Broad Street Capital Group to Advise on $75 million financing for the Tier III Data Center Project

(London, UK – June 24, 2016) On this historic day of the “Brexit” referendum, Broad  Street Capital Group announced that it has been appointed as the exclusive financial adviser for for financing of a state-of-the-art data center in the Baltic States.  The proposed $100 million project, called AmberCore DC, will launch in 2017 and will be financed through a combination of owner and investor equity, coupled with senior debt to be provided by the UK Export Finance (UKEF). Lithuania_Page_1

CBRE of London and PACT Consulting Inc., based in Bethesda, Md., have been selected as the data center’s marketing consultants and will be responsible for introducing anchor clients to the project.

“We are delighted to serve as the financiers for this  project,” stated Alexander M. Gordin, Managing Director of Broad Street Capital Group. “With the worldwide explosion of cloud computing services, significant demand exists for quality data hosting facilities in emerging markets. Not only does the proposed project enjoy a strategic location and terrific connectivity, but it is also being developed by an experienced, highly reputable teleport operator and satellite services provider with a diverse international clientele. Despite strong geopolitical winds, which have slowed the project down over the last 24 months, the owners persevered and have remained completely committed to the project. “, said Gordin

“We aim to attract large European  and US-based corporate customers from the IT, oil & gas and financial sectors. who are interested in a professional Tier III certified data center facility strategically located in close proximity to some of the fasted growing emerging markets,” said Vitaliy Malashevskiy, Director of Ambercore DC and a co-owner of Satgate UAB, the project’s sponsor.

The AmberCore DC project will be the second high-tech facility in the Baltic States for the SatGate Group. It will be scalable up to 30MW of power and 5,000 racks, due to the modular design approach, which will utilize the latest cooling technologies to maximize the efficiency and minimize power consumption.

“This project will showcase the latest technological advances, and will open up a superb opportunity for UK and U.S. cooperation with the Baltic region countries,” Gordin added.

About Ambercore DC – a project company formed to develop a TIER III data center strategically located in the Baltics. To date, the project’s sponsors have invested over $6 million in property acquisition, design, engineering, development, certification and marketing of the project. The design has been certified TIER III by the Uptime institute. It is the only facility in Europe with proprietary access to an adjacent uplink/downlink teleport facility, which has been developed and is being operated by its parent company – Satgate UAB

Fi3E BadgeAbout Satgate UAB  – SatGate UAB is a leading satellite services provider, based in Lithuania. Operating a unique satellite teleport facility located near of Vilnius, SatGate provides a full range of satellite communication services in Europe, the Middle East and Central Asia to ISPs, telecoms, the oil and gas industry, and other corporate and private customers. SatGate integrates and manages turn-key communication solutions of any complexity. For more information, please visit http://www.satgate.net

WP_20130620_022About Broad Street Capital Group-Based in the World Trade Center’s Freedom Tower in New York City’s financial district, Broad Street Capital Group is an international private merchant bank, which since 1988 has served several foreign governments, multiple state-owned companies, as well as SMEs in emerging markets. The Firm focuses on arranging project financing in the $50-500 million range, providing political risk mitigation, export management services and cross-border market development advisory. Although the Firm has clients ranging from Bangladesh to Oklahoma, its primarily geographic focus is on the countries of Eastern and Central Europe and Central Asia.

The  firm works closely with all trade and development agencies of the U.S. Government and Export Credit Agencies of several European and North American countries.  Since its inception, Broad Street Capital Group has been involved in multiple high-profile cross-border transactions in IT/telecom, aerospace, healthcare,  energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory portfolio exceeds $675 million.  For more information, please visit www.broadstreetcap.com, or contact Rustem Tursynov at info@broadstreetcap.com

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U.S. Export Weakness Hampers Growth

Strong dollar and global economic strains undermine foreign trade in goods and services

Hopes for an American export boom are wilting under the weight of a strong dollar and global economic strains.

U.S. exports are on track to decline this year for the first time since the financial crisis, undermining a national push to boost shipments abroad. Through July, exports of goods and services were down 3.5% compared with the same period last year. New data released Tuesday by the Commerce Department showed that exports of U.S. goods sank a seasonally adjusted 3.2% in August to their lowest level in years.
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The weak trade performance is restraining overall economic growth, a sign of how troubles in China and other major economies are dinging the U.S. economy.

“Foreign demand remains the weakest part of the economy,” said Jim O’Sullivan, chief U.S. economist at consulting firm High Frequency Economics.
It didn’t seem that way in 2010, when President Barack Obama set a goal of doubling exports over five years. Some big cities took up the challenge, including Portland, Ore.

Facing a battered economy at home, Vanessa Keitges, president of Portland-based Columbia Green Technologies, lined up sales in Belgium and New Zealand. In Canada, she chased public-building projects and Wal-Marts. Within three years, one-quarter of the green-roofing company’s sales were outside the U.S.

But that proved to be a high-water mark for the company’s foreign ambitions. Ms. Keitges is now focusing on the strengthening domestic market for the company’s rooftop planters as weak growth abroad tempers demand and a strong dollar creates pricing problems.

