I am trying to be objective about president elect Obama's various "infrastructure jolt" proposals. David Gergen, who I have my peronsal doubts about as any great intellect, informs me Obama has appointed a team of economic advisors beyond brilliant.
Yesterday, Obama said he was going to go through the government's budget line by line and eliminate wasteful programs and spending. That would be wonderful and, of course, we have heard this before.
Our economic situation is so dire it places a lot of wind at Obama's back as did 9/11for GW. Thus, Obama is in a perfect position to strike fast and hard. The longer he is in office the normal honeymoon period begins to fray and his ability to bring about change erodes.
What continues to concern me is the enormity of the funds already being spent and about to be spent by government and the aftermath problems that will eventually ensue. We are in a deflationary environment (even art and antique cars prices are falling) but curing our problem with massive bail outs will eventually create significant inflation. Money chases production and elevates prices when the amount of money exceeds what is produced. No doubt some of these excess funds will find their way back into the stock market.
Another concern is that Obama's goal is to make Americans spend, go into the stores and do what got them into the mess in the first place. Spending two trillion dollars to jump start the economy works out to about $7/capita. What we need to become are savers not spenders. We need to restore confidence in the value of our currency - the value of a Roman coin is in its antiquity. Debase a nation's currency and you ultimately debase that society.
Lastly, it appears Obama either said whatever he said to get elected and will abandon his rhetoric to govern or is so circumscribed by our economic woes he cannot be the president he intended by bringing about all that undefined change he promised.
In the former case that would be nothing new because politicians are not above saying one thing and doing something else. In the latter, however, he could run into a tremendous amount of resistance from within his own party and among those who supported him and placed their faith in his every word.
Killing government programs means slaying entrenched oxen and that means goring some politician's pet project. Nixon tried to eliminate a WW 2 eyesore that obscured his view of The Mall when he looked out the window from the Oval Office. I forget whether Nixon accomplished this goal before he resigned but Gore Vidal in "Nixon Agnosites" inidcated he had not at the time Vidal's book was published, if memory serves me correctly.
Bureaucracy outlives all presidents who Constitutionally serve only 8 years. Bureaucrats are expert at outwaiting presidents and they have job security.
For sure desparate times provide more grease for desparate actions so Obama has a relatively free hand and a Congress that should be his captive audience but many newly elected Democrats are conservative and could be vulnerable to a very far left agenda of tax and spend and then what happens if all this taxing and spending does not work? Also what happens if new acts of terrorism and/or the Iraq and Afghanistan Wars do not co-operate? Then there is the intractable issue of Iran's nuclear goal and Russia' desire to throw their energy resource weight around.
Finally, and most ironically, China holds most of the the liquid chips and their actions will go a long way towards determining Obama's flexibility. Why? Because China is the nation that most likely can and will fund the purchase of our new debt with their excess dollars. Consequently, we will be very indebted to China and a few Middle East Sheikdoms before Obama's "infrastructure jolt" plays itself out and those theoretical 2 1/2 million people are employed. External nations who are our natural antagonists will become our largest creditors and that could go a long way towards shaping Obama's future policy responses.
The next year will be quite interesting - our entire nation's future will be because our destiny is less and less in our own hands. Getting and spending we have laid waste our power. Leading from weakness is never encouraging. (See 1 below.)
Iran reaches critical stage with respect to operating centrifuges. (See 2 below.)
With Government and politicians in the driver's seat no wonder Detroit is a car wreck. Better to be seen asking questions than listening for the answers because the latter could prove embarassing. (See 3 below.)
Stealing an election is frankly Franken. Liberal money is also pouring into Georgia to defeat Chambliss. (See 4 below.)
Projecting forward, should the war in Afgansitan heat up, as is likely, because reports suggest al Qaeada has now focused its insurgency effort in both Pakistan and Afghanistan, the question is whether the press and media will go back to reporting daily casualties now that Obama is president? In less than two months every problem will become Obama's as was the case when GW took over from Clinton during a mild recession etc. It will be interesting to see how the media and press treat Obama since he is one of theirs. I still miantain should Obama not succeed they will turn on him in order to distance themselves from their favored choice. The press have been known to eat their own so as to avoid blame. After all they have their reputation for objectivity to mainatin.
Leaving town Friday so no more memos for the rest of the week. After all that turkey you are due a reprieve.
Have a Great and Safe Thanksgiving!
Dick
1) Buyer's Remorse on the Left
By Janice Shaw Crouse
One after another, we are learning the names of the future Obama Administration. Behold, they are not new faces, nor are they the change agents that Obama's campaign rhetoric promised. Instead, we are seeing Clinton retreads and a surprising move toward the political center. Rather than the far left team of new faces and new politics that the President-elect's supporters dreamed about when they cast their ballots for the "change" they could believe in, we are seeing familiar faces and experienced pols. More than a few Obama fans are experiencing buyer's remorse as they discover that "The One" seems to be abandoning them and their policies.
When confronted with the far left's disappointment over the first appointments to be announced, one of the Transition team members responded, "An Obama White House will be focused on meeting the next challenge, not winning the next election."
Well, that response does not pass the laugh test! Or perhaps the correct translation is, "We're so sure we'll win the next election, we don't even have to take that into consideration."
Clearly, Obama intends to be more than a one-term president; even before his Inauguration, he is already starting his next campaign. He is putting his chief competition, Senator Hillary Clinton, safely inside his camp and working to dispel any evidence that he is an extremist. Rather than come in and clean house, the President-elect seems to be embracing politics as usual.
The "insult" added to previous "injury" came with an announcement over the weekend that Obama's White House will continue the political office that was held by Karl Rove in the Bush White House. During his campaign, of course, Mr. Obama vowed to keep politics out of the White House. He criticized the Bush Administration for its partisanship and accused President Bush of running a "perpetual campaign." The Obama Administration, he promised, would end what he called "politics as usual."
But he is appointing the usual -- a bevy of inside-the-beltway politicians.
Thus far, there are no new faces and no one who will obviously push for new policies. Eric Holder (nominee for Attorney General) and Rahm Emanuel (Chief of Staff) bring lots of Clinton-era baggage; Tim Gaithner (Treasury Secretary) is part of New York's big-money establishment. Tom Daschle, (HHS Secretary) is welded into the Senate's good ‘ole boy network. Further, Obama helped to protect Joe Lieberman's Senate committee chairmanship even though Lieberman crossed party lines to actively campaign for John McCain. The leftist Bible, The Nation, noted recently that "not a single, solitary, actual dyed-in-the-wool progressive" has even been mentioned for the Obama Cabinet.
The Far Left contends that Barack should be dancing with the ones that brought him to the White House. Those on the right who treasure our traditional America values of personal responsibility and freedom have far more serious cause for worry.
While Obama is filling top slots of his Administration with politicians from the center, his agenda will be thrust forward by the Schedule C minions in the lower levels of government who will be able to work under the radar to push his far left ideology. That is the bottom-up strategy that he learned as a community organizer and a strategy that links him with his primary season competitor, Hillary Clinton, who promoted the feminist goals of the Beijing Platform for Action through various task forces set up in the federal agencies following the U.N.'s Beijing World Conference on Women. Both of these leftist politicians have learned to speak the language of the masses while working behind the scenes on the policies of the radical true believers.
Thus, Obama's appointments are sending a signal that his administration will be far more hawkish than his campaign rhetoric indicated. In addition to the likely appointment of Senator Clinton as Secretary of State, there are other signs that President-elect Obama is changing his stance on the war in Iraq -- despite official assurances that his position on Iraq hasn't changed and won't change. He seems to be leaning toward retaining Robert Gates, President Bush's Defense Secretary. Also, he is leaning toward a McCain backer, General James Jones, former NATO commander, as National Security Advisor and Janet Napolitano, governor of Arizona and a supporter of the Iraq war, for heading the Homeland Security Department. These possible appointments appear to signal a weakening of his promise to withdraw troops over the next 18 months.
The possible appointment of Mrs. Clinton to the top foreign policy position also raises questions about the U.S. position on Iran and Israel. During the campaign, Senator Clinton held to a hard line regarding Iran and Senator Obama famously talked about sitting down to negotiate "without preconditions." Senator Clinton has been a steadfast supporter of Israel (not any surprise in light of her numerous Jewish constituents in New York) and some pundits think that she would aggressively pursue a Middle East peace deal if she were Secretary of State.
Beyond questions of policy, critics are concerned that Obama is shaping a third Clinton term. The sheer drama of appointing Hillary, with the added soap-opera potential of husband Bill's antics, is cause for apprehension to many of Obama's supporters who fear that his agenda will be overshadowed by the Clintons' egos.
