Renemge of Gerograpphy

1

OUTLOOK Economic Data and Commentary

December 2012 Volume 9 Number 12

THE REVENGE OF GEOGRapHy ............. 1-7

political Map of the world ............. 4

INTEREsT RaTEs aNd

EcONOmIc INdIcaTORs ..........................8

cOBaNk aNNOuNcEs

2013 BOaRd OFFIcERs ...................... 9-12

aBOuT cOBaNk .....................................9

cOBaNk dIREcTOR BIll FaRROw

appOINTEd TO BOaRd OF

cHIcaGO FEd .......................................13

The Revenge of GeographyMedia coverage of international events tends to focus almost exclusively on human factors – things like elections, treaties, trade agreements and military conflicts.

all, of course, are undeniably important to the course of world history. But they aren’t the whole story. as world affairs expert robert Kaplan notes in a new book, geographic factors exert a profound but increasingly overlooked influence on states and how they cooperate and conflict with one another.

Kaplan is a longtime foreign correspondent who is also chief geopolitical strategist for Stratfor, the well-known and highly regarded private intelligence firm. oUtlooK recently interviewed Kaplan about the central thesis of his book, titled “the revenge of Geography,” and how it can help us understand geopolitical events taking place today and in the future.

OUTLOOK: Tell us what you were trying to accomplish in “The Revenge of Geography.”

Robert kaplan: if you read the opinion pages and the journals of intellectual thought of both right and left, they all have something in common. they’re all about what the United States can do, what we can overcome. they’re about the power of the individual, the power of new technology, of new financial mechanisms. Nothing is impossible in foreign policy, whether you read The New York Times’ editorialists or those of The Wall Street Journal. this book stands athwart that belief. all these people – which i call the “global elite” – are telling us what we can do. this book is about constraints. it’s about the things that limit our actions.

i have focused on geography, which is the most fundamental and simple constraint. it is such an obvious constraint that it goes unnoticed and unremarked upon. there is this sensibility out there that because of electronic communications that geography doesn’t matter. that’s wrong. Geography still matters a great deal.

2

OuTlOOk www.cobank.com

OUTLOOK: Where does this hubris, this lack of appreciation of geographic factors, come from? Is it just because of technology? Is it an American phenomenon or a global phenomenon?

rK: i think it’s partly because of the lifestyle of the global elite, which travels around in business class, crossing entire continents in hours, dipping down even in poor countries to stay at luxury hotels. their world is one of luxury travel and conferences, and they’re isolated from the reality on the ground.

the idea that the United States could overcome geography started to really gain traction two decades ago. the fall of the Berlin wall was thought by intellectuals to mean that suddenly every place in the Middle east and africa could also be liberated and democratized, and that things such as national character and territory no longer mattered. this was wrong.

OUTLOOK: Give us an example of how an appreciation for geographical constraints can help us better understand international events.

rK: take a look at russia and its president, Vladimir putin. the american media loves to hate putin. they consider putin evil, that he has the most cynical imperialistic designs. and of course putin has done a number of things to cultivate this impression. he has conducted a limited invasion of Georgia, and has used russian natural gas and pipeline configurations into central and eastern europe as a way to politically intimidate former warsaw pact allies that are now in Nato, like poland and Bulgaria and hungary. he has used intimidation in the Baltic States through crime groups using ethnic russian minorities to turn against majority populations. russia also desperately wants to re-integrate Ukraine into its orbit, and this is the real drama because Ukrainians are resisting. we don’t know how it will end.

But Vladimir putin is just a normal russian autocrat who understands his country’s geography. russia occupies half of the lines of longitude on earth, yet it has a population smaller than Bangladesh. it has very few good natural borders, and so it has been invaded over the centuries, not just by Napoleon and hitler but by Swedes, lithuanians and poles – all coming from europe. russia is also threatened by Muslims in the caucasus and in central asia. So putin is doing what any normal russian leader would do. he is trying to carve out buffer zones of influence in eastern europe, in the caucasus and in central asia.

Because these buffer zones are inconvenient to america’s own national interest, we oppose him. But that doesn’t mean that what putin desires is illegitimate. it just means there is a conflict between our national interest and his. it’s almost as if the west expects russia to be ruled by someone

about this article

Robert D. Kaplan is chief

geopolitical analyst for Stratfor, a

private global intelligence firm,

and is a non-resident senior fellow at the Center

for a New American Security in Washington,

D.C. He has been a foreign correspondent for

The Atlantic for more than a quarter century.

He is the author of 14 books on foreign affairs

and travel. In 2011, Mr. Kaplan was chosen by

Foreign Policy magazine as one of the world’s

“Top 100 Global Thinkers.”

3


like themselves, by some western-oriented democrat. wake up for a minute. russia will be ruled by a russian. and that russian, whether democratic or not, is going to have a sense of his country’s geography and that sense of geography is going to force him or her to try to create buffer zones on russia’s periphery.

OUTLOOK: You mentioned Putin’s attempt to bully Central and Eastern Europe. Europe itself, however, possesses some special geographical characteristics that your book highlights that helped propel it to world dominance.

rK: Yes, europe has a remarkably long coastline for its relatively compact size and that coastline is rich in natural harbors. it is likewise blessed with several major rivers, such as the rhine and danube, that have facilitated mobility. So europe’s historic maritime dynamism that was used in the past to project its power is no accident. Moreover, the fact that europe is located mainly in the upper temperate zone that is neither excessively hot nor cold creates an almost perfect geography for incubating the states that would come to dominate world politics for so long.

