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Ethan Belding
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Rather than taking a strictly financial view I focus on political, social, cultural, geographic and historical factors which impact global markets. My intent is to highlight overlooked non-economic factors that influence a variety of industries. Professionally, I teach Sociology, World Regional... More
  • Is Bolivia One Step Closer To Becoming A Maritime Power?

    Author's Note - For more analyses please visit

    Bolivian President Evo Morales traveled to Peru yesterday to meet with his Peruvian counterpart President Ollanta Humala. Bolivia's access to the Port of Ilo and surrounding territory and the expansion of port facilities were presumably key issues to be discussed. In 1992 then Peruvian President Alberto Fujimori offered Bolivia access to this territory with a 99-year, potentially renewable lease. The understanding was that Bolivia would cover the cost of building the requisite infrastructure. Though the treaty was never ratified its status was of relatively little importance as La Paz lacked the funds to invest in the project. In recent years the Bolivian economy has improved to such a degree that it has the capital which it lacked in the past. For this reason the implementation of the agreement is a key geopolitical imperative for La Paz as it would functionally change Bolivia from a landlocked country to a maritime power.

    Bolivia has been fairly successful in recent years. The country's economy grew an estimated 6.5% in 2013, the budget is balanced, inflation is under control, and debts are manageable. Though the country's success has been aided by the high price of commodities in recent years and thus is subject to market fluctuations (it is already estimated that 2014's growth will be lower than in 2013) the fact that La Paz has foreign reserves worth an estimated $14 Billion gives the country room to maneuver. Such a nest egg could help fund the expansions of Ilo's port. Bolivia is also attempting to reduce its dependency on primary commodities. In August 2013 Bolivia and the Netherlands signed a letter of intent in which they agreed to cooperate in developing Bolivia's substantial lithium deposits to manufacture batteries in Bolivian territory. Though a letter of intent is not a firm agreement, access to adequate port facilities would make Bolivian batteries more competitive thus the development of Ilo could help to transform this letter of intent into a legally binding document. The development of the port could also afford Bolivia the opportunity to set up Export Processing Zones and profit from the types of manufacturing that has helped countries, such as China, develop. Linking the port to the Interoceanic Highway (which connects Brazil to Peru) would also help Bolivia further expand its manufacturing industry and make the country's exports more competitive.

    Access to the sea has long been a contentious issue in Bolivia. The 1879-84 War of the Pacific saw a victorious Chile seizing Bolivia's coastal territory. Bolivia has long sought to address this issue. In April 2013 Bolivia filed a case against Chile with the International Court of Justice. Despite Peru's success in reclaiming land from Chile last month we must note that the cases are different so Peru's victory is not a precedent which will see Bolivia reclaiming the territory that it lost during the war. Access to Ilo mitigates this issue. No matter what happens the combination of access to adequate port facilities, a well managed economy, developing infrastructure, positive growth, and valuable resources will go a long way towards restoring the investor confidence which Bolivia lost in 2006 when President Morales put the country's energy sector under state control. Many investors are pulling out of emerging markets for a variety of reasons such as tapering. Exiting emerging markets without taking the time to differentiate between them is short sighted and could stop investors from putting their money in a place where it could contribute to economic development and provide impressive returns. Bolivia may very well be one of these places.

    Feb 28 3:28 PM | Link | Comment!
  • The 2016 Ugandan Election's Potential Impact On East African Development

    For Further Analyses please visit

    A new scramble for Africa is underway. What is different this time around is that African countries are playing a role. Currently South Africa, Angola, and several East African States are developing infrastructure to allow for the export of Central African Minerals. For geographic regions the East African States are particularly well situated to profit from exports to East Asian and South Asian Markets. This reality is having an impact on regional monetary policy which will influence the extraction of natural resources as well as the region's transformation into a manufacturing center and the further development Kenya's technology sector.

    On November 30th Kenya, Tanzania, Uganda, Rwanda and Burundi signed a monetary union which sets the stage for a common East African currency. Such a currency could facilitate intraregional trade and promote investment in an area that is beginning to see significant economic development. A larger currency bloc could also aid the development of an East African financial center to rival Johannesburg's status in Southern Africa. Presumably, Nairobi would fill this position due to its status as the gateway to East Africa. Such a development would also localize startup capital for Kenya's burgeoning technology industry and serve as a channel for investment into East Africa's rapidly expanding infrastructure and the development of manufacturing hubs in areas such a Mombassa, Bagamoyo, and potentially Lamu. Though it has historically taken decades for a city to establish itself as a financial center we must note that the rapid development of cities like Dubai combined with advances in communication technology serve as indication that this process can be expedited. This is an important factor to take into account when looking at potential investments in East Africa. Despite these positive signs we must pay attention to potential instability in Uganda and its implications for the development of East Africa.

    Uganda occupies a unique geographic role in the region, as a great deal of minerals extracted from the Eastern Congo would pass through its territory. This reality is impacting investment in the country. On December 4th the Bank of Uganda sold 40.67 billion shillings ($16.1 million) of the 80 billion shillings worth of 15-year bonds. Despite the relative success of the issuance the Ugandan Election of 2016 could result in instability which could undermine investment in the country. Such instability would impact the whole of East Africa. After all it is a challenge to transport raw materials through a conflict zone. It has been speculated that President Yoweri Museveni's son Muhoozi Kainerugaba is being groomed to succeed him. This rumor has caused a great deal of discontent. Even if Kainerugaba does not run for president his promotion to the status of brigadier in 2012 and the fact that he is in charge of the Special Forces Group, which oversees oil security, has caused resentment amongst officers in his age range who feel that his promotion was not based upon merit. In addition to this, many of the older members of the armed forces, who are loyal to Museveni, are retiring while the younger officers are not necessarily loyal to either Museveni or Kainerugaba. An erosion of this power base could set the stage for conflict. That said, the fact that Kainerugaba is in charge over oil security could give him the ability to expand his patronage network thus allowing him to purchase some modicum of stability.

