Quickthink

Oh dear. An appellate court in Bahrain has come down with its decision on charges against 18 Shiite doctors who were arrested during the recent unrest.  First the good news. The court dismissed charges against 9 of them and reduced the sentences imposed on the other 9. Now the bad news. The court did not seem bothered by the idea that the doctors were arrested while treating victims of violence during the unrest. Nor was there a response to the allegations by most of the doctors that they were tortured while in custody.  NYT reports.

 (A) statement, from the International Affairs Authority, said the doctors were not convicted for treating patients, but “primarily for their involvement in politicizing their profession, breaching medical ethics,” and “their call and involvement in the overthrow of the monarchy.”

Hmmm … so just what were the 9 doctors actually doing? If they were doing something bad (like assaulting security officers or refusing access to investigators) the above statement would probably have said so. But the whole thing remains suspiciously murky. One of the doctors said

“It’s a cocktail of baseless sentences,” Dr. Dhaif said in a telephone interview after the verdict. “They’ve reduced the sentences based on international pressure. We were arrested arbitrarily, and we were tortured. It’s all politicized, and based on revenge.”

My take - there is no sense trying to understand this decision from a strictly legal perspective. It reflects an attempted political balancing act - one the one hand, keeping the US just happy enough and on the other hand keeping the Shiites just frightened enough so that the monarchy can maintain its political control. Control is the key word here. Not absolute control, but control of the pace of reform events so that it does they do not endanger authority.

Is it right? Well, human rights and rule of law advocates have room to complain. Probably the more important question is, will it work? My guess is that it will — but only in the short run. Still, let’s hope for the best. And what would that be? That the parties can still somehow find a way back to dialogue rather than confrontation as the tool of choice for dealing with the crisis. And yes, Bahrain is still in crisis.

I just saw this from Bits of Freedom via Hacker News.

The Next Installment on the SOPA/PIPA Melodrama

It is touching that Senator Marco Rubio suddenly sees the light about PIPA. Unfortunately, in backing away from the bill that he co-sponsored, Rubio had to admit that he simply didn’t understand what he was doing. From HuffPo (link above)

In a frank statement posted to his Facebook page on Wednesday, Rubio hinted at a Beltway truth that many other wavering Protect IP and SOPA supporters have been hesitant to admit: More than one lawmaker signed on to the legislation without understanding its technical workings and potential problems, believing it to be an uncontroversial, bipartisan bill that would support American industries.  (emphasis added)

I would add one other and perhaps larger embarrassment. Rubio et al did not bother to ask whether the increased protections for IP rights that are sought by Hollywood et al are needed. Instead, I would guess that Rubio — a senator from Florida, where Disney holds sway — took Disney at its word.

The blackout protest has brought out that Disney, et al should not have been trusted. After the blackout, at least thirteen other senators are now racing to the microphones to announce that they are also anti-PIPA.

Any lessons to be learned out of this legislative fiasco? I can think of two.

1. Let’s call a spade a spade - Greater protection against internet piracy (beyond the DMCA) is not needed. This was a power grab by Hollywood and a few others. Problems with piracy are the result of the business plans of IP rights holders — namely to maintain content scarcity and pump up prices rather than offer content more broadly for less. In short, it is time for Hollywood et al to wake up and smell the coffee. Embrace the enhanced capacities offered by technology rather than desperately cling to the past.

2.  For the time being at least, the US Congress is dominated by special interests. Larry Lessig and others have been arguing for years now that this is a huge governance problem and they were right from day 1. US citizens need a tool to make legislators more accountable for what they are doing on the hill. If you want a more direct statement about the nature of the problem, check out what Seth Godin has to say. Ouch!

I love how this potential disaster has turned into a great story, with very important learning opportunities. And I love how web based businesses are starting to realize that they need to impact the debate about policy. We will see more on this, as there is a lot of work to do (1) to educate the public and (2) to build new tools and networks with the goal of leading policy discussion rather than reacting to crisis (like what happened here).

