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A requiem for fine journalism

Jawed Naqvi in The Dawn

RONALD L. Haeberle was a combat photographer with the US army whose pictures exposed the horrors of the My Lai massacre in Vietnam in 1969. Military analyst Daniel Ellsberg, at peril to his life, leaked the papers revealing the cover-up of US perfidies in Vietnam. Mordechai Vanunu was an Israeli scientist who shared his country’s nuclear secrets with a British newspaper. Israel kidnapped him and put him in jail. US soldier Chelsea Manning handed over 750,000 secret military documents to WikiLeaks and was court martialled for it. She went to prison.

There’s no end to ill-informed media chatter about Vladimir Putin’s KGB past. But it took KGB master spy Vasili Mitrokhin to hand over a treasure trove of Kremlin’s secrets to the Western media. Likewise with Edward Snowden, living in exile in Moscow after exposing the US government’s illegal surveillance of its own citizens.

If there were no journalists, it seems, the truth would somehow still come out. That is one’s best bet for Ukraine. Somebody will blow the whistle, almost inevitably, after pattern, as it were, and the world would know a little more than what the media wants us not to know.

It’s a strange war out there in which columns upon columns of enemy tanks were lined up for days without stirring from their highly visible location a short distance from the capital city, and no one took a pot shot at the sitting ducks. Is there something one is missing? It’s a strange war in which the besieged capital of the invaded country should be running low on critical daily resources but its citizens are able to keep their mobile phones charged and these work very efficiently.

An Israeli analyst says the Russians are allowing the phones to work to be able to listen in. It’s tempting to believe that. But then, why couldn’t the Israeli wizard advise his friends in New Delhi to keep the mobile phones running in besieged Kashmir. Not for days or weeks, but for months, till the courts intervened, did Kashmir have no internet. It’s nice to have an Israeli expert talk about phone tapping.

It’s a strange war also, in which leaders and politicians from friendly countries wade into the heart of supposedly besieged cities to cheer on the fighters they are arming to the teeth and return home unscathed. In football matches, the team managers shout out orders from outside the arena. Here you have them walking to the goalkeeper to plan which way to dive to stop the curving ball.

The Ukraine war looks set to reset the world order. It has in the bargain already exposed the overstated claim of objective journalism the West had credited itself with. The claim lay in tatters, of course, for the most part since the US invasion of Iraq. Many in the media covering Ukraine had purveyed brazen lies that provided the fig leaf for the destruction of a robustly secular country like Iraq.

The overwhelming impression being created is that the Russians are being chased out of Ukraine if they are not being drawn into a trap. Frustrated by their failure, the retreating troops are committing war crimes. It would be difficult to regard any army, Western or Eastern, as a saviour of human rights. It could be a great point to start a discussion. Who is going to try whom for the massacres? The US refuses to be a member of the International Criminal Court that is reported to have initiated its probe into the Bucha killings. And neither is Russia looking interested in blessing the court with acceptance. The worried world and the ICC can only persuade but not prosecute a non-member.

The basic question many are keen to ask is this: is the West on top of the situation in Ukraine, or is Russia winning the war, as non-Russian, non-journalist analysts are beginning to assert. Any journalist should be interested in both parts of the question, but asking the latter would be deemed tantamount to betrayal. Or are we heading towards a long-drawn stalemate dipped in even more innocent blood? The even-handed, old-fashioned school of journalism with cautionary words like ‘alleged’ and ‘claimed’ and ‘could not be independently verified’ etc is becoming sadly extinct.

As a South Asian journalist, one grew up admiring the probity and diligence of Western journalists. There was a time when the BBC in all the South Asian languages would be way ahead of domestic news services in credibility and speed. Z.A. Bhutto’s execution and Indira Gandhi’s assassination, for example, were first announced on BBC and only later reported by the national media outfits. Mark Tully and Satish Jacob were household names during the Punjab turmoil. Dalit leader Ram Vilas Paswan told me that he respected Western journalists more because they were honest in describing the injustices of the Hindu caste system. Indian journalists, he said, were mealy-mouthed about caste inequities.

Tully’s dispatches from New Delhi were broadcast in Hindi, Urdu, Bangla, Sinhalese etc. They found audiences in remote villages. One day, Mark Fineman of the Financial Times was travelling with me to a village near Mathura where a Jat girl and two Jatav boys were lynched by a kangaroo court in a typical love story that went tragically wrong. Fineman decided to flash his press card at the village octroi to get past the barrier speedily. The village boys took one look at him and said: “Oh! Mark Tully! You may go.” Incensed, Fineman promptly thrust a five-rupee note into the toll collector’s hand — more than twice the octroi fees and shouted: “No, I’m not Mark Tully. I can never be.”