To repeat: what Obama's critics are overlooking is that he is a former community organizer; he prefers to work under the radar, starting from the grassroots. Those who are looking at the top layer of the Obama Administration wanting to see a sign of the "second coming of Saul Alinsky" (as one blogger put it), are going to be disappointed. Those who watched First Lady Hillary Clinton set up little fiefdoms in all the government agencies to push the policies of the Beijing Platform for Action and those who observed Senator Barack Obama utilize ACORN to build a political machine that spread from Chicago throughout the nation will recognize the strategy and tactics of master manipulators.
Even though they differ on many other fronts, Barack and Hillary are kindred spirits when it comes to using the government's legendary "soft power" and the national "bully pulpit" to achieve their personal and political ends. So, while the nation is lulled into thinking that Barack is moving to the center, his minions who are actually carrying the water will be hard-core "progressives" moving the leftist agenda forward largely out of the public's sight in the mid-level management positions of the government's sprawling bureaucracy. Much of the real action will happen behind the scenes in thousands of small decisions and initiatives that will remain nearly invisible until -- like the explosion in the number of mother-only families that followed from Lyndon Johnson's War on Poverty -- the transformation of their cumulative effects begins to emerge.
2) Iran announces more than 5,000 centrifuges working, launches Kavosh-2 (Explorer-2) rocket into space
Minutes after launching a three-stage rocket carrying a research lab, Wednesday, Nov. 26, Iran's nuclear chief announced Iran now has more than 5,000 centrifuges operating at its uranium enrichment plant, flatly defying UN resolutions.
Explorer-2, a three-stage rocket, spent 40 minutes in space; the space lab aboard was parachuted to land. Military sources report that this was the first time Iran had launched a three-stage rocket like the Israeli Shavit.
It followed a test-fire earlier this month of a new surface missile, the 2,000-km Sejili.> The special features of this ballistic missile point to significant advances in Iran's solid-propellant, two-stage missile development. Military experts note that the same long-range ballistic technology applies equally to putting satellites in space and launching weapons capable of carrying nuclear warheads.
After the Sejil's launch, Tehran will no doubt start converting its arsenal of surface missiles from liquid to solid fuel and go on to develop a capability for launching space satellites both for military use and civilian research.
Two missile launches in a month indicate that Tehran has put its ballistic missile development into top gear, an extremely troubling development for Washington, Jerusalem and the European nations within range.
Last February, Iran launched Explorer-1 which almost certainly failed to reach orbit, at the same time unveiling its first space center and promising to put its first satellite in space next year. Then too analysts pointed out that the Explorer series could serve doubly for telecommunications and guiding intercontinental missiles.
Unfortunately, military sources, Israeli leaders appear to have fallen behind the alarming events rushing forward in Iran: In a single week, the UN nuclear watchdog reported Tehran had stocked enough enriched uranium to make its first A-Bomb, while US analysts expect the Iranian to be able to make three bombs by the end of 2009. The Kavosh-2 launch shows Iran may have already perfected the missile technology to deliver warheads. However, instead of addressing this peril, defense minister Ehad Barak is mired in a huge effort to hold back a military operation in the Gaza Strip, keep his Labor party from crumbling and battling the Hebron Jewish community.
3)A Car Wreck Made in Washington Can Democrats afford to let Detroit succeed?
By HOLMAN W. JENKINS, JR.
The wrong folks were in the witness chairs in last week's congressional hearings on auto doom. A fantastic moment was Massachusetts Rep. Stephen Lynch assailing Rick Wagoner about whether GM was asking China for a bailout too. The implication seemed to be that GM can't afford its inflated UAW pay packages because it's squandering money to build cars in China.
Mr. Wagoner mildly answered that GM's China operations are profitable. They actually help to underwrite the massive losses in the U.S.
Mr. Lynch showed no sign he was actually listening, having illustrated his disapproval of foreigners. He didn't ask the obvious question: If GM can make cars profitably in China, why doesn't GM import them to the U.S.?
For that matter, any of the brainpans on the Hill might have asked why Ford and GM managed to build viable auto businesses all over the world but not in North America.
You don't need the Hubble telescope to tell the answer: The UAW is present only in the U.S., not all over the world.
What you wouldn't know is that the single biggest factor in preserving the UAW's monopolistic power has not been labor law but Congress's fuel-economy rules. These effectively have required the Big Three to lose tens of billions making small cars at a loss in UAW factories. Not only were the companies obliged to forgo profits they might have earned importing such cars, but CAFE deprived them of crucial leverage to control labor costs by threatening to move jobs to a factory in Spain or Taiwan or Poland. (Let's face it, that's what other successful U.S. manufacturers do.)
All this was deliberately designed to give the UAW the means to defend uncompetitive wages in the face of a globalizing auto business. It had nothing to do with making sure Americans have high-mileage cars. Yet not a single legislator last week breathed a hint of recognition that something might be behind Detroit's woes other than an improbable series of "stupid decisions" (as another Massachusetts congressman put it) by 18 CEOs over 30 years.
There's a larger lesson here for the Obama administration. A whole lot of Rube Goldbergism is coming home to roost, in the auto business, in the mortgage market, in the health-care market, in farm policy. We need to simple-down. The economy has a giant adjustment ahead, paying off debts, going from a heavy absorber of foreign capital and goods to a rebalanced relationship with the world.
The good news is that we have a natively resilient, flexible economy capable of making these adjustments -- unless bound up in Rube Goldbergian mandates. Barack Obama, bless his heart, may or may not be ready for what's coming his way. Yet his objectives are perfectly amenable to the simple-down approach.
He asked on Monday for Detroit to deliver a "plan" somehow to reconcile, at long last, the fantasy life of Washington, with nobody losing a job, with super energy-efficient cars, and yet somehow all this being done at a profit to Detroit.
Here's a plan, but it requires Mr. Obama to play a role too, finally relinquishing such chronic free-lunchism where autos are concerned. He should simply get rid of the CAFE rules and impose a gasoline tax to move the country to a "new energy economy," if he really believes in panicky climate predictions and/or that "energy independence" would be a net improver of American welfare. And be prepared for Detroit to shift jobs offshore if the UAW won't concede competitive labor agreements.
Not acceptable? Here's an alternative plan: Buy out the UAW with taxpayer dollars and free the Big Three to staff their factories with nonunion workers the way Toyota and Honda and BMW do. Last week's Hill circus notwithstanding, the negotiation that really needs to take place now is between Democrats and their union allies. The Big Three executives are just in the way.
Of course, Mr. Obama may have ideas of his own. His climate speech last week was Rube on steroids, aimed at creating whole client sectors of the economy dependent on his favor and endlessly flowing subsidies. It would be a poor excuse indeed of an economic depression that didn't create demagogic opportunities to boss around entire patches of the economy and extract political rents for doing so. There will be plenty of scope for Mr. Obama to head in this direction if he chooses.
Then again, he might just hand the next election cycle to the GOP, assuming Republicans can figure out that they're supposed to be the party of non-Rube-Goldberg government.
4) The Battle for Minnesota Is Just Getting Started: Al Franken demands to know the identity of every voter whose absentee ballot was rejected.
By JOHN FUND
In a government warehouse in the northeast part of this city, the recount of the Senate race between GOP Sen. Norm Coleman and Democrat Al Franken is orderly and transparent. Teams of workers sort paper optical-scan ballots as campaign representatives look on. Minneapolis election director Cindy Reichert allows outsiders almost to lean over the shoulders of the counters and observe their work. At least here, everyone is "Minnesota nice."
That may soon change. Today, the state's five-member Canvassing Board meets to rule on Mr. Franken's demand that it review whether absentee ballots rejected by county officials can be added to vote totals. Those ballots are likely to determine the outcome and will be the center of challenges in the courts or before the U.S. Senate, which is the final judge of the winner. A lot rides on the result because the Minnesota race, along with a Dec. 2 runoff in Georgia, will determine if Democrats get the 60 votes they need to cut off GOP filibusters on a party-line vote.
"Things are clearly moving in the wrong direction for Franken [in the recount]," Larry Jacobs, a political scientist at the University of Minnesota, told the St. Paul Pioneer Press. He says many of the challenges filed by both campaigns against individual ballots are frivolous and will be withdrawn or dismissed by the canvassing board: "The Franken campaign is going to win or lose based on what happens with the absentees."
A review of less than half of Minnesota's 87 counties has found that at least 2,066 absentee ballots were rejected because the voter wasn't registered, didn't sign the ballot or have a witness. Late yesterday the Franken campaign claimed it had learned of hundreds of "missing ballots." Those numbers dwarf the 725-vote margin Mr. Coleman had on election night, as well as the 215-vote lead he had before the recount began, and his current lead of some 200 votes.
