Not a heron: the Eurasian Economic Union should ‘stand on two legs’

By Evgeny Vinokurov, Director of the Centre for Integration Studies at the Eurasian Development Bank, member of the IIASA-led project, Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space

An Italian nursery riddle goes: “Why does the heron stand on one leg? Because if it takes away the second leg, it will fall down!” An ornithologist will tell you that herons have incredibly strong legs. The EAEU, consisting of Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia is not a heron – it does need to stand firmly on two legs. In this case, one leg is the European Union, and the other leg is the People’s Republic of China. An economist will tell you that the strength of “economic legs” underpinning the countries which make up the Eurasian Economic Union (EAEU) can be described, at best, as fair to middling: the heavy reliance on oil and gas is not particularly wholesome. That is why Russia and its EAEU partners need to establish close economic ties with both the EU and China.

© Galushko Sergey | Shutterstock

Both partners are critically important for the EAEU. The EU remains its largest trade partner: in 2016 it accounted for 50% of total exports from, and 41% of total imports to the Eurasian Union. EAEU member states are interested in expanding the inflow of European investment capital, transfer of EU technologies, and stable EU demand for energy. The EAEU, in turn, is the third largest EU trade partner (after the US and China); accordingly, the EU may be interested in liberalization of trade with the EAEU (establishment of a free trade agreement), reduction of non-tariff barriers in EAEU member states (with a view to increase EU exports), and stability of EAEU power supplies.

At the same time, the EAEU’s “turn to the East” is slowly gaining momentum: Asia-Pacific Economic Cooperation (APEC) countries,first and foremost, China and Association of Southeast Asian Nations  (ASEAN) countries, are beginning to overtake the EU. By the end of 2016, the Eurasian Union had imported 1.5% more goods from APEC countries (42.3% of total imports, mostly from China, Korea, and ASEAN countries) than it did from EU countries. It is also important for EU investors to understand that they are exposed to an ever-increasing risk of losing EAEU markets due to the inflow of capital from the leading Asian economies.

These matters have been subjected to rigorous applied analysis in Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space, a project initiated by IIASA in 2014. It advanced an independent dialogue platform to facilitate interaction between representatives of supranational bodies, expert and business communities of the two unions. The project is designed to help its European and Eurasian participants find common ground with respect to a possible inter-union trade and economic agreement.

According to project publications , it is advisable to reach a comprehensive agreement covering a much broader range of partnership domains than that associated with a standard free trade area. According to the latest calculations by European and Russian experts, an EU-EAEU free trade agreement would produce a positive impact. However, experts from the Information and Forschung (IFO) institute in Munich point out that EAEU agriculture and automotive industry may suffer heavy losses. This demonstrates that it is necessary to work out a quite structurally complex solution offering asymmetric advantages to the two sides.

Relations with China display completely different patterns. Two following “tracks” are especially important.

The first relates to the ongoing negotiations on a non-preferential agreement on trade and economic cooperation between the EAEU and China, envisaging reciprocal minimization of barriers in customs regulations and the financial sector, and intensification of investment cooperation. Talks have already been underway for one year, and are expected to continue for another year or two.

The second track deals with realization of the One Belt One Road  initiative. It involves implementation of large-scale joint infrastructure projects, primarily in transportation.  EAEU’s participation in the One Belt One Road initiative is very promising for its member states, especially for Russia and Kazakhstan, which need to remove infrastructural limitations inhibiting railroad carriage of containerized cargoes.  The EAEU continues to face the issue of insufficient investment capital allocation to container logistical hubs. Kazakhstan will also need to eliminate bottlenecks in its transportation and logistics infrastructure, primarily by building modern container terminals. These are but several of the numerous problems facing the EAEU.

We are looking at One Belt One Road in the broad Greater Eurasia context. Higher efficiency of Greater Eurasian land transportation corridors could enhance trade and generate numerous industrial opportunities. This is particularly relevant for landlocked countries and regions (all Central Asian countries, Russian Urals and Western Siberia).