    Another reason to be concerned about the stability of Uganda is the passage of the Public Order Management Act (POMA) which Museveni signed into law in September. The law imposes restrictions on public meetings and affords the police powers to regulate them. The nature of this act heightens the possibility of a conflict which could escalate. Despite the resentment that POMA and the succession have generated it must be noted that the opposition Forum for Democratic Change is having their own internal disputes which weakens them. That said, common grievances could breed solidarity. This dynamic could help the Forum for Democratic Change overcome its internal divisions and form a united front with other concerned interests which would increase tensions in the country and undermine confidence in the region.

    Events in Uganda in the coming years will have a significant impact on the continuing development of East Africa. Despite the challenges that Uganda faces we must note that Kenya's recent elections went relatively smoothly. Part of this stems from investment in the country. When money is coming in political opponents can have an incentive to play nice. Hopefully, this will be the case with Uganda.

    Dec 13 11:35 AM | Link | Comment!
  • The Implications Of Korean Reunification Part 1

    More posts can be viewed at:

    This is the first part of an analysis of the changes that we could expect to see in the event of the reunification of the Korean Peninsula. Please note that I am not arguing that reunification will occur. I am merely examining the likely outcomes of reunification and their implication on regional security and the global economy. The focus of this post is on how a united Korea could offset some of the costs of reunification. In future posts I will outline:

    • China's concerns vis-à-vis Korean reunification
    • Possible scenarios for regime change in North Korea
    • How reunification could impact US interests and military deployment.
    • How a united Korea will impact the global economy and the interests of other key powers in the Asia Pacific region.


    The unthinkable can occur quickly. In November 2010 who would have argued that longstanding regimes in Tunisia, Egypt and Libya would fall within the next year? On June 27th, 1914 how many people thought that a war which would set the stage for the end of European global hegemony was imminent? The list of such events goes on and on. History has shown that the impossible can quickly become reality. Though we cannot determine the specific dates and set of circumstances that lead to such changes we can:

    • Identify troubled areas around the world.
    • Project how the problems in these regions might be resolved (by force, diplomacy or other means).
    • Determine the implications of these resolutions. 

    Such exercises improve our understanding of how the world is interconnected and better equip us to contend with political changes that impact the security and economic health of a region. Those who have forecasted the implications of potential shifts in international relations have a distinct advantage over those who are still trying to determine what is happening when rapid change is occurring. There are many parts of the world where the political landscape could change quickly impacting economic, political and military relations. The Korean Peninsula is one such example.

    Korean Interests: Security concerns between North and South Korea have persisted since the end of the Korean War. In fact both countries are still technically at war. The 1953 armistice merely means that the countries observe an uneasy truce. The potential for intra-Korean hostility has long been in the interest of both countries, the wider region, and the international community. Despite the benefits that a more stable Korean Peninsula would offer, the reality is that reunification, if it were to occur, would incur significant costs as North Korea lags far behind South Korea in terms of economic development and human capital. With that in mind it is important to examine ways in which reunification could be financed.

    It has been estimated that North Korea contains up to six trillion dollars worth of mineral wealth including tungsten, magnesite, graphite and zinc. All of these minerals have important industrial applications. South Korea certainly has an interest in improved access to zinc and magnesite, as it is dependent upon imports to service its demands for these minerals. Pyongyang is currently in the process of developing better ways of exporting these resources. For example, the construction of the Jilin-Rason Highspeed Railway will have a major impact on the greater integration of the North Korean economy into China. A reunited Korea would see improved infrastructure on the peninsula as well, which would further link the North to the global economy. That said, the exploitation of these minerals will take time and their value is subject to the volatility of the commodity market. Though these resources will presumably play a crucial role in funding Korean reunification and investing in the future prosperity of the country other ways of accessing capital will likely enter into discussions between Seoul and Pyongyang if they were to pursue reunification.

    North Korea's nuclear program could offer some economic advantage. It is unlikely that North Korea's nuclear program will be abandoned as a prerequisite for Korean reunification. That said, international pressure would make it difficult for a unified Korea to become a nuclear power. After all a nuclear armed Korea and China would push the Japanese to pursue similar capabilities. Such an action would increase tensions in East Asia which are already heightened due to Japan and China's conflicting territorial claims to the Diaoyu Islands. This reality and the need to finance reunification would limit Korea's ability to continue with the program. However, a reunified Korean peninsula could use the nuclear program as a bargaining chip. Essentially, we are looking at a deal that says, "We will give up our nuclear weapons if you (the international community) give us significant funding in order to offset the costs of reunification." Given that Korea could only give up the program once it is likely that the demands would be substantial.

    These factors and the increased investment that a unified Korean peninsula would likely see could go a long way towards covering the trillions of dollars needed for the reunification of the peninsula. Despite the economic advantages that a unified Korea would offer, its neighbors will have concerns about such a move. In the next post we will look at some of China's concerns regarding the Korean peninsula and examine how these concerns might be changing.

    Oct 18 3:28 PM | Link | Comment!
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