The problem with adding absentee ballots is state law. According to an advisory opinion issued last week by the office of Democratic state Attorney General Lori Swanson, "Only the ballots cast in the election and the summary statements certified by the election judges may be considered in the recount process." A recount manual prepared this year by the office of Secretary of State Mark Ritchie, also a Democrat, makes clear that the canvassing board only supervises "an administrative recount" that is "not to determine if absentee ballots were properly accepted."
But Mr. Franken's attorneys are now arguing that Minnesota law also requires that each county's election report include "the complete voting activity within that county." They are also invoking the Equal Protection arguments cited by the Supreme Court in Bush vs. Gore, as well as rulings from Washington State's disputed 2004 governor's race -- that contest was decided for Democrat Christine Gregoire by 133 votes after an initial count and two subsequent recounts.
Intent on harvesting absentee ballots, the Franken campaign has presented affidavits from four voters who claim their ballots were improperly rejected. It hopes to find more, now that a Ramsey County judge has agreed to a Franken demand that it have access to data from that county on whose absentee ballots had been rejected. After initially saying rejected absentee ballots shouldn't be part of the recount, the secretary of state's office now says the information should be made public.
If the absentee names are made public, a mad scramble will ensue to contact those voters and get them to demand their ballots be counted. That's just what happened in the 2004 governor's race in Washington State after King County Judge Dean Lum allowed local Democrats access to the list of provisional voters that hadn't been counted because either there was no signature or no match between the signature and the voter registration on file with officials.
Judge Lum's ruling was criticized by many election lawyers because, in the 2002 Help America Vote Act, Congress stipulated that provisional ballot votes remain private -- a provision mirrored by Washington State's constitution. But Judge Lum ruled such arguments weren't as important as the need to make sure every vote counted -- an echo of the arguments Democrats made during Florida's 2000 recount.
His ruling set off a partisan hunt for votes. Ryan Bianchi, communications assistant for Ms. Gregoire, told the Seattle Times that Democratic volunteers asked voters if they had cast ballots for Ms. Gregoire. "If they say no, we just tell them to have a nice day," he said. Only if they said yes did Democrats ask if they wanted to make their ballots valid.
Margot Swanson, a voter in Redmond who forgot to sign her ballot, told me she was contacted by phone and asked whom she voted for. When she said Republican Dino Rossi, the caller quickly hung up. "I puzzled out there might be a problem with my ballot, and I found out there was," she said. "But I would never have known from the tricky call I got."
Republicans played catch-up by belatedly using their own phone banks to call voters. But Democrats turned in some 600 written oaths from people declaring how they had intended to vote, and Republicans about 200. Those ballots were all counted, and made the difference in the race.
Games can be played with such last-minute ballots. In Washington State, one voter submitted an affidavit that a Parkinson's disease patient who could neither speak nor write was nonetheless "mentally strong" and had completed a ballot signed by her husband. But it is illegal for anyone to sign a ballot on behalf of someone else; they can only witness it. And in Minnesota, even Secretary of State Ritchie criticized the Franken campaign last week for falsely claiming that an elderly woman in Bemidji had her absentee ballot rejected because she had suffered a stroke and her new signature didn't match the one on her registration form. In fact, no ballots were rejected due to signature mismatches, according to the local county auditor.
Democrats with experience from the Washington recount are now advising Mr. Franken. Paul Berendt, a former chair of the Washington Democratic Party, was in Minneapolis this month. "What I bring to this effort," he told Oregon Public Radio from the Minneapolis recount office, "is that I understand every single step of this recount process and the things that you need to look for in order to make sure that every vote is counted."
If the strategy of adding previously rejected ballots to the Minnesota Senate recount is successful, a final outcome could be months away. In 1975, the U.S. Senate refused to accept New Hampshire's certification that Republican Louis Wyman had won by two votes. The seat was vacant for seven months, with the Senate debate spanning 100 hours and six unsuccessful attempts to break a filibuster and vote on who should be seated. The impasse ended only when a special election was agreed to, which was won by Democrat John Durkin.
Given how critical Minnesota's election is for the outcome of filibusters, don't be surprised if this recount becomes "Washington mean" when the Senate convenes in January.
Tuesday, November 25, 2008
Sunday, November 23, 2008
Obama No Socialist?
Professor Wilzig analyses Obama and his Middle East policy by reading tea leaves and projecting. Interesting, objective and scholarly article. Worthy read. (See 1 below.)
Olmert and Bush meet Monday. They have many things in common but most of all their low poll standings among the populace of their respective nations. GW somehwat more undeserving than Olmert (See 2 below.)
Barry Rubin, ever the hawk, wise in the advice he is offering. (See 3 below.)
Chapman - Obama not a socialist but he has other attributes that are worrisome. (See 4 below.)
Nobody may care but Rumsfed also offers some sound advice. (See 5 below.)
Michael Halloran offers his advice on the new Barbary Coast - Somali - pirates and how to stop them.
Michael Oren says get tough. Oren wrote a book, which I reviewed, about the U.S.'s involvement in the Middle East and documments it back to alomst the nation's founding. (See 6 below.)
Dick
1) Obama and the Middle East: Reading Election Tea Leaves
By Sam Lehman-Wilzig
In Israel, Barack Obama's victory has raised the question: "Is it good for Israel?" The answer depends on several yet unknown factors.
1) Who will win the Israeli elections?
As previous American administrations have learned, without Israeli cooperation the peace process cannot move forward. If Kadima wins and Tzippi Livni forms a coalition, Obama's election could be a watershed, as he will have an Israeli government that wants to continue the peace process. On the other hand, if Likud wins and Benjamin Netanyahu becomes Prime Minister, it is hard to see significant forward movement -- and Obama may not want to waste any political energy. Obama's victory might even influence the outcome of the Israeli election in Livni's favor. Israelis may want to avoid serious tension with the United States, their greatest friend and ally, something that would occur with Netanyahu at the helm.
2) Who will be the next Palestinian President?
The 2009 Palestinian elections will determine the next Palestinian leader. If current Chairman Mahmoud Abbas wins, then the Palestinians will have a leader who wants peace but is too weak to make significant concessions. President Obama might be able to offer economic carrots to Abbas, but the real problem is a lack of political courage and the ability to persuade his people that true peace can only come by relinquishing the "Dream of Refugee Return." Other younger and more determined Palestinian leaders might be able to succeed, if they are willing. Here too Obama has to wait for the election outcome.
3) Does Obama have street credibility with the Arab world?
The answer is obvious: more than any other entering President. With a middle name of Hussein and his paternal connection to Islam (he is not a Muslim) Obama will be viewed as a more honest broker than previous Presidents. For Israelis, the appointment of Rahm Emanuel, the son of an Irgun fighter, as White House Chief of Staff, will quell suspicions of Obama having a "pro-Arab bias". Thus, it is possible that all sides of the Israeli-Arab conflict can feel a measure of confidence in the American President.
4) What about other hot spots connected to Israel?
Here Obama's approach to international relations brings good news. Without a doubt he will encourage Israeli negotiations with Syria, and the Syrians too will be less wary of dealing with Israel and an American administration that does not call it part of the "axis of evil". And if Israel and Syria reach an agreement, Lebanon will be in the bargain too. That leaves the Palestinians, and most important of all: Iran.
5) Whither Iran?
Once again, the answer is to be partly found in the election tea leaves: Iranian elections! If Iran's current administration returns, then Obama's promised discussions with them will be short. If a more "moderate" President is chosen -- and perhaps that can occur precisely because Obama is far less threatening of Iranian sovereignty -- then there is an outside chance that Obama can diffuse the crisis. Moreover, if Russia and China conclude that Obama made a real effort to talk to the Iranians and came up empty, greater U.N. sanctions would be in the offing - and after that perhaps "sterner" measures from the Obama Administration. Israeli-Syrian negotiations could be influential here, if they include conditions that Syria break with terrorist regimes. Iran then might feel the diplomatic noose tightening and perhaps seriously consider a negotiated settlement.
6) What about the price of oil?
If oil prices stay depressed or drop even more, Iran's economy will be deeply in trouble - another incentive for possible serious negotiations regarding its nuclear program. What does Obama have to do with this? Any significant alternative energy program initiated by the Americans would have repercussions in the oil market, even if the actual impact on production and prices wouldn't be felt for years. The perception of eventual Middle East power decline cannot but move the Middle East power brokers to try and clear up their political and economic muddles.
In short, Obama is a huge "Joker" thrown into a complex game of Middle East poker. It is his hand to play, but he will need a few other good cards to succeed.
2)Rice: Peace deal delayed due to political situation in Israel
Bush, Olmert to meet in Washington Monday to discuss Iranian nuclear program, Israel-PA peace talks. PM aide: He wants to leave process in best possible shape
President George W. Bush and Israeli Prime Minister Ehud Olmert, two lame-duck leaders, look to their final meeting to leave a blueprint for fulfilling their ambitious but unrealized Mideast agendas.