Russia and its EAEU partners need to establish close economic cooperation ties with both the European Union and China. The EAEU will have to learn to balance between those two poles, making ample use of economic vistas presented by the tripartite cooperation setup, and “capitalize on contradictions.” If the EAEU manages to reach this overarching goal, its foreign economic policy would be successful.

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Myths are not true… or are they?

By Gerid Hager, IIASA Ecosystems Services and Management Program

©Gerid Hager | IIASA

In July, Miranda Lakerveld, a music drama artist and founder of the World Opera Lab, visited IIASA to run two storytelling workshops with young actors in civil society and youth policy, as well as with YSSP students and IIASA staff. Miranda first came to IIASA in September 2016 as part of the Citizen Artist Incubator.

After the workshops in July, Miranda and I sat down for a chat.

Gerid: Miranda, in the workshop you shared how you approach storytelling in your artistic practice. You said: “I’m looking for moments that feel true, I pick them up and weave them together into new stories.” Then, a participant exclaimed: “Stories are not true!” It seems a contradiction, but possibly this is the very nature of stories. They might not be true, giving accurate accounts of past events, but they carry truths in them, which we so often can’t capture otherwise. You’ve been working with myths for a long time: What value do you see in them today, as we’re trying to navigate between “alternative facts” and often incomprehensible scientific writing?

Miranda: Yes, this was a short reflection on the methodology I have developed and applied in many different contexts over the last eight years. It uses comparative mythology as a starting point. The aim of the method is to create a meaningful creative exchange that can involve people from all walks of life. Myths are examined from the perspectives of different cultures, and through this intercultural lens, we find symbols and archetypes that resonate as ‘true across cultures.

The ‘post-truth’ era made us extra aware of the divides between communities and I believe such an embodied practice of mythology can be an inspiring place for people to meet. I think the renunciation of facts and scientific insight is a symptom of people feeling left out and angry. Using myths and stories can be one way to bring people together and find common truths.

This workshop was part of the Systems Thinking for Transformation project and we wanted to search for “systems stories” in ancient narratives. We arrived at a very personal story of endurance and adaptation, pondered the power of great nature and cyclical behavior on a very large scale, and discussed economic justice and its relation to sustainable development. How does one story from Greek mythology – the Hymn to Demeter – lead to such diverse considerations?

The development of myths and folk stories has very specific characteristics, which I like to compare to ecosystems. Symbols and characters create organisms in constant interaction with their environments. Through time, myths change, in fertile circumstances the stories flourish, and layers of meaning are added.

Participants relate the Greek myth to myths from their own cultural backgrounds, and then to their personal histories. Interestingly, in the encounter between the myth and a group, some deeply felt preoccupations spring up from under the surface. I am still not sure how this happens. It probably has to do with a combination of embodiment of the characters, the richness of the archetypes, and the mise en scène, which represents the people inside the larger system.

Majnun & Leyla- World Opera Lab 2016- photo by Fouad Lakbir

One integral part of systems thinking is to be able to consider and explore multiple perspectives on a problem or situation. How does the embodiment exercise come in to this?

Slipping into different characters from the story is an essential part of the process. It unlocks the creative imagination and is related to action in society. The Greek root-word for drama is “dran”, which means “to act”. Through embodiment we can take the position of another character or force in the system. The performing arts make this possible: we can take on different roles, understand new parts, and at the same time experience the whole system from a new perspective.

There are other examples of how art and science meet through storytelling. A researcher at Berkeley University teamed up with story artists from PIXAR to help researchers create better stories about their research. What interests you in working with scientists and what is the role of storytelling?

I think the collaboration between art and science could go far beyond creating stories about research. We see very different approaches of creating and transmitting knowledge. So we have to deal with this tension but an inclusive society also means we should value these differences. The academic world has created an intricate system of validating knowledge leading to very specialized fields of research. Artists work on larger ideas, but the output cannot necessarily be validated. We are trying to grasp truths about the same river, but we work from opposite river banks. I think we can build bridges and increase our ability for insight and action by telling stories together.