Exports seemed a golden opportunity as Portland and the rest of the nation emerged from the 2007-09 recession. Foreign sales were a major contributor to U.S. economic growth in 2010 and 2011, outstripping past recoveries. Political leaders hoped selling goods and services abroad would offer a sustained boost to the job market at home.

But the dream of an export boom has faded.

As unemployment has declined, American consumers have reasserted their dominant role in driving economic growth. And a strong dollar and weakness overseas have helped turn international trade into a drain on overall economic growth in four of the past six quarters.

The Federal Reserve worries exports will be a persistent drag on the broader economy going forward. Fed Vice Chairman Stanley Fischer in August said it was “plausible to think that the rise in the dollar over the past year would restrain growth…through 2016 and perhaps into 2017.” If the Fed begins to raise short-term interest rates later this year, that could provide new fuel to push the dollar’s value even higher.

Exports of goods and services grew 80% from 2003 to 2008, but then expanded only 48% from 2009 to 2014, according to Census Bureau data.

A Commerce Department official described President Obama’s export-growth initiative as “catalytic and a success,” driving exports “despite strong global economic headwinds and macroeconomic factors outside our control.”

The administration is looking to spur trade growth through agreements such as the Trans-Pacific Partnership. Senior officials from around the world are meeting in Atlanta, trying to complete the expansive trade deal after talks stalled earlier this year.

It isn’t just the U.S. where exports have been a disappointment in recent years. Globally, growth in trade volume is set to trail the pace of economic growth for the third year in a row, and trade growth has been averaging just half its pre-financial crisis pace. In the immediate aftermath of the recession, confronted by weakness in the domestic economy, U.S. policy makers saw opportunity in global markets.

Following Mr. Obama’s lead, the Portland metro region in 2012 set its own goal to double its exports in five years. “This is how we fight for jobs in the next economy,” then-Portland Mayor Sam Adams declared. In the past year, Portland has quietly shelved that aim. The value of Portland-area exports actually declined slightly between 2012 and 2014, according to tallies from the Commerce Department and the Brookings Institution, a Washington think tank.

After Portland set its goal, economic conditions started to shift. The value of major currencies declined relative to the dollar, making American-made goods more expensive for foreign customers. Growth slowed in key markets such as China and Canada. At home, the U.S. economy regained its footing.

Over the past year, Portland first was caught up in a labor dispute that caused gridlock at ports along the West Coast, then it lost regular ocean-bound container service. Local officials also came to realize export growth depended overwhelmingly on chip maker Intel Corp., MMINTCMM which has extensive facilities in the Portland suburbs.

Exports of computer and electronic products helped drive a more than doubling of the metro area’s exports between 2003 and 2008, according to Brookings. But Intel has suffered from a slowdown in demand for personal computers.Measurable gains from smaller companies are likely to take years to materialize. Federal estimates show only about 5% of U.S. firms export, with nearly two-thirds of the annual value concentrated among 500 companies.

Hand-tool maker Astro Tool Corp. in the Portland suburb of Beaverton has seen many of the challenges up close. Over the past year, general manager Mike Barnes dedicated half his time to chasing foreign customers, while still overseeing day-to-day operations of the 30-employee company. He faced a steep learning curve. “We, A, didn’t know how to do it, and B, we didn’t have the money to do it,” he said. “You can’t just go to the Internet and say, ‘Where do we find foreign opportunities?’ ”

He eventually landed a small grant to hire a consultant and tapped connections for advice. The share of Astro’s business coming from overseas climbed over the past year to 25% from 15%. But he also watched at a trade show as a foreign competitor sold a cheap, knockoff version of a product similar to his.

The Portland region is trying to court foreign companies that already incorporate exports into their business model. But those companies aren’t immune to global pressures.

Two years ago, exports were nearing 70% of the sales of Shimadzu USA Manufacturing Inc., a subsidiary of the Japanese maker of instruments to test everything from wine fermentation to the urine of Olympic athletes. Now the plant in an industrial park at the far southern edge of metro Portland is getting closer to 50-50 as domestic growth outpaces sales gains abroad.

Foreign customers “can get it cheaper from Japan now than they can from the United States. We’re not as competitive as we were,” said Joe Shaddix, vice president of operations and manager of the factory, referencing the strong dollar.

At the same time, domestic demand for test instruments is developing among marijuana growers as states move to legalize the drug. The factory has expanded what it can make, becoming U.S. Food and Drug Administration registered.

Mr. Adams, the former mayor, remains a strong advocate for the goal of doubling exports—if not by 2017, then eventually. He worries the Portland economy isn’t keeping up with the quality of life that draws twenty- and thirty-somethings at an enviable rate.

“Obviously the timeline will move, but keeping that goal front and center is key,” he said.
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Write to Mark Peters at mark.peters@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

http://www.wsj.com/articles/u-s-export-weakness-hampers-growth-1443576283

Export Champions!™ With help of cutting-edge financing, four small and mid-size US companies are poised to export over $525 million of goods and services!

With the help of cutting edge financing, four small and mid-size US companies are poised to export over $525 million in just three individual transactions! 