OUTLOOK: How do geographic factors help explain events in China?

rK: when china looks just beyond its border to the russian far east, to central asia, to Mongolia, it sees societies that are poorer but that are nevertheless rich in natural resources. china is flush with cash and has a robust economy, so it faces few impediments to expand into those regions in one form or another. china is quickly, in an economic sense, taking over central asia. it is poised to erupt into outer Mongolia and the russian far east. it is effecting a divide-and-conquer strategy throughout Southeast asia, too. So china has great possibilities for expanding its zone of influence.

at the same time, there is a geographic problem that china faces. ethnic han chinese predominate in the center of china and on the pacific coast. But on the periphery you have inner Mongolians to the north, Uighur turk Muslims to the northwest and Buddhist tibetans to the southwest. and where these minorities live, which is on the plateau uplands, is also where 80 percent of china’s coal comes from, where much of its natural water sources come from, and where significant amounts of other energy resources and minerals and metals come from. So in that sense china’s geography is claustrophobic. were china to open up and liberalize, it might lead to ethnic minority unrest in all of these areas.

the fall of the Berlin wall was thought to mean that suddenly every place in the Middle east and africa could also be liberated and democratized. this was wrong.

4


OUTLOOK: Is China then at risk from a resources standpoint if these ethnic minorities become more empowered?

rK: No, i don’t believe so. the empowerment of the ethnic minorities will not really endanger china’s ability to extract energy from central asia, from Myanmar, from the Middle east and other places. But the empowerment of the ethnic minorities will really threaten the chinese political system itself.

OUTLOOK: How do geographic factors come into play in the Middle East?

rK: let’s compare iran, an enemy state of the U.S., with Saudi arabia, an ally. iran is a country where the political space overlaps with the natural geographic space, the iranian plateau. it is a country that is heir to governments and civilizations that go back to antiquity - from the Medes and the parthians to the achaemenids and Sassanids right up to the ayatollahs of the present day. the government of iran may collapse, it may undergo change, it may evolve because of the pressures of economic sanctions. But there will always be an iran.

Saudi arabia, by contrast, is more artificial. it’s the contrivance, in a sense, of the Saudi royal family, and indeed of one man, abdul aziz ibn Saud and his conquests in the early 20th century. it is artificial because of the differences

Source: University of Texas at Austin, Perry-Castañeda Library Map Collection.

pOlITIcal map OF THE wORld

120 60 0 60 120 180

30

30

0 0

60

30 3090150 90 150

60

120 60 0 60 120 18030 3090150 90 150

60

30

30

60

Equator EquatorEquator

Tropic of Capricorn (23°27') Tropic of Capricorn (23°27')

Antarctic Circle (66°33')Antarctic Circle (66°33')

Tropic of Cancer (23°27')Tropic of Cancer (23°27')

Arctic Circle (66°33')Arctic Circle (66°33')

Gough Island

Falkland Islands(Islas Malvinas)

Bouvet Island

Johnston Atoll

Kingman Reef (U.S.)

Palmyra Atoll (U.S.)

Greenland

and Miquelon

WesternSahara

MacauS.A.R.

Wake Island

Mariana

Guadeloupe (FR.)

GuamAruba

JarvisIsland

(Fr. Poly.)

Christmas Island

Ashmore andCartier Islands

(Fr. Poly.)Coral Sea

Islands

Caledonia

Reunion

(Fr. Poly.)

NorfolkIsland

Heard Island andMcDonald Islands

Cook Islands

F r e n c h P o l y n e s i a(Fr. Poly.)

Pitcairn Islands

Cayman Is.

NavassaIsland

Turks andCaicos Islands

Bermuda

Martinique (FR.)

(Fr. S. and Ant. Lands)




Cocos(Keeling) Islands

Tromelin Island

Juan de NovaIsland

Mayotte

Glorioso Islands

Bassasda India

EuropaIsland

Ocean Territory

New

AmericanSamoa

Niue

Wallis andFutuna

Tokelau

Howland Island

Baker Island

Northern

MidwayIslands

Islands

Svalbard

Jan Mayen

FaroeIslands

British Indian

Clipperton Island

Hong KongS.A.R.

South Georgia and South Sandwich Islands

Montserrat

CeutaMelilla

French Guiana

St. Pierre

Gibraltar

Saint Helena

Saint Helena, Ascension,and Tristan da Cunha

(U.K.)

TRISTAN DA CUNHA

French Southern and Antarctic Lands

GuernseyJersey

Isle ofMan

Saint Barthelemy (FR.)

Curacao

BritishVirgin Islands

(U.K.)Virgin

Islands(U.S.)

PuertoRico

Anguilla (U.K.)Saint-Martin (FR.)Sint Maarten (NETH.)