FOLLOW -  A further reflection on Mr. Rubio co-sponsoring PIPA without studying it. We all do such things. What do I mean? I mean that we all act based on trust. We simply cannot be experts on all things, especially these days. So I do not begrudge Mr. Rubio trusting somebody. I do get a bit agitated, however, about his trusting lobbyists for Disney et al in this setting. Was he so completely unaware of what was behind their power play? Apparently, he was, and like a puppy dog in the long grass, he just rushed in … even where angels fear to tread. I also get a bit agitated about the lack of transparency in the relationships behind the scenes. Only now — after SOPA and PIPA have been thrashed about for months — do we see how easy it was to get these ideas on the legislative agenda and how challenging it is to get them off.

2d FOLLOW -  Jaron Lanier offers a different take on all this. He writes

The adulation of “free content” inevitably meant that “advertising” would become the biggest business in the open part of the information economy.

That is, advertising agencies rake in the money instead of content producers. Here is his clincher

We in Silicon Valley undermined copyright to make commerce become more about services instead of content — more about our code instead of their files. The inevitable endgame was always that we would lose control of our own personal content, our own files. We haven’t just weakened Hollywood and old-fashioned publishers. We’ve weakened ourselves.

Hmm … I think this is bullshit. I was always pretty weak. Still, I defend Mr. Lanier’s right to confess his own weakness. I just would not pay him for the privilege of reading about it. In turn, that would cut off a potential dialogue, and hence we would have less potential for exchange.  Less exchange means less chance for learning. Thus, the debate should not be about paying for access to content. That is a non-starter. It is about expanding opportunities from exchanges. Of course advertising is the first service that reaps a reward from this - after all, it is the crudest form of exchange facilitator.

3rd FOLLOW -  Over at Wired, Julian Sanchez from the Cato Institute looks for evidence that piracy is a major problem - and finds a lack of evidence. He concludes

In short, piracy is certainly one problem in a world filled with problems. But politicians and journalists seem to have been persuaded to take it largely on faith that it’s a uniquely dire and pressing problem that demands dramatic remedies with little time for deliberation. On the data available so far, though, reports of the death of the industry seem much exaggerated.

4th FOLLOW -  Ryan lawler at Giga offers more on how the Hollywood business model encourages piracy.

5th FOLLOW -  Jon Stewart has great fun with the chit chat in Washington.

6th FOLLOW -  As usual, Fred Wilson has some reasonable suggestions to get beyond the current messy situation.

Some years ago when I was still in that line of work, I believed that it would be possible to sustain a long term and genuine global legal reform agenda. The idea was simple. Strengthen incentives for the key sectors of legal communities around the world to achieve higher professional standards and step back. What are those sectors? Again, no rocket science or brain surgery is needed. They are (1) legal education, (2) law making, (3) dispute resolution, (4) private legal representation services, and (5) appropriate rights advocacy.

In fact, that agenda proved to be way, way too ambitious. Why? The main problem lies with the legal profession as we understand it these days. And here I do not refer to the legal profession within countries in transition. I refer to legal experts haling from so called sophisticated legal traditions of the west. Sophisticated or not, we have not led the way to achieve legal reform. Indeed, we have not even demanded such a thing other than in “technical aspects”.  In fragmented bits and pieces. It is a tragedy.

Case in point. Some years ago, Dubai had every opportunity and incentive to pursue a grand legal reform strategy to sustain its economic development aspirations. They had the money. They had access to any and all expertise that they desired. They had sophisticated investors and legal residents demanding legal protections. And they did not produce meaningful legal reform even as it touches on core areas. Why do I say that? Among other things, consider this quote from an article today in NYT

“The rules of the (real estate investment) game are definitely opaque here,” said an investor who has bought several properties in Dubai and who insisted on anonymity because of talks with developers and regulators. “In the United States, I would know my legal position much more clearly and could take actions if necessary.”

Here is the link to the full story. It is astounding. A legal jurisdiction that prided itself on attracting huge flows of investment in real estate never bothered to develop an adequate (let alone sophisticated) legal regime to regulate the rights of the parties involved. And BTW, this does not even touch upon the disastrous topic of bankruptcy law reform. I have posted about that before. Here is a link to my post on problems in the judiciary dealing with debt restructuring. And perhaps more alarming, the sloppy manner of recording the transaction flow.

