Trade, Terror, Oil SpillsBitcoin expansion is vital to Somalian remittances---banks blocking them nowJon Matonis 12, Forbes, "The Somali American Remittance Dilemma", 5/12, www.forbes.com/sites/jonmatonis/2012/05/12/the-somali-american-remittance-dilemma/By threatening to close their Wells Fargo and U.S. Bancorp accounts this week, a group representing Somali Americans has pushed the ongoing hawala remittance issue to a head. For months now, Somalis in Minnesota have been barred from making the small regular transfers to their family members in Somalia that they have been making for years. According to American Banker, Bank officials say they sympathize with the plight of the expatriates but that there is no clear way to process the payments comfortably within federal rules. The problem lies in Somalias money services businesses. Remittance there is done through a loose network of MSBs known as hawalas. U.S.-based hawalas work with banks to wire the money to hawalas in Somalia. Since hawalas in Somalia are unregulated, the U.S. government worries that such intermediaries could assist in funding terrorism. Unfortunately, its not an isolated incident. This scenario is likely to happen more and more as onerous Bank Secrecy and USA Patriot Acts make it increasingly difficult for financial institutions to be in full compliance with anti-money laundering regulations. Instead of trying to comply, they are electing to opt out so as not to encounter heavy federal fines. It sure would be nice if the world had a decentralized peer-to-peer digital currency that could be transferred to mobile devices in a secure fashion. Wait a minute! Doesnt bitcoin allow for rapid and trustworthy international value transfer? Isnt bitcoin fairly easy to obtain in the developed economies of North America and Europe? Doesnt Somalia have good telecommunications infrastructure supporting mobile phones? Heres how the bitcoin money remittance process would work. A hard-working honest Somali American wishes to send the equivalent of $150 to his mother in Somalia so he purchases bitcoin at one of the many exchanges that accept cash deposits at banks for bitcoin. Alternatively, our would-be remitter could use the Bitcoin OTC (over-the-counter) exchange and arrange a person-to-person sale based on reputation history. Once the bitcoin is stored safely in the remitters client wallet, he would ask the overseas recipient to generate a bitcoin receiving address using one of the many bitcoin wallet apps for Android. [Sorry but Apple's App Store is currently restricting bitcoin wallet apps with send or receive capability.] After his mother in Somalia has received and confirmed the bitcoin transaction (approximately 10 minutes), she would be able to maintain the bitcoin balance or change it out into her local currency, the Somali shilling. Bitcoin exchangers are already springing up in many countries around the world including Brazil, Latvia, and Philippines. If it hasnt happened already, a savvy merchant in Somalia will start accepting bitcoin for Somali shillings. Or a traditional currency exchange dealer could get in on the action too the spreads are certainly there. In September 2010, the mobile penetration rate in Somalia was estimated at 25.84% over a population estimate of 9.9 million. Since the financial flow would be principally in U.S. dollars to bitcoin to Somali shillings, several aggregators could make a market in bitcoin and then sell their bitcoin in the market to other intermediaries. All it takes is a few Somalia-based bitcoin outlets to open up their economy to the rest of the world economy. As a distributed network, bitcoin possesses the capability to route around interference and disruption. In fact, this was a key design consideration as resiliency has grown to become an imperative for privacy-enhancing electronic cash. Its detractors remind me of the holy papacy being fearful of the printing press because it allowed for individual interpretation and diminished mankinds reliance on the anointed biblical teachers.All remittances have stopped now---new avenues like Bitcoin are vital to preventing al-Shabaab terrorism and piracyMadeleine Moreau 2/24, Global Risk Insights, "Halt of remittances threatens stability in Somalia", 2015, globalriskinsights.com/2015/02/halt-of-remittances-threatens-stability-in-somalia/Increasing pressure on U.S. banks has led to a complete halt of remittance payments from Somali immigrants to family and friends back home. The decision puts banks in a frustrating position between government officials who cite the need to monitor cash transfers to terrorist groups and humanitarian experts who say remittances are an integral part of Somalias national economy. Last week, the last U.S. bank accepting money transfers from Somali immigrants to relatives living back home officially halted all transactions. Government institutions have made it a priority to monitor these cash transfers more closely, including stepping prosecution of banks when transfer agencies they service have been caught sending cash to illicit recipients. The U.S. Treasury Department and the FBI cite concerns that Somali immigrants could be sympathetic to radical Islamic groups such as Al Shabaab operating within Somalia and use the money to fund their operations. Humanitarian institutions such as Oxfam America, however, explain that remittance payments are a large part of Somalias national economy. Somali immigrants living in the U.S. warn of family and friends not being able to survive. To strike a balance of these political risks, a better system need to be put in place to both ensure greater transparency in cash transfers while also encouraging the economic opportunity that remittance payments offer. Remittances key to national economy Somalia is one of the poorest, most unstable countries in the world. As a result of years of civil war and violence, thousands have fled the country in hopes of a better life. The U.S. hosts some 80,000 Somali migrants who work and send portions of their income to family and friends back home. A study by Oxfam America indicates that of the $1.3 billion in remittances being sent to Somalia annually, $215 million come from immigrants living in the US. These cash transfer are significant, because after years of war Somalia still does not have a central banking system. There are also no official international transfer companies such as Western Union in the country. As a result, families living abroad have had to rely upon informal networks known as hawalas to deliver money to relatives back home. One-third of the nations economy is believed to be dependent on these remittances. The Merchants Bank of California, the last U.S. bank to shut down remittance transfers, handled 60-80% of these payments. Humanitarian experts say that the money being sent from families abroad is key to filling in the gap of a poor central banking system, and could have a devastating effect on the health of citizens living there. In an interview with Al Jazeera, Ifrah Ahmed, a 25-year-old law student in New York who was born in Somalia but raised in Seattle, used to send $100 to $300 a month back home to relatives. She stresses the importance of these funds in supporting her family: Even though you send remittances to one person, the amount of people that money affects is incredible. If we send money to my aunt, not only will she feed her children, she will feed her neighbors as well, because they may not get remittances from abroad. Fear of terrorist funding Government institutions, however, have put increasing pressure on banks that offer cash transfers to Somalia so as to ensure that the funds are not being used to fund terrorist operations. Officials explain that because the cash transfers are operated by the informal hawala networks, it is harder to monitor where remittance payments are being sent exactly. The added pressure has made these transactions very risky for U.S. banks, which is why many of them shut down transfers. Treasury Undersecretary David S. Cohen said in a recent statement that there are real money laundering and terrorist financing risks associated with these cash payments. The government is working to establish a more secure system so that legitimate customers are receiving funds. In addition, State Department spokeswoman Jen Psaki has also said that these cash transfers are not as significant to the nations economy, saying it would be a stretch to connect remittances to economic opportunity in Somalia. The U.S. government deems Al Shabaab a terrorist organization, as it continues to carry out violent operations in Somalia that threaten US interests. Officials also note the rise of piracy off the coast of the country, which has seized U.S. ships in the past. Last month, law enforcement officials arrested a man from Northern Virginia who was allegedly funneling money toward illicit activities. At the same time, critics say that cutting off these funds could exacerbate the humanitarian crisis in Somalia and actually strengthen the appeal of terrorism and piracy. Terrorist groups could exploit this removal of economic opportunity by offering payments of their own to win over support. Striking a political risk balance Overall, authorities seek a balance between engaging in an effective counter-terrorism campaign without running the risk of funding terrorist organizations such as Al Shabaab. Greater banking transparency, in other words, is needed to make sure funds do not end up in the wrong hands. Engaging with officials on the ground in Somalia that handle the hawala transfers is a first step in ensuring legitimacy of the customers receiving the payments. This would require an investment in infrastructure to improve regulation, which would ultimately strengthen Somalias poorly managed financial institutions and thus encourage indigenous economic growth. Failing to establish some sort of system to allow remittance fund to go through, however, could have reverse counter-terrorism effects and push Somalia into a deeper humanitarian crisis.That collapses global trade, causes devastating oil spills, and finances terror networks Roger Middleton 8, consultant researcher in the Africa Programme at the Chatham House, the Royal Institute of Economic Affairs, "Piracy in Somalia", October, http://www.chathamhouse.org/sites/default/files/public/Research/Africa/1008piracysomalia.pdfWhat piracy does to international trade Clearly a company whose cargo is prevented from reaching its destination on time will lose money. Add to this the cost of paying ransoms and already the damaging economic effect of Somali piracy can be seen. The consequences are not limited only to companies whose vessels are hijacked; of wider concern is the growth of insurance premiums for ships that need to pass through the Gulf of Aden. The danger means that war risk insurance premiums must now be paid: premiums are reported to have risen tenfold in a year. 32 If the cost of extra insurance becomes prohibitive, or the danger simply too great, shipping companies may avoid the Gulf of Aden and take the long route to Europe and North America around the Cape of