The White House session Monday evening was expected to focus on Iran's nuclear program and progress in Israeli-Palestinian peace talks.
Just a year ago, Olmert and the Palestinian president, Mahmoud Abbas, proudly announced the resumption of peace talks after a seven-year hiatus at a summit hosted by Bush in Annapolis, Maryland. The three set an ambitious target of wrapping up a final peace deal by the end of 2008.
Despite frequent negotiating sessions, two trips to the region by Bush and eight more by Secretary of State Condoleezza Rice, the sides have little to show for their efforts and have acknowledged the year-end target will not be met.
"Even though there was not an agreement by the end of the year, it is really largely because of the political situation in Israel," Secretary of State Condoleezza Rice told reporters aboard Air Force One as Bush back from a summit in Peru.
Still, she tried to sound upbeat about the peace process. "It's in pretty good shape," Rice said.
With his time in power running out, Olmert has become increasingly candid, saying Israel will have to withdraw from almost all the West Bank and parts of east Jerusalem to make peace with the Palestinians. Talk of such concessions was virtually unheard of just a few years ago.
"I know that Mr. Olmert wants to leave to whomever is elected as the next prime minister the peace process in the best shape possible," spokesman Mark Regev said.
Bush, who spent the weekend in Peru at a meeting of Pacific Rim nations, invited Olmert to Washington as part of his final round of talks with world leaders before he leaves office Jan. 20.
Olmert, who announced plans to resign in September amid corruption charges, will step down after a successor is chosen Feb. 10.
'It's a farewell, a double farewell'
With hardline opposition leader Benjamin Netanyahu leading in Israeli polls, the future of peace talks appears murky. Netanyahu wants to keep much of the West Bank and all of east Jerusalem - areas captured by Israel in the 1967 Mideast war - and believes peace talks should be scaled down to discussions on the Palestinian economy. That approach has been rejected by the Palestinian leadership.
As for Tehran's nuclear program, Israel has identified it as the biggest threat in light of Iran's development of long-range weapons and its president's repeated calls for the destruction of the Jewish state. A report this past week by the International Atomic Energy Agency said Iran was stonewalling attempts to monitor its nuclear activities.
Israel believes Iran will be capable of building a bomb by 2010.
The UN Security Council has imposed three rounds of economic penalties against Iran, which insists its nuclear program is peaceful and designed to produce energy. Both the US and Israel say they hope diplomatic pressure resolves the standoff, but have not ruled out military action.
Olmert often speaks of the close personal friendship he has developed with Bush over the past three years. When Bush visited Israel in May, Olmert showered the president with praise, saying, "You're a great person, you're a great leader, and you're a great friend."
Though largely unpopular internationally, Bush is loved in Israel, where he is seen as a staunch defender of the US ally.
"It's a farewell, a double farewell," said Danny Ayalon, a former Israeli ambassador to Washington. "They will try to sum up a period and cement all the understandings and agreements between the US and Israel over the last eight years."
After Monday's meeting, Olmert and his wife, Aliza, will dine with president and first lady Laura Bush at the White House.
The two leaders probably also will discuss the global financial crisis, Israel's indirect peace talks with Syria and the future of arms and aircraft deals to Israel.
During his visit to Washington, Olmert also planned to meet with Rice, Vice President Dick Cheney, national security adviser Stephen Hadley, and congressional and Jewish leaders.
3) The Region: Don't flatter your enemies, protect your friends
By BARRY RUBIN
In explaining why he was too fearful to vote in Jerusalem's mayoral election, an east Jerusalem Palestinian shopkeeper, Issam Abu Rmaileh, said, "I would have liked to vote because it's in our interest, but who's going to protect me and my family afterwards?"
Let's call it the Abu Rmaileh principle; it is extraordinarily important in the Middle East. Why should someone support you if you cannot protect them? If they cannot depend on you to be tough, they might as well play it safe by doing nothing or make their own deal through appeasement and shout radical slogans.
Here is the Abu Rmaileh principle at a higher pay grade. Jordan's Foreign Minister Salah Bashir stated in a closed meeting, "For us the Iranian surge for hegemony has become a crisis," according to a participant who asked not to be named.
And here's the flip side from a frustrated American colonel fighting in Iraq, "All these guys we rounded up, they're saying in the interrogation, if we don't torture them, we're not going to get the information."
HOW IMPORTANT is popularity? According to the school enthusiastic about President-elect Barack Obama in the United States, it is everything. One journalist explained that al-Qaida is afraid of Obama because, presumably, he will win away Muslims from supporting radical Islamism. It is written in the Washington Post: "Even among the followers of radical groups, such as Hamas and the Taliban, Obama has inspired a sense of change and opportunity."
That last statement - intended to imply that even extremists like Obama - is worded with a shocking, though unintentional, ambiguity. It is sure true that Hamas, the Taliban, Hizbullah, Iran, Syria, and al-Qaida view this "change" as an "opportunity." Unfortunately, they view it as an opportunity for being more aggressive.
Here's how Iranian Ayatollah Ahmad Khatami put it, in words typical of the reaction from Iran and these other groups. He sees Obama's slogan of "change" as a retreat caused by Iran's revolution, which brought down American power, and says the United States is continuing to decline.
For them, Barack the creator of a more popular America and a figure of weakness. Should there be any doubt that his flexibility will be interpreted as retreat, no matter how well-intentioned he is?
THE DEBATE in Washington is far away from the debate in the Middle East. In America's capital, the talk is of how the radicals are more moderate than thought, how they will be won over by Obama's charisma and changed American policies. The disconnect between the region and the rationalizers is frightening.
There is no policy change in Washington that will appease the radicals. And there are no concessions that will make an American president popular in a meaningful way among Middle Easterners. Even more worrisome, such steps are not going to make moderates feel more secure.
Here the al-Qaida leader Ayman al-Zawahiri gets it just right. He tells Obama: "It appears that you don't know anything about the Muslim world and its history... You are neither facing individuals nor organizations, but are facing a jihadi awakening and renaissance which is shaking the pillars of the entire Islamic world; and this is the fact which you and your government and country refuse to recognize and pretend not to see."
Zawahiri even invokes the Abu Rmaileh principle: "It appears that you don't know anything about... the fate of the traitors who cooperated with the invaders against it." In other words, anyone who cooperates with the United States or fights the Islamists will die.
Al-Qaida is not a very important group nowadays. But the rise of Islamist forces is clear, even though some of them are hostile to each other. It is Iran, not Ayman, who is the main beneficiary of this phenomenon, though Muslim Brotherhood groups - most notably Hamas - are also advancing.
IN WHICH way are President George Bush and his successor identical? Both believe that being liked in the Middle East will bring victory. Bush thought that by gifting the locals with a non-dictatorial Iraq and democracy they would come to love him. The opposite happened. Obama's strategy of being a nice guy and making concessions is likely to be less costly in direct terms for the United States but will also be used by the radicals for their own benefit.
One problem with the belief that Obama's popularity and flexibility will succeed is the Abu Rmaileh principle: Don't tell me who is nice; tell me who is going to protect me. Being feared and respected, as Syrian dictator Bashar Assad rightly put it, is more important than being liked. Osama bin Ladin noted that people understandably prefer to put their money on the horse that seems more certain to win the race.
A SECOND problem is how people in the Middle East are going to find out that you are such a great guy. They don't follow the American or European media but local sources, including both government and radical Islamist propaganda.
The frustrated American colonel in Iraq quoted above was bewildered by the fact that ""We poured a lot of our heart and soul into trying to help the people" only to hear them say the most inaccurate things about the United States stealing their oil, taking their land, and "turning our country over to Israel." A US pull-out may well be the right policy, but it will not bring gratitude.
What's needed is not a president who can work with Iran or Syria but a president who can work with Egypt, Jordan, Saudi Arabia, the Lebanese forces who want their country to be free, and so on, along with Israel and Europe in a grand alignment. Yes, it is in large part a zero-sum game: What makes Teheran or Damascus happy is going to damage their intended victims.
Alas, just because something isn't true doesn't mean people can't believe it. That's a truism applicable both to the Middle East and to Washington DC.
4) 'Socialism' Is Not the Problem
By Steve Chapman
Something about Barack Obama has a way of driving some conservatives completely batty. John McCain detected something "a lot like socialism" in his tax plan. Veteran conservative media critic L. Brent Bozell has no doubt the new president will "deliver socialism." But the prize goes to Rep. Paul Broun, R-Ga., who says "we've elected a Marxist" who may create an American Gestapo.
In the radioactive atmosphere of modern partisan politics, no one puts much value on verbal precision. So it's safe to say that over the next four years, the 44th president will come to think his name is Socialist Obama, as critics on the right abandon analysis in favor of invective.