Fi3E Badge(April 23, 2015, Washington, DC) During US EXIM Bank’s Annual Conference, Export Champions!™, a new program, which allows small and mid-size US manufacturing companies to vastly boost their export sales by utilizing cutting-edge export credit and capital markets financing for international opportunities, was announced by the Broad Street Capital Group.

Using actual case studies of the three US companies, whose export revenues from just three projects total over $525 million, as the result of their foresight to deploy financing techniques traditionally reserved for large companies and mega projects,  Broad Street Capital Group and representatives of various US Government and private trade and project financing institutions, will empower other US small and midsize companies to successfully compete for large export business opportunities.

“Today, we are witnessing a paradigm shift in the way US small and mid-size companies are able take advantage of sales opportunities, which are two or three times their annual revenue.” said Alexander Gordin, Managing Director of the Broad Street Capital Group. “The key, is a carefully structured project, which is developed with specific long-term, low-cost financing solution in mind from the beginning” said Gordin.

The Export Champions! program will offer monthly half-day web based programs and live training events to help companies learn:

  • which foreign markets and buyers to target,
  • how to correctly develop a financeable transaction,
  • which financing tools and programs to utilize,
  • how to put together a correct team of advisers,
  • utilizing external economic and political factors to gain an advantage,
  • how to mitigate risks along the entire transaction life cycle

The first Export Champions! event to take place in New York on May 8th.  Companies seeking to boost their international sales opportunities should send their inquiries to info@broadstreetcap.com , or call  + 1 212 705 8765 ext 702

About Broad Street Capital Group

Based in the heart of the New York City, Broad Street Capital Group is an international private merchant bank with extensive experience in developing and financing exports and infrastructure projects in emerging markets. The firm works closely with a number of international Export Credit Agencies, as well as with all trade and development agencies of the U.S. Government.   For over 25 years, Broad Street Capital Group has successfully served a broad array of private and state-owned clients in multiple countries and has been involved in several high-profile cross-border transactions in energy, IT/telecom, aerospace, healthcare, hospitality and franchising sectors. The firm’s hallmark is its proprietary Develop, Finance, Supply and Insure™ approach to help clients achieve their international business goals For more information, please visit www.broadstreetcap.com

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Maintaining Export Advantage in the Face of a Rising Dollar – Part 1

It has been a great run for U.S. exporters. The Department of Commerce just announced that our nation’s exports of goods and services were $2.35 trillion in 2014—a record for the fifth year running. Yet clouds are gathering on the horizon, as the economic growth in many foreign markets, specifically those in the emerging and frontier category, has been slowing. Some markets like Russia and Ukraine are set to experience outright GDP contractions brought on by political upheaval.

The single biggest threat facing U.S. exporters is ironically the rising U.S. dollar, which continues to strengthen significantly as the result of the improvement of U.S. economy in the face of the international weakness.

How can U.S. exporters maintain their competitive position and continue to play a leading role in the international export space?strategies for US exporters

While there is no magic bullet and the process is a comprehensive long-term endeavor, below, most U.S. exporters can use the following five-step approach to maintain and expand their exports, while swimming upstream against the rising dollar:

  • Recommit to exports
  • Expand the markets served
  • Offer open account terms and buyer financing
  • Reduce focus on price
  • Use available resources more effectively

Recommit to exports.

Despite its undisputed success in the export arena, the U.S. as a nation has been a very anemic exporter. Unlike in countries such as Germany, the Netherlands or Chile, where exports have for years been part of the business’ DNA due to the small size of the home markets, a great number of companies in the U.S. have been treating exports as an afterthought to their domestic sales strategies. Other than the Fortune 500 companies, the majority of U.S. companies export to fewer than three markets. The primary export drivers are either organic demand from overseas, natural affinity of the owners to a particular country, commonality of language or geographic proximity.
In good times, as we know, the tide raises all boats, yet in the face of the upcoming slowdown, it is vital that U.S. companies recommit to exports in a strategic fashion.

To succeed in this endeavor, U.S. firms must make exports an integral part of their sales mix. Whether through building internal export departments or outsourcing to export management firms, the focus on international sales must be relentless and deep. Companies developing or expanding their in-house export departments should invest in training, product adaptation, international network and market analytics. Managers responsible for exports in organizations, along with top management, must make ongoing efforts to follow events in target markets and understand the culture and business customs and attempt to learn as much of the foreign language as possible.  Departments not directly involved in exports should undergo inclusionary training to ensure that exports do not become orphans within the organization when it comes to issues such as service, exchanges, spare parts supply, collections, payments and financing.  READ MORE

How One Burger Chain Profits From Turmoil Abroad

By , Businessweek.com


A Fatburger outlet in Karachi, Pakistan

Photograph by Rizwan Tabassum/AFP via Getty Images A Fatburger outlet in Karachi, Pakistan

Political protests, disease outbreaks, terrorist campaigns—U.S. business owners considering expanding internationally would be forgiven for deciding to stay at home. But name a tumultuous spot abroad—Hong Kong, Iraq, Egypt—and Andy Wiederhorn has probably opened a burger shop there in the past seven years.

Wiederhorn has taken his Los Angeles-based franchise, Fatburger, from a struggling also-ran to a $125 million company by opening in 32 countries since 2007. He has 200 international locations now and an additional 350 in development, including in places rocked by unrest, such as Tunisia and Libya. Despite the advances of Islamic State, a second store in Iraq is also in the works.