Good Hope. Indeed this option is mentioned by shipping industry insiders as a very real possibility. The extra weeks of travel and fuel consumption would add considerably to the cost of transporting goods. At a time when the price of oil is a major concern, anything that could contribute to a further rise in prices must be considered very serious indeed. Potential Environmental Catastrophe Large oil tankers pass through the Gulf of Aden and the danger exists that a pirate attack could cause a major oil spill in what is a very sensitive and important ecosystem. During the attack on the Takayama the ships fuel tanks were penetrated and oil spilled into the sea. The consequences of a more sustained attack could be much worse. As pirates become bolder and use ever more powerful weaponry a tanker could be set on fire, sunk or forced ashore, any of which could result in an environmental catastrophe that would devastate marine and bird life for years to come. The pirates aim is to extort ransom payments and to date that has been their main focus; however, the possibility that they could destroy shipping is very real. Possible co-opting by international terrorist networks The other worst-case scenario is that pirates become agents of international terrorism. It should be emphasized that to date there is no firm evidence of this happening. However, in a region that saw the attacks on the USS Cole, seaborne terrorism needs to be taken very seriously. For example, a large ship sunk in the approach to the Suez Canal would have a devastating impact on international trade. Terrorism at sea could take many forms: direct attacks on naval or commercial shipping, such as the 6 October 2002 attack on the MV Limburg, 33 hostages from pleasure boats being used as bargaining chips for terrorists or high-profile victims of an atrocity, and hijacked ships being used as floating weapons. Terrorist networks could also use the financial returns of piracy to fund their activities around the world. The potentially massive consequences of this scenario must be taken into account along with the more likely scenario that piracy money is being routed to Al-Shabaab. 34 As has been seen over the last year, pirates in Somalia have become ever more dangerous, but it is impossible to tell what will happen next. It is best to act to prevent the worst-case scenarios rather than try to solve the problem once it has escalated. Nuclear terror causes accidental US/Russia nuclear war---extinctionAnthony Barrett 13, PhD, Engineering and Public Policy from Carnegie Mellon University, Director of Research, Global Catastrophic Risk Institute, Fellow in the RAND Stanton Nuclear Security Fellows Program, Seth Baum, PhD, Geography, Pennsylvania State University, Executive Director, GCRI, Research Scientist at the Blue Marble Space Institute of Science, former Visiting Scholar position at the Center for Research on Environmental Decisions at Columbia University, and Kelly Hostetler, Research Assistant, GCRI, 6/28, Analyzing and Reducing the Risks of Inadvertent Nuclear War Between the United States and Russia, Science and Global Security 21(2): 106-133War involving significant fractions of the U.S. and Russian nuclear arsenals, which are by far the largest of any nations, could have globally catastrophic effects such as severely reducing food production for years,1 potentially leading to collapse of modern civilization worldwide and even the extinction of humanity.2 Nuclear war between the United States and Russia could occur by various routes, including accidental or unauthorized launch; deliberate first attack by one nation; and inadvertent attack. In an accidental or unauthorized launch or detonation, system safeguards or procedures to maintain control over nuclear weapons fail in such a way that a nuclear weapon or missile launches or explodes without direction from leaders. In a deliberate first attack, the attacking nation decides to attack based on accurate information about the state of affairs. In an inadvertent attack, the attacking nation mistakenly concludes that it is under attack and launches nuclear weapons in what it believes is a counterattack.3 (Brinkmanship strategies incorporate elements of all of the above, in that they involve intentional manipulation of risks from otherwise accidental or inadvertent launches.4 ) Over the years, nuclear strategy was aimed primarily at minimizing risks of intentional attack through development of deterrence capabilities, though numerous measures were also taken to reduce probabilities of accidents, unauthorized attack, and inadvertent war. For purposes of deterrence, both U.S. and Soviet/Russian forces have maintained significant capabilities to have some forces survive a first attack by the other side and to launch a subsequent counterattack. However, concerns about the extreme disruptions that a first attack would cause in the other sides forces and command-and-control capabilities led to both sides development of capabilities to detect a first attack and launch a counter-attack before suffering damage from the first attack.5 Many people believe that with the end of the Cold War and with improved relations between the United States and Russia, the risk of East-West nuclear war was significantly reduced.6 However, it has also been argued that inadvertent nuclear war between the United States and Russia has continued to present a substantial risk.7 While the United States and Russia are not actively threatening each other with war, they have remained ready to launch nuclear missiles in response to indications of attack.8 False indicators of nuclear attack could be caused in several ways. First, a wide range of events have already been mistakenly interpreted as indicators of attack, including weather phenomena, a faulty computer chip, wild animal activity, and control-room training tapes loaded at the wrong time.9 Second, terrorist groups or other actors might cause attacks on either the United States or Russia that resemble some kind of nuclear attack by the other nation by actions such as exploding a stolen or improvised nuclear bomb,10 especially if such an event occurs during a crisis between the United States and Russia.11 A variety of nuclear terrorism scenarios are possible.12 Al Qaeda has sought to obtain or construct nuclear weapons and to use them against the United States.13 Other methods could involve attempts to circumvent nuclear weapon launch control safeguards or exploit holes in their security.14 It has long been argued that the probability of inadvertent nuclear war is significantly higher during U.S.-Russian crisis conditions,15 with the Cuban Missile Crisis being a prime historical example. It is possible that U.S.-Russian relations will significantly deteriorate in the future, increasing nuclear tensions. There are a variety of ways for a third party to raise tensions between the United States and Russia, making one or both nations more likely to misinterpret events as attacks.16Trade prevents war---best new game theoretical studiesMatthew O. Jackson 14, William D. Eberle Professor of Economics at Stanford and Stephen M. Nei, PhD Student in Economics at Stanford, Networks of Military Alliances, Wars, and International Trade, October 2014, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2389300This instability provides insights into the constantly shifting structures and recurring wars that occurred throughout the nineteenth and first half of the twentieth centuries.6 Wars, however, have greatly subsided in parallel with the huge increase of trade (partly coincidental with the introduction of containerized shipping in the 1960s): between 1820 and 1959 each pair of countries averaged .00056 wars per year, while from 1960 to 2000 the average was .00005 wars per year, less than one tenth as much. We see this pattern quite clearly in Figure 1.7 These changes also follow the advent of nuclear weapons, which impacted the technology of war. Indeed, we show how nuclear weapons can lead to some changes in stability, but does not generate peace on its own. Indeed, in order to capture the actual patterns that have emerged one must add other considerations - such as trade considerations - since the base model shows that networks of alliances would not be stable with nuclear weapons but without trade.8 Thus, the second part of our analysis is to enrich the base model to include international trade. Indeed, there has been a rapid increase in global trade since World War II (partly coincident with the growth of container shipping among other stimuli). The empirical relationship between war and trade is an active area of research, with strong suggestions (e.g., Martin, Mayer, and Thoenig (2008)) that network concerns may be important. So, we introduce a concept of a network of alliances being war and trade stable, which allows countries to form alliances for either economic or military considerations. In this richer model, an alliance allows countries to trade with each other and to coordinate military activities, and so can be formed for either reason. This restores existence of networks of alliances that are stable against the addition or deletion of alliances. Trade provides two helpful incentives: first it provides economic motivations to maintain alliances, and the resulting denser network of alliances then has a deterrent effect; and second, it can reduce the incentives of a country to attack another since trade will be disrupted. This reduces the potential set of conflicts and, together with the denser networks, allows for a rich family of stable networks that can exhibit structures similar to networks we see currently. We provide some results on the existence and structure of war and trade stable networks of alliances, showing that structures similar to those observed over the past few decades are economically stable under apparently reasonable parameters. It is important to note that another dramatic change during the post-war period was the introduction of nuclear weapons, which changes the technology of war and is generally thought to have greatly increased the defensive advantage to those with such weapons.9 Our model suggests that although world-wide adoption of nuclear weapons could stabilize things in the absence of trade, it would result in an empty network of alliances as the stable network. To explain the much denser and more stable networks in the modern age along with the paucity of war in a world where nuclear weapons are limited to a small percentage of countries, our model points to the enormous growth in trade as a big part of the answer. We close the paper with some discussion of this potential role that the growth in trade has played in reducing wars over the past half century, and how this relates to the advent of the nuclear age. Before proceeding, let us say a few words about how this paper contributes to the study of war. The literature on war provides many rationales for why wars occur. Our analysis here fits firmly into what has become a rationalist tradition based on cost and benefit analyses by rational actors, with roots seen in writings such as Hobbes (1651) Leviathan, and has become the foundation for much of the recent international relations literature.10 To our knowledge, there are no previous models of conflict that game-theoretically model networks of alliances between multiple agents/countries based on costs and benefits of wars. 11 There are previous models of coalitions in conflict settings (e.g., see Bloch (2012) for a survey). Here, network structures add several things to the picture. Our model is very much in a similar rationalist perspective of the literature that examines group conflict (e.g., Esteban and Ray (1999, 2001); Esteban and Sakovicz (2003)), but enriching it to admit network structures of alliances and of international trade. This allows us to admit patterns that are consistent with the networks of alliances that are actually observed, which are far from being partitions (e.g., the U.S. is currently allied with both Israel and Saudi Arabia, Pakistan and India, just to mention a couple of many prominent examples). More importantly, our Theorem 3 provides a first model in which such non-partitional such structures are stable and provide insight into peace. Moreover, as we already mentioned above, the observed patterns of wars and of alliances are not partitional, and so this provides an important advance in moving the models towards matching observed patterns of wars, trade and alliances. Our model thus serves as a foundation upon which one can eventually build more elaborate analyses of multilateral interstate alliances, trade, and wars. It is also important to emphasize that the network of international trade is complex and can in fact be stable (and prevent conflict) precisely because it cuts across coalitions. This is in contrast to coalitional models that generally predict only the grand coalition can be stable or that very exact balances are possible (e.g., see Bloch, Sanchez-Pages, and Soubeyran (2006)). Again, this is something illustrated in our Theorem 3, and which does not exist in the previous literature. Finally, our model illuminates the relationships between international trade, stable network structures, and peace, something not appearing in the previous literature - as the previous literature that involves international trade and conflict generally revolves around bilateral reasoning or focuses on instability and armament (e.g., Garfinkel, Skaperdas, and Syropoulos (2014)) and does not address the questions that we address here. The complex relationship between trade and conflict is the subject of a growing empirical literature (e.g., Barbieri (1996); Mansfield and Bronson (1997); Martin, Mayer, and Thoenig (2008); Glick and Taylor (2010); Hegre, Oneal, and Russett (2010)). The literature not only has to face challenges of endogeneity and causation, but also of substantial heterogeneity in relationships, as well as geography, and the level of conflict. The various correlations between conflict and trade are complex and quite difficult to interpret, and a model such as ours that combines military and economic incentives, and others that may follow, can provide some structure with which to interpret some of the empirical observations, as we discuss in the concluding remarks.Carribean GrowthAnd, Bitcoin expansions key to massive Caribbean economic growthPaul Vigna 2/26, with Michael J. Casey, both authors and economy and finance journalists for the Wall Street Journal, Bitcoin for the Unbanked, 2/26/15, http://www.foreignaffairs.com/articles/143162/paul-vigna-and-michael-j-casey/bitcoin-for-the-unbankedRoughly 2.5 billion adults in the world dont have access to banks, which means somewhere in the order of 5 billion people belong to households that are cut off from a financial system that the rest of us take for granted. They cant start savings accounts. They dont have checking accounts. They cant get credit cards. They live in places where banks dont want to go, and because of this, they remain effectively walled off from the global economy. They are called the unbanked. But they are not unreachable, not by a long shot, and one of the biggest and most exciting prospects bitcoiners talk about is using their cryptocurrency to bring these billions of people roaring into the twenty-first century. The Caribbean is an area of the emerging-market world where a strong case can be made for locals to use bitcoin to get around a restrictive financial system. Jamal Ifill, a young, soft-spoken artist with a head full of dreadlocked hair and a warm smile, has been blowing glass in Barbados for 11 years and has had his own one-room studio-cum-showroom for five years. One of his latest pieces is a two-foot-high, rectangular, latticework lamp that to our New York eyes looked like one of the Twin Towers. He sells his artwork locally and has attracted some attention; a piece he made was presented to Princess Anne when she visited the island in 2011. He wants to expand into the U.S. market, but the logistics and costs of moving money from there to here are prohibitively high, so most of his business remains local. I tried everything, Ifill says, sitting at the desk that doubles as his office and workspace in his small glass-blowing studio in Bridgetown, Barbados. Credit cards, PayPal, Western Union. Theyre too expensive. Leroy McClain, managing director of the government-run Barbados Investment Development Corp., explained why that is: The big international banks are happy to provide merchant-banking services to companies in the United States and Canada, but they make island businesses jump through far more hoops for the same services. Ifill understands the problem all too well. In fact, he has all the problems of an international business. The particular glass he uses must be imported from Ukraine. His customers are not only on the island, but overseas. He is competing with foreign artists who arent hamstrung by the costs that tie him up. He tried e-commercethrough a local companybut gave up on it because not enough customers were using it, which meant he wasnt getting any business out of it. A vicious circle. I even tried Etsy, he says, the online arts-and-craft site. Again, he couldnt compete on costs with U.S. artists. Ifills problem stems in part from the difficulty in shifting money around the regions island nations, which requires constant and costly currency exchanges. Barbados and virtually every nation in the British West Indies has its own, separately printed currencyeach called the dollar, each fluctuating in value against the others and against the better-known U.S. dollar. And the former Spanish, Dutch, and French colonies all have their own pesos, guilders, and gourdes. The governments of the region have long talked about creating a monetary union to deepen the regions free-trade arrangement, the Caricom common market. But as with the development of that free-trade area, progress toward building a single monetary authority and the other institutions needed for a common currency has been fitful. A Caribbean dollar remains a pipe dream. To make matters worse, a number of central banks impose capital controls on their citizens. Barbadians such as Ifill, for instance, are limited in the amount of foreign currency they can buy. That Barbados, the Cayman Islands, the Bahamas, and other Caribbean nations serve as tax havens for hedge funds and other foreign financial institutions is an irony not lost on the regions tightly controlled residents. This mix of monetary systems and financial regulations, and the frustration that it breeds, make the sunny islands of the Caribbean ripe for bitcoinor so says Gabriel Abed. Abed, 27, turned to cryptocurrencies as the answer to a problem: how to expand e-commerce. He is the CEO of Web Designs, a local business that sells Internet domain registrations, Web site designs, maintenance, and e-commerce platforms. The last has been a particularly tough sell. Because of the costs of foreign exchange, credit cards, and PayPal, which can add up to eight or nine percent, he said, most merchantsIfill was one of themsimply avoid selling abroad. Abed learned of bitcoin early on and saw its potential to solve this problem. He began with the idea of a Caribbean cryptocurrency, which he dubbed CaribCoin, but realized quickly it was a bigger project than he wanted to take on. He pivoted to the idea of a bitcoin exchange, and a merchant service that he could bundle with his Web-design and hosting service, and began building Bitt (the URL is actually bi.tt, the .tt being the domain for neighboring Trinidad and Tobago). He also began mining his own bitcoinsin Trinidad, taking advantage of relatively low electricity costs there, and using the profits from that and from Web Designs to fund Bitt. Bitt is designed as a Caribbean-focused online exchange and merchant service, providing trading between different cryptocurrencies and fiat currencies, as well as a module for helping local businesses adopt digital currencies for payment. His appeal to them is simple: What if I can give you a payment option that costs only one percent? The catch is that the one percent fee comes with bitcoins, which as of this writing cant buy you much in Barbados. To say that cryptocurrencies are not big in Barbados would be an understatement. They effectively dont exist on the island, and neither does mobile commerce. While virtually everybody has a cell phone, the proverbial badge of a digital citizen, people use them only for texting and talking. E-commerce is barely getting started, as is online banking. The way to get over the chicken-and-egg problem and encourage adoption, Abed believes, is to focus on the merchants. He believes that if he can offer them a dramatically cheaper payment method, they can be talked into accepting that method at their shops. But he has his work cut out for him. EARLY ADOPTERS The chicken-and-egg dilemma will require incentives. The promise of saving money is certainly one of them. But there are others. As in the developed world, one hope is that if big firms or institutions whose relationships run deep in the economy start using bitcoin, they can create incentives for their suppliers and customers to use it. Patrick Byrne, the CEO of Salt Lake City-based online retailer Overstock.com, which began accepting bitcoin in early 2014 to become what was then the biggest revenue-earning merchant to do so, believes his firm can play such a catalytic role creating a bitcoin ecosystem in the developing world. When we met in June 2014 in Utah, Byrne explained that he viewed bitcoin as a way to widen economic opportunity, if only he could get people to accept it. He was still figuring out the carrots he would use, but he had some ideas. In the world of payments and dealing with vendors, theres all this sensitivity around the terms of payment. Vendors will sometimes give you a two percent discount for shaving off 20 days, because to them thats like a 36 percent cost of money over the year. That affects all kinds of things. The very fact that vendors offer those terms means theres an enormous opportunity for bitcoin to step up in this area. A few weeks later, Byrne announced he would not only be paying bitcoin-accepting