That is a mistake -- as McCain's losing campaign confirms. Accusing Obama of socialism is unwise for three reasons: 1) It's not true, and 2) it makes the accuser sound like an idiot, and 3) it distracts from Obama's true inclinations, which are worrisome enough.
These days, no one believes in socialism -- defined by the late, left-wing economist Robert Heilbroner as "a centrally planned economy in which the government controls all means of production." A socialist wouldn't favor government aid to the automakers or the banks. He'd propose that the government take them over and run them for the benefit of society. But you haven't heard Obama or anyone else suggest that.
The president-elect is not unaware of the superiority of capitalism. His book "The Audacity of Hope" contains a testimonial that could have been plagiarized from Ayn Rand: "Our Constitution places the ownership of private property at the very heart of our system of liberty. ... The result of this business culture has been a prosperity that's unmatched in human history. ... Our greatest asset has been our system of social organization, a system that for generations has encouraged constant innovation, individual initiative and the efficient allocation of resources."
Of course Obama believes the government should do more to help the poor and vulnerable. If redistributing wealth makes you a socialist, though, you have to apply that label to the legendary libertarian economist Milton Friedman, who proposed a "negative income tax" to assure everyone basic sustenance.
But just because Obama is not nearly as bad as his detractors claim doesn't mean we have no worries. His biggest shortcoming is a common one in his party: the assumption that every problem can be solved by government intervention, and that if a little intervention is good, more is better.
His plan on climate change shows the problem. He has a sensible idea -- putting caps on greenhouse gas emissions and letting companies buy and sell the right to pollute. That would discourage harmful activity while leaving market forces to find the most efficient means to that end.
Alas, Obama isn't content to leave it there. He unpacks an array of bright ideas to reduce carbon emissions -- demanding higher fuel economy from automakers, showering money on clean coal technology, giving consumers tax credits for plug-in hybrids, and on and on.
This belt-and-suspenders approach reflects a familiar liberal vice: the insatiable urge to meddle. It's like the team owner offering the coach a generous new contract if he wins the championship -- and then dictating the starting lineup and the play selection for the entire season. It presumes that the government knows in advance the right mix of changes to achieve cleaner energy use at the lowest cost, which neither it nor Stephen Hawking nor anyone else does.
Obama also seems to regard the nation's productive sector as a laboratory for well-intentioned policymakers. In his "60 Minutes" interview, he praised Franklin Roosevelt for his "willingness to try things. And experiment in order to get people working again." What he overlooks is that experimentation creates uncertainty, and uncertainty discourages businesses from doing what they are supposed to do.
During the 1930s, as economist Robert Higgs showed in a 1997 essay, the effect of all the experimentation was the opposite of what Obama assumes. The endless fear of what FDR might do caused net business investment to fall, year after year, prolonging the very catastrophe he was trying to end.
Obama exhibits blithe confidence in the government's power to take economic problems and make them better. He will fare better if he keeps in mind its unbounded capacity to make things worse. For that you don't need socialism.
5) One Surge Does Not Fit All
By DONALD H. RUMSFELD
THE surge in Iraq has been one of the most impressive military accomplishments in recent years. It has been so successful that the emerging consensus is that what may now be needed in Afghanistan is a similar surge of American forces. President-elect Barack Obama campaigned on his intention to do so, as did his former opponent, John McCain.
As one who is occasionally — and incorrectly — portrayed as an opponent of the surge in Iraq, I believe that while the surge has been effective in Iraq, we must also recognize the conditions that made it successful. President Bush’s bold decision to deploy additional troops to support a broader counterinsurgency strategy of securing and protecting the Iraqi people was clearly the right decision. More important, though, it was the right decision at the right time.
By early 2007, several years of struggle had created the new conditions for a tipping point:
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Al Qaeda in Iraq’s campaign of terrorism and intimidation had turned its Sunni base of support against it. The result was the so-called Anbar Awakening in the late summer of 2006, followed by similar awakening movements across Iraq.
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From 2003 through 2006, United States military forces, under the leadership of Gen. John Abizaid and Gen. George Casey, inflicted huge losses on the Baathist and Qaeda leadership. Many thousands of insurgents, including the Qaeda chief in Iraq, Abu Musab al-Zarqawi, were captured or killed and proved difficult to replace.
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The Iraqi Security Forces had achieved cohesion, improved operational effectiveness and critical mass. By December 2006, some 320,000 Iraqis had been trained, equipped and deployed, producing the forces necessary to help hold difficult neighborhoods against the enemy. By 2007, the surge, for most Iraqis, could have an Iraqi face.
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And the political scene in Iraq had shifted. Moktada al-Sadr, the firebrand cleric, declared a cease-fire in February 2007. The government of Prime Minister Nuri Kamal al-Maliki, seated in May 2006, moved against militias and Iranian-backed militias and has imperfectly, but notably, rejected narrow sectarian policies.
The best indication that timing is everything may be that there had been earlier surges without the same effect as the 2007 surge. In 2005, troop levels in Iraq were increased to numbers nearly equal to the 2007 surge — twice. But the effects were not as durable because large segments of the Sunni population were still providing sanctuary to insurgents, and Iraq’s security forces were not sufficiently capable or large enough.
The decision to conduct a surge came out of an interagency review in the fall of 2006. By mid-December, as I was leaving the Pentagon, there was a rough consensus in the Defense Department that deploying additional combat brigades to Iraq was the right step. Some military leaders raised reasonable questions about the potential effectiveness of a surge, in part because of a correct concern that military power alone could not solve Iraq’s problems. I agreed, and emphasized that a military surge would need to be accompanied by effective diplomatic and economic “surges” from other departments and agencies of the American government, and by considerably greater progress from Iraq’s elected leaders.
During my last weeks in office, I recommended to President Bush that he consider Gen. David Petraeus as commander of coalition forces in Iraq, as General Casey’s tour was coming to an end. General Petraeus and his deputy, Gen. Ray Odierno, had the experience and skill to recognize and exploit the seismic shifts that were taking place in Iraq’s political landscape. And United States troops had the courage to win the alliance of Iraq’s people against a common enemy — and the benevolence to win their friendship.
At the critical moment — a moment when the Iraqis were able and willing to be part of the surge with the American forces — the United States surged into Iraq with the right commanders, additional forces and a fresh operational approach rooted in years of on-the-ground experience. Americans can be proud of what has been accomplished in Iraq over the last five-plus years. They should also be impressed by the results of the surge, which, thus far, has outstripped expectations, including mine.
President Bush’s decision to increase combat troop levels in Iraq in January 2007 sent a clear message that he was determined not to abandon a people to death squads and terrorists. We will need the same commitment to helping the people of Afghanistan succeed, but that does not mean we will achieve it with the same tactics or strategies.
The way forward in Afghanistan will need to reflect the current circumstances there — not the circumstances in Iraq two years ago. Additional troops in Afghanistan may be necessary, but they will not, by themselves, be sufficient to lead to the results we saw in Iraq. A similar confluence of events that contributed to success in Iraq does not appear to exist in Afghanistan.
What’s needed in Afghanistan is an Afghan solution, just as Iraqi solutions have contributed so fundamentally to progress in Iraq. And a surge, if it is to be successful, will need to be an Afghan surge.
Left unanswered in the current debate is the critical question of how thousands of additional American troops might actually bring long-term stability to Afghanistan — a country 80,000 square miles larger than Iraq yet with security forces just one-fourth the size of Iraq’s. Afghanistan also lacks Iraq’s oil and other economic advantages. It is plagued by the narcotics trade. Its borders are threatened by terrorist sanctuaries in Pakistan. Fractured groups of Pashtun tribesmen on both sides of the Afghanistan-Pakistan border do not yet appear willing to unite and take on the insurgents in their midst, as Arab tribes did in Iraq.
Further, Afghanistan has a long history of defeating foreign armies that sought strength in numbers. The Soviet Union tried to occupy Afghanistan with hundreds of thousands of troops — and withdrew, defeated and broken. More United States troops could raise tensions, particularly in Afghanistan’s Pashtun south, where the insurgency is strongest.
Only capable indigenous forces can ultimately win an insurgency. Afghan forces, backed by coalition troops, will need to move into the most violent areas to secure and protect the local population, enabling Afghans to cooperate with their government without losing their lives.
To do this, the size of the Afghan National Army will need to be increased well beyond its 70,000 or so troops and its training accelerated. More American forces will need to undertake the unglamorous work of embedding with Afghan soldiers as advisers, living and fighting together. Kingpins and senior facilitators in the thriving poppy industry that helps to fuel the insurgency will need to be treated as military targets, as Qaeda and Taliban leaders are. Reconstruction projects should be focused on provinces and towns that are cooperating with the Afghan government, instead of making blanket commitments to increase foreign assistance across Afghanistan and possibly fostering a culture of dependence.