ARCTIC OCEAN ARCTIC OCEAN

HudsonBay

Black Sea

Philippine

Sea

N O R T H

P A C I F I C

O C E A N

S O U T H

A T L A N T I C

O C E A N

CaspianSea

Coral

SeaI N D I A N

O C E A N

O C E A N

BalticSea

Bengal

S O U T H

O C E A N

Tasman Sea

AralSea

Lake Balkhash

LakeBaikal

RossIce Shelf

Bay of

South ChinaSea

Barents Sea

LakeVictoria

LakeTanganyika

Ross Ice Shelf

ARCTIC OCEAN

Java Sea

Celebes Sea

AndamanSea

White Sea

LakeLadoga Lake

Onega

Sea ofJapan

Mediterranean Sea

S O U T H

P A C I F I C

O C E A N

S O U T H E R N O C E A N S O U T H E R N O C E A NS O U T H E R N O C E A N

N O R T H

P A C I F I C

O C E A NYellowSea

Amery IceShelf

East ChinaSea

P A C I F I C

RedSea

Ronne Ice Shelf

Bering Sea

LakeNyasa

N O R T H

A T L A N T I C

LagoTiticaca

LakeSuperior

LakeMichigan

LakeHuron

Lake Erie

Lake Ontario

Sea

Arabian

NorthSea

NorwegianSea

Greenland Sea

Beaufort Sea

DenmarkStrait

Kara SeaLaptev Sea

East Siberian Sea

Sea of

Okhotsk

DavisStrait

BaffinBay

Caribbean Sea

Gulf of Mexico

Gulf of AlaskaLabrador

Sea

Chukchi Sea

Banda Sea

ArafuraSea

TimorSea

LuzonStrait

Gulfof

Bothnia

Persian Gulf

Gulf of Oman

Sea ofAzov

Gulf ofTonkin

Gulf ofThailand

DrakePassage

Ross Sea

Bellingshausen SeaAmundsen Sea

Great AustralianBight

Great

Barrier

Reef

Gulf ofCarpentaria

Bay ofBiscay

Sea

Laccadive

MozambiqueChannel

Gulf of Aden

Gulf ofSt. Lawrence

LakeWinnipeg

Slave Lake

Bear LakeGreat

Great

Gulf of Guinea

CelticSea

Ross Sea

Scotia Sea

Weddell Sea

CUBA

COLOMBIA

PERU

BOLIVIA

CHILE

PAPUANEW GUINEA

ZEALAND

C A N A D A

MEXICO

BELIZE

HONDURAS

NICARAGUAEL SALVADOR

GUATEMALA

COSTARICA PANAMA

R U S S I A

C H I N A

SURINAME

THEBAHAMAS

(U.K.)

THE GAMBIA

SWAZILAND

ZIMBABWE

ZAMBIA

ANGOLA COMOROS

SEYCHELLESTANZANIA

AFRICASOUTH

KENYAUGANDA

CENTRALAFRICAN REPUBLIC

YEMENN I G E R

LIBERIACAMEROON

GABON

EQUATORIAL GUINEA

GUINEAGUINEA-BISSAU

M A L IMAURITANIA

SENEGAL

CAPE VERDE

NORWAYSWEDEN

FINLAND

FRANCE

SPAIN

EST.

LAT.

LITH.

ITALY

TUNISIA

LAOS

JAPAN

PHILIPPINES

MARSHALLISLANDS

SOLOMONISLANDS

FIJI

TONGA

K I R I B A T I

(FRANCE)

(administered by U.K.,claimed by ARGENTINA)

(CHILE)

(NORWAY)

(administered by U.K.,claimed by ARGENTINA)

(CHILE)

(SOUTH AFRICA)

(AUSTL.)

(AUSTL.)

(N.Z.)

(N.Z.)(N.Z.)

(N.Z.)(N.Z.)

(N.Z.)

(N.Z.)

(FRANCE)

(N.Z.)

(JAPAN)

(N.Z.)

(EQUA. GUI.)

(BRAZIL)

(BRAZIL)

(BRAZIL)

(FRANCE)

(YEMEN)

(SP.)

(PORT.)

(PORT.)

(U.K.)

(DEN.)

U.S.

(U.K.)

THAILAND

BANGLADESH

CAMBODIA

VIETNAM

(INDIA)

MALDIVES

SRILANKA

SINGAPORE

BRUNEI

M A L A Y S I A

I N D O N E S I A

(AUSTL.)

(AUSTL.)

TIMOR-LESTE

A U S T R A L I A

NEW

(U.S.)(U.S.)

NORTH KOREA

MOROCCO

(FRANCE)

(NETH.)

TRINIDAD ANDTOBAGO

DOMINICANREPUBLIC

JAMAICA

(U.S.)

PARAGUAY

ICELAND

UNITED

KINGDOMIRELAND (U.K.)

(U.K.)(U.K.)

LIECH.

SWITZ.

LUX.CZECH REP.

SLOVAKIA

ROMANIA

ALB.

BELARUS

SYRIACYPRUS

LEBANON

Indianclaim1972

Line of Control

Line of ActualControl

(DENMARK)

U K R A I N E

MOLDOVA

GEORGIA

AZERBAIJANARMENIA

U N I T E D S T A T E S

U.S.

(U.S.)

K I R I B A T I

I R A N

IRAQAFGHANISTAN

PAKISTAN

ANDORRA

SANMARINO

AUSTRIAHUNGARY

SERBIA

MONT.KOS.

CROATIA

SLOVENIA

BURMAI N D I A

NEPALBHUTAN

T U R K E Y

(U.S.)

(U.S.)

(U.S.)

(U.S.)

(U.S.)

NAURU

(FR.)

B R A Z I L

A L G E R I AL I B Y A

E G Y P T

A n t a r c t i c a

BOS. &HER.

NIGERIA

SAMOA

(U.K.)

VATICANCITY

(SP.)

(U.K.)(SP.)

(IT.)

(SP.)

(FR.)

(IT.)MALTA

NETH.

BELGIUM

DENMARK

JORDAN

ISRAEL

(GR.)

KUWAIT

BAHRAIN

QATAR UNITED ARABEMIRATES

OMAN

OMAN

GERMANYPOLAND

ST. VINCENT ANDTHE GRENADINES

GRENADA

BARBADOS

ST. LUCIA

DOMINICA

(ECUADOR)

(FRANCE)

(FRANCE)

(FRANCE)

M O N G O L I A

DJIBOUTI

BOTSWANA

NAMIBIA

TURKMENISTANUZBEKISTAN

KYRGYZSTAN

TAJIKISTAN

(FRANCE)

ANGOLA(Cabinda)

(FRANCE)

(FRANCE)

(AUSTL.)

(AUSTL.)

(AUSTL.)

BULGARIA

RUSSIA

GUYANA

URUGUAY

ECUADOR

(CHILE)

(CHILE)

(FRANCE)

(U.K.)

(NORWAY)

(NORWAY)

BENIN

TOGOD'IVOIRE

CÔTE

SAUDI

ARABIA

SIERRALEONE

(MEXICO) ERITREA

SOUTH KOREA

GREECE

MACEDONIA

(KIRIBATI)

(BRAZIL)MAURITIUSMADAGASCAR

(AUSTL.)(administered by FRANCE,claimed by COMOROS)

(U.K.)

PALAU

VANUATU

TUVALU

BURKINAFASO

U. S.

ARGENTINA

PORTUGAL

MONACO

LESOTHO

(FRANCE)

(U.S.)

(N.Z.)

(INDIA)

(INDIA)

(COSTA RICA)

(COLOMBIA)

(CHILE)

CHAD

Occupied by the SOVIET UNION in 1945,administered by RUSSIA, claimed by JAPAN

(JAPA

N)

( JA

PA

N)

(U.K.)

