisely the asset classes that required little capital that have been taking down the global financial system, more slowly that us Americans realized.

As Jeffrey Friedman explains in the first piece, these rules only applied to large institutions such as banks and pension funds. While other investors were not as heavily invested in these risky products, they did fall victim to the mania to a lesser extent – though in the end, it's the banks who need the bailouts (and the public pension crisis in America is coming), not hedge funds and S&L's.

Those who call for more regulation of financial risk are frequently unaware of how minutely risk is regulated for large institutions. Proponents of regulation that are aware often argue that these are merely ceilings on risks and that an unregulated market would have been able to go even wilder on these risky loans, but the truth is that regulations are more than just ceilings. As they used to say in IT procurement, nobody ever got fired for buying IBM – a company whose big break was FDR's 1935 Social Security Act and the lucrative federal contracts it created. And when you lower ceilings on risk – presumably the Democrat's desired regulatory policy – you're only entrenching the idea of relying on the government to tell you what is a good investment and what is not.

US judge kills LimeWire, used by 60% of music pirates

A few days ago, a US district court judge ruled against LimeWire, effectively forcing the company to fold its extremely popular filesharing product:

While Wood's decision won't come close to killing online piracy--there's still BitTorrent and plenty of other ways to share files--she likely has scuttled a peer-to-peer service used by nearly 60 percent of the people who download songs. She also may have ushered out the era of large, well-funded file-sharing services, at least the kind that help distribute mostly copyright-infringing content. By making Gorton personally liable for damages, Wood served notice that operating these kinds of businesses is now a very risky financial endeavor. If the RIAA gets its way, Gorton, Lime Wire, and Lime Group will collectively be responsible for paying damages of $450 million.

BitTorrent is still the major player in the filesharing game, with the protocol carrying about half of all internet data. It's harder to use than LimeWire and other standalone filesharing applications (especially to download individual songs), but it's possible that the death of LimeWire will spur either easier-to-use BT clients, or broader consumer knowledge about how to use BitTorrent as is. And once consumers learn to use BitTorrent to download albums, it's only a short step to video piracy, BitTorrent's niche, which has the potential to be much more disruptive.

The Taliban never really banned opium

I often hear about the Taliban's short-lived ban on opium cultivation in 2000, but according to this paper (pdf), the ban likely had nothing to do with religion, morals, or international pressure:

Under the ban, poppy cultivation was reduced by more than 90 percent; it continued to flourish only in areas controlled by the anti-Taliban Northern Alliance forces.

Though the West initially applauded the Taliban’s about-face as a sign of a new willingness to join the international community, the enthusiasm was probably premature. Analysts now believe that the Taliban had a large stockpile of opium and heroin on hand from previous years of bountiful production, and that the ban was simply an attempt to use Afghanistan’s monopoly power to raise prices in a weak market.

It looks likely only a profit motive can stop Afghanistan's heroin exports.

€500 note taken out of circulation in the UK

The Brits have withdrawn the €500 note from circulation in the UK, on evidence that the vast majority of them are used by those conducting illegal business:

However, fed up with abuse of the currency, Britain's Serious and Organised Crime Agency (Soca) has decided with the Treasury and Home Office to remove €500 notes from circulation in Britain. Soca's ban follows an investigation which revealed that 90 per cent of the €500 notes in this country are being used for criminal purposes. It's the latest of a number of high-denomination bank notes favoured by villains that have fallen out of favour. Richard Nixon halted the circulation of $10,000 bills in 1969 because of their association with organised crime; these days the 1,000 Swiss franc note, while rare, is another popular choice for those engaging in nefarious deeds, and the 1,000 Dutch guilder note was a black-market favourite before the introduction of the euro.

It's not exactly clear to me how they're doing this, since the euro isn't a British currency to begin with – are they forbidding banks from accepting them in transactions?

Did Google's unsubsidized Nexus fail in a free enough market?

The Tech Liberation Front has a post about Google's failure to attract customers to its unsubsidized smart phones, and reasons that the widespread subsidization of phones by wireless providers (the reason your iPhone only costs $199) must be the market, revealed.

I'm a bit weary of the "market has spoken" kind of talk, though, considering how managed the wireless market really is. The government doles out spectrum rather arbitrarily, shaping the market in a pretty heavy-handed way. Even an auction system is still imposing a perhaps unnecessary layer of government control – open spectrum and competition in interference avoidance might utilize the spectrum more efficiently than either the status quo or an auctions.

I'm not sure how exactly the government intervention is pushing carriers towards offering subsidized phones, but the whole industry is just too managed to be accepted at face value as a working market. I'm not saying that there should necessarily be a complete free-for-all, but until the government does with long distance-capable bands what it did with the frequencies now used for wifi, I'm going to be skeptical of any weird things that the wireless industry comes up with.

Here is my archive of open spectrum-related posts, for those interested in the idea of ending government control of the airwaves.

Would Germany be better off now if it were on the pound rather than the euro?

I don't really feel very qualified to talk about European monetary and macroeconomics, which is why for the most part I've avoided writing about Greece and the Eurozone's crisis, but – and maybe it's just the benzos – I feel like I have something slightly relevant to say.

