The economics and political economy of Gazan smuggling tunnels

I've written a lot in the past about the smuggling tunnels between Egypt and the Gaza Strip, but the London Review of Books has what has got to be the best article I've ever seen. As the article says, data's hard to find, but the anecdotes are pretty good. Here's an excerpt:

According to World Bank officials, 80 per cent of Gaza’s imports currently come through the tunnels. Once black-market smuggling had turned into Gaza’s formal trade, Hamas inspectors began to impose controls and licensing fees. Some tunnel merchants now operate a telephone order service and send out catalogues: office equipment ordered by phone arrives in 48 hours. ‘Goods move faster now than when Rafah terminal was open,’ a businessman told me. With the rise in trade, prices have fallen. Egyptian goods cost less than Israel’s, sometimes even after Hamas and the smugglers have taken their cut. Petrol is half its pre-siege price.

There are precious few macroeconomic data on the effect all this is having. ‘For us Gaza’s a bit of a black hole,’ a World Bank economist reliant on Ramallah’s figures admits. Even so, he says, unemployment rates in May dropped 3 per cent from a high of 32 per cent. ‘My tiler’s gone underground,’ a UN civil servant complained to me: he couldn’t compete with the tunnel smugglers, who pay four times the £12 daily wage he was offering.

More tangible signs of recovery can be seen among Gaza’s numerous money-changers, who help smugglers launder their earnings. The weight of a million dollars in hundred dollar bills to the nearest decimal point trips off their tongues. In June, the Gaza-based Bank of Palestine doubled the size of its trading rooms, which are linked electronically to Nablus, Cairo and Dubai stock markets, and installed rows of plasma screens. With investors keen to park their profits, share-trading volumes doubled in a year, and this summer the Bank of Palestine share price reached an all-time high. Traders who used to go home at lunchtime now stay till four.

Is Russia liberalizing its economy?

The Russian government has recently announced that a new round of privatizations of state firms will occur next year, and Stratfor seems to think that this is a potentially monumental step for the Russian state. According to Stratfor (the first two parts of a five-part series have already been published),* this is the beginning of a sort of "clan war" within the Kremlin.

Stratfor frames it as roughly being between the old siloviki and the new "civilviki." On the side of the old (lead by Igor Sechin) is the FSB and the state-owned giant Rosneft, and on the "civilviki" side (led by Vladislav Surkov) is President Medvedev, liberal reformer Finance Minister Alexei Kudrin, the GRU, Gazprom, and Chechen President Ramzan Kadyrov.

Anyway, Surkov and his clan are being given an opportunity to shake things up with their liberalization plan. Putin isn't taking any sides, and is waiting for it to play out before siding with the victor. Definitely not a textbook case of good vs. evil, but all in all, I think we should be rooting for Surkov and his clan.

* Stratfor is a private intelligence agency with a subscription-only site, but if you search the title of the article in Google and click the link from the search results page, you can access anything you want. This trick also works with the Wall Street Journal.

Aspirin and the 1918 flu

The New York Times has an interesting article on a new paper that claims that some of the 50 million deaths worldwide attributed to the 1918 Spanish Flu pandemic may have actually been caused by aspirin overdoses, a common (but sometimes deadly) treatment at the time. But this passage stood out to me:

Aspirin packages were produced containing no warnings about toxicity and few instructions about use. In the fall of 1918, facing a widespread deadly disease with no known cure, the surgeon general and the United States Navy recommended aspirin as a symptomatic treatment, and the military bought large quantities of the drug.

I'll bet a lot of the New York Times' readers read that paragraph and come away thinking, "Thank god we have a government agency to make sure there are warnings on medicines." But personally, it was the second sentence that struck me – maybe if the government hadn't been in the business of giving out health advice, the use of high doses of aspirin in 1918 wouldn't have been so widespread.

Russian natural gas market = capitalism?

In an article about natural gas pipelines to Europe, the New York Times makes the egregious error of implying that Russia's natural gas industry is anything other than an arm of the Russian government:

It is a free-market capitalism that post-Communist Russia has cannily exploited, says Pierre Noël, a professor at Cambridge University and a fellow at the European Council on Foreign Relations.

“It is an open, competitive, capitalist economy,” he said. “People build the pipes they want to build.”

With his Nobel, Obama will slay the communists and the godless

Here's Thorbjørn Jagland, head of the committee that issued the award, comparing what Obama's about to do to the fall of the Berlin wall, which liberated (to various extents) the 300 million people of the Eastern Bloc:

He compared the selection of Mr. Obama with the award in 1971 to the then West German Chancellor Willy Brandt for his “Ostpolitik” policy of reconciliation with communist eastern Europe.

“Brandt hadn’t achieved much when he got the prize, but a process had started that ended with the fall of the Berlin Wall,” Mr. Jagland said.

Not to be outdone, Shimon Peres comes dangerously close to calling Obama the messiah:

[A]nother laureate, President Shimon Peres of Israel, sent a letter to President Obama on Friday morning, saying: “Very few leaders if at all were able to change the mood of the entire world in such a short while with such a profound impact. You provided the entire humanity with fresh hope, with intellectual determination, and a feeling that there is a lord in heaven and believers on earth.”

FTC sees into the future, corrects problem

The FTC is imposing rules on internet publishers (bloggers, tweeters, etc.) for the first time, in terms of disclosure and some other things. But just in case you thought that this new spate of regulation was in response to an actual problem, the FTC wants to disabuse you of that notion:

Richard Cleland, assistant director of the division of advertising practices at the F.T.C., said: “We were looking and seeing the significance of social media marketing in the 21st century and we thought it was time to explain the principles of transparency and truth in advertising and apply them to social media marketing. Which isn’t to say that we saw a huge problem out there that was imperative to address.”