vendors one week early, but that hed also pay his employee bonuses in bitcoin. What companies such as Overstock are trying to do with digital-currency payments has parallels with what Walmart achieved by pioneering communications technology to revolutionize supply-chain management in the 1990s and early 2000s. The Arkansas-based retailer famously developed a sophisticated network with which to tie all of its suppliers worldwide into a single, integrated database for managing the goods and services flowing in and out of Walmarts warehouses. Along with big improvements in shipping logistics, this allowed the company to optimize its just-in-time inventory management, which drastically cut costs. Walmart parlayed those cost savings into the cheapest prices anywhere in the United States, which turned it into the iconic and, to some, infamous behemoth that now dominates American suburbia. Just as important, its high-tech network had a feedback effect on suppliers, contributing to the concentration of manufacturing in hubs such as Chinas Pearl River Delta. As Walmart became an increasingly powerful but relentless hunter of the cheapest manufacturing sources, and as other Western buyers caught on to its high-tech lead, factories paying low wages in the developing world would congregate in locales where it was most efficient to tap into Walmarts network. Byrne now sees similar opportunities for firms like his to build influence by leveraging bitcoin in its international payment relationships and thus creating a tipping point from which change starts rippling over the global economy. As a group of businesses in one region begins adopting the currency, it will become more appealing to others with whom they do business. Once such a network of intertwined businesses builds up, no one wants to be excluded from it. Or so the theory goes. Just as American retail collapsed into Walmart, who knows how much can collapse into us? And I dont mean Overstock. I mean bitcoin, Byrne said. You start getting network effects. You are incentivizing everyoneits like we have the first fax machine but nobody else has a fax machine, so it doesnt do you any good. But you start adding other nodes and making incentives to add nodes and eventually get a critical mass. Now people arent just faxing us, they are faxing each other.Growth is key to Caribbean stabilityChristine Lagard 14, Manager Director of the International Monetary Fund, June 27th, 2014, "The Carribean and the IMF---Building a Partnership for the Future," https://www.imf.org/external/np/speeches/2014/062714.htmGiven this legacy, the Caribbean was vulnerable going into the global financial crisis, and was hit with its full force. Six years on, output has still not returned to pre-crisis levels, and public debt is still at record highsalmost 100 percent of GDP in tourism-dependent countries, and 140 percent of GDP here in Jamaica. As always, the poor and the vulnerable were hit hardest by crisis. Across the region, about a third of young people are out of work. In Jamaica, the poverty rate doubled to 17 percent. With the doors of opportunity barred for so many, the result is disengagement and disenchantment. Exclusion creates an inflammatory cocktail of crime and insecurity, and a steady deterioration in the quality of life. Clearly, then, the crisis was a major wake up call. Caribbean leaders understand the need for changenot just to free themselves from the grip of crisis, but to adapt to the challenge of the global new normal. Think about it. The global economy is more interconnected than ever before. The engines of growth are shifting away from traditional markets in North America and Europe to the far-flung shores of Asia. The cozy comfort of trade preferences is long gone. The specter of climate change hovers over the small island states. As Derek Walcott put it, the future happens, no matter how much we scream. Change begins with restoring economic stabilitythis establishes a platform for rising and shared prosperity.Caribbean instability collapses global hotspot management---escalates conflict everywhereTim Gorrell 5, Lieutenant Colonel in the United States Army, CUBA: THE NEXT UNANTICIPATED ANTICIPATED STRATEGIC CRISIS?, US Army War College Research Project, 3-18, http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA433074)Regardless of the succession, under the current U.S. policy, Cubas problems of a post Castro transformation only worsen. In addition to Cubans on the island, there will be those in exile who will return claiming authority. And there are remnants of the dissident community within Cuba who will attempt to exercise similar authority. A power vacuum or absence of order will create the conditions for instability and civil war. Whether Raul or another successor from within the current government can hold power is debatable. However, that individual will nonetheless extend the current policies for an indefinite period, which will only compound the Cuban situation. When Cuba finally collapses anarchy is a strong possibility if the U.S. maintains the wait and see approach. The U.S. then must deal with an unstable country 90 miles off its coast. In the midst of this chaos, thousands will flee the island. During the Mariel boatlift in 1980 125,000 fled the island.26 Many were criminals; this time the number could be several hundred thousand fleeing to the U.S., creating a refugee crisis. Equally important, by adhering to a negative containment policy, the U.S. may be creating its next series of transnational criminal problems. Cuba is along the axis of the drug-trafficking flow into the U.S. from Columbia. The Castro government as a matter of policy does not support the drug trade. In fact, Cubas actions have shown that its stance on drugs is more than hollow rhetoric as indicated by its increasing seizure of drugs 7.5 tons in 1995, 8.8 tons in 1999, and 13 tons in 2000.27 While there may be individuals within the government and outside who engage in drug trafficking and a percentage of drugs entering the U.S. may pass through Cuba, the Cuban government is not the path of least resistance for the flow of drugs. If there were no Cuban restraints, the flow of drugs to the U.S. could be greatly facilitated by a Cuba base of operation and accelerate considerably. In the midst of an unstable Cuba, the opportunity for radical fundamentalist groups to operate in the region increases. If these groups can export terrorist activity from Cuba to the U.S. or throughout the hemisphere then the war against this extremism gets more complicated. Such activity could increase direct attacks and disrupt the economies, threatening the stability of the fragile democracies that are budding throughout the region. In light of a failed state in the region, the U.S. may be forced to deploy military forces to Cuba, creating the conditions for another insurgency. The ramifications of this action could very well fuel greater anti-American sentiment throughout the Americas. A proactive policy now can mitigate these potential future problems. U.S. domestic political support is also turning against the current negative policy. The Cuban American population in the U.S. totals 1,241,685 or 3.5% of the population.28 Most of these exiles reside in Florida; their influence has been a factor in determining the margin of victory in the past two presidential elections. But this election strategy may be flawed, because recent polls of Cuban Americans reflect a decline for President Bush based on his policy crackdown. There is a clear softening in the Cuban-American community with regard to sanctions. Younger Cuban Americans do not necessarily subscribe to the hard-line approach. These changes signal an opportunity for a new approach to U.S.-Cuban relations. (Table 1) The time has come to look realistically at the Cuban issue. Castro will rule until he dies. The only issue is what happens then? The U.S. can little afford to be distracted by a failed state 90 miles off its coast. The administration, given the present state of world affairs, does not have the luxury or the resources to pursue the traditional American model of crisis management. The President and other government and military leaders have warned that the GWOT will be long and protracted. These warnings were sounded when the administration did not anticipate operations in Iraq consuming so many military, diplomatic and economic resources. There is justifiable concern that Africa and the Caucasus region are potential hot spots for terrorist activity, so these areas should be secure. North Korea will continue to be an unpredictable crisis in waiting. We also cannot ignore China. What if China resorts to aggression to resolve the Taiwan situation? Will the U.S. go to war over Taiwan? Additionally, Iran could conceivably be the next target for U.S. pre-emptive action. These are known and potential situations that could easily require all or many of the elements of national power to resolve. In view of such global issues, can the U.S. afford to sustain the status quo and simply let the Cuban situation play out? The U.S. is at a crossroads: should the policies of the past 40 years remain in effect with vigor? Or should the U.S. pursue a new approach to Cuba in an effort to facilitate a manageable transition to post-Castro Cuba? ANALYSIS OF POLICY ALTERNATIVES The U.S. can pursue three policy alternatives in dealing with Cuba: SUSTAIN THE CURRENT POLICY AND FULLY ENFORCE THE ECONOMIC EMBARGO The crux of the argument for this policy is that sanctions and other restrictions will exert tremendous pressure on the Castro regime, in hope that the regime will fall prior to Castros death. There is little indication that this policy will succeed. The U.S. is virtually the only country pursuing a policy to isolate Cuba. In the 1990s Castro was able to develop new trade and markets. While Cuba is not a prosperous country, it has nonetheless managed to endure. The loss of Soviet subsidies, which amounted to 25% of Cubas national income, and the loss of the Eastern European bloc as trading partners, which amounted to 75% of Cubas import/export trade, left Castro with no alternative but to implement economic changes both internally and externally.30 These initiatives have stimulated steady, but modest, economic growth. Today in Cuba, 160,000 people (or 4% of the workforce) are self-employed.31 These entrepreneurial endeavors include small restaurants, taxi drivers, repairmen, and other service industries. If the present course of sanctions continues, the gains of these small reforms will be suppressed leading to significant deprivation for the people involved. Also, Cuba trades with over 100 countries worldwide, so while trade with the U.S. would certainly improve Cubas economic well-being, it is debatable whether the lack of U.S. trade is bringing the regime to its knees. The point is that sanctions are not hurting Castro, but are hurting the Cuban population. Restricting trade and travel hurts the small businesses, the tourist industry and others whose livelihood depends on a service economy. It also degrades the quality of life of those Cubans