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Cornelius Hirsch: Digging into foreign investment in agriculture

By Parul Tewari, IIASA Science Communication Fellow 2017

Two things are distinctly noticeable when you meet Cornelius Hirsch—a cheerful smile that rarely leaves his face and the spark in his eyes as he talks about issues close to his heart. The range is quite broad though—from politics and economics to electronic music.

Cornelius Hirsch

After finishing high school, Hirsch decided to travel and explore the world. This paid off quite well. It was during his travels, encompassing Hong Kong, New Zealand, and California, that Hirsch started taking a keen interest in economic and political systems. This sparked his curiosity and helped him decide that he wanted to take up economics for higher studies. Therefore, after completing his masters in agricultural economics, Hirsch applied for a position as a research associate at the Austrian Institute of Economic Research and enrolled in the PhD-program of the Vienna University of Economics and Business to study trade, globalization, and its impact on rural areas. Currently, he is looking at subsidies and tariffs for farmers and the agricultural sector at a global scale.

As part of the 2017 Young Scientists Summer Program at IIASA, Hirsch is digging a little deeper to analyze how foreign direct investments (FDI) in agricultural land operate. “Since 2000, the number of foreign land acquisitions have been growing—governmental or private players buy a lot of land in different countries to produce crops. I was interested in knowing why there are so many of these hotspots in the world— sub-Saharan Africa, Papua New Guinea, Indonesia—why are people investing in these areas?,” says Hirsch.

Farming in one of the large agricultural areas in Indonesia ©CIFOR I Flickr

Increased food demand from a growing world population is leading to an increased rate of investment in agriculture in regions with large stretches of fertile land. That these regions are largely rain-fed make them even more attractive for investors as they save the cost of expensive irrigation services. In fact, Hirsch argues that “the term land-grabbing is misleading. It should actually be water-grabbing as water is the foremost deciding factor—even more important than simply land abundance.”

Some researchers have found an interesting contrast between FDI in traditional sectors, such as manufacturing, and the ones in agricultural land. While investors in the former look for stable institutions and good governmental efficiency, FDI in land deals seems to target regions with less stable institutions. This positive relationship between corruption and FDI is completely counterintuitive. Hirsch says that one reason could be that “sometimes weaker institutions are easier to get through when it comes to such vast amount of lands. A lot of times these deals and contracts are oral and have no written proof—the contracts are not transparent anyway.”

For example in South Sudan, the land and soil conditions seem to be so good that investors aren’t deterred despite conflicts due to corrupt practices or inefficient government agencies.

One of the indigenous communities in Madagascar, a place which is vulnerable to land acquisitions © IamNotUnique I Flickr

One area that often goes unnoticed is the violation of land rights of indigenous communities. If a government body decides to sell land or give out production licenses to investors for leasing the land without consulting the actual community, it is only much later that the affected community finds out that their land has been given away. Left with no land and hence no source of livelihood, these communities are forced to migrate to urban areas.

A strain of concern enters his voice as Hirsch talks about the impact. “Land as big as two times the area of Ecuador has been sold off in the past—but it accounts for a tiny percentage of the global production area.” With rising incomes and greater consumption of meat, a lot of land is used to produce animal feed crops. “This is a very inefficient way of using land,” he says.

During the summer program at IIASA, Hirsch is generating data that will help him look at these deals in detail and analyze the main factors that are taken into consideration before finalizing a land deal. At the moment he is only able to give an overview of land-grabbing at the global level. With more data on the location of the deals he can look at the factors that influence these decisions in the first place such as the proximity between the two countries involved in agricultural investments and the size of their economies.

While there is always huge media coverage when a scandal about these land acquisitions comes out in the open, Hirsch seems determined to dig deeper and uncover the dynamics involved.

About the researcher
Cornelius Hirsch is a research associate at the Austrian Institute of Economics and Research (WIFO). At IIASA he is working under the supervision of Tamas Krisztin and Linda See in the Ecosystems Services and Management Program (ESM).

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Do smokers know what they are doing to their life expectancy?

