Night Watch
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North Korea: Kim Jong-un was elected a delegate to the Korean Workers' Party Conference yesterday. His constituency is the Korean People's Army. He had no challengers. The Army also elected many other delegates to the Conference which will convene next month in honor of Kim Il-sung's 100th birthday.

Comment: Selection and then election of delegates is occurring nationwide, according to the Korean Central News Agency. This is normal, but it consumes the energy and resources of the state for more than a month. No substantive diplomacy or other official work will take place until after 15 April.

North Korea-US: The US on 28 March confirmed it has suspended planned food aid to North Korea. The decision is a reaction to North Korea's announcement of a rocket launch next month, which the United States says breaks the terms of a food deal agreed last month in exchange for a moratorium on long range missile tests.

Comment: The timing of this US action looks like an attempt to punish North Korea before it has done anything. The rocket launch is still half a month in the future.

Some US leaders might intend today's action as a deterrent. More likely, it will backfire by confirming the North Koreans' low expectations of the US administration. The North Koreans will interpret it as a US failure to keep its promises and will be even more encouraged to launch a rocket as an act of national defiance.

After Kim ll-sung's birthday celebrations on 15 April, the smoke will clear and some US leaders will realize that they still must negotiate with North Korea, assuming they continue to cling to the belief that the North can be coerced or talked out of having a nuclear weapons and missile delivery programs.

After 15 April, what will have changed is the price of a ticket to the negotiating table. That will have increased significantly beyond 400,000 tons of food. This episode of increased stress invariably will end in negotiations, regardless of a rocket launch or a US food aid suspension.

India: Chief of Army Staff General V.K. Singh warned Prime Minister Manmohan Singh in a letter that was leaked to the media that India lacked ammunition for its tanks and its air defense systems were antiquated. The letter was published just as Chinese President Hu Jintao arrived in New Delhi on the 28th.

Comment: General Singh has had a continuing struggle to remain in office because of an administrative mistake about his birth date. The result is that he will retire in two months, a year earlier than if the mistake had been corrected. He actually took the government to court over this issue and lost, sealing his early retirement.

That does not gainsay his criticism, but helps explain his decision to embarrass the government during the visit by Chinese President Hu. He probably has been influenced by too much US vs. UK training.

Singh is an interesting fellow in that he is the only commando to become Chief of Army Staff. He is one of the few genuine counter-insurgency experts in the Indian Army.

Singh also is an honors graduate of the United States Army Infantry School, a graduate of the Rangers Course at Fort Benning here he came first in combat operations and of the United States Army War College in Carlisle, Pennsylvania.

Afghanistan: The US command in Kabul announced new security measures that require US soldiers to protect other US soldiers while they work and sleep. The command calls this the "guardian angel" program. It also involves turning desks around to face doorways and allowing officers on duty in offices to keep handguns close at hand.

Comment: In the medical profession, these measures would be described as compromises, meaning actions of surrender to the illness in hopes of creating conditions and time for wellness. Compromises mean the patient and the doctors are losing the struggle against the illness, but still have hope.

When US soldiers are required to guard US soldiers against US allied soldiers, the situation appears difficult to retrieve because there is no trust. 

Egypt: Update. The new constitution. A committee tasked with drawing up a new constitution held its first meeting Wednesday, although it was boycotted by liberal and secular members who refused to attend in protest of the strong Islamist bias in the committee.

The Islamists dominate the 100-member committee, holding 60 seats. Christians have six and women have six. The liberal and secular 25% of the members accused the Islamists of trying to hijack the charter-writing process and have refused to participate.

Comment: Refusing to participate makes a statement but also denies the liberals the opportunity to influence the drafting process. This act of protest looks premature.

Army economics. The Army leadership on 28 March warned against any interference in its economic activites, as an escalation step in the evolving power struggle with Islamists who control parliament.

State media reported on Wednesday that Major General Mahmud Nasr, a member of the ruling Supreme Council of the Armed Forces, warned that the military "will not allow any interference from anyone in the armed forces' economic projects."

In an unusually detailed defense of the military's involvement in the civilian economy, Nasr said the businesses' annual revenues were 1.2 billion Egyptian pounds ($198 million). He explained that the military's enterprises were meant to allow the army to become self-sufficient and complied with financial and tax regulations. He also denied that the military was "a state within a state."

Nasr said the businesses compensate the Army for the small percentage of the budget allotted to the military. He claimed the military receives only 4.2 percent rather than its "deserved" 15 percent of the budget.

He concluded that the Army wants to have the final say over any Army-related matters in a future constitution. The military government amended Egypt's penal code last year to allow only military courts to investigate charges of corruption against officers.

Comment: The Army seldom permits discussions of its business holdings in public. Usually that is a criminal offense because details about Army commercial enterprises are state secrets. NightWatch found one essay on Army holdings. It presented credible evidence that they are considerably larger than described by Major General Nasr, if retirement benefices, government offices and specialized enterprises are included.

The implication is that the army commercial enterprises always are corrupt. That is not quite fair because the Army has the legacy of serving as a state-supported safety-net from the Nasser era. That means, for example, in outlying areas, gasoline, pasta, mineral water, butane and other items produced by state-subsidized Army enterprises are the only goods available because there is no commercial market in small villages.

The Army leadership, including Field Marshal Tantawi in particular, is skeptical and dubious about the merits of free market economics. This might be the only viewpoint that they share with the Muslim Brotherhood's leadership.

Nevertheless, these are not the backbone of the military-economic complex. The high-end activities include land sales and development, operating vacation resorts, construction companies, meat packing plants and interests in telecommunications, to name a few.

Army-owned-and-operated or protected industries are estimated by one credible Egyptian researcher to account for between 20 and 40% of Egypt's GDP. Thus, rather than earning $198 million, as General Nasr said, Army enterprises might earn between $46 and $92 billion per year. The official military budget is somewhere between $800 million and $1billion, according to the CIA World Factbook, not counting more than $1 billion in US military assistance.

There are two drivers in the Egyptian economy this year. The first is the expectation that the currency must be devalued. Productivity is down; GDP is anemic, unemployment remains high and inflation is around 12% or higher. Hard currency reserves have been drawn down to finance government operations by buying bonds.

Financial Times analysts estimate reserves are now barely enough to cover three months' worth of imports. This is similar to the continuing economic crisis in Europe, but the economic crisis in Egypt is much harsher at the local level than the numbers might suggest to financial analysts.

The overriding concern is institutional change, which is the second driver. A Brotherhood-dominated government will make changes to the economy, most likely in the interest of the working family, support for Islamist causes and greater regulation of free markets. Active duty and retired officers could be divested of their holdings or management jobs and brought to trial, just like President Mubarak who promoted them.

As the date for a final transfer of power to an elected government approaches, Army actions to protect its commercial enterprises may be expected to increase. The Brotherhood appears inclined to move slowly in making changes, but the military statement today is a strong indicator that the Army leadership expects a confrontation. The language General Nasr used is very close to being a warning and a line in the sand.

Mali: Update. Ousted President Amadou Toumani Toure, whose location has been unknown since he was overthrown on 22 March by a military mutiny, told the press today that is safe in Bamako, Mali, and not in custody.

Comment: This is the third important development that trends towards a reversal of the military coup by junior officers. The first was the suspension of aid by the French. The second is the West African Union's move to intervene by sending a delegation to Bamako.

This announcement means that the legitimate, elected President is ready and able to take charge from the soldiers, after they have had their fill of looting.

End of NightWatch.

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