VENEZUELAGHANA

S U D A N

RWANDA

BURUNDI

MALAWI

MOZAMBIQUE

ETHIOPIA

SOMALIA

SOUTHSUDAN

FEDERATED STATES OF MICRONESIA

HAITI

REP. OFTHE

CONGODEMOCRATIC

REPUBLIC

OF THE CONGO

SAO TOME AND PRINCIPE

K A Z A K H S T A N

Taiwan

Twenty-one of 28 Antarctic consultative countries have made no claims to Antarctic territory (although Russia and the United States have reserved the right to do so) and they do not recognize the claims of the other countries.

(NETH.)

ANTIGUA AND BARBUDAST. KITTS AND NEVIS

(U.S.)

Kabul

Tirana

Algiers

Pago Pago

Luanda

Buenos Aires

Yerevan

Canberra

Vienna

Baku

NassauManama

Dhaka

Minsk

Brussels

Belmopan

Porto-Novo

Thimphu

La Paz

Sarajevo

Gaborone

Brasília

Bandar SeriBegawan

Sofia

Ouagadougou

Rangoon

Bujumbura

PhnomPenh

Yaoundé

Ottawa

Praia

Bangui

N'Djamena

Santiago

Beijing

Bogotá

Moroni

San José

Yamoussoukro

Zagreb

Havana

Nicosia

Prague

Kinshasa

Copenhagen

Djibouti

SantoDomingo

Dili

Quito

Cairo

San Salvador

Malabo

Asmara

Tallinn

AddisAbaba

Stanley

Tórshavn

Palikir

Suva

Helsinki

Paris

Cayenne

Papeete

Libreville

Banjul

Tbilisi

Berlin

Accra

Athens

Nuuk(Godthåb)

HagåtñaGuatemala City

Conakry

Bissau

Georgetown

Port-au-Prince

Tegucigalpa

Budapest

Reykjavík

NewDelhi

Jakarta

Tehran

Baghdad

Dublin

Tel Aviv-Yafo

Jerusalem

Rome

Kingston

Tokyo

Amman

Astana

Nairobi

Tarawa

Kuwait

Bishkek

Vientiane

Beirut

Maseru

Monrovia

Tripoli

Vilnius

Luxembourg

Skopje

Pristina

Antananarivo

Lilongwe

KualaLumpur

Male

Bamako

Valletta

Majuro

Nouakchott

Port Louis

MexicoCity

Chisinau(

Ulaanbaatar

Podgorica

Rabat

Maputo

Windhoek

YarenDistrict

Kathmandu

Amsterdam

Noumea

Wellington

Managua

Niamey

Abuja

Pyongyang

Saipan

Oslo

Muscat

Islamabad

Melekeok

PanamaCity

PortMoresby

Asunción

Lima

Manila

Adamstown

Warsaw

Lisbon

Doha

Brazzaville

Saint-Denis

Bucharest

Moscow

Kigali

Apia

Sâo Tomé

Riyadh

Dakar

Belgrade

Victoria

Freetown

Singapore

Bratislava

Ljubljana

Honiara

Mogadishu

Pretoria

Seoul

Madrid

Colombo

Khartoum

Paramaribo

Longyearbyen

Mbabane

Stockholm

Bern

Damascus

Dushanbe

Dar es Salaam

Bangkok

Lomé

Nuku'alofa

Port of Spain

Tunis

Ankara

Ashgabat

Funafuti

Kampala

Kyiv

AbuDhabi

London

Washington, D.C.

Montevideo

Tashkent

Port-Vila

Caracas

Hanoi

Mata-Utu

Sanaa

Lusaka

Harare

Riga¯

Kandahar

ConstantineOran

Namibe

Benguela

Bahía Blanca

ComodoroRivadavia

Córdoba

La Plata

Mar del Plata

Mendoza Rosario

San Miguelde Tucumán

Adelaide

Alice Springs

Brisbane

Cairns

Darwin

Hobart

Melbourne

Newcastle

Perth

SydneyWollongong

Chittagong

Khulna

Homyel

Cochabamba

SantaCruzSucre

Belém

BeloHorizonte

Campinas

CampoGrande

Curitiba

Florianópolis

Fortaleza

Goiânia

João Pessoa

Joinville

Maceió

Manaus

Natal

PôrtoAlegre

Pôrto Velho Recife

Rio deJaneiro

Salvador

Santos

São Luís

São Paulo

Teresina

Uberlândia

Vitória

Mandalay

Nay PyiTaw

Douala

Alert

Calgary

Churchill

Edmonton

Fort McMurray

Halifax

Happy Valley-Goose Bay

Iqaluit

Kuujjuaq

Montréal

Pond Inlet

PrinceGeorge

Québec

Resolute

Saskatoon

Toronto

Vancouver

Whitehorse

Winnipeg

Antofagasta

Concepción

Puerto Montt

Punta Arenas

Valparaiso

Baotou

Changchun

Changsha

Chengdu

Chongqing

Dalian

Datong

Fuzhou

Guangzhou

Guiyang

Hangzhou

Harbin

Hefei

Jilin

Jinan

Kunming

Lanzhou

LhasaNanchang

Nanjing

Nanning

Nantong

Ningbo

Qingdao

Shanghai

Shantou

Shenyang

Shijiazhuang

Taipei

Taiyuan

Tianjin

Ürümqi

Wuhan

Xiamen

Xi'an

Yantai

Zhanjiang

Zhengzhou

Zibo

Barranquilla

Cali

Cartagena

Cúcuta

MedellínAbidjan

Kisangani

Lubumbashi

Mbuji-Mayi

Santiago

Guayaquil

Alexandria

Aswan

Bordeaux

Lille

Lyon

Marseille

Toulouse

Cologne

Frankfurt

Hamburg

Munich

Qaanaaq (Thule)

Agra

Ahmadabad

Bengaluru(Bangalore)

