The Top Ten Stories You Missed in 2006

Foreign Policy

Posted December 2006

You saw the stories that dominated the headlines in 2006: the war in Iraq, North Korea’s nuclear tests, and the U.S. midterm elections. But what about the news that remained under the radar? From the Bush administration’s post-Katrina power grab to a growing arms race in Latin America to the new hackable passports, FP delivers the Top Ten Stories You Missed in 2006.

10 - Hackable Passports

In October, the U.S. State Department began issuing biometric “ePassports” that contain a radio frequency identification (RFID) tag under the back cover. The tiny chip holds the usual passport data, including a digital photo. The motive behind adding the chips is ostensibly good: to combat counterfeiting and illegal immigration.
But a German hacker quickly found a vulnerability. With a laptop and a chip reader he bought for $200, he was able to steal data from an encrypted RFID tag, potentially allowing him to clone an ePassport. And it’s not just Americans who are at risk. Twenty-seven countries (mostly in Europe) that participate in the U.S. Visa Waiver Program are required by U.S. law to issue the new electronic passports to their citizens. The Dutch and British media have already reported major security flaws in the new IDs.

So, what’s a security conscious citizen to do? Again, the answer may come out of Germany. A group of hackers there recommends that people microwave the new passports to destroy the chips. The State Department may want to go back to relying on a paper trail.

9 - What’s Worse Than Bird Flu? The Cure

In 2006, bird flu didn’t become the killer pandemic everyone feared. In fact, there were no confirmed deaths in developed countries from bird flu. But the alarm, stoked by Western media reports, led to an unexpected—and unfortunate—outcome: A rash of abnormal behavior, hallucinations, and even deaths attributed to Tamiflu, the medicine marketed as a key drug capable of fighting the disease. In November, the Canadian health ministry issued a warning on Tamiflu after 10 Canadians taking the drug had died suspiciously. And the U.S. Food and Drug Administration received more than 100 reports of injury and delirium among Tamiflu takers for a 10-month period in 2005 and 2006. That’s nearly as many cases as were logged over the drug’s five-year trial period. For now, the cure seems worse than the disease.

8 - Petro Powers Drop the Dollar

If you thought record oil prices this year were a pain in your wallet, there’s more bad news on the horizon. The latest Bank for International Settlements quarterly report, which tracks the investment trends of oil-producing countries, indicates that Russia and OPEC countries are moving their holdings out of dollars and into euros and yen. OPEC cut its holdings in the dollar by more than $5 billion during the first and second quarter of 2006. And Russia now keeps most of its new deposits in euros instead of dollars.
That decrease is swift and significant—and helps to explain why the dollar recently fell to a 20-month low against the euro and a 14-year low against the British pound. Holding dollars while other currencies gain strength means less profit for oil producers. But if they rapidly divest themselves of dollars, it may weaken the currency and push up inflation in the United States. “This new trend may be bigger trouble for the United States than high oil prices and surging Chinese exports,” says Nouriel Roubini, a professor at New York University’s Stern School of Business. If this year’s move away from the dollar is a sign of future thinking by oil producers, the pain felt at the pump may soon be the least of our worries.

7 - The Gender Gap Gets Smaller

It was a good year for women in politics. Female heads of state took office in Chile and Liberia, and Hillary Clinton and Ségolène Royal set tongues wagging in Washington and Paris over their own presidential prospects. But it was also a great year for future female leaders, especially those in poor countries.
A report released in February by the Washington-based Population Reference Bureau found that the gender gap in secondary education is closing or has closed in most developing countries. Particularly in Latin America and Asia, girls are attending school at the same rate—or higher—than boys. In 1990 in China, for example, 75 girls attended secondary school for every 100 boys. Today, that figure is 97. In India, girls’ enrollment shot up from 60 percent to 81 percent. Though sub-Saharan Africa lagged behind the rest of the world, it too saw more girls in the classroom.

The shift isn’t due to an unexpected worldwide surge in favor of gender equality. The more likely explanation is that urbanization and economic development has boosted girls’ likelihood of attending school, as has a number of innovative government and private-sector programs. In India, for example, UNICEF credits basic sanitation and hygiene education programs in Alwar with increasing girls’ enrollment by 78 percent over a five-year period. Given the clear link between girls’ education and a society’s economic success, it’s good news everyone can celebrate.

6 - Iran and Israel Hold Secret Talks

While Iranian President Mahmoud Ahmadinejad spent the better part of 2006 denying the Holocaust and threatening to destroy Israel, his country was sitting down with Israeli representatives to settle old debts. The clandestine talks, first reported by Israeli daily Haaretz this month, concern hundreds of millions of dollars allegedly owed to Iran for oil it supplied to Israel before the 1979 Islamic Revolution, when Iran severed the two countries’ economic ties dating back to the 1950s. According to the report, negotiations over the debt have been on-again and off-again for nearly two decades, and the two sides met recently in Geneva in an attempt to reach an agreement.
It’s unclear why Israeli and Swiss officials are now willing to confirm that the talks are taking place. However, there is one leading theory: The leak was timed to embarrass Iran by publicizing its cooperation with a country it refuses to recognize. And the strategy may have worked. Iran swiftly and vehemently denied it’s secretly talking to the Jewish state. It just goes to show, money talks.

