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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 9, Issue 34: August 20, 2007

  1. Time for “Benign Neglect” in Mideast?
  2. Stifled at Home, More Latin American Businesses Invest Overseas
  3. Risk of Persian Gulf Oil Shock Overblown
  4. Self-Government versus World Governance

1) Time for “Benign Neglect” in Mideast?

Despite President Bush’s recent pledge to help restart Israeli-Palestinian peace talks, the time may be ripe for U.S. policymakers to employ an opposite strategy—one of “constructive disengagement” or “benign neglect”—Mideast policy expert Leon T. Hadar, a research fellow with the Independent Institute’s Center on Peace & Liberty, argued in an op-ed published last week in the San Diego Union-Tribune.

Attempts to mediate the Arab-Israeli conflict may be doing more harm than good to the cause of peace and also to U.S. interests, according to Hadar. “By pursuing the illusion that the United States has the power and moral authority to broker a ‘peace’ in the Middle East, Washington has created unrealistic expectations that cannot be fulfilled,” he writes. “Meanwhile, America’s repeated failures as an ‘honest broker’ ends up producing an anti-American backlash, which creates even more pressure on Washington to ‘do something’ or else.”

Paradoxically, by not pushing for peace talks, the United States could actually create incentives for the two sides to achieve real peace. Continues Hadar: “The United States should be more than ready, if necessary, to work with other international players to facilitate a resolution to the conflict but only if and when both sides are ready to make peace, and deal seriously with core existential issues, such as Israel’s right to exist securely and in peace, the fate of the remaining Jewish settlements, and the status of Arab refugees and the city of Jerusalem.”

“Time for ‘Benign Neglect’ in Mideast?” by Leon T. Hadar (San Diego Union-Tribune, 8/14/07) Spanish Translation

Upcoming Event: Troop Withdrawal: Looking Beyond Iraq September 21, featuring Leon T. Hadar, David R. Henderson, and Ivan Eland at the Independent Institute’s Washington, D.C., office.

Center on Peace & Liberty

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2) Stifled at Home, More Latin American Businesses Invest Overseas

While media coverage of Latin America has focused on the region’s stormy politics and steamy soap operas, foreign investments made by the region’s largest private companies are beginning to change the global business landscape in significant but underreported ways.

Mexican cement producer Cemex’s $14 billion purchase of Australia’s Rinker Group and Brazilian mining giant Companhia Vale do Rio Doce’s $17 billion purchase of Canada’s Inco are just two deals that have contributed to a six-fold increase of Latin American investments made overseas in the past three years.

“Few people anticipated that underdevelopment could be a stimulus for the globalization of Latin American businesses,” writes Alvaro Vargas Llosa, director of the Independent Institute’s Center on Global Prosperity, in his latest syndicated column. “We tend to think that a country needs to save a lot of capital before its entrepreneurs can become international players.”

Latin American businesses have accelerated their investments overseas, according to Vargas Llosa, in part because thickets of bureaucratic red tape and a high cost of capital have made it too hard for them to thrive by serving only domestic markets. “Latin America’s global players are sending a powerful signal back home, showing that the potential for a spectacular leap forward is there if politicians can get their act together,” he concludes.

“Latin America’s Global Players,” by Alvaro Vargas Llosa (8/15/07) Spanish Translation

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa

The Che Guevara Myth, by Alvaro Vargas Llosa

Center on Global Prosperity (Alvaro Vargas Llosa, Director)

Spanish version of the Independent Institute website

Spanish-language blog

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3) Risk of Persian Gulf Oil Shock Overblown

The Joint Economic Committee, a bipartisan congressional office, has just released a surprising—and fundamentally optimistic—study on Persian Gulf oil supplies, reports Independent Institute Research Fellow David Isenberg.

“Contrary to the usual dire warnings one usually sees about threats to Persian Gulf and other regional oil supplies, which have been regularly issued since the Organization of Petroleum Exporting Countries (OPEC) oil embargo of 1973 and subsequently the Russian invasion of Afghanistan in 1979, the study concluded that the increased flexibility and resiliency of the U.S. economy have improved its ability to withstand a temporary oil-supply disruption,” writes Isenberg in the Asia Times.

Isenberg also notes that most parties in the Persian Gulf, including Iran, have incentives to keep the oil shipping lanes of the Straits of Hormuz open. “The study makes a point that even those who flunked Economics 101 can understand that economic interdependency discourages embargos, boycotts, and other interference with trade,” Isenberg continues, “The Middle East is no exception…. Even if one believes that al-Qaeda would like to disrupt oil-tanker traffic, as the White House claimed in the ‘10 Foiled al-Qaeda Plots’ document it released in October 2005, the result would not be very significant.”

“A New Oil Crisis? Not So Fast,” by David Isenberg (Asia Times, 8/9/07)

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4) Self-Government versus World Governance

Should nation-states be held accountable to universal, transnational legal standards? Would an expanded United Nations or an International Criminal Court that enforces such standards help or hinder the cause of liberty? In his recent book, Law Without Nations? Jeremy Rabkin provides the historical and political context necessary to help readers see why the seemingly liberalizing move toward “global governance” poses a threat to limited government, individual autonomy, and consent-based politics.

“Without a doubt, Rabkin’s book represents a timely addition to an important debate,” writes Georg Vanberg in the summer issue of The Independent Review. “The perspective he brings to bear, including a healthy skepticism about the questionable normative commitments underlying appeals to transnational legal standards and a hard-nosed look at the actual efficacy of efforts to realize ‘global governance,’ is provocative and perhaps underemphasized.”

Rabkin’s revealing look at efforts to enforce international human-rights agreements, as well as the edicts of the World Trade Organization and the European Union, shows how inept and invasive the enforcement of transnational legal standards already is. “Although the book does not present the strongest case that can be made for its position, its arguments should be taken seriously by those who clamor for supranational governance,” Vanberg concludes.

Law Without Nations? Why Constitutional Government Requires Sovereign States, by Jeremy Rabkin, reviewed by Georg Vanberg (The Independent Review, Summer 2007)

The Independent Review

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