Bhopal

Kozhikode

Chennai

Kochi

Coimbatore

Hyderabad

Indore

Jaipur

Jamshedpur

Kanpur

Kolkata

Lucknow

Ludhiana

Madurai

Mumbai

Nagpur

Patna

Pune

Surat

Vijayawada

Vishakhapatnam

Bandung

Banjarmasin

Denpasar

Kupang

Jayapura

Makassar

Malang

Medan

Padang

Palembang

Pekanbaru

Pontianak Samarinda

Semarang Surabaya

Tanjungkarang-Telukbetung

Ahvaz

EsfahanKermanshah

Mashhad

Qom

Zahedan

Al Basrah

Erbil

Mosul

Genoa

Milan

Naples

Palermo

Turin

Fukuoka

HiroshimaNagoya

Osaka

Sapporo

Yokohama

Almaty

Kashi

Herat

Aqtaü(Aktau)

Atyraü

Qaraghandy(Karaganda)

Shymkent

Mombasa

Blantyre

TombouctouAcapulco

Cancún

Chihuahua

CiudadJuarez

GuadalajaraLeón

Matamoros

Mérida

Mexicali

Monterrey

Oaxaca

Puebla

San LuisPotosí

Tijuana

Toluca

Torreón

Casablanca Fès

Marrakech

Laayoune

Beira

Walvis Bay

Auckland

Christchurch

Ibadan

Kano

Lagos

Ogbomoso

Faisalabad

Hyderabad

Karachi

Lahore

Multan

Peshawar

Quetta

Colón

Arequipa

Cusco

Iquitos

Trujillo

Cebu

DavaoZamboanga

Kraków

Porto

Pointe-Noire

Anadyr'Arkhangel'sk

Astrakhan'

Barnaul

Chelyabinsk

Cherskiy

Irkutsk

Izhevsk

Kazan'

Khabarovsk

Krasnoyarsk

Magadan

Murmansk

NizhniyNovgorod

Noril'sk

NovosibirskOmsk

Orenburg

Perm'

Petropavlovsk-Kamchatskiy

Pevek

Provideniya

Rostov

Saint Petersburg

Samara

Saratov

Tiksi

TomskTyumen'

UfaUl'yanovsk

Vladivostok

Volgograd

Voronezh

Yakutsk

Chita

Yaroslavl'

Yekaterinburg

JeddahMecca

Kassala

Mek’ele

Nyala

Medina

Hargeysa

Cape Town

Durban

Johannesburg

PortElizabeth

Busan

Barcelona

Bilbao

MálagaSevilla

Valencia

Juba

Omdurman

Port Sudan

Aleppo

Kaohsiung

Dodoma

ChiangMai

Adana

Bursa

Gaziantep

Istanbul

I.zmir

Konya

Donets'k

KharkivL'viv

Odesa

Belfast

Birmingham

Glasgow

Leeds

Anchorage

Atlanta

Austin

Baltimore

Barrow

Boston

Charlotte

Chicago

Cincinnati

Cleveland

Dallas

Denver

Detroit

El Paso

Fairbanks

Honolulu

Houston

Indianapolis

Jacksonville

Juneau

Kansas City

Las Vegas

Los Angeles

Miami

Milwaukee

Minneapolis

Nashville

NewOrleans

New York

Nome

Oklahoma City

Orlando

Philadelphia

Phoenix

Pittsburgh

Portland

ProvidenceBuffalo

SacramentoSaintLouis

Salt Lake City

SanAntonio

San Diego

San Francisco

Seattle

Tampa

Norfolk

CiudadGuayana

Maracaibo

Valencia

Da Nang

Haiphong

Ho Chi MinhCity

Aden

Ndola

Bulawayo

Shiraz¯

Tabriz¯

Al Jizah¯

Benghazi

Lódz.

SanJuan

QUEEN ELIZABETH

ISLANDS

KURILISLANDS

WrangelIsland

NEW SIBERIAN ISLANDS

SEVERNAYAZEMLYA

FRANZ JOSEFLAND

NOVAYAZEMLYA

EllesmereIsland

BanksIsland

VictoriaBaffinIsland

Island

Rockall

SakhalinIsland ofNewfoundland

Sardinia

Sicily

Crete

Minami-tori-shima

HainanDao

Socotra

PENEDOS DESÃO PEDRO E SÃO PAULO

Kiritimati(Christmas Island)

Annobon

DiegoGarcia

Martin Vaz

Trindade

Isla San AmbrosioEaster Island

Lord HoweIsland

Île Amsterdam

Île Saint-Paul

Tasmania

CampbellIsland

MacquarieIsland

GALAPAGOSISLANDS

HAWAIIAN ISLANDS

ÎLES MARQUISES

SOCIETYISLANDS

ÎLES TUBUAI

ARCHIPEL DES TUAMOTU

ARCHIPIÉLAGOJUAN FERNÁNDEZ

SOUTH ORKNEYISLANDS

PRINCE EDWARDISLANDS

ÎLES CROZET

ÎLES KERGUELEN

CHATHAM ISLANDS

BOUNTY ISLANDSSNARES ISLANDS

ANTIPODES ISLANDS

AUCKLANDISLANDS

KERMADECISLANDS

SPRATLYISLANDS

NICOBARISLANDS

PARACELISLANDS

AZORES

CANARY ISLANDS

MADEIRAISLANDS

ISLASREVILLAGIGEDO

ANDAMANISLANDS

LAKSHADWEEP

Isla deMalpelo

Isla del Coco

Isla Sala y Gómez

ARQUIPÉLAGO DEFERNANDO DE NORONHA

Isla San Felíx

N A

M P O

- S H O

T O

-

-

Okinawa

R Y

U

K

Y

U

I

S

L

A

N

D

S

BALEARICISLANDS

Corsica

Ascension

ALEUTIAN ISLANDS

A L E U T I A N I S L A N D S

803512AI (G00010) 11-11

Bermuda

AUSTRALIA

Sicily / AZORES

Dependency or area of special sovereignty

Capital

Scale 1:35,000,000

standard parallels 38°N and 38°SRobinson Projection

Island / island group

Independent state

Political Map of the World, November 2011

November 2011

Boundary representation is not necessarily authoritative.