whose financial support comes from family members in the U.S. Strategists who subscribe to current policy argue that these limitations/hardships will eventually promote an uprising among the populace to overthrow Castro. There is no substantial evidence that this will occur and much that argues against it. While Castro will not live forever, he has outlasted over 45 years of such U.S. policy. He is 78 years old and his father lived to be 80 under significantly less desirable conditions.32 If the present policy course is to wait Castro out this could potentially take another 5-10 years. The wait equates to 5-10 years of despair for the Cuban people, further decay of the countrys infrastructure and more dire conditions that would make democratic reform all the more difficult and costly when Castro actually expires. Pursuing the present steady state policy will further alienate the Cuban people at home and abroad. The U.S. often has a myopic vision in regard to other cultures. In the case of Cuba, by focusing only on Castro and ignoring the Cuban peoples culture and traditions, U.S. policy makers are blinded and have failed to see a future Cuba. RETAIN SANCTIONS AGAINST CUBA, BUT ENFORCE THEM IN VARYING DEGREES DEPENDING ON THE POLITICAL CLIMATE AND THE CUBAN REGIMES CONDUCT IN REGARD TO AMERICAN INTERESTS Throughout the past 15 years, the U.S. has experimented with a variable enforcement option. During the Clinton administration, restrictions were occasionally eased. For example, in March 1998, President Clinton announced: 1) the resumption of licensing for direct humanitarian charter flights to Cuba; 2) the resumption of cash remittances up to $300 per quarter for the support of close relatives in Cuba; 3) the development of licensing procedures to streamline and expedite licenses for the commercial sale of medicines and medical supplies and equipment; and 4) a decision to work on a bipartisan basis with Congress on the transfer of food to the Cuban people.33 In January 1999, President Clinton ordered additional measures to assist the Cuban people, which included further easement of cash remittances, expansion of direct passenger charter flights to Cuba, reestablishment of direct mail service, authorization for the commercial sale of food to independent entities in Cuba, and an expansion of people-to-people exchanges (i.e. scientist, students, athletes, etc.)34 This policy ended when the new administration failed to see any reciprocal progress from Castro. Fragmenting the policy process may do more harm than good. It does too little too late and causes hard feelings among Cubans and American businesses. The carrot-stick diplomatic approach will not make Castro yield. Such policy breeds inconsistency as it can vary from administration to administration, as it has between the Clinton and Bush administrations. The rules constantly change and thus have a ripple effect on American businesses and the quality of life of Americans, Cuban-Americans and native Cubans. Cuban trade has already declined to a trickle since the Bush administration sought to further squeeze the Castro government. Prior to the Bush administrations trade crack down, 2004 was emerging as a record year for U.S. imports to Cuba. By the end of December 2004 U.S. suppliers and shippers were projected to have earned some $450 million, a 20% increase over 2003 sales.35 Imposing restrictions, as the Bush administration did in June 2004, perplexed American businesses with unpredicted problems. These businesses make adjustments, as do Cuban- American citizens, then must abruptly alter their business strategies because of a Congressional vote or an Executive order. This political tug-of-war does not move the U.S. any closer to realizing its security objectives. On the Cuban American front there is eroding support for this U.S. policy position. In the 2000 presidential election, President Bush won 81% of south Floridas Cuban-American vote. A recent poll by the William C. Veleasquez Institute-Mirram Global indicates that his support today has fallen to 66%.36 This decline signals a negative response to policy that limits travel, restricts the amount of goods people can bring to their relatives, and places limitations on sending money to family in Cuba. Cuban-Americans believe that this only hurts their poor relatives in Cuba. According to Jose Basulto, head of Brothers to the Rescue, and Ramon Raul Sanchez, head of the anti-Castro Democracy Movement, the U.S. government is using the Cuban people to harass Castro.37 Applying policy in a give-and-take manner, accomplishes little to facilitate the fall of Castro. The Cuban people enjoy brief periods of limited benefits, only to have these benefits withdrawn should the President or members of Congress wish to take another jab at Castro. American civilian businesses are also negatively affected. LIFT ALL SANCTIONS AND PURSUE NORMAL DIPLOMATIC RELATIONS WITH CUBA Normalcy is the only policy that the U.S. has not attempted. The present policy misses the security implications, alienates allies and others worldwide, harms U.S. businesses, and is losing support domestically. First, the U.S. must reassess the threat posed by Cuba. There is, in fact, virtually no security threat. Further, policies that were applicable in the past, when there was a threat, should not be applied to the current environment. The U.S. Cuban policy is perplexing because it appears to conflict with the ends, ways and means that the National Security Strategy is applied in other regions of the world. The U.S. has normalized relations with Vietnam and Libya and has certainly opted for an open dialogue with Communist China. Likewise, there is abundant evidence that a new policy toward Cuba could very well achieve the ends that 43 years of embargo have failed to accomplish. Secondly, Cuba currently trades and has diplomatic ties with much of the world. The goal of U.S. sanctions is to isolate the Cuban regime; however, they have only slowed, not deterred economic growth. On 4 November 2003 the United Nations voted, for the 12th straight year, 173 to 3 (with 4 abstentions) against the four-decade U.S. embargo against Cuba.38 Voting with the U.S. were Israel and the Marshall Islands. The U.S. staunchest allies, the 15 members of the European Union, along with Japan, Australia and New Zealand, all object to the extra-territorial effect of U.S. legislation that they feel violates their sovereignty. 39 There are two schools of thought regarding trade and democracy. The first is that economic growth will promote democracy. The other questions this notion and argues that democracy must come first.40 There is strong opinion, however, that in Cubas case economic engagement will bring about the desired results. Certainly many Cuban-Americans and perhaps some others in the world would not agree with this course of action. However, there is evidence that a significant number of people both within the U.S. and abroad favor a policy change. In 1992 a pastoral letter from Cubas Bishops stated that the US embargo directly affects the people who suffer the consequences in hunger and illness. If what is intended by this approach is to destabilize the government by using hunger and want to pressure civic society to revolt, then the strategy is also cruel.41 The third consideration is U.S. business. Under the current rules, U.S. businesses are permitted to sell agricultural produce to Cuba.42 Today 27 firms from 12 U.S. states are doing business with Cuba, making Cuba 22nd among U.S. agricultural markets.43 These business activities are greatly influenced by Cuban-Americans and members of Congress. The economic power of the U.S. can be our most powerful weapon. The possibilities of economic engagement offer a myriad of branches and sequels that could promote a rapport between the American people and the Cubans. The aggressive pursuit of these endeavors would go far in ensuring an orderly transition to a post-Castro Cuba. It is an erroneous assumption to believe that Castros demise will miraculously trigger reform and all the problems of the last 40 years will vanish. A visionary policy, albeit constrained within the parameters of the Castro regime, will go far in setting agreeable social-economic conditions in Cuba both now and in the future. Finally, public opinion in the U.S. favors a new policy direction. A 1997 Miami Herald poll found that a majority of Cubans under the age of 45 supported establishing a national dialogue with Cuba, whereas for the most part their elders opposed such dialogue.44 Former President Jimmy Carter, writing in the Washington Post after his May 2002 visit to Cuba, reported that he found an unexpected degree of economic freedom. Carter went on to say that if Americans could have maximum contact with Cuban, then Cubans would clearly see the advantages of a truly democratic society and thus be encouraged to bring about orderly changes in their society. 45 Castro himself appears willing to consider greater reform. In 1998 he permitted Pope John Paul II to visit Cuba; Cubans are permitted to own property; he has opened trade; and in 2002 he broadcast former President Jimmy Carters address at the University of Havana.46 Additionally, he indicated that the Cuban government would return any of the Guantanamo detainees in the unlikely event that they would escape.47 CONCLUSION AND RECOMMENDATION U.S. policy makers need to confront the real Cuba of today in order to build a free Cuba of tomorrow that is capable of taking its place in the world community as a responsible, democratic nation. Given the history of the past 100 years, and particularly our Castro centric policy, the U.S. needs to make a bold change toward Cuba. The U.S. has pursued a hard-line approach toward the Castro regime for over 40 years. While this policy was easily justified during the Cold War era and, to a certain degree, during the 1990s, it fails to address the present U.S. national security concerns. The globalization trends of the 21st century are irreversible, Fidel Castro is in the twilight of his life, and a new generation of Cuban-Americans is supportive of new strategies that will ease the transition to a post-Castro Cuba while buttressing economic and social opportunities in the near term. Furthermore, there is a new dimension that U.S. policy strategists must take into account in deciding the course of U.S.