“Consumers all over the world love American brands, especially burgers, shakes, and fries,” he says. Facing increasing competition from other specialty burger brands at home, “I knew there was a huge opportunity for us overseas,” he says. Wiederhorn began Fatburger’s global expansion after serving a stint in prison a decade ago, having pleaded guilty to charges related to paying an illegal gratuity and filing a false tax return in a financial scandal at his previous company.FI3Indices

Fatburger is unusual in its adventures abroad: Less than 1 percent of America’s 30 million companies regularly export, according to the U.S. Commercial Service, a percentage that’s significantly lower than in all other developed countries. And of the American businesses that do export, most sell to just one other country. That’s a major missed opportunity, considering that more than 70 percent of the world’s purchasing power is located outside the U.S.

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So how do small and midsize companies venture beyond their own backyards and into parts of the world that may be challenging?  

[ A great place to start is with a Fluent In Foreign Company Profiles, that feature Fi3F indices™ rating attractiveness of 180 markets for franchisors seeking to expand. 

                                                                                READ MORE

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Yes, America Should Be the World’s Policeman

Bush did too much and Obama too little—but a ‘broken-windows’ model of U.S. foreign policy can be just right

‘If the world’s leading liberal-democratic nation doesn’t assume its role as world policeman,’ writes Journal columnist Bret Stephens, ‘the world’s rogues will try to fill the breach, often in league with one another.’
‘If the world’s leading liberal-democratic nation doesn’t assume its role as world policeman,’ writes Journal columnist Bret Stephens, ‘the world’s rogues will try to fill the breach, often in league with one another.’ PHOTO ILLUSTRATION BY STEPHEN WEBSTER; GETTY IMAGES (COP, BADGE)

When it comes to U.S. foreign policy, Americans must sometimes feel like Goldilocks in the three bears’ house. The porridge that was President George W. Bush’s “freedom agenda”—promising democracy for everyone from Karachi to Casablanca—was too hot. The mush that has been President Barack Obama ’s foreign policy—heavy on rhetoric about resets, pivots and engagement but weak in execution and deeply ambivalent about the uses of U.S. power—is too cold.

What we need instead, as the fairy tale has it, is a foreign policy that is just right—neither too ambitious nor too quiescent, forceful when necessary but mindful that we must not exhaust ourselves in utopian quests to heal crippled societies.

The U.S. finds itself today in a post-Cold War global order under immense strain, even in partial collapse. Four Arab states have unraveled since 2011. The European Union stumbles from recession to recession, with each downturn calling into question the future of the common currency and even the union itself. In Asia, China has proved to be, by turns, assertive, reckless and insecure. Russia seeks to dominate its neighbors through local proxies, dirty tricks and even outright conquest. North Korea’s nuclear arsenal and Iran’s effort to develop one tempt their neighbors to start nuclear programs of their own. And even as the core of al Qaeda fades in importance, its jihadist offshoots, including Islamic State, are metastasizing elsewhere.

As for the U.S., the sour experience of the wars in Iraq and Afghanistan has generated a deep—and bipartisan—reluctance to interfere in foreign conflicts, on the view that our interventions will exact a high price in blood and treasure for uncertain strategic gains. One result is that aggressive regimes seem to think that they can pursue their territorial or strategic ambitions without much fear of a decisive U.S. response. Another is that many of our traditional allies, from Israel to Saudi Arabia to Japan, are quietly beginning to explore other options as the old guarantees of the postwar Pax Americana no longer seem as secure as they once were.

How should an American president navigate through this world of ambitious rogues and nervous freelancers? How can the U.S. enforce some basic global norms, deter enemies and reassure friends without losing sight of our global priorities and national interests? How do we conduct a foreign policy that keeps our nightmares at bay, even if we can’t always make our dreams come true?

When it comes to restoring order in places widely assumed to be beyond the reach of redemption, there is a proven model for us to consult. But it has nothing to do with foreign policy; it has to do with policing our toughest inner cities. And it has brought spectacular—and almost wholly unexpected—results.

Could it be that there’s a ‘broken windows’ cure not just for America’s mean streets but for our increasingly disorderly world?Could it be that there’s a ‘broken windows’ cure not just for America’s mean streets but for our increasingly disorderly world? GETTY IMAGES

The year 1991 was a year of foreign policy triumphs for the U.S., from victory in the Gulf War to the collapse of the Soviet Union. But it was the annus horribilis for American crime, with nearly 1.1 million aggravated assaults, 106,590 forcible rapes and 24,700 murders. In every category, crime was up from the year—and the decade—before. As late as 1995, some criminologists were predicting that a new wave of “super-predators” would descend on American neighborhoods. “If current trends continue, the number of arrests of juveniles for violent crimes will double by the year 2010,” reported the New York Times, citing a Justice Department report.

“Current trends” did not continue.

In 1990, New York City registered a homicide rate of 30.7 murders for every 100,000 people. By 2012, it had fallen to a rate of 5. A similar, if slightly less dramatic, story unfolded in every other major U.S. city. The social deliverance happened despite the fact that many of the factors often cited to explain crime—bad schools, broken homes, poverty, the prevalence of guns, unemployment—remained largely the same from one decade to the next.