5


between the people of the arid central Najd, with its capital of riyadh, and the large populations who live for example in cities such as Mecca along the red Sea in what is known as the hijaz. those people are affected by the millions of pilgrims who come from other countries to visit the holy sites and they are more cosmopolitan as a consequence than many in the Najd.

the founding family may have been very impressive and enlightened at the time by the standards of the region but the family is facing greater problems than ever before: the diminishing underground water table, high male youth unemployment, a division within the family itself as it evolves from a group of just a dozen or so to hundreds of grandchildren all vying for power and influence. the future does not look bright for Saudi arabia.

So keeping all of this in mind, my geographically based analysis is that we should not be surprised if 10 or 20 years hence that we have closer relations with tehran than we do with Saudi arabia.

OUTLOOK: In your book, you describe the Israeli-Palestinian conflict as a classic example of the stubbornness of geography. Arabs see the existence of Israel, or most certainly the occupation of the West Bank that goes back to the 1967 war, as an affront that must be erased, along with the Israeli settlements that have been erected there in the intervening years.

rK: Yes, and because of geography, israel also faces a demographic dilemma. if it continues to occupy all of the west Bank, it must evolve into some variation of an apartheid society, which is defined as one ethnic group ruling a demographically larger ethnic group through somewhat repressive measures. that’s because the palestinians’ birth rate is much higher than that of israelis. and israelis are conscious of this demographic clock. Yet in groping for an answer, israel finds it hard to locate palestinians with whom it can negotiate.

OUTLOOK: How has geography influenced the history of the U.S.?

rK: americans are creatures of their geography. they happen to occupy the last resource-rich part of the temperate zone that was settled by europeans at the time of the enlightenment. and this temperate zone region proved to be very rich in energy and other natural resources and proved to be very easy to get from one point to another point because there were more miles of navigable inland waterways than in much of the rest of the world combined.

we should not be surprised if 10 or 20 years hence that we have closer relations with tehran than we do with Saudi arabia.

6


this played a large part in determining what america became. america is protected by oceans on two sides and the canadian arctic to the north. its only real security/demographic dilemma is with Mexico to the south. its geography has helped sustain its prosperity and also permitted it to be more idealistic in its approach to foreign affairs than more vulnerable states with genuine threats on their borders.

OUTLOOK: Will the natural geographic advantage of the U.S. continental land mass, temperate zone, rivers, and resources continue to deliver meaningful benefits in the future?

rK: Yes, and the most obvious example from a geographical resource standpoint at the moment is natural gas from shale. Shale gas is giving the United States a major advantage going forward in terms of energy and manufacturing.

OUTLOOK: In your book you say that what happens in Mexico may be as important to us as what happens in Europe.

rK: Mexico has a younger population than the United States and its population is growing faster than the american population. Meanwhile, Mexico’s economy is going to become one of the dozen largest in the world. its economic growth rate, even in the teeth of this global recession, was 4 percent. i wish we had 4 percent. So it’s a dynamic country. on the other hand, if you look at a map of Mexico and see who monopolizes the use of force, you’ll find significant regions dominated by various drug cartels. So it’s a very troubled country even as it is a very dynamic country, technologically and economically.

we don’t know which direction Mexico will go. But what Mexico eventually evolves into will have significant effect on what the U.S. evolves into because latin history is moving north. the southern halves of texas, New Mexico and arizona and the southern fourth of california are heavily latino. the northern third of Mexico is developing its own economy, its own reality, separate from that of Mexico city. the ties that link the northern third of Mexico to the american Southwest are becoming more and more intense, so we’re seeing a reorientation of the United States from an east-west shining sea of patriotic myth to a more north-south orientation.

what Mexico eventually evolves into will have significant effect on what the U.S. evolves into because latin history is moving north.

7


OUTLOOK: What are the key lessons of the book for American policy makers?

rK: one lesson is that we must pay attention not only to china and the Middle east but also to Mexico because no place is more important to the cultural evolution of the american Southwest, and by extension much of the rest of the United States, than Mexico.

OUTLOOK: What will the political geography of the world look like in 20 years? What will be the biggest changes from today?

rK: that’s a very good question. the biggest change is likely to be more emphasis on the arctic and the upper latitudes as a result of warming and the opening up of northern sea lanes. i also expect South america and africa to become more important in geopolitical terms or at least more integrated into the rest of the world than they are today.

the United States’ geography has helped sustain its prosperity and also permitted it to be more idealistic in its approach to foreign affairs than more vulnerable states with genuine threats on their borders.

8


ImplIEd FORwaRd swap RaTEsyears

Forward3-month lIBOR

1-year swap

3-year swap

5-year swap

7-year swap

10-year swap

today 0.31% 0.33% 0.44% 0.75% 1.15% 1.65%

0.25 0.31% 0.33% 0.48% 0.83% 1.23% 1.72%

0.50 0.33% 0.35% 0.53% 0.91% 1.32% 1.79%

0.75 0.34% 0.37% 0.59% 1.00% 1.40% 1.86%

1.00 0.35% 0.39% 0.65% 1.09% 1.49% 1.94%

1.50 0.41% 0.46% 0.83% 1.28% 1.66% 2.09%

2.00 0.48% 0.57% 1.02% 1.49% 1.83% 2.24%

2.50 0.68% 0.79% 1.26% 1.70% 2.02% 2.38%

3.00 0.88% 1.01% 1.50% 1.91% 2.21% 2.52%

4.00 1.34% 1.49% 1.94% 2.30% 2.54% 2.77%

5.00 1.84% 2.01% 2.38% 2.59% 2.82% 2.98%

pROjEcTIONs OF FuTuRE INTEREsT RaTEsthe table below reflects current market expectations about interest rates at given points in the future. implied forward rates are the most commonly used measure of the outlook for interest rates. the forward rates listed are derived from the current interest rate curve using a mathematical formula to project future interest rate levels.