- Cuba relations the GWOT. World-wide asymmetrical threats to U.S. interests, coupled with the Iraqi occupation and the potential for any one of the present hot spots (i.e. Iran, North Korea, Taiwan, etc.) to ignite, should prompt strategic leaders to work harder to mitigate a potential Caribbean crises. The prudent action would then be to develop strategies that can defuse or neutralize these situations before they require the U.S. to divert resources from protecting its interests in the GWOT. Global nuclear warJames Hardy 14, Asia-Pacific Editor of IHS Janes Defence Weekly, 5 Places Where World War Three Could Break Out, The National Interest, 10-17, http://nationalinterest.org/feature/5-places-where-world-war-three-could-break-out-11487?page=showIt seems these days the world is literally on fire. Conflict continues on and off in Ukraine, there are tensions throughout the Asia-Pacific, Ebola is on the rampage, ISIS continues its bloody war of attrition throughout Syria, into Iraq and on and on. Yet, could something even worse be on the horizona conflict with more-severe global ramifications? Before we begin this foray into the five places where World War Three could break out, I should note a few qualifiers and weasel words. First off, whats World War Three? As illustrated by the Ukraine crisis and the Obama administrations struggle to define what is going on in Syria/Northern Iraq, 20th-Century Industrial War is out of fashion and has been for some time. Some of the predictions below envisage regime collapse that leads to war, while the specter of a terrorist WMD attack has the capacity to turn apocalyptic very quickly. That said, this might just be a phase: state-on-state violence will still be theoretically and practically possible as long as nation-states possess the means to expend blood and treasure. Thats why most of the predictions below examine the possibility of conventional strike and counterstrike between nations. No nuclear-armed powerwhether it is the United States, China or Russiawould accept defeat to a peer competitor in conventional warfare without then inflicting the maximum penalty on its opponent. That is one very good reason why World War Three as we know it is unlikely to happen; it is also why all of the possibilities mentioned below involve nuclear-armedor potentially nuclear-armedentities. North Korea vs. the World: News out of Pyongyang over the last several weeks that Kim Jong-un is feeling unwell has reminded people that Northeast Asia contains its very own brand of extremist Kool-Aid drinkers. The smart line on North Korea is that its provocations, to use the accepted term, are graduated steps in a controlled game of escalation that Kim plays to receive concessions in the form of aid or economic largesse from the international community. The current talks between North Korea and Japan over the longstanding abduction issue are just one particularly cruel variation on this, where Pyongyang is trying to leverage the political importance of the abductees in Japan at a moment where both sides are short of allies in Northeast Asia. The provocation theory works fine until you realize that at the end of the day, North Korea is still developing a nuclear-weapons program and mobile systems to deliver atomic-tipped warheads. Meanwhile, South Korea is building its own deterrent in the form of the kill chain, which ambitiously proposes knocking out Pyongyangs nuclear weapons before they can leave the ground. Throw in the fact that China appears to have lost patienceand more importantly, influencein North Korea since the purging and execution of Jang Song Thaek, and the situation on the peninsula becomes a lot less predictable. For sure, North Koreas behavior is grounded in the absolute logic of regime survival. But if Kim dies or can no longer ensure that the Pyongyang elite benefit from his rule, then all bets are off. China vs. India (vs. Pakistan) The border confrontation between India and China that was finally de-escalated on September 27 after nearly three weeks is the latest illustration of just how uneasy relations can be between these two massive neighbors. The recent arrival of a PLA Navy Type 039 submarine in Sri LankaChinas westernmost foray with a submarineis another sign that Delhi and Beijings strategic priorities may clash. Other than history and bloody-mindedness, there is no real reason why the two countries would be destined to go to war. China has concluded a number of successful negotiations with its land neighbors over border disputesthe Line of Actual Control is the only remaining dispute, in factand India has the strategic position and military power to exert regional supremacy over the Indian Ocean Region (IOR). The natural borders of the Himalayas and southeast Asia have created geographical spheres of influence that should keep both sides happy. However, Beijings all-weather friendship with Pakistan and its moves into the Indian Ocean threaten Indias regional hegemony, while Indias Look East policy is unwelcome to China because it allies Delhi with Vietnam and Japan. This kind of strategic competitionalong with bad decisions at flashpoints such as Ladakh and Kashmircould lead to escalation from which neither side could step away. Middle East Imbroglio The ongoing situation in the Middle Eastwhether its the Islamic State, Iraq, Gaza, Syria, Iran, Israel, Lebanon or the fallout from the Arab Springis so perplexing, confusing, horrific and insurmountable that the only thing we can say in its favor is that at least it has not led to World War Three. For this to happen, the nuclear balance in the region would have to go irrevocably out of kilter. One obvious way this could happen: Iran getting the bomb and in response, Israel using its widely suspected unmentionables. Another possibility deserving more scrutiny than it gets is whether the Saudis would upgrade their DF-3 ballistic missiles with DF-21ssomething that is heavily rumoredor fit the older, less accurate DF-3s with nuclear warheads. Another element of this scenario is the question of which way these missiles would be pointedat Iran or Israel? Other regional wildcards include the North Koreans helping out the Assad regime, or the Islamic State somehow capturing a previously unknown stockpile of fissile material and having the brainpower to weaponize it. In this light, U.S. attempts to prevent Iran from getting the bomb make even more sense; why it is not equally scrutinizing Saudi Arabias intentions in this area, less so. Russia vs. NATO: Before the air campaign against the Islamic State took over the news cycle, the biggest story of the year was what exactly was going to happen in east Ukraine. The shooting down of an airliner, multiple border violations by Russian troops and the annexation of Crimea had added up to force a major reevaluation by the West of its relationship with Vladimir Putins Russia. The speed and intelligence of the Russian campaign bodes ill for NATO and other multilateral organizations such as the EU, which have been hamstrung by a committee-led approach to decision making that slows down their response times. In fairness to NATO, the alliance is aware of this and has made a number of attempts to bolster its position in eastern Europe. At the Wales summit in September, it began to work out of the details of a Readiness Action Plan that will include very rapid reaction forces and deploying pre-positioned equipment and supplies along its eastern frontier. The new force will be in contrast to what IHS Janes correspondent Brooks Tigner brilliantly described as the distinctly un-rapid NATO Response Force (NRF), which currently needs months to deploy its full force of 20,000-plus troops and equipment. NATO also needs to work out a way to win the information war, which Putin has managed as adeptly as any confrontations on the ground in Ukraine. These tactical considerations aside, at the heart of the issue is NATOs eastward move, which Russia unsurprisingly opposes, and Moscows assertion that it had the right to protect Russian-speaking minorities in other countries, which NATO would have to react to if member nations such as the Baltic states or Poland were threatened. China vs. America (via Taiwan, Japan or the South China Sea) Last and definitely not least, the biggest potential conflict of all. The threat of the Thucydides Trapthat of a rising power and a preeminent power ending up at warhas become a notable talking point in Sino-U.S. relations in recent years. Some analysts argue that Thucydides analysis of the Sparta-Athens relationship is a poor analogy for that between China and the United States. However, it is undeniable that Chinas rise and military buildup changes the balance of power and dangerously affects enough points of friction in northeast Asia. The most dangerous feature of these friction points is that they involve third parties: the South China Sea, Japan, Taiwan or North Korea could all spark a localized conflict that quickly gets out of hand. The most dangerous, in my view, are the territorial disputes that could be contested in the maritime sphere: that is, in waters and territories close to China that Beijing claims and would likely contest if the status quo changed against its interests.InnovationVirtual currency expansion leads to adoption of blockchain technologyCarney 15 [Michael Carney, associate @ Upfront Ventures, former managing director of Worldvest, 3-16-2015, "Nations might not adopt pure bitcoin, but IBM's blockchain-based alternative has a chance," Pando, https://pando.com/2015/03/16/nations-might-not-adopt-pure-bitcoin-but-ibms-blockchain-based-alternative-has-a-chance/]Imagine youre a disruptive new technology and youre looking for mainstream support among consumers, businesses, and regulators. Whats the best endorsement you could get? Youd be hard pressed to do better than bitcoin did last week, getting a nod of approval from IBM. Reuters reports that the granddaddy of tech blue chip brands is experimenting with the same blockchain technology that underpins the often controversial digital currency and wants to see central banks do the same. Reuters explains: International Business Machines Corp is considering adopting the underlying technology behind bitcoin, known as the "blockchain," to create a digital cash and payment system for major currencies, according to a person familiar with the matter. The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, the person said. The transactions would be in an open ledger of a specific country's currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorization to discuss the project in public. According to Reuters and earlier reports, IBM has been in discussions with the US federal reserve and other central banks about such a money transfer system. Naturally, IBM is hoping to build and likely maintain the necessary infrastructure for such a project. Whether the company has the personnel and experience to build out the software side of things is another matter entirely. Positive as the development may be, IBM doesnt appear to be offering a full endorsement of bitcoin. Put another way, the company isnt trying to convince Fed Chair Janet Yellen to adopt bitcoin straight away. Rather, the plan, as Reuters describes it, calls for a bitcoin-like currency or currencies, with the report indicating it might create different digital fiat replacement for each government built on the same underlying blockchain distributed trust ledger system, but managed by global central banks. The thinking is that such a currency would be less expensive to maintain, allow for quicker settlements, and more convenient for consumers to carry and use. Reuters' source says: "These coins will be part of the money supply. It's the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain." Bitcoin, as it currently exists, is decentralized, meaning that no single government or company (or group thereof) controls the issuance of new currency units or the maintenance of the ledger. Bitcoins ledger is publicly available, and maintained by a community of professional and amateur miners, who use specialized computers to solve cryptographic problems in exchange for bitcoin-based compensation. One thing that this report fails to address is how IBM and the Fed might convince banks to embrace such a new currency. Checking and savings accounts are not the revenue centers for most banks that the were decades ago, but they still produce non-trivial fees and interest income. More importantly, however, banks use low-margin checking and savings account relationships with consumers and businesses as a source of generating higher-margin business like lending and investments. In a decentralized, digital currency world, the role of banks will certainly change, if not disappear, at least in part. Its hard to imagine the need for separate checking and savings accounts, which today serve to keep people from hiding stacks of paper currency under their mattress. In a digital currency world, it requires effectively no more space to store $1 as it does $1 million, and the security demands for each are the same. Early bitcoin wallet leaders like Coinbase, Circle, Blockchain.info, and Xapo offer a glimpse into the fee models that might emerge in a digital currency-dominated world, but those have hardly been tested at global economy scale. But nevertheless, the fact that IBM and seemingly multiple central banks are even considering a blockchain-based currency solution confers a great deal of positive endorsement on bitcoin, and offers a counter point to fears over, among other things, security and money-laundering risk. These discussions remain informal and governments rarely move at anything like startup speed. That secures IP rights and ensures patent security Leswing 15 [Kif Leswing, editor at Futurism and IBT, 5/22/2015, "Why The Deed To Your House Could Soon Be A Bitcoin," International Business Times, http://www.ibtimes.com/why-deed-your-house-could-soon-be-bitcoin-1935315]Several enterprising companies are using the blockchain to keep track of objects with substantial value, including stocks and art and land. And its not just startups and cryptocurrency fanatics who are embracing the blockchain -- major institutions are experimenting with it as well, including Nasdaq, which runs the second largest stock exchange in the United States. What Is The Blockchain? The reason bitcoin works is the blockchain, which works like this: A network of computers around the world checks every bitcoin transaction and records it in a database, which is how you can be sure your bitcoins are yours and havent been spent before. Essentially, its a ledger that millions of computers agree on. The beauty of the blockchain is that it can timestamp anything -- sort of like a notary. This isnt theoretical. If youd like to prove that your business plan -- or novel or a prediction -- exists, you can embed a note in the blockchain using an inexpensive service called Proof of Existence. The service, created by Manuel Araoz, essentially takes your document and slices it up to create something mathematicians call a hash -- a string of letters and numbers that uniquely and provably corresponds to your document and the time it was uploaded. That hash is then listed in the comment section of a tiny bitcoin transaction, say, a cent or two, creating a record that your document exists -- but not a copy of your document itself -- on computers around the world. For example, heres proof that my first draft of this story existed at 12:15 pm EDT. You can also find that proof here, here, and here. But Araoz isnt satisfied with providing a notary service. He tells International Business Times hes working on a new blockchain application -- for tracking land. Digital Gold In The Hills Araoz isnt the only entrepreneur who thinks the blockchain is a great fit for real estate. Last week, Reuters reported that the country of Honduras entered into a deal with American bitcoin startup Factom to build a land title registry using blockchain-based technology. Using the blockchain with land is more of a longer play. Youre going to need a nation or region or state to connect the legal dots, said Peter Van Valkenburgh, director of research at bitcoin lobby Coin Center. Instead of passing a deed when you sell your house, the deed could be a hash included in a fraction of a bitcoin. That piece of Internet money then becomes a colored coin. That colored coin might be involved in a transaction thats only a few cents, but youre actually passing an asset. Factom CEO Peter Kirbys pitch is that his technology will reduce fraud. Currently, Honduran land is managed by the government, which means corrupt cronies could potentially steal prime real estate. But if all land needs to have a title confirmed by the blockchain, not even well-connected criminals could claim they own something they dont. Its like writing on a dollar bill that the owner of that bill also owns 123 Real Street. Only the ownership of that bill is public and can be checked by anyone with access to the Internet. Nasdaq is taking a similar approach to using the blockchain for keeping an eye on private equity. Although publicly traded stock holdings are regulated and watched by the Securities and Exchange Commission, smaller, private companies often track their owners through certificates. The Nasdaq Private Market subsidiary will start using blockchain technology to supplement that process in the fourth quarter. Nasdaqs program is small scale, and its only a pilot program. But its still an important sign. As IBMs UK financial technology lead Richard Brown writes, we now have a brand-name firm experimenting for real. Its not just big companies that might be able to benefit. Artists could use it to prove a works provenance. A German company, Ascribe, thinks the blockchain can be better than a certificate of authenticity -- and might eventually lead to the end of unattributed pictures floating around sites like Tumblr and Instagram. Blockchain is very useful to secure intellectual property, but unless it can touch the lives of everyday creators, it won't be adopted, Ascribe CTO Trent McConaghy wrote in an email. This will be a multibillion-dollar business across many industry verticals. IP security and patent protection is key to sustainable innovationIPP 12 [Innovation Policy Platform, joint initiative developed by the World Bank and OECD, composed of top policy practitioners around the world, 2012 (most recent date given), Intellectual Property Rights for Innovative Entrepreneurship, https://www.innovationpolicyplatform.org/content/intellectual-property-rights-innovative-entrepreneurship] Intellectual Property (IP) systems can be critical in helping new ventures transform their innovation potential and creativity into market value and competitiveness. Intellectual Property rights (IPR) allow innovative entrepreneurs to protect their inventions. They may also have multiple other functions, such as signaling current and prospective value to investors, competitors and partners, accessing knowledge markets and networks, and preventing rivals from patenting related inventions. However, IP systems can also create obstacles to the development of entrepreneurial ideas and hamper knowledge diffusion and innovation. Evidence at the firm level indicates a positive correlation between patenting and new ventures growth, access to venture capital and survival. Data shows a huge upsurge in patent applications in the last decade, with a strong variation in the share of young patenting firms across countries. Effective IP systems can facilitate access to finance and the development of markets for technology, both of which help innovative entrepreneurship. Such systems also provide incentives to invest in R&D and innovation, and can encourage technology co-operation with firms, universities and PRIs. IP systems need to fully take into account the new roles played in the economy by patents and other types of IP, and in particular how they relate to innovation (e.g. the increasing use of patents in opportunistic litigation). IP systems also need to adapt and modify IPR in order to better match it with the characteristics of todays innovative world. [Table of Contents Omitted] What is the IP system? General definition of intellectual property rights (IPR) Intellectual Property (IP) is divided into two categories: Industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indications; and Copyright, which includes literary and artistic works. Intellectual property rights (IPR) refer to the general term for the assignment of property rights on these assets (seeTypes of IPR). The rights allow the holder to exclude other agents from the commercial exploitation of their intellectual property for a predetermined period. IPR is also designed to foster knowledge diffusion (see Access to knowledge and inventions). The granting of such rights is conditional on disclosing the content of the invention, so individuals can freely access the existing stock of protected IP and use it as the basis or inspiration for new and original intellectual assets. However, applicants can act strategically and avoid disclosing relevant or complementary information, making the disclosure less effective. Different forms of intellectual property protection Patents are the most well known form of IPR, but several other IPR instruments have been developed in order to address the large number of different forms of intellectual assets, reflecting the multidimensional nature of innovation. In most jurisdictions, the following types of formal IPR are available: trademarks, copyright, utility models, registered designs, lay-out designs of integrated circuits, new plant varieties, geographical indications and non-original database rights (WIPO, 2004) (seeTypes of IPR). IPR, however, is not the only tool to protect innovations. Rather, survey evidence suggests that in most industries it is not the most important one (Cohen, Nelson and Walsh, 2000). A number of different strategies are also employed by firms to manage their intellectual assets, either as an alternative or complement to formal IPR. They include secrecy, confidentiality agreements, lead-time, complexity of design, building-in of specialist know-how and open source (OECD, 2011) (see Innovation without IP). How does the IP system affect innovative entrepreneurship? The IP system as an asset for innovative entrepreneurship The acquisition and management of IPR are critical in helping firms transform their innovation potential and creativity into market value and competitiveness. This is particularly the case for new enterprises, as these rely heavily on exploiting intellectual capital in their business models. Protecting an invention is only one of the many roles that IPR may play in innovative firms. Other functions that companies fulfill with IPR (OECD, 2011; Cohen, Nelson and Walsh, 2000) are: positioning in global markets, by opening up new commercial pathways or by segmenting existing markets signaling