Likewise, there cannot be another Robert Fisk who died in 2020. However, John Pilger and a few others of the old school are still around to give us a sliver of hope about an otherwise fatally stricken profession.

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Will dollar dominance give way to a multipolar system of currencies?

From The Economist

In the wake of an invasion that drew international condemnation, Russian officials panicked that their dollar-denominated assets within America’s reach were at risk of abrupt confiscation, sending them scrambling for alternatives. The invasion in question did not take place in 2022, or even 2014, but in 1956, when Soviet tanks rolled into Hungary. The event is often regarded as one of the factors that helped kick-start the eurodollar market—a network of dollar-denominated deposits held outside America and usually beyond the direct reach of its banking regulators.

The irony is that the desire to keep dollars outside America only reinforced the greenback’s heft. As of September, banks based outside the country reported around $17trn in dollar liabilities, twice as much as the equivalent for all the other currencies in the world combined. Although eurodollar deposits are beyond Uncle Sam’s direct control, America can still block a target’s access to the dollar system by making transacting with them illegal, as its latest measures against Russia have done.

This fresh outbreak of financial conflict has raised the question of whether the dollar’s dominance has been tarnished, and whether a multipolar currency system will rise instead, with the Chinese yuan playing a bigger role. To understand what the future might look like, it is worth considering how the dollar’s role has evolved over the past two decades. Its supremacy reflects more than the fact that America’s economy is large and its government powerful. The liquidity, flexibility and the reliability of the system have helped, too, and are likely to help sustain its global role. In the few areas where the dollar has lost ground, the characteristics that made it king are still being sought out by holders and users—and do not favour the yuan.

Eurodollar deposits illustrate the greenback’s role as a global store of value. But that is not the only thing that makes the dollar a truly international currency. Its role as a unit of account, in the invoicing of the majority of global trade, may be its most overwhelming area of dominance. According to research published by the imf in 2020, over half of non-American and non-eu exports are denominated in dollars. In Asian emerging markets and Latin America the share rises to roughly 75% and almost 100%, respectively. Barring a modest increase in euro invoicing by some European countries that are not part of the currency union, these figures have changed little in the past two decades.

Another pillar of the dollar’s dominance is its role in cross-border payments, as a medium of exchange. A lack of natural liquidity for smaller currency pairs means that it often acts as a vehicle currency. A Uruguayan importer might pay a Bangladeshi exporter by changing her peso into dollars, and changing those dollars into taka, rather than converting the currencies directly.

So far there has been little shift away from the greenback: in February only one transaction in every five registered by the swift messaging system did not have a dollar leg, a figure that has barely changed over the past half-decade. But a drift away is not impossible. Smaller currency pairs could become more liquid, reducing the need for an intermediary. Eswar Prasad of Cornell University argues convincingly that alternative payment networks, like China’s Cross-Border Interbank Payment System, might undermine the greenback’s role. He also suggests that greater use of digital currencies will eventually reduce the need for the dollar. Those developed by central banks in particular could facilitate a direct link between national payment systems.

Perhaps the best example in global finance of an area in which the dollar is genuinely and measurably losing ground is central banks’ foreign-exchange reserves. Research published in March by Barry Eichengreen, an economic historian at the University of California, Berkeley, shows how the dollar’s presence in central-bank reserves has declined. Its share slipped from 71% of global reserves in 1999 to 59% in 2021. The phenomenon is widespread across a variety of central banks, and cannot be explained away by movements in exchange rates.

The findings reveal something compelling about the dollar’s new competitors. The greenback’s lost share has largely translated into a bigger share for what Mr Eichengreen calls “non-traditional” reserve currencies. The yuan makes up only a quarter of this group’s share in global reserves. The Australian and Canadian dollars, by comparison, account for 43% of it. And the currencies of Denmark, Norway, South Korea and Sweden make up another 23%. The things that unite those disparate smaller currencies are clear: all are floating and issued by countries with relatively or completely open capital accounts and governed by reliable political systems. The yuan, by contrast, ticks none of those boxes. “Every reserve currency in history has been a leading democracy with checks and balances,” says Mr Eichengreen.
Battle royal

Though the discussion of whether the dollar might be supplanted by the yuan captures the zeitgeist of great-power competition, the reality is more prosaic. Capital markets in countries with predictable legal systems and convertible currencies have deepened, and many offer better risk-adjusted returns than Treasuries. That has allowed reserve managers to diversify without compromising on the tenets that make reserve currencies dependable.

Mr Eichengreen’s research also speaks to a plain truth with a broader application: pure economic heft is not nearly enough to build an international currency system. Even where the dollar’s dominance looks most like it is being chipped away, the appetite for the yuan to take even a modest share of its place looks limited. Whether the greenback retains its paramount role in the international monetary system or not, the holders and users of global currencies will continue to prize liquidity, flexibility and reliability. Not every currency can provide them. 

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