First of all, Tyler Cowen has a great round-up of recent events and indicators (although I hate his first point) here. Additionally, I hear that even Paul Krugman – someone who, sometime during his transition from serious economist to columnist, turned into a man who never met a bailout he didn't like – thinks Greece is going to be dropped from the euro. (Although later in the article he seems overjoyed at the fact that a Greece back on the drachma would be able to destroy the currency to its heart's content.)

As far as I can gather, the consensus among economists is that debt restructuring (in Krugman's words, "a polite term for partial default") is certain, a more serious default is likely, and Greece leaving the eurozone – an that was seen as very fringe a few weeks ago – is now a distinct possibility. In the end, I think that the quicker Greece leaves the euro, the better. Many in Europe worry about the resultant instability won't be worth the risk – after all, even Greek dogs like to riot. But in the end, Greeks have become too accustomed to capitalism and liberal democracy, and once its leftist protestors no longer have the euro and lack of monetary and fiscal sovereignty to blame, the rioting will stop and the hard reforms will begin. Greek voters are too sophisticated to give into geography and regress to the level of its Balkan neighbors, who despite Greece's problems, they still make it look like Switzerland in comparison.

The big European monetary debate has always been whether the UK and Scandinavia should give up their pounds and crowns in favor of the euro. But it now looks like it would have been better for Germany, the Benelux, and Scandinavia to give up their marks, francs, guilders, and crowns in favor of the pound sterling.

Dots on soda cans in Cuba

Yoani Sánchez, by far the most famous Cuban blogger, has fascinating post on one of Cuba's clandestine industries, framed by a friend asking her why soda cans have different colored dots on them. It's not long, but here are some excerpts:

So the colored dots indicate who owns the drinks that have been sold. Those of the local administrator might be marked in red, the waitress’s marked in blue, and the cook probably decided to opt for an orange dot. Everyone gets a share. [...]

Also, clandestine factories produce Bucanero and Cristal beers with the same appearance as the originals and even long time drinkers can barely tell the difference. These knock-off industries are located in what looks like family homes, in whose rooms a canning device snaps on the lids. [...]

A labyrinthine network of counterfeiting and resale that undermines the dysfunctional centralization and diverts profits to thousands of private pockets.

Russian neo-Nazis mistake bubble blowers for gay pride marchers, beat them up

The Moscow Times, eternal font of all weird Russian things, has this dispatch from the motherland:

Young people who gathered to celebrate spring by blowing bubbles at an annual flash mob in central St. Petersburg were attacked by a group of suspected neo-Nazis who mistook the gathering for a gay pride event, flash mob organizers said.

Some 500 people stood blowing bubbles on the steps of Gorkovskaya metro station and in the surrounding Alexandrovsky Park at about 4 p.m. Sunday — the agreed time for the start of the flash mob — when about 30 men ran up and started beating them and firing rubber bullets.

Several people fell to the ground before the attackers fled at the sight of approaching OMON riot police officers. A reporter saw officers detain at least one attacker. Police also detained about 30 bubble-blowers for five hours on suspicion of walking on the grass, a charge that they denied, organizers said.

Emphasis mine. True story: I've actually been vaguely threatened with arrest by Romanian police officers because I was standing on the grass (an Eastern European euphemism for mud, as far as I can tell). I think they were shaking me down for a bribe (or at least sizing me up/priming me for one), though eventually they left me alone.

In this specific case, I think the, uh, "mix-up" was probably genuine and not directed on high, but I think the Kremlin deserves ultimate responsibility for the rise of Russian neo-Nazism generally. And not just for indirect reasons like a poor economy and the government's political scapegoating of immigrants; rather, the Russian is literally training them:

Human Rights researchers in Moscow have published documents showing "Nazi skinheads are being encouraged, organized, and used by Russia's ruling circles in their own interests." And Isvestiya reported that "Nazi skinheads from an openly fascist organization, the NNP (People's National Party), were being trained at the Moscow OMON special-purpose police detachment facilities and that they were being trained specifically by OMON coaches." Several years ago Russian historian Vladimir Ilyushenko asserted that "some parties view skinheads as their reserve. The process of encouraging fascist sentiments in Russia is steered by government officials."

South African cities and their multipolarity

So, I knew that South Africa's capital/city situation was a bit odd, but I never realized until today just how weird it truly is. Officially, South Africa's has three capitals – Cape Town is the legislative capital, Pretoria is the executive capital, and Bloemfontein is the judicial capital. It's unclear to me where Jacob Zuma, the country's president, actually lives, but he has official residences in both Pretoria and Cape Town. The parliament meets in Cape Town, however oddly enough, despite being the judicial capital, Bloemfontein is actually not where the nation's highest court, the Constitutional Court, meets – that honor goes to Johannesburg – which despite being the largest in the country, is not an official capital.

The largest and most important city not being the capital is actually something that's common throughout former British colonies. Washington, DC is not even within the top 10 American cities by population, Ottawa is only the eighth largest city/fourth largest metro area in Canada, and Wellington is essentially tied for second in New Zealand with Christchurch (Wikipedia seems to be confident enough that the 100 person difference is accurate, though).

At first I was going to say that this is due to their fluctuating populations, but now that I think about it, that's not the case with the US, for which, if I understand correctly, DC was a compromise between the North and the South after the Civil War. A lot of state capitals in the US are similarly insignificant – Sacramento in California and Albany in New York, for example. In fact, none of the six most populous US states have the same capital/largest city; not until number seven, Ohio, do you get Columbus as both the largest city and capital.