The current suggestion of “opening negotiations” with the Taliban may well win over some low- and mid-level supporters, but if history is any guide, offering the hand of peace to hardened fanatics is not likely to prove successful. Aggressive action against Taliban and Qaeda sanctuaries in Pakistan will need to continue. Pakistani officials will have to isolate any factions in their military and intelligence services that are sympathetic to the Taliban.
In a few weeks, the new commander in chief, Barack Obama, will assume the responsibility of leading a nation at a time of war. Time and flexibility are the two constants of military success. In a struggle with an adaptable, thinking enemy, there is no single template for success. More is not always better. One size does not fit all.
The singular trait of the American way of war is the remarkable ability of our military to advance, absorb setbacks, adapt and ultimately triumph based upon the unique circumstances of a given campaign. Thus it has been throughout our history. And thus it will be in Iraq and Afghanistan, if we have the patience and wisdom to learn from our successes, and if our leaders have the wherewithal to persevere even when it is not popular to do so.
6) How to Stop the Pirates
By Richard Halloran
Pirates armed with guns and grenades grabbed headlines around the world last week by hijacking the 320,000 ton Saudi Arabian tanker Sirius Star 450 miles off the coast of Somalia in East Africa and holding hostage the crew of 25. The piracy was bold as the captured ship was the largest ever taken and was seized the farthest from land.
In striking contrast, five pirates armed with long knives recently boarded a tug towing a barge in the Straits of Singapore off the coast of Malaysia as she headed from Singapore to Thailand. The pirates stole personal belongings of the crew of seven, then put them ashore unharmed.
While piracy near Somalia has soared in number and audacity, that in the South China Sea in Southeast Asia has been on a steady decline, largely due to the concentrated anti-piracy operations of Indonesia, Singapore, and Malaysia. Thailand has just joined the campaign while the US and Japan have supported the Southeast Asians in the background.
The International Maritime Bureau (IMB) in Kuala Lumpur, Malaysia, which tracks piracy worldwide, reported 49 incidents in Southeast Asia during the first nine months of 2008, down from 133 in the same period of 2004. Piracy around the Indonesian archipelago was third in the world, behind Somalia and Nigeria, on Africa's west coast, but had dropped to 23 incidents from 70 in 2004.
The IMB asserted that "the number of attacks has dropped due to the increase and constant patrols by the littoral states." Patrols at sea begin in 2004, those in the air in 2005. Moreover, the bureau said, "all except two of these cases were low level incidents aimed at theft of valuables and stores."
In addition, a lash-up between pirates and terrorists in Southeast Asia, long feared by American and Southeast Asian officials, has so far failed to materialize. Even so, intelligence agencies continue to watch this closely.
A critical part of the US support has been erecting radar sites for Southeast Asian nations to track ships.If a ship deviates from its plotted course, that may be a sign it is under attack. The US has also encouraged Southeast Asians to share such intelligence.
The IMB said the US had given Indonesia five radar stations to provide surveillance in the Straits of Malacca and four to watch the Straits of Makassar, with three more coming. Radar stations have either been given to Malaysia, Thailand, and the Philippines or are on the way.
Although piracy in that region has declined, said Captain Jeffrey Breslau, spokesman for the US Pacific Command in Hawaii, "Maritime security remains a central theme of this command's theater security cooperation program."
"The focus of discussions regarding maritime security is on partnership and cooperation among regional nations," Breslau said. "Most countries realize that building a collective capacity to defeat or deter piracy serves to promote regional stability as well as prosperity."
The Strait of Malacca and the South China Sea are important to the US for military operations and to the economies of most Asian nations. They comprise the primary passageway for US warships between the Pacific and Indian oceans. If that sea lane was closed, ships would need to sail routes three to five times longer.
Over the last two decades, that passage has become the world's most travelled sea line of communication. Between 50,000 to 70,000 ships a year transit this passage, more than through the Suez and Panama Canals combined, particularly carrying Persian Gulf oil to China, Japan, South Korea, and Taiwan.
US officers said getting Southeast Asian nations to work together meant overcoming issues of sovereignty. Those nations, once ruled by the US, France, Britain, Portugal, or the Netherlands, are jealous of the independence gained after World War II and suspicious of any encroachment on sovereignty.
The officers said they have sought first to get agencies within a nation to work together. In Indonesia, for example, 13 agencies are engaged in maritime security. Second is to get each nation to work with its next door neighbors.
Third is to foster a process in which decisions can be made rapidly. In cultures that prizes consensus, this takes patient explanation. Fourth is interdiction of a suspected pirate and communicating in a timely manner with another nation's forces.
"An advantage we have in the Pacific," said one officer, "is that we have functioning governments ashore. The first step to stopping piracy begins ashore. Without that, pirates can live and operate freely, as you see in Somalia."
Olmert and Bush meet Monday. They have many things in common but most of all their low poll standings among the populace of their respective nations. GW somehwat more undeserving than Olmert (See 2 below.)
Barry Rubin, ever the hawk, wise in the advice he is offering. (See 3 below.)
Chapman - Obama not a socialist but he has other attributes that are worrisome. (See 4 below.)
Nobody may care but Rumsfed also offers some sound advice. (See 5 below.)
Michael Halloran offers his advice on the new Barbary Coast - Somali - pirates and how to stop them.
Michael Oren says get tough. Oren wrote a book, which I reviewed, about the U.S.'s involvement in the Middle East and documments it back to alomst the nation's founding. (See 6 below.)
Dick
1) Obama and the Middle East: Reading Election Tea Leaves
By Sam Lehman-Wilzig
In Israel, Barack Obama's victory has raised the question: "Is it good for Israel?" The answer depends on several yet unknown factors.
1) Who will win the Israeli elections?
As previous American administrations have learned, without Israeli cooperation the peace process cannot move forward. If Kadima wins and Tzippi Livni forms a coalition, Obama's election could be a watershed, as he will have an Israeli government that wants to continue the peace process. On the other hand, if Likud wins and Benjamin Netanyahu becomes Prime Minister, it is hard to see significant forward movement -- and Obama may not want to waste any political energy. Obama's victory might even influence the outcome of the Israeli election in Livni's favor. Israelis may want to avoid serious tension with the United States, their greatest friend and ally, something that would occur with Netanyahu at the helm.
2) Who will be the next Palestinian President?
The 2009 Palestinian elections will determine the next Palestinian leader. If current Chairman Mahmoud Abbas wins, then the Palestinians will have a leader who wants peace but is too weak to make significant concessions. President Obama might be able to offer economic carrots to Abbas, but the real problem is a lack of political courage and the ability to persuade his people that true peace can only come by relinquishing the "Dream of Refugee Return." Other younger and more determined Palestinian leaders might be able to succeed, if they are willing. Here too Obama has to wait for the election outcome.
3) Does Obama have street credibility with the Arab world?
The answer is obvious: more than any other entering President. With a middle name of Hussein and his paternal connection to Islam (he is not a Muslim) Obama will be viewed as a more honest broker than previous Presidents. For Israelis, the appointment of Rahm Emanuel, the son of an Irgun fighter, as White House Chief of Staff, will quell suspicions of Obama having a "pro-Arab bias". Thus, it is possible that all sides of the Israeli-Arab conflict can feel a measure of confidence in the American President.
4) What about other hot spots connected to Israel?
Here Obama's approach to international relations brings good news. Without a doubt he will encourage Israeli negotiations with Syria, and the Syrians too will be less wary of dealing with Israel and an American administration that does not call it part of the "axis of evil". And if Israel and Syria reach an agreement, Lebanon will be in the bargain too. That leaves the Palestinians, and most important of all: Iran.
5) Whither Iran?
Once again, the answer is to be partly found in the election tea leaves: Iranian elections! If Iran's current administration returns, then Obama's promised discussions with them will be short. If a more "moderate" President is chosen -- and perhaps that can occur precisely because Obama is far less threatening of Iranian sovereignty -- then there is an outside chance that Obama can diffuse the crisis. Moreover, if Russia and China conclude that Obama made a real effort to talk to the Iranians and came up empty, greater U.N. sanctions would be in the offing - and after that perhaps "sterner" measures from the Obama Administration. Israeli-Syrian negotiations could be influential here, if they include conditions that Syria break with terrorist regimes. Iran then might feel the diplomatic noose tightening and perhaps seriously consider a negotiated settlement.
6) What about the price of oil?
If oil prices stay depressed or drop even more, Iran's economy will be deeply in trouble - another incentive for possible serious negotiations regarding its nuclear program. What does Obama have to do with this? Any significant alternative energy program initiated by the Americans would have repercussions in the oil market, even if the actual impact on production and prices wouldn't be felt for years. The perception of eventual Middle East power decline cannot but move the Middle East power brokers to try and clear up their political and economic muddles.