What is going on? Very simple. The Dubai legal community never woke up to the idea that investors’ rights should be taken seriously. Instead, law makers allowed the interests of local developers to dominate. Short sighted. Of course. But predictable because again, Dubai did not take legal reform seriously. And, I would argue it still does not. It is window dressing instead of a core value. And did western legal advisers complain, advise their clients to stay away or otherwise attempt to lobby for faster reform? If so, such efforts never made it onto the radar screen. Huge amounts of money rushed in where angels feared to tread.

Is Dubai the exception?  No. And that scares me a bit given the volume of capital flow around the world these days. Forget Russian legal reform. But is anyone thinking about Chinese legal reform? Or do we live and die by the modern equivalent of the golden rule, “He who has the gold (for the time being), rules.”

NYT ran a fascinating article today about an assistance project in Kenya. Here is the link. The story is nice, because it showcases the commitment of Jeffrey Sachs to doing good work, and because his good work is having results in a small village called Sauri. But more fascinating still are the learning strategies that might grow out of this.

One might recall that we cannot learn without plugging our actions into a story line. And that the story line has to build towards a positive ending. If we do not believe in the ending, we give up. Jeff Sachs has produced a success story. He has been able to reverse the poverty for a group of people. But the naysayers ask, “Is it scalable?”  Wrong question. Of course it can be duplicated. And as we engage in duplicating the project, we will learn how to do it better — and expand on the success. Why? Because we are confident that it works (it gives a happy ending). The scaling will be learned as we go — not something we bring to the story at the beginning.

The bogey man in the closet here is corruption and poor governance. The naysayers want to attack corruption and poor governance directly, arguing that these are the things that  hold countries back. Yet after quite a long time, we have no happy endings in projects that directly combat corruption and poor governance. I would argue that we should therefore seek to contain the negative effects of these things (keep them from interfering), while building more projects, like the Sauri project that work.

Rule of law advocates take note. There is a hint of a strategy here for better legal assistance projects as defensive tools (against certain effects of corruption and poor governance) rather than social engineering tools.

This is not our problem. Keep saying it. It has nothing to do with us. A nice lady, Ms Mulyasari, wrote emails complaining about the mis-diagnosis that she received at a hospital in Indonesia, and ended up in jail for “defamation”. Here is the link to the story.

In fact, we should ignore the story, because that sort of thing only happens in other places. And anyway, we are not responsible for the results of Indonensian law. Keep saying it. But also keep in mind that when we shrug our shoulders and turn away from stories like this, we should also accept that we have little or no idea of how our own legal systems are different.

I used to argue that one reason Estonia should invest in developing its judicial training system was to be ready for a crisis. What kind of crisis? That was the problem. It was difficult to predict. So its training system had to be anchored in a robust and annually updated judicial training needs assessment. One of the challenges we faced was to build the institutional capacity to handle the assessment process. That capacity does not just grow on trees.

An analogy might bring this into better focus. Before you head out for a long excursion in your car, you usually hand the car over to a mechanic to do a maintenance check to be sure you don’t break down. The more rigorous the planned trip, the more extensive the check up. And the more regular the check ups, the more effective they tend to be. Fortunately, mechanics are usually ready and able to do this on demand. Unfortunately, most legal systems have no established career path for judicial training needs assessors, and one cannot fix a judiciary as one might fix a car. So the institutional strengthening work cannot be done “on demand”. The system to handle it must be built up over time.

This article from NYT that questions the capacity of the Dubai judiciary to handle Dubai’s current financial crisis illustrtes my point (and Heather Timmons deserves credit for digging into the story). One did not have to be a genius some years ago to ask whether Dubai’s judges would be able to cope with a financial crisis where the debt instruments were shariah compliant. Why? Dubai long has had aspirations to be a regional financial centre. And the rapid growth of Islamic banking institutions that were issuing shariah compliant debt instruments was a key factor driving that ambition. Insuring that the judiciary could cope with such debt instruments was therefore a key aspect of meeting Dubai’s aspirations — especially in light of the huge amount of debt that was piling up.