What happened? The crack epidemic crested in the early 1990s. The police began developing new techniques to track and control patterns of criminal activity. Between 1992 and 2008, the number of law enforcement personnel rose by 141,000, a 25% increase, and from 1990 to 2000, the adult incarceration rate nearly doubled. More cops on the streets; more bad guys behind bars. It was bound to have an effect.

But something else was at work. In 1982, George Kelling, a criminologist at Rutgers, and James Q. Wilson, a political scientist at Harvard, wrote an essay for the Atlantic Monthly titled “Broken Windows.”

Their core insight turned on a social-science experiment conducted in 1969 by Philip Zimbardo, a psychologist at Stanford. Dr. Zimbardo parked a car on a street in the Bronx, with the hood up and without license plates. Within 10 minutes, vandals begin to pick the car clean of its valuables: battery, radiator, tires. By the next day, people began destroying the car, ripping up pieces of upholstery and smashing windows.

Dr. Zimbardo then conducted the same experiment in tony Palo Alto, Calif., near the Stanford campus. This time, the car—also with the hood up and the license plates removed—sat untouched for several days. So Dr. Zimbardo smashed a window with a sledgehammer. “Soon, passersby were joining in,” wrote Drs. Kelling and Wilson. “Within a few hours, the car had been turned upside down and utterly destroyed.” What to conclude?

“Disorder and crime are usually inextricably linked, in a kind of developmental sequence,” Drs. Kelling and Wilson argued. It had long been known that if one broken window wasn’t replaced, it wouldn’t be long before all the other windows were broken too. Why? Because, they wrote, “one unrepaired broken window is a signal that no one cares, and so breaking more windows costs nothing.”

The idea that the mere appearance of disorder encourages a deeper form of disorder cuts against the conventional wisdom that crime is a function of “root causes.” Yet municipalities that adopted policing techniques based on the broken-windows theory—techniques that emphasized policing by foot patrols and the strict enforcement of laws against petty crimes and “social incivilities”—tended to register sharp drops in crime and improvements in the overall quality of life.

We are disposed to think that, over time, order inevitably dissolves into disorder. But the drop in crime rates reminds us that we can go the other way—and impose order on disorder. Could it be that there’s a “broken windows” cure not just for America’s mean streets but for our increasingly disorderly world?

President Obama often talks about rules. After Syrian dictator Bashar al-Assad used sarin gas to murder more than 1,000 people near Damascus in August 2013, Mr. Obama warned that “if we fail to act, the Assad regime will see no reason to stop using chemical weapons.” After Russia seized Crimea in 2014, he denounced the Kremlin for “challenging truths that only a few weeks ago seemed self-evident, that in the 21st century, the borders of Europe cannot be redrawn with force.”

The language is elegant; the words are true. Yet the warnings rarely amount to much. The U.S. succeeded in getting Mr. Assad to give up much of his chemical arsenal, but the Syrian dictator goes on slaughtering his people, sometimes using chlorine gas instead of sarin. The president’s immediate response to the seizure of Crimea was to sanction a handful of Russians, send a few fighter jets to Poland and Lithuania, and refuse Ukrainian requests for military support.

This is how we arrive at a broken-windows world: Rules are invoked but not enforced. Principles are idealized but not defended. The moment the world begins to notice that rules won’t be enforced, the rules will begin to be flouted. One window breaks, then all the others.

The most urgent goal of U.S. foreign policy over the next decade should be to arrest the continued slide into a broken-windows world of international disorder. The broken-windows theory emphasizes the need to put cops on the street—creating a sense of presence, enforcing community norms, serving the interests of responsible local stakeholders. It stresses the need to deter crime, not react to it, to keep neighborhoods from becoming places that entice criminal behavior.

A broken-windows approach to foreign policy would require the U.S. to increase military spending to upward of 5% of GDP. That is well above the 3.5% of GDP devoted to defense in 2014, though still under its 45-year average of 5.5%. The larger budget would allow the Navy to build a fleet that met its long-stated need for 313 ships (it is now below 290, half its Reagan-era size). It would enable the Air Force to replace an aircraft fleet whose planes are 26 years old on average, the oldest in its history. It would keep the U.S. Army from returning—as it now plans to do, over the warnings of officers like Army Chief of Staff Gen. Raymond Odierno —to its pre-World War II size.

The key to building a military ready to enforce a broken-windows policy is to focus on numbers, not on prohibitively expensive wonder-weapons into which we pour billions of research dollars—only to discover later that we can afford just a small number of them.

Broken-windows foreign policy would sharply punish violations of geopolitical norms, such as the use of chemical weapons, by swiftly and precisely targeting the perpetrators of the attacks (assuming those perpetrators can be found). But the emphasis would be on short, mission-specific, punitive police actions, not on open-ended occupations with the goal of redeeming broken societies.