In short, Obama is a huge "Joker" thrown into a complex game of Middle East poker. It is his hand to play, but he will need a few other good cards to succeed.
2)Rice: Peace deal delayed due to political situation in Israel
Bush, Olmert to meet in Washington Monday to discuss Iranian nuclear program, Israel-PA peace talks. PM aide: He wants to leave process in best possible shape
President George W. Bush and Israeli Prime Minister Ehud Olmert, two lame-duck leaders, look to their final meeting to leave a blueprint for fulfilling their ambitious but unrealized Mideast agendas.
The White House session Monday evening was expected to focus on Iran's nuclear program and progress in Israeli-Palestinian peace talks.
Just a year ago, Olmert and the Palestinian president, Mahmoud Abbas, proudly announced the resumption of peace talks after a seven-year hiatus at a summit hosted by Bush in Annapolis, Maryland. The three set an ambitious target of wrapping up a final peace deal by the end of 2008.
Despite frequent negotiating sessions, two trips to the region by Bush and eight more by Secretary of State Condoleezza Rice, the sides have little to show for their efforts and have acknowledged the year-end target will not be met.
"Even though there was not an agreement by the end of the year, it is really largely because of the political situation in Israel," Secretary of State Condoleezza Rice told reporters aboard Air Force One as Bush back from a summit in Peru.
Still, she tried to sound upbeat about the peace process. "It's in pretty good shape," Rice said.
With his time in power running out, Olmert has become increasingly candid, saying Israel will have to withdraw from almost all the West Bank and parts of east Jerusalem to make peace with the Palestinians. Talk of such concessions was virtually unheard of just a few years ago.
"I know that Mr. Olmert wants to leave to whomever is elected as the next prime minister the peace process in the best shape possible," spokesman Mark Regev said.
Bush, who spent the weekend in Peru at a meeting of Pacific Rim nations, invited Olmert to Washington as part of his final round of talks with world leaders before he leaves office Jan. 20.
Olmert, who announced plans to resign in September amid corruption charges, will step down after a successor is chosen Feb. 10.
'It's a farewell, a double farewell'
With hardline opposition leader Benjamin Netanyahu leading in Israeli polls, the future of peace talks appears murky. Netanyahu wants to keep much of the West Bank and all of east Jerusalem - areas captured by Israel in the 1967 Mideast war - and believes peace talks should be scaled down to discussions on the Palestinian economy. That approach has been rejected by the Palestinian leadership.
As for Tehran's nuclear program, Israel has identified it as the biggest threat in light of Iran's development of long-range weapons and its president's repeated calls for the destruction of the Jewish state. A report this past week by the International Atomic Energy Agency said Iran was stonewalling attempts to monitor its nuclear activities.
Israel believes Iran will be capable of building a bomb by 2010.
The UN Security Council has imposed three rounds of economic penalties against Iran, which insists its nuclear program is peaceful and designed to produce energy. Both the US and Israel say they hope diplomatic pressure resolves the standoff, but have not ruled out military action.
Olmert often speaks of the close personal friendship he has developed with Bush over the past three years. When Bush visited Israel in May, Olmert showered the president with praise, saying, "You're a great person, you're a great leader, and you're a great friend."
Though largely unpopular internationally, Bush is loved in Israel, where he is seen as a staunch defender of the US ally.
"It's a farewell, a double farewell," said Danny Ayalon, a former Israeli ambassador to Washington. "They will try to sum up a period and cement all the understandings and agreements between the US and Israel over the last eight years."
After Monday's meeting, Olmert and his wife, Aliza, will dine with president and first lady Laura Bush at the White House.
The two leaders probably also will discuss the global financial crisis, Israel's indirect peace talks with Syria and the future of arms and aircraft deals to Israel.
During his visit to Washington, Olmert also planned to meet with Rice, Vice President Dick Cheney, national security adviser Stephen Hadley, and congressional and Jewish leaders.
3) The Region: Don't flatter your enemies, protect your friends
By BARRY RUBIN
In explaining why he was too fearful to vote in Jerusalem's mayoral election, an east Jerusalem Palestinian shopkeeper, Issam Abu Rmaileh, said, "I would have liked to vote because it's in our interest, but who's going to protect me and my family afterwards?"
Let's call it the Abu Rmaileh principle; it is extraordinarily important in the Middle East. Why should someone support you if you cannot protect them? If they cannot depend on you to be tough, they might as well play it safe by doing nothing or make their own deal through appeasement and shout radical slogans.
Here is the Abu Rmaileh principle at a higher pay grade. Jordan's Foreign Minister Salah Bashir stated in a closed meeting, "For us the Iranian surge for hegemony has become a crisis," according to a participant who asked not to be named.
And here's the flip side from a frustrated American colonel fighting in Iraq, "All these guys we rounded up, they're saying in the interrogation, if we don't torture them, we're not going to get the information."
HOW IMPORTANT is popularity? According to the school enthusiastic about President-elect Barack Obama in the United States, it is everything. One journalist explained that al-Qaida is afraid of Obama because, presumably, he will win away Muslims from supporting radical Islamism. It is written in the Washington Post: "Even among the followers of radical groups, such as Hamas and the Taliban, Obama has inspired a sense of change and opportunity."
That last statement - intended to imply that even extremists like Obama - is worded with a shocking, though unintentional, ambiguity. It is sure true that Hamas, the Taliban, Hizbullah, Iran, Syria, and al-Qaida view this "change" as an "opportunity." Unfortunately, they view it as an opportunity for being more aggressive.
Here's how Iranian Ayatollah Ahmad Khatami put it, in words typical of the reaction from Iran and these other groups. He sees Obama's slogan of "change" as a retreat caused by Iran's revolution, which brought down American power, and says the United States is continuing to decline.
For them, Barack the creator of a more popular America and a figure of weakness. Should there be any doubt that his flexibility will be interpreted as retreat, no matter how well-intentioned he is?
THE DEBATE in Washington is far away from the debate in the Middle East. In America's capital, the talk is of how the radicals are more moderate than thought, how they will be won over by Obama's charisma and changed American policies. The disconnect between the region and the rationalizers is frightening.
There is no policy change in Washington that will appease the radicals. And there are no concessions that will make an American president popular in a meaningful way among Middle Easterners. Even more worrisome, such steps are not going to make moderates feel more secure.
Here the al-Qaida leader Ayman al-Zawahiri gets it just right. He tells Obama: "It appears that you don't know anything about the Muslim world and its history... You are neither facing individuals nor organizations, but are facing a jihadi awakening and renaissance which is shaking the pillars of the entire Islamic world; and this is the fact which you and your government and country refuse to recognize and pretend not to see."
Zawahiri even invokes the Abu Rmaileh principle: "It appears that you don't know anything about... the fate of the traitors who cooperated with the invaders against it." In other words, anyone who cooperates with the United States or fights the Islamists will die.
Al-Qaida is not a very important group nowadays. But the rise of Islamist forces is clear, even though some of them are hostile to each other. It is Iran, not Ayman, who is the main beneficiary of this phenomenon, though Muslim Brotherhood groups - most notably Hamas - are also advancing.
IN WHICH way are President George Bush and his successor identical? Both believe that being liked in the Middle East will bring victory. Bush thought that by gifting the locals with a non-dictatorial Iraq and democracy they would come to love him. The opposite happened. Obama's strategy of being a nice guy and making concessions is likely to be less costly in direct terms for the United States but will also be used by the radicals for their own benefit.
One problem with the belief that Obama's popularity and flexibility will succeed is the Abu Rmaileh principle: Don't tell me who is nice; tell me who is going to protect me. Being feared and respected, as Syrian dictator Bashar Assad rightly put it, is more important than being liked. Osama bin Ladin noted that people understandably prefer to put their money on the horse that seems more certain to win the race.
A SECOND problem is how people in the Middle East are going to find out that you are such a great guy. They don't follow the American or European media but local sources, including both government and radical Islamist propaganda.
The frustrated American colonel in Iraq quoted above was bewildered by the fact that ""We poured a lot of our heart and soul into trying to help the people" only to hear them say the most inaccurate things about the United States stealing their oil, taking their land, and "turning our country over to Israel." A US pull-out may well be the right policy, but it will not bring gratitude.
What's needed is not a president who can work with Iran or Syria but a president who can work with Egypt, Jordan, Saudi Arabia, the Lebanese forces who want their country to be free, and so on, along with Israel and Europe in a grand alignment. Yes, it is in large part a zero-sum game: What makes Teheran or Damascus happy is going to damage their intended victims.
Alas, just because something isn't true doesn't mean people can't believe it. That's a truism applicable both to the Middle East and to Washington DC.
4) 'Socialism' Is Not the Problem
By Steve Chapman
Something about Barack Obama has a way of driving some conservatives completely batty. John McCain detected something "a lot like socialism" in his tax plan. Veteran conservative media critic L. Brent Bozell has no doubt the new president will "deliver socialism." But the prize goes to Rep. Paul Broun, R-Ga., who says "we've elected a Marxist" who may create an American Gestapo.