HEdGING THE cOsT OF FuTuRE lOaNsa forward fixed rate is a fixed loan rate on a specified balance that can be drawn on or before a predetermined future date. the table below lists the additional cost incurred today to fix a loan at a future date.

FORwaRd FIXEd RaTEscost of Forward Funds

forward period (days)

Average Life of Loan

2-yr 3-yr 5-yr 10-yr

30 5 5 5 5

90 5 8 10 11

180 5 12 17 19

365 14 24 35 36

Costs are stated in basis points per year.

TREasuRy yIEld cuRVE

RElaTION OF INTEREsT RaTE TO maTuRITythe yield curve is the relation between the cost of borrowing and the time to maturity of debt for a given borrower in a given currency. typically, interest rates on long-term securities are higher than rates on short-term securities. long-term securities generally require a risk premium for inflation uncertainty, for liquidity, and for potential default risk.

3-mONTH lIBOR

sHORT-TERm INTEREsT RaTEsthis graph depicts the recent history of the cost to fund floating rate loans. three-month liBor is the most commonly used index for short-term financing.

kEy EcONOmIc INdIcaTORsGross domestic product (Gdp) measures the change in total output of the U.S. economy. the consumer price index (cpi) is a measure of consumer inflation. the federal funds rate is the rate charged by banks to one another on overnight funds. the target federal funds rate is set by the federal reserve as one of the tools of monetary policy. the interest rate on the 10-year U.S. treasury Note is considered a reflection of the market’s view of longer-term macroeconomic performance; the 2-year projection provides a view of more near-term economic performance.

interest rates and economic indicatorsThe interest rate and economic data on this page were updated as of 11/30/12. They are intended to provide rate or cost indications only and are for notional amounts in excess of $5 million except for forward fixed rates.

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Daily Rate

30 Day Moving Avg.

YIEL

D

1/1/0

6

5/1/0

6

9/1/0

6

1/1/0

7

5/1/0

7

9/1/0

7

1/1/0

8

5/1/0

8

9/1/0

8

1/1/0

9

5/1/0

9

9/1/0

9

1/1/1

0

5/1/1

0

9/1/1

0

1/1/1

1

5/1/1

1

9/1/1

1

1/1/1

2

5/1/1

2

9/1/1

2

11/30/12

3 Months Ago

6 Months Ago

3m 6m 1 2 3 5 10 15 30

November 2012

YIEL

D

3 Month

6 Months Ago

s Ago

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

EcONOmIc aNd INTEREsT RaTE pROjEcTIONsSource: Insight Economics, LLC and Blue Chip Economic Indicators us Treasury securities

2012 Gdp cpI Funds 2-year 10-year

Q4 1.70% 2.50% 0.15% 0.30% 1.72%

2013 Gdp cpI Funds 2-year 10-year

Q1 1.60% 1.80% 0.15% 0.30% 1.71%

Q2 2.20% 2.00% 0.15% 0.30% 1.75%

Q3 2.60% 2.30% 0.15% 0.31% 1.80%

Q4 2.90% 2.20% 0.15% 0.40% 1.85%

9


about coBank

coBank is a $90 billion cooperative bank

serving vital industries across rural america.

the bank provides loans, leases, export

financing and other financial services to

agribusinesses and rural power, water and

communications providers in all 50 states.

the bank also provides wholesale loans and

other financial services to affiliated farm credit

associations serving more than 70,000 farmers,

ranchers and other rural borrowers in 23 states

around the country.

coBank is a member of the farm credit

System, a nationwide network of banks and

retail lending associations chartered to support

the borrowing needs of U.S. agriculture and the

nation’s rural economy. headquartered outside

denver, colorado, coBank serves customers

from regional banking centers across the

U.S. and also maintains an international

representative office in Singapore.

for more information about coBank, visit the

bank’s web site at www.cobank.com

coBank announces 2013 Board OfficerscoBank this month announced the appointment of officers for its 2013 board of directors.

everett dobrinski, chairman of the board since 2008, will continue in the chairman’s role in the coming year. he is the owner and operator of dobrinski farm, a cereal grain and oilseed farm in Makoti, North dakota. he is also a member of the board of the farm credit council and previously served as chairman of Verendrye electric cooperative. in addition, he is a former director of the dakota pride cooperative and a current member of the board for the North dakota coordinating council for co-ops. dobrinski first joined the coBank board in 1999.

dan Kelley will serve as first vice chairman. Kelley is chairman and president of GrowMarK inc., an agricultural and energy cooperative in Bloomington, illinois. a director since 2004, he produces corn and soybeans in a family farming partnership near Normal, illinois. in addition, he serves as a director for National Bank, Nationwide Mutual insurance and Midwest Grain llc, a grain merchandising company. he is also chairman of the illinois agricultural leadership foundation.

Mary fritz will serve as second vice chairman. fritz is the owner of a dry land grain and cow/calf operation in chester, Montana. a director since 2003, she also serves as vice chair of the farm credit council board and is a former director and chair of Northwest farm credit Services in Spokane, washington.

“i look forward to working closely with dan, Mary and the rest of our board members in the coming year,” dobrinski said. “the success coBank has enjoyed is due in large part to our cooperative structure and the fact that our board is elected by customer-owners throughout rural america. our top priority for 2013 remains the same as always: preserving the long-term financial strength of the bank so it can continue fulfilling its mission and delivering dependable credit to the vital rural industries we serve.”

as previously announced, the number of seats on the coBank board is being consolidated as part of the merger between coBank and U.S. agBank, which closed at the beginning of 2012. Going forward, coBank will have

dOBRINskI

kEllEy

FRITZ

10


24 elected directors from six voting regions around the country, in addition to between two and five appointed directors. the names of all of the bank’s 2013 directors are listed in the table below, along with occupation, residence, region, seat type and term expiration date.

REGION NamE OccupaTION REsIdENcETypE OF

sEaT

TERm

EXpIREs

eastwilliam h.

harris

owner of a cash crop

farming operationleroy, NY

Modified

equity2015

eastJames a.