The central tragedy of the Iraq war is that it took nine months, at a cost of some 480 American lives, to remove Saddam Hussein from power and capture him in his spider hole—which ought to have been the central goal of the war. Yet we spent eight years, and lost an additional 4,000 Americans, in an attempt to turn Iraq into a model of Arab democracy—a “root cause” exercise if ever there was one. There’s a big difference between making an example of a regime like Saddam’s Iraq and trying to turn Iraq into an exemplary state.

A broken-windows foreign policy would be global in its approach: no more “pivots” from this region to that, as if we can predict where the crises of the future are likely to arise. (Did anyone see Russia’s invasion of Ukraine coming?) But it would also know how to discriminate between core interests and allies and peripheral ones.

As Henry Nau of the George Washington University notes in a perceptive recent essay in the American Interest, we should “focus on freedom where it counts the most, namely on the borders of existing free societies.” Those are the borders that divide the free countries of Asia from China and North Korea; the free countries of central Europe from Russia; and allies such as Israel and Jordan from many of their neighbors.

A broken-windows foreign policy wouldn’t try to run every bad guy out of town. Nor would it demand that the U.S. put out every geopolitical fire. American statesmen will have to figure out which of those fires risks burning down the entire neighborhood, as the war in Syria threatens to do, and which will probably burn themselves out, as is likely the case in South Sudan.

Then again, foreign crises rarely present a binary choice between doing nothing and conducting a full-scale military intervention. A cruise-missile strike against a single radio tower in Rwanda during the 1994 genocide could have helped to prevent Hutus from broadcasting instructions for murdering Tutsis, potentially saving thousands of innocent lives at minimal cost to the U.S. Bomb strikes by NATO to lift the siege of Sarajevo helped to turn the tide of the war in the former Yugoslavia against Serbian dictator Slobodan Milosevic, also at no serious cost to the U.S. Perhaps it is time for a strategy that enshrines the principle that preventing tragedy should enjoy greater moral legitimacy than reactingto it.

In his famous 1993 essay, “Defining Deviancy Down,” the late Daniel Patrick Moynihan observed how Americans had become inured to ever-higher rates of violent crime by treating as “normal” criminal activity that would have scandalized past generations of Americans. “We are getting used to a lot of behavior that is not good for us,” the senator from New York wrote. Twenty years later, the opposite has happened. We have defined deviancy up. But having done so, we have tended to forget how much better things are now than they were before.

Americans have lived in a relatively orderly world for so long that we have become somewhat complacent about maintaining it. Perhaps that explains why, in recent years, we have adopted a foreign policy that neglects to do the things that have underpinned that orderly world: commitments to global security, military forces adequate to those commitments, a willingness to intervene in regional crises to secure allies and to confront or deter aggressive regimes.

In recent months, however, and especially since the rise of Islamic State and the beheading of American journalists Steven Sotloff and James Foley, Americans have begun to rediscover certain truths about Pax Americana: If our red lines are exposed as mere bluffs, more of them will be crossed. If our commitments to our allies aren’t serious, those allies might ignore or abandon us. If our threats are empty, our enemies will be emboldened, and we will have more of them.

In other words, if the world’s leading liberal-democratic nation doesn’t assume its role as world policeman, the world’s rogues will try to fill the breach, often in league with one another. It could be a world very much like the 1930s, a decade in which economic turmoil, war weariness, Western self-doubt, American self-involvement and the rise of ambitious dictatorships combined to produce catastrophe. When President Franklin Roosevelt asked Winston Churchill what World War II should be called, the British prime minister replied, “the unnecessary war”—because, Churchill said, “never was a war more easy to stop than that which has just wrecked what was left of the world from the previous struggle.” That is an error we should not repeat.

To say that the U.S. needs to be the world’s policeman isn’t to say that we need to be its preacher, spreading the gospel of the American way. Preachers are in the business of changing hearts and saving souls. Cops merely walk the beat, reassuring the good, deterring the tempted, punishing the wicked.

Not everyone grows up wanting to be a cop. But who wants to live in a neighborhood, or a world, where there is no cop? Would you? Should an American president?

Mr. Stephens writes “Global View,” the Journal’s foreign-affairs column, for which he won a Pulitzer Prize in 2013. This essay is adapted from his new book, “America in Retreat: The New Isolationism and the Coming Global Disorder,” to be published Tuesday by Sentinel.

Develop, Finance, Supply & Insure Your Way to International Business Success

Develop, Finance, Supply & Insure,
Are services offered by Broad Street each day.
 In crossing the borders, the headaches we cure,
     For clients who risk, we hold danger at bay
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The deals are global, the problems are massive,
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Wine-Infused Ice Cream Boosts U.S. Small Company Exports

By Jeff Kearns , Bloomberg

Mercer’s Dairy in Boonville, New York. Mercer’s manufactures all of its products in Boonville for distribution throughout the world.Photographer: Mike Bradley/Bloomberg

Used to be, Mercer’s ice cream wasn’t found far from the 60-year-old dairy in Boonville, a town of about 4,500 in central New York.

Now Mercer’s Dairy owners Ruth Mignerey and Roxaina Hurlburt and their 25 employees ship specialtywine-infused ice cream in a half-dozen flavors, including Cherry Merlot and Riesling, to 14 nationsincluding China, Indonesia, the Netherlands, Seychelles and Trinidad and Tobago. The product was conceived at a 2005 event sponsored by then-U.S. Senator Hillary Clinton and sales began two years later. Exports started in 2008 and now account for about a quarter of annual sales of more than $1 million. Employment is up from 20 four years ago.