5 - United States Funds the Taliban

The Taliban’s resurgence brought the ongoing war in Afghanistan back onto the front pages in 2006. From record opium production to suicide bombings, the outlook has only grown dimmer in the past 12 months. What you probably didn’t hear is that some of the money the United States is spending to combat the resurgence of the Taliban is winding up in the hands of . . . the Taliban.
As recently as November, the Institute for War and Peace Reporting revealed that villagers in Afghanistan’s war-torn south were handing over U.S. cash meant for reconstruction projects to Taliban fighters, who then use the money to purchase weapons, cell phones, and explosives. As part of an effort to stimulate economic development in the country, the United States had committed $43.5 million for reconstruction as of September. One Canadian officer charged with helping to distribute cash said that “millions” has already gone missing in the five years since coalition troops arrived. Why? According to the report, local mullahs have urged residents to fight the foreign occupation and hand over the money in the hopes of gaining back the security they’ve lost. Others say it’s simple extortion from Taliban thugs. Either way, the United States may inadvertently be aiding the enemy in a fight that will almost certainly become more costly in the year ahead.

4 - Russia Fuels Latin American Arms Race

When Costa Rican President Oscar Arias spoke at a September conference sponsored by the Miami Herald, one sentence stood out: “Latin America has begun a new arms race.” He was referring to the sudden uptick in major arms deals in the region, largely between Brazil, Colombia, Ecuador, Mexico, Peru, Uruguay, and Venezuela, and their newest patron, Russia. The deals have left the region flush with shiny new tanks, fighter jets, and custom-built presidential helicopters.
The Latin arms trade is as much about politics as it is weapons. Not long after Brazil announced a deal to purchase roughly $300 million in Russian military equipment, Russian Foreign Minister Sergei Lavrov said he would back Brazil’s bid for a seat in the U.N. Security Council. It’s not just Brazil’s military that has a hard time saying nyet to Russian firms. Venezuela inked a more than $1 billion deal in July for Russian jets and helicopters. There’s even talk of Moscow relocating Kalashnikov gun and ammo factories to Venezuela, next door to Colombia’s ammunition-strapped FARC rebels. With Venezuela’s populist anti-American president Hugo Chávez seeking to dominate Latin American politics, U.S. officials are concerned, especially given the United States’ sliding popularity in the region. More dangerous, though, is Latin America’s militarization. More guns and less butter is the last thing the troubled region needs.

3 - Bush’s Post-Katrina Power Grab

When U.S. President George W. Bush signed the $532 billion federal defense spending bill in October, there were the usual budgetary turf battles on Capitol Hill. But largely overlooked was a revision of a nearly 200-year-old law to restrict the president’s power during major crises. In December, Congressional Quarterly examined the changes, saying that the new law “takes the cuffs off” federal restraint during emergencies. Rather than limiting the circumstances under which a president may deploy troops to “any insurrection, domestic violence, unlawful combination, or conspiracy,” the 2006 revision expands them to include “natural disaster, epidemic, or other serious public health emergency, terrorist attack or incident.” In other words, it’s now easier for the federal government to send in troops without a governor’s invitation.
Ostensibly, the move aims to streamline bureaucratic inefficiencies that left thousands of New Orleanians stranded last summer. Yet the Insurrection Act that existed when Katrina struck didn’t actually hinder the president’s ability to send federal troops. He simply chose not to.

Critics have called the changes an opening for martial law. Democratic Sen. Patrick Leahy of Vermont, one of the few to raise the issue in congress, says that “Using the military for law enforcement goes against one of the founding tenets of our democracy.” Is martial law more likely than before? Perhaps not. But the fact that the revisions were slipped into a defense bill without a national debate gives ammunition to those who argue the administration is still trampling on civil liberties five years after 9/11.

2 - China Runs up African Debt

The debt-relief deal struck at last year’s Group of Eight (G8) summit, where rich countries promised to forgive about $40 billion in debts owed by poor countries, was supposed to be a turning point in Africa’s development, a chance to wipe its economic slate clean. Then came China. The rapidly industrializing country has emerged as a top lender to poor African countries, and that has many international development organizations worried that years of campaigning for debt relief will be set back by a new wave of bad loans.
The World Bank estimates that Chinese loans for African infrastructure already total more than $12.5 billion. In November, Chinese President Hu Jintao promised to provide another $5 billion in loans to Africa by 2009. Many of these deals are believed to be similar to commercial loans rather than the low-interest, long-term credits extended by multilateral development banks. It’s hard to know the full extent of the risk because China usually refuses to divulge the terms of the deals. Development experts now fear that aggressive lending by Chinese banks will land Africa back where it started—in the red.

1 - India Helps Iran Build the Bomb, While the White House Looks the Other Way

The U.S. government usually takes a hard line against countries that assist Iran with its nuclear program. In 2006 alone, Washington sanctioned firms in Cuba, North Korea, and Russia for making it a little easier for Iran to develop weapons of mass destruction. But, when the proliferator is a close American ally, the United States seems to take a different approach.

Just after the U.S. House of Representatives voted in July to support a plan to provide India with nuclear technology, the Bush administration quietly imposed sanctions on two Indian firms for supplying Tehran with missile parts. Nor was the White House forthcoming with congress about other blots on India’s proliferation record: In the past two years, two other Indian companies have been penalized for allegedly passing chemical weapons information to Iran, and two Indian scientists who ran the state-run nuclear utility were barred from doing business with the U.S. government after they allegedly passed heavy-water nuclear technology to Tehran. Far from scuttling India’s nuclear deal, the United States seems to have rewarded the country by overturning 30 years of nonproliferation policy in its favor.