current and prospective value to investors, competitors and partners accessing knowledge markets and networks defending themselves from patent infringement suits blocking rivals from patenting related inventions using patents in negotiations over technology rights. The role of IPR in accessing external finance is particularly important, especially in the risk capital market (see IP and markets for finance). For knowledge-intensive start-ups, patents are often the only asset entitlement they can use to raise funding. The emergent secondary market for patents should facilitate entry by these firms by providing a salvage value for those that fail (Hall and Harhoff, 2012). Shane (2001) also stresses that an effective IPR system allows entrepreneurs to have more time to grow their businesses before their ideas are imitated. For a new firm, time is crucial in order to collect funding, develop the supply chain and reach the market all aspects in which incumbents have a competitive advantage. Furthermore, effective patent protection may allow a new firm to compete on the basis of differentiation rather than on the basis of costs. This is another a crucial asset for new ventures, since incumbent firms generally have a strong comparative advantage in producing at a lower cost. Innovation is key to respond to every transnational challengeBarker, 2k electrical engineer, and manager of corporate communications for the Electric Power Research Institute and former industrial economist and staff author at SRI International and as a commercial research analyst at USX Corporation (Brent, Technology and the Quest for Sustainability. EPRI Journal, Summer, infotrac)From a social standpoint, accelerating productivity is not an option but rather an imperative for the future. It is necessary in order to provide the wealth for environmental sustainability, to support an aging population in the industrialized world, and to provide an economic ladder for developing nations. The second area of opportunity for technology lies in its potential to help stabilize global population at 10-12 billion sometime in the twenty-first century, possibly as early as 2075. The key is economics. Global communications, from television to movies to the Internet, have brought an image of the comfortable life of the developed world into the homes of the poorest people, firing their own aspirations for a better quality of life, either through economic development in their own country or through emigration to other countries. If we in the developed world can make the basic tools of prosperity--infrastructure, health care, education, and law--more accessible and affordable, recent history suggests that the cultural drivers for producing large families will be tempered, relatively quickly and without coercion. But the task is enormous. The physical prerequisites for prosperity in the global economy are electricity and communications. Today, there are more than 2 billion people living without electricity, or commercial energy in any form, in the very countries where some 5 billion people will be added in the next 50 years. If for no other reason than our enlightened self-interest, we should strive for universal access to electricity, communications, and educational opportunity. We have little choice, because the fate of the developed world is inextricably bound up in the economic and demographic fate of the developing world. A third, related opportunity for technology is in decoupling population growth from land use and, more broadly, decoupling economic growth from natural resource consumption through recycling, end-use efficiency, and industrial ecology. Decoupling population from land use is well under way. According to Grubler, from 1700 to 1850 nearly 2 hectares of land (5 acres) were needed to support every child born in North America, while in the more crowded and cultivated regions of Europe and Asia only 0.5 hectare (1.2 acres) and 0.2 hectare (0.5 acre) were needed, respectively. During the past century, the amount of land needed per additional child has been dropping in all areas of the world, with Europe and North America experiencing the fastest decreases. Both crossed the "zero threshold" in the past few decades, meaning that no additional land is needed to support additional children and that land requirements will continue to decrease in the future. One can postulate that the pattern of returning land to nature will continue to spread throughout the world, eventually stemming and then reversing the current onslaught on the great rain forests. Time is critical if vast tracts are to be saved from being laid bare, and success will largely depend on how rapidly economic opportunities expand for those now trapped in subsistence and frontier farming. In concept, the potential for returning land to nature is enormous. Futurist and scholar Jesse Ausubel of the Rockefeller University calculates that if farmers could lift average grain yields around the world just to the level of today's average U.S. corn grower, one-half of current global cropland--an area the size of the Amazon basin--could be spared. If agriculture is a leading indicator, then the continuous drive to produce more from less will prevail in other parts of the economy Certainly with shrinking agricultural land requirements, water distribution and use around the world can be greatly altered, since nearly two-thirds of water now goes for irrigation. Overall, the technologies of the future will, in the words of Ausubel, be "cleaner, leaner, lighter, and drier"--that is, more efficient and less wasteful of materials and water. They will be much more tightly integrated through microprocessor-based control and will therefore use human and natural resources much more efficiently and productively. Energy intensity, land intensity, and water intensity (and, to a lesser extent, materials intensity) for both manufacturing and agriculture are already heading downward. Only in agriculture are they falling fast enough to offset the surge in population, but, optimistically, advances in science and technology should accelerate the downward trends in other sectors, helping to decouple economic development from environmental impact in the coming century. One positive sign is the fact that recycling rates in North America are now approaching 65% for steel, lead, and copper and 30% for aluminum and paper. A second sign is that economic output is shifting away from resource-intensive products toward knowledge-based, immaterial goods and services. As a result, although the U.S. gross domestic product (GDP) increased 200-fold (in real dollars) in the twentieth century, the physical weight of our annual output remains the same as it was in 1900. If anything, this trend will be accelerating. As Kevin Kelly, the editor of Wired magazine, noted, "The creations most in demand from the United States [as exports] have lost 50% of their physical weight per dollar of value in only six years.... Within a generation, two at most, the number of people working in honest-to-goodness manufacturing jobs will be no more than the number of farmers on the land--less than a few percent. Far more than we realize, the network economy is pulling us all in." Even pollution shows clear signs of being decoupled from population and economic growth. Economist Paul Portney notes that, with the exception of greenhouse gases, "in the OECD [Organization for Economic Cooperation and Development] countries, the favorable experience [with pollution control] has been a triumph of technology That is, the ratio of pollution per unit of GDP has fallen fast enough in the developed world to offset the increase in both GDP per capita and the growing number of 'capitas' themselves." The fourth opportunity for science and technology stems from their enormous potential to unlock resources not now available, to reduce human limitations, to create new options for policymakers and businesspeople alike, and to give us new levels of insight into future challenges. Technically resources have little value if we cannot unlock them for practical use. With technology, we are able to bring dormant resources to life. For example, it was only with the development of an electrolytic process late in the nineteenth century that aluminum--the most abundant metal on earth--became commercially available and useful. Chemistry unlocked hydrocarbons. And engineering allowed us to extract and put to diverse use untapped petroleum and gas fields. Over the course of history, technology has made the inaccessible accessible, and resource depletion has been more of a catalyst for change than a longstanding problem. Technology provides us with last-ditch methods (what economists would call substitutions) that allow us to circumvent or leapfrog over crises of our own making. Agricultural technology solved the food crisis of the first half of the nineteenth century. The English "steam crisis" of the 1860s, triggered by the rapid rise of coal-burning steam engines and locomotives, was averted by mechanized mining and the discovery and use of petroleum. The U.S. "timber crisis" that Teddy Roosevelt publicly worried about was circumvented by the use of chemicals that enabled a billion or so railroad ties to last for decades instead of years. The great "manure crisis" of the same era was solved by the automobile, which in a few decades replaced some 25 million horses and freed up 40 million hectares (100 million acres) of farmland, not to mention improving the sanitation and smell of inner cities. Oil discoveries in Texas and then in the Middle East pushed the pending oil crisis of the 1920s into the future. And the energy crisis of the 1970s stimulated the development of new sensing and drilling technology, sparked the advance of non--fossil fuel alternatives, and deepened the penetration of electricity with its fuel flexibility into the global economy Thanks to underground imaging technology, today's known gas resources are an order of magnitude greater than the resources known 20 years ago, and new reserves continue to be discovered. Technology has also greatly extended human limits. It has given each of us a productive capability greater than that of 150 workers in 1800, for example, and has conveniently put the power of hundreds of horses in our garages. In recent decades, it has extended our voice and our reach, allowing us to easily send our words, ideas, images, and money around the world at the speed of light. But global sustainability is not inevitable. In spite of the tremendous promise that technology holds for a sustainable future, there is the potential for all of this to backfire before the job can be done. There are disturbing indications that people sometimes turn in fear and anger on technologies, industries, and institutions that openly foster an ever-faster pace of change. The current opposition to nuclear power genetically altered food, the globalization of the economy and the spread of American culture should give us pause. Technology has always presented a two-edged sword, serving as both cause and effect, solving one problem while creating another that was unint