“We went from being a local institution with maybe a 100-mile radius of people knowing Mercer to building a global brand,” Mignerey says by phone amid preparations to expand on four continents. “There are so many people who say something can’t be done and it can. Just don’t take no for an answer.”

Photographer: Mike Bradley/Bloomberg  Half gallon cans of wine ice cream at Mercer’s Dairy in Boonville, New York, 
 

Foreign sales by small companies like Mercer’s are becoming a focus for economic development officials in upstate New York and other U.S. regions who are seeking a bigger slice of record exports to boost growth. Shipments abroad by businesses with fewer than 500 employees accounted for 32.9 percent of the U.S. total in 2012, up from 29.2 percent in 2005, according to Census Bureau data.

Continuing to move the needle means persuading more such companies that it’s possible to sell outside of the country. President Barack Obama, who pledged in his 2010 State of the Union speech to double exports in five years, created the National Export Initiative, in part to help small businesses sell abroad.

Photographer: Mike Bradley/Bloomberg

One Country

There’s still plenty of room for improvement. Less than 1 percent of the nation’s 30 million companies ship outside the U.S., significantly less than other developed countries, according to the Commerce Department’s International Trade Administration. Of those that do, 58 percent sell to just one country.

U.S. exports rose last year to a fourth-straight record of $2.28 trillion, increasing by almost $700 billion from 2009 to account for 13.5 percent of the $16.8 trillion gross domestic product, according to Commerce Department data. Selling goods and services abroad supports 11.3 million jobs, the datashow.

A report today showed confidence among small businesses increased in July. The National Federation of Independent Business’s optimism index increased by 0.7 point to 95.7, close to the almost seven-year high of 96.6 reached in May. A net 13 percent of respondents said they planned to hire, the highest share since September 2007.

Skepticism Challenge

Skepticism is the main challenge in working with small firms to expand beyond the nation’s borders, according to Robert Simpson, president of the CenterState Corporation for Economic Opportunity in Syracuse, New York.

He said he often tells business leaders more than 95 percent of the world’s population is outside the U.S. Demand from the global middle class will soar to $56 trillion by 2030 from $21 trillion in 2010, according to a report from the Organization for Economic Co-operation and Development.

“Antipathy toward the global market is the single-biggest hurdle we have,” Simpson said in a presentation at a recent Federal Reserve Bank of Philadelphia community development conference. “Companies don’t yet fully understand how their products can compete internationally.”

Toni Corsini, who helps jump-start exports by smaller firms as a New York-based loan officer for the U.S. Small Business Administration’s Office of International Trade, shares Simpson’s mission. She says her three-biggest obstacles among small business owners are fear, financing, and lack of faith.

One-Stop Shop

She works to alleviate all three from the Export Assistance Center in lower Manhattan, one of about 100 regional centers around the country. The office (called USEAC, which stands for US Export Assistance Center sic) also is home to other federal agencies that assist with exports(among them US Commercial Service and the Export Import Bank of the United States – US ExIm, the main Agency which finances and insures exports for large and small business exporters sic), making it a kind of one-stop shop.

“We’re available, don’t be afraid, come to us,” she says of her message to business owners. “If you are serious about continuing your business and growing your business, you better understand this is a global marketplace.”

Frigid Fluid Co. took advantage of a Commerce Department program to help expand exports of its funeral products to 16 nations, adding ItalyMexico, Poland and Spain over the past two years. President Brian Yeazel, whose family has had the Chicago-area firm for 122 years and five generations, says he’s turning to predominantly Catholic countries more geared to traditional burials as Americans increasingly choose cremation.

Buyer Meetings

Yeazel used Commerce’s Gold Key Service, which gives firms market research and arranges meetings with buyers on visits to the country. Trips cost $700 for small companies like Frigid Fluid, which has 17 employees; first-time users pay half price. Commerce Department specialists in 80 countries plan trips, attend meetings, and provide translators.

Exports of products like embalming fluid and casket-lowering devices have grown to make up 34 percent of Frigid Fluid’s $4 million in annual sales, he said.

While such small businesses add to exports, there probably aren’t enough of them to help Obama reach the 2015 goal of $3.1 trillion.

Caroline Freund, a senior fellow at the Peterson Institute for International Economics in Washington, calls Obama’s initiative focusing on small firms misguided and impractical, given the export dominance of bigger companies such as Chicago-based Boeing Co., the largest U.S. exporter.

Large Businesses

“Exporting is by its nature dominated by large businesses,” Freund, a former economist at the Federal Reserve, World Bank and International Monetary Fund, wrote in a February research report. A strategy built around small companies does “little to lift exports because only the most productive firms can compete globally, and such highly productive firms grow to be large firms precisely because they are so efficient.”

Yet boosting exports is the missing piece of the full-fledged recovery in the U.S. economy, according to Ludovic Subran, chief economist at Euler Hermes Group. The Paris-based credit insurer pays companies if foreign customers don’t, tracking risk through 1,500 underwriters.