By Valeria Bordone, University of Munich Department of Sociology and IIASA World Population Program

Everyone, consciously or unconsciously, formulates in their own mind a subjective survival probability– i.e., an estimate of how long they are going to live. This will affect decisions in different spheres of later life: retirement, investments, and healthy behaviors. Moreover, previous research has found that subjective survival probability is a good predictor of mortality. In fact, on average, people somehow know better than standard health measures the effect that their characteristics and their behavior have on life expectancy. It is however plausible not only to expect differences within the population in terms of survival, but also in the ability to predict their own survival.

(cc) roujo | Flickr

In a recent publication with Bruno Arpino from the University Pompeu Fabra and Sergei Scherbov from the Wittgenstein Centre (IIASA, VID/ÖAW, WU)., we presented for the first time joint analyses of the effect of smoking behavior and education on subjective survival probabilities and on the ability of survey respondents to predict their real survival, using longitudinal data on people aged 50-89 years old in the USA drawn from the Health and Retirement Study.

We found that, consistent with real mortality, smokers report the lowest subjective survival probabilities. Similarly, less educated people report lower subjective survival probabilities than higher education people. This is in line with the well-known positive correlation between education and life expectancy. However, despite being aware of their lower life expectancy as compared to non-smokers and past smokers, people currently smoking at the time of the survey tended to overestimate their survival probabilities. This holds especially for less educated people.

This graph shows the probability of correctly estimating the own survival probabilities with 95% confidence intervals, by smoking behavior and educational attainment. ©Arpino B, Bordone V, & Scherbov S (2017)

Our study suggests that in fact, education also plays an important role in shaping people’s ability to estimate their own survival probability. Whether or not they smoke, we found that more highly educated people are more likely to correctly predict their survival probabilities.

In view of the high proportion of the American population that consists of current or past smokers, a percentage that reached 77% in some male cohorts, our findings emphasize the need to disseminate more information about risks of smoking, specifically targeting people with less education.

By showing that smoking and education play together in determining how well people can assess the own survival potential, this study extends our understanding of the variability of subjective survival probabilities within a population. The fact that sub-groups within the population differently incorporate the effects of smoking into their assessment of survival probabilities may have important consequences for example on when people exit the labor market or whether they buy a life insurance, as individuals are likely to base their decisions also on their longevity expectations.

Policymakers can therefore draw some relevant conclusions from our study to design policies concerned with health and survivorship in later life. Despite the various anti-smoking campaigns and smoking restrictions, smokers may not be fully aware of the risks of smoking. In particular, educational groups seem to be differently exposed to the information that is disseminated to the public. Our study suggests that there is a need to target such information to less educated people, who are the most likely to underestimate the risks of smoking. Providing information on how survival probabilities vary by smoking behavior may not only reduce smoking but it may also increase individuals’ ability to assess their own survival.

(cc) Quinn Dombrowski | Flickr

Arpino B, Bordone V, & Scherbov S (2017). Smoking, Education and the Ability to Predict Own Survival Probabilities: An Observational Study on US Data. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-17-012 []

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Disappearing Act: Bolivia’s second largest lake dries up

By Parul Tewari, IIASA Science Communication Fellow 2017

In 2016, Bolivia saw its worst drought in nearly 30 years. While the city of La Paz faced an acute water shortage with no piped water in some parts, the agricultural sector was hit the hardest. According to The Agricultural Chamber of the East, the region suffered a loss of almost 50% of total produce. Animal carcasses lay scattered in plain sight in the valleys, where they had died looking for watering holes.

Lake Poopo (Bolivia) before it dried up © David Almeida I Flickr

One of the most dramatic results of this catastrophic drought was that Lake Poopo, (pronounced po-po) Bolivia’s second largest lake was drained of every drop of water. Located at a height of approximately 1127 meters, and covering an area of 1,000 square kilometers, what remains of it now resembles a desert more than a lake. This event forced the fishing community of Uru Uru, which depended on the lake, to either migrate to other lakes or look for alternate livelihood options.