As far as I know, Dubai did invest in developing its judicial training system. I used to hear about it when I was consulting in Bahrain, though I never had any connection with it. We may now find out whether that system is effective. Going back to my analogy, the car is already out on the highway. It would be reassuring to know that the brakes work.

FOLLOW - This quote from the article made me a bit nervous.

The decisions of the Dubai courts, which are controlled by the emirate’s ruling family, can be fickle, say lawyers in the region.

Most important, in order to bring a court case against a government-owned or government-run entity, a corporation or individual needs to get permission — from the government.

The risk section of the Nakheel prospectus offers scant guidance here, as well. “Judicial precedents in Dubai have no binding effect on subsequent decisions,” it says, and court decision in Dubai are “generally not recorded.”

Perhaps unnecessarily, the document adds: “These factors create greater judicial uncertainty.” (emphasis added)

Finally, I can’t help wondering why Ms Timmons did not ask Dr. Jamal Alsumaiti, Director General at the Dubai Judicial Institutefor his assessment rather than asking “lawyers in the region” and quoting from the Nakheel prospectus. Quoting Dr. Alsumaiti

… our vision and strategy (is) to implement the best judicial practices and reinforce the position of Dubai Judicial Institute as a regional center for excellence in judicial and legal studies.

Hmmm … a regional center for excellence? That is an interesting idea.

2d FOLLOW - Those who are interested to learn more about the potential difficulties in handling the shariah compliant debt instruments might take a look at Andrew Sorkin’s article. Another article, jointly written by Worth, Timmons and Thomas provides additional thoughts on the ongoing negotiations about debt restructuring. Brinkmanship indeed. 

3rd FOLLOW - Dave Leonhardt offers his analysis of the effects of the Dubai episode on global markets — in sum, the world can survive a default but perhaps we should get used to these types of “pops”.

Before the great crash, people didn’t think about foreclosure policy very much. Foreclosure was something that happened to someone else. But now —- well, things have changed. A lot of people (Nicolas Cage included) are sitting on a lot of debt that they cannot pay. Should policy makers come up with a way to help these people? I think so. But what to do?

Here is what the City of Philadelphia is doing (from NYT).

Under the rules adopted by Philadelphia’s primary civil court, no owner-occupied house may be foreclosed on and sold by the sheriff’s office before a “conciliation conference,” a face-to-face meeting between the homeowner and the lender aimed at striking a workable compromise. Every homeowner facing a default filing is furnished with counseling, and sometimes legal representation.

I liked this follow up sentence

In a nation confronting a still-gathering crisis of foreclosure, Philadelphia’s program has emerged as a model (emphasis added)

Two quićk points. First, we need more models and information sharing about models. Thank you NYT and Philadelphia! Second, for many years, Philadelphia’s civil courts (especially small claims courts) have put a high priority on conciliation and settlement. This mindset gives a lot of added value, as we can see here. Brilliant.

Iraq is about to enter a new phase. Don’t get me wrong. The sporadic violence is likely to continue. But now, the government has enough coherence to start thinking about economic development. And this, of course, means trying to attract foreign investment.

There are two potential paths Iraq may take. In the first, the government takes a passive stance, allowing larger business interests to do what they want. And what do they want? To leverage their way to riches. This has happened all over Eastern Europe and Russia. it produces a bumpy ride to normalcy, and creates a new class of oligarchs. In the second, Iraq disciplines larger players in the market to limit corruption, and abuse of dominant position. This requires political will, because it “shuffles the deck”. It also opens the door wider for young people to share the wealth.

Which is likely? Based on this NYT article, it appears that the Iraqi government would prefer to take the first path. This quote caught my eye

“We are after a gradual change from a centrally controlled economy to an open one.”

That is usually code for, “We don’t want to rock the boat.” Let’s see if they things change.

This quote from Doing Business caught my eye

For the first time since Doing Business started tracking reforms, a Sub-Saharan African economy, Rwanda, led the world in reforms.

There is an interesting trend emerging — some countries long seen as basket cases aspire to leave that category.