“There is a misconception about the potential to grow outside of the U.S.,” he said. “People don’t realize they can make the big bucks if they go to Latin America or Asia.”

Some business owners have doubts about repayment, a consideration when one big unpaid bill can threaten their future, said Laurel Delaney, the Chicago-based founder of GlobeTrade who’s been helping entrepreneurs sell abroad since 1985. Still, she says insurance can cut risk.

‘Growth Potential’

“They’re just not realizing their growth potential,” she said. “You need to develop a global mindset.”

At Mercer’s, Mignerey is working to expand in new markets, including AustraliaKenya, Puerto Rico,South Africa, South Korea, the U.K., Philippines and Suriname. Classification makes approval complicated because some jurisdictions call its wine ice cream food, others label it alcohol. Packaging needs vary.

The hybrid product was born at a 2005 Washington event promoting New York Farm Day sponsored by Clinton. When attendees made ice cream floats with the wine from the next booth, Clinton and others suggested it may have a commercial future.

Labeling Products

Mignerey and Hurlburt, her aunt, introduced wine ice cream, which has about 5 percent alcohol content, in 2007. At a New York City trade show the same year, they met a Dutch distributor, who arranged their first foreign deals. They weren’t worried about payment because it was done in advance, but they were concerned about simple labeling errors, Mignerey says. Exports of the wine flavors began in 2008 with the Netherlands, though the company wants to also sell more traditional varieties abroad.

Foreign sales help take the seasonality out of the ice cream business. In the production facility, four employees work year-round where previously winter staffing fell to two full-time and one part-time. In the office, four workers help with export-related administration, up from two.

“It can be done,” Mignerey says. “But it’s a lot of work.”

To contact the reporter on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net; Gail DeGeorge at gdegeorge@bloomberg.netCarlos Torres at ctorres2@bloomberg.net Gail DeGeorge, Carlos Torres

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To Invest In The Rise Of The Emerging Market Consumer Start By Looking In Their Fridge

TASSOS STASSOPOULOS, THE ALLIANCE BERNSTEIN BLOG 

It’s not easy for investors to grasp the dynamics of consumer spending in diverse emerging markets. We think the best way is to look inside the refrigerators of people across the developing world.
Refrigerators are more than just iceboxes. Their contents speak volumes about their owners. And their proliferation signals a country’s economic progression. So the fridge and its contents can serve as a guide for investors seeking to tap emerging consumer spending, which is projected to grow eightfold to US$63 trillion by 2030, according to our forecasts, based on OECD data.

Devices Are Deceiving

Emerging consumers defy simple classifications. Some analysts look at income, assets or people per room as a framework. In our view, these indicators are flawed. For example, a Living Standard Measure counts the number of certain items in a home to determine a household’s socioeconomic status. So a person with a laptop, TV, mobile phone and stereo could be classified as rich. Yet in our field research, we’ve met people in countries like Ghana whose ramshackle homes are full of electronic devices but who are quite obviously poor.

Kitchens offer a more honest reflection. Behind the fridge door is an abundance of information that can help us understand who emerging consumers are and how they’re likely to spend money in the future. We’ve analyzed the contents of 70 refrigerators in rural and urban homes that we visited across 12 developing countries from Chile to China. While it may not be a statistical sample, the initial patterns we’ve seen suggest that the inside of a fridge mirrors the status of a home.

Food for Thought

In working-class homes, the fridge is used mainly for efficiency items (Display). It includes basic foods such as eggs, fruits and vegetables and some pre-cooked food. Middle-class fridges stock more indulgences, from alcoholic beverages to chocolate and cheese. And for affluent households, health is a primary concern. So expect to find foods like low-fat Yoghurt or 100% fruit juices.

Why is this important? Because once we understand how people’s tastes change as their income levels increase, we can also figure out how to invest in the consumer evolution as the refrigeration revolution sweeps through a market.

The display below shows penetration of refrigerators in different countries as income levels increase, from 1980 through 2013. In developed markets, more than 99% of households have a fridge. Brazil isn’t far behind. In China, about 86% of homes had a fridge. But in India, by contrast, only about 27% of households were able to chill their food. This is likely to increase rapidly as annual per capita incomes reach US$3,000, which seems to be the tipping point for rapid adoption of refrigeration.

refrigeration revolution The AllianceBernstein Blog

Indulgences in China

Our research suggests that China is in the indulgence phase. So companies that make products like beer, butter and chocolates should benefit from rising incomes. Indian families are still buying fridges, then filling them with efficiency items like milk, yogurt and ready-made sauces. Brazil has already shifted toward health mode, which should see higher-end food producers draw more spending.

Of course, specific investing conclusions differ in every country. Market environments and company fundamentals must also be studied to identify successful portfolio candidates. But by starting with refrigerator shelves, we think investors can gain vital intelligence to understand the people, lifestyles and spending scenarios that will unlock earnings growth in emerging consumer companies

This article originally appeared at The Alliance Bernstein Blog. Copyright 2014.

Read more: http://blog.alliancebernstein.com/index.php/2014/06/20/cold-facts-in-emerging-market-fridges/#ixzz35M4aCKN2

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