Kinsey

owner/operator of a

purebred angus seed-

stock operation

flemington, wVone-member-

one-vote2016

eastJ. Scott

Markham

owner of a diversified

corn, dairy heifer and

beef operation

constableville,

NY

Modified

equity2013

Southrobert M.

Behrcoo, citrus world lakeland, fl

Modified

equity2016

SouthGeorge B.

Kitchens

GM & ceo, Joe

wheeler eMcdecatur, al

one-member-

one-vote2013

Southdavid l.

reindersceo, Sunray co-op dumas, tX

one-member-

one-vote2014

Southrichard w.

Sitman

owner, retail rental

and storage businessKentwood, la

one-member-

one-vote2015

centraleverett M.

dobrinski

owner, cereal grain

and oilseed farmMakoti, Nd

one-member-

one-vote2015

centraldaniel t.

Kelley

owner, corn and

soybean farmNormal, il

Modified

equity2013

centraldavid J.

Kragnes

owner/operator of a

diversified farm raising

wheat, sugarbeets,

soybeans and corn

felton, MNone-member-

one-vote2016

centralJames r.

Magnuson

GM & ceo,

Key cooperativeSully, ia

one-member-

one-vote2014

central Kevin a. Still ceo, co-alliance llp danville, iNone-member-

one-vote2014

Mid plains robert w. Bray

farmer and rancher;

owner of big-game

hunting business

redvale, coModified

equity2014

Mid plainsoghi a. “tony”

deGiusti, Jr.

owner of an alfalfa,

grass hay and wheat

farm and cow/calf

stocker operation

tuttle, oKModified

equity2014

11


REGION NamE OccupaTION REsIdENcETypE OF

sEaT

TERm

EXpIREs

Mid plainsronald J.

rahjes

farmer producing

wheat, corn, soybeans

and grain sorghum

Kensington, KSModified

equity2015

Mid plains clint e. roush

owner/operator of

a wheat, alfalfa hay

and stocker cattle

operation

arapaho, oKone-member-

one-vote2014

Mid plainsScott h.

whittington

GM, lyon-coffey

electricBurlington, KS

one-member-

one-vote2016

Northwest Gene J. Bataliowner, spearmint

farmYakima, wa

Modified

equity2013

Northwest Mary e. fritz

owner of a dry land

grain and cow/calf

operation

chester, MtModified

equity2015

Northwesterik N. “rick”

Jacobson

retired president &

ceo, Norpac foods

inc.

Bend, orone-member-

one-vote2014

westJ. “less”

Guthrie

owner of a cow/calf

and stocker cattle

ranch and diversified

farming operation

porterville, caModified

equity2013

westJon e.

Marthedal

owner of a farm

producing grapes,

raisins and blueberries

fresno, caone-member-

one-vote2013

west alarik Myrin

owner/operator of a

ranching and farming

operation

altamont, UtModified

equity2014

westdavid S.

phippen

almond grower

and co-owner of an

almond processing

company

ripon, caModified

equity2015

william M.

farrow iii

president & ceo,

Urban partnership

Bank

evanston, il appointed 2014

Gary a. Millerpresident & ceo,

GreyStone powerdouglasville, Ga appointed 2013

catherine

Moyer

ceo & General

Manager, pioneer

communications

Ulysses, KS appointed 2014

Barry M.

Sabloff

retired executive Vice

president, Bank onewinnetka, il appointed 2016

12


Nine current members of the board are stepping down at the end of 2012 as a result of the board consolidation process. those directors include: wayne S. allen, wesley d. Brantley, John J. “Jack” Breen, John c. eisenhut, Kenneth w. Shaw, donnell Spencer, david V. Vanni, robert J. wietharn and leland t. willeke. Most will continue to serve as non-voting board advisors throughout 2013. in addition, director robert d. Nattier is retiring from the coBank board after 10 years of service, including five as chair of the board’s Governance committee.

“i’d like to personally express my gratitude to these directors for their dedication throughout a crucial transition year for our board,” dobrinski said. “all have worked tirelessly to ensure the success of the coBank-U.S. agBank merger, and we deeply appreciate their service and their commitment to the mission of the farm credit System.”

13


Commentary in outlook is for general information only and does not necessarily reflect the opinion of CoBank. The information was obtained from sources that CoBank believes to be reliable but is not intended to provide specific advice.

coBank director Bill Farrow appointed to Board of chicago Fed

coBank director william M. farrow iii has been elected to a three-year term on the board of the federal reserve Bank of chicago, one of 12 regional reserve Banks that make up the nation’s central banking system.

farrow is the president and ceo of Urban partnership Bank, a chicago-based certified community development financial institution. he previously served as executive vice president

and chief information officer for the chicago Board of trade. he has served as an outside appointed member of the coBank board since 2007.

as a member of the chicago fed’s board, farrow and his fellow board members will provide the federal reserve System with a wealth of information on economic conditions in the region. this information is used by the federal open Market committee (foMc) and the Board of Governors in reaching decisions about monetary policy. the chicago fed serves the Seventh federal reserve district, which includes portions of illinois, indiana, wisconsin and Michigan and the entire state of iowa. in addition to participating in the formulation of monetary policy, the chicago fed supervises member banks and bank holding companies, provides financial services to depository institutions and the U.S. government, and monitors economic conditions in the district.

“i am honored to have been chosen for this position and look forward to working with my fellow board members to fulfill the chicago fed’s mission and public policy objectives,” farrow said.

the chicago fed’s board is designed to represent an economic cross-section of the district. Six board members (three bankers and three non-bankers) are elected by representatives from the Seventh district banks. the other three members are appointed by the federal reserve’s Board of Governors.

farrow holds a master’s degree in management from Northwestern University. in addition to serving as ceo of Urban partnership Bank, he is also the owner of winston and wolfe, llc, a privately held technology development company. in addition, he serves as a trustee of the illinois institute of technology.

FaRROw

Documents

Renemge of Gerograpphy