Lake Poopo is located in the central South American Altiplano, one of the largest high plateaus in the world (Bolivia’s largest lake, Titicaca, is located in the north of the region). Due to its unique topography, the highland faces extreme climatic conditions, which are responsible for difficult lives as well as widespread poverty among the people who live there.

While Titicaca is over 100 meters deep, Poopo had a depth of less than three meters. Combined with a high rate of evapotranspiration, erratic rainfall, and limited flow of water from the Desaguadero River, Poopo was in a precarious position even during the best of times. Whatever little water flowed in from the river is further depleted by intensive irrigation activities at the south of Lake Titicaca before the water makes it way down to Poopo.

Sattelite images of Lake Poopo

Changes in water levels of Lake Poopo over 30 years © U.S. Geological Survey, Associated Press

The lake’s existence had been threatened several times in the past. However, the 2016 drought was one of the most devastating ones. According to the Defense Ministry of Bolivia, early this year the lake started recovering after several days of heavy rain, restoring as much as 70% of the water. However, since the lake is a part of a very fragile ecosystem, there have been some irreversible changes to the flora and fauna in addition to the losses to the fishing communities living around the lake.

Charting a better future

Claudia Canedo, a participant of the 2017 Young Scientists Summer Program (YSSP) at IIASA, is exploring the impact of droughts and the risk on agricultural production in the light of this event, after which Bolivia declared a state of water emergency. Canedo was born and raised in the city of La Paz and experienced water shortages while growing up close to the Altiplano. This motivated her to investigate a sustainable solution for water availability in the region. With the results of her study she is hoping to ensure that such a situation doesn’t arise again in the Altiplano – that other communities directly dependent on ecosystem services, like that of Lake Poopo, do not have to lose everything because of an extreme weather event.

For a region where more than half the population is dependent on agriculture for their livelihoods, droughts serve as a major setback to the national economy. “It is not just one factor that led to the drought, though. There were different factors that contributed to the drying up of the lake and also contribute to the agricultural distress,” she says.

“The southern Altiplano lies in an arid zone and receives low precipitation due to its proximity to the Atacama Desert. Poor soil quality (high saline content and lack of nutrients) makes it unsuitable for most crops, except quinoa and potato in some areas,” adds Canedo. Residents also lack the knowledge and the monetary resources to invest in newer technology, which could possibly lead to better water management.

A woman from one of the drought affected communities in Bolivia © EU – Photo credits: EC/ECHO/Laurence Bardon I Flickr

One of the most critical factors in the recent drought was the El Nino- Southern Oscillation, the warming of the sea temperatures in the Pacific Ocean, which in turn carries the warmer oceanic winds and lowers the rate of precipitation in the highland leading to increased evapotranspiration. In 2015 and 2016, the losses due to this phenomenon were devastating for agriculture in the Altiplano, says Canedo.

In her quest to find solutions, the biggest challenge is the lack of recorded data from local weather stations for the past years. Although satellite data is available, it is too generic in nature to do a local analysis. Therefore combining ground and satellite data could enhance the present knowledge and provide consistent results of the climate and vegetation variability. If done successfully, Canedo hopes to identify a correlation between precipitation and vegetation. With this information, she can improve climate forecasting that could help the local people adapt to droughts powerful enough to turn their lives upside down.

With weather forecasts and early warning systems for extreme weather events like droughts, farmers would know what to expect and would be able to plant resilient varieties of crops. This might not earn them the same profits as in a normal year, but would not result in a failed crop. Claudia aims to come up with a drought index useful for drought monitoring and early warning, which will integrate short-term and long-term meteorological predictions.

Perhaps, in the future, with this newfound knowledge, the price for extreme weather events won’t be paid in terms of lost ecosystems like that of Lake Poopo, robbing people of their lives and livelihoods.

About the Researcher

Claudia Canedo is a participant in the 2017 IIASA YSSP. She is pursuing a doctoral program in water resources engineering at Lund University, Sweden. She is interested in studying the hydrological and climatological conditions over small basins in the South American highlands. The aim of her research is to define water resources availability and find strategies for sustainable water management in the semi-arid region.

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.