In the radioactive atmosphere of modern partisan politics, no one puts much value on verbal precision. So it's safe to say that over the next four years, the 44th president will come to think his name is Socialist Obama, as critics on the right abandon analysis in favor of invective.
That is a mistake -- as McCain's losing campaign confirms. Accusing Obama of socialism is unwise for three reasons: 1) It's not true, and 2) it makes the accuser sound like an idiot, and 3) it distracts from Obama's true inclinations, which are worrisome enough.
These days, no one believes in socialism -- defined by the late, left-wing economist Robert Heilbroner as "a centrally planned economy in which the government controls all means of production." A socialist wouldn't favor government aid to the automakers or the banks. He'd propose that the government take them over and run them for the benefit of society. But you haven't heard Obama or anyone else suggest that.
The president-elect is not unaware of the superiority of capitalism. His book "The Audacity of Hope" contains a testimonial that could have been plagiarized from Ayn Rand: "Our Constitution places the ownership of private property at the very heart of our system of liberty. ... The result of this business culture has been a prosperity that's unmatched in human history. ... Our greatest asset has been our system of social organization, a system that for generations has encouraged constant innovation, individual initiative and the efficient allocation of resources."
Of course Obama believes the government should do more to help the poor and vulnerable. If redistributing wealth makes you a socialist, though, you have to apply that label to the legendary libertarian economist Milton Friedman, who proposed a "negative income tax" to assure everyone basic sustenance.
But just because Obama is not nearly as bad as his detractors claim doesn't mean we have no worries. His biggest shortcoming is a common one in his party: the assumption that every problem can be solved by government intervention, and that if a little intervention is good, more is better.
His plan on climate change shows the problem. He has a sensible idea -- putting caps on greenhouse gas emissions and letting companies buy and sell the right to pollute. That would discourage harmful activity while leaving market forces to find the most efficient means to that end.
Alas, Obama isn't content to leave it there. He unpacks an array of bright ideas to reduce carbon emissions -- demanding higher fuel economy from automakers, showering money on clean coal technology, giving consumers tax credits for plug-in hybrids, and on and on.
This belt-and-suspenders approach reflects a familiar liberal vice: the insatiable urge to meddle. It's like the team owner offering the coach a generous new contract if he wins the championship -- and then dictating the starting lineup and the play selection for the entire season. It presumes that the government knows in advance the right mix of changes to achieve cleaner energy use at the lowest cost, which neither it nor Stephen Hawking nor anyone else does.
Obama also seems to regard the nation's productive sector as a laboratory for well-intentioned policymakers. In his "60 Minutes" interview, he praised Franklin Roosevelt for his "willingness to try things. And experiment in order to get people working again." What he overlooks is that experimentation creates uncertainty, and uncertainty discourages businesses from doing what they are supposed to do.
During the 1930s, as economist Robert Higgs showed in a 1997 essay, the effect of all the experimentation was the opposite of what Obama assumes. The endless fear of what FDR might do caused net business investment to fall, year after year, prolonging the very catastrophe he was trying to end.
Obama exhibits blithe confidence in the government's power to take economic problems and make them better. He will fare better if he keeps in mind its unbounded capacity to make things worse. For that you don't need socialism.
5) One Surge Does Not Fit All
By DONALD H. RUMSFELD
THE surge in Iraq has been one of the most impressive military accomplishments in recent years. It has been so successful that the emerging consensus is that what may now be needed in Afghanistan is a similar surge of American forces. President-elect Barack Obama campaigned on his intention to do so, as did his former opponent, John McCain.
As one who is occasionally — and incorrectly — portrayed as an opponent of the surge in Iraq, I believe that while the surge has been effective in Iraq, we must also recognize the conditions that made it successful. President Bush’s bold decision to deploy additional troops to support a broader counterinsurgency strategy of securing and protecting the Iraqi people was clearly the right decision. More important, though, it was the right decision at the right time.
By early 2007, several years of struggle had created the new conditions for a tipping point:
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Al Qaeda in Iraq’s campaign of terrorism and intimidation had turned its Sunni base of support against it. The result was the so-called Anbar Awakening in the late summer of 2006, followed by similar awakening movements across Iraq.
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From 2003 through 2006, United States military forces, under the leadership of Gen. John Abizaid and Gen. George Casey, inflicted huge losses on the Baathist and Qaeda leadership. Many thousands of insurgents, including the Qaeda chief in Iraq, Abu Musab al-Zarqawi, were captured or killed and proved difficult to replace.
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The Iraqi Security Forces had achieved cohesion, improved operational effectiveness and critical mass. By December 2006, some 320,000 Iraqis had been trained, equipped and deployed, producing the forces necessary to help hold difficult neighborhoods against the enemy. By 2007, the surge, for most Iraqis, could have an Iraqi face.
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And the political scene in Iraq had shifted. Moktada al-Sadr, the firebrand cleric, declared a cease-fire in February 2007. The government of Prime Minister Nuri Kamal al-Maliki, seated in May 2006, moved against militias and Iranian-backed militias and has imperfectly, but notably, rejected narrow sectarian policies.
The best indication that timing is everything may be that there had been earlier surges without the same effect as the 2007 surge. In 2005, troop levels in Iraq were increased to numbers nearly equal to the 2007 surge — twice. But the effects were not as durable because large segments of the Sunni population were still providing sanctuary to insurgents, and Iraq’s security forces were not sufficiently capable or large enough.
The decision to conduct a surge came out of an interagency review in the fall of 2006. By mid-December, as I was leaving the Pentagon, there was a rough consensus in the Defense Department that deploying additional combat brigades to Iraq was the right step. Some military leaders raised reasonable questions about the potential effectiveness of a surge, in part because of a correct concern that military power alone could not solve Iraq’s problems. I agreed, and emphasized that a military surge would need to be accompanied by effective diplomatic and economic “surges” from other departments and agencies of the American government, and by considerably greater progress from Iraq’s elected leaders.
During my last weeks in office, I recommended to President Bush that he consider Gen. David Petraeus as commander of coalition forces in Iraq, as General Casey’s tour was coming to an end. General Petraeus and his deputy, Gen. Ray Odierno, had the experience and skill to recognize and exploit the seismic shifts that were taking place in Iraq’s political landscape. And United States troops had the courage to win the alliance of Iraq’s people against a common enemy — and the benevolence to win their friendship.
At the critical moment — a moment when the Iraqis were able and willing to be part of the surge with the American forces — the United States surged into Iraq with the right commanders, additional forces and a fresh operational approach rooted in years of on-the-ground experience. Americans can be proud of what has been accomplished in Iraq over the last five-plus years. They should also be impressed by the results of the surge, which, thus far, has outstripped expectations, including mine.
President Bush’s decision to increase combat troop levels in Iraq in January 2007 sent a clear message that he was determined not to abandon a people to death squads and terrorists. We will need the same commitment to helping the people of Afghanistan succeed, but that does not mean we will achieve it with the same tactics or strategies.
The way forward in Afghanistan will need to reflect the current circumstances there — not the circumstances in Iraq two years ago. Additional troops in Afghanistan may be necessary, but they will not, by themselves, be sufficient to lead to the results we saw in Iraq. A similar confluence of events that contributed to success in Iraq does not appear to exist in Afghanistan.
What’s needed in Afghanistan is an Afghan solution, just as Iraqi solutions have contributed so fundamentally to progress in Iraq. And a surge, if it is to be successful, will need to be an Afghan surge.
Left unanswered in the current debate is the critical question of how thousands of additional American troops might actually bring long-term stability to Afghanistan — a country 80,000 square miles larger than Iraq yet with security forces just one-fourth the size of Iraq’s. Afghanistan also lacks Iraq’s oil and other economic advantages. It is plagued by the narcotics trade. Its borders are threatened by terrorist sanctuaries in Pakistan. Fractured groups of Pashtun tribesmen on both sides of the Afghanistan-Pakistan border do not yet appear willing to unite and take on the insurgents in their midst, as Arab tribes did in Iraq.
Further, Afghanistan has a long history of defeating foreign armies that sought strength in numbers. The Soviet Union tried to occupy Afghanistan with hundreds of thousands of troops — and withdrew, defeated and broken. More United States troops could raise tensions, particularly in Afghanistan’s Pashtun south, where the insurgency is strongest.
Only capable indigenous forces can ultimately win an insurgency. Afghan forces, backed by coalition troops, will need to move into the most violent areas to secure and protect the local population, enabling Afghans to cooperate with their government without losing their lives.
To do this, the size of the Afghan National Army will need to be increased well beyond its 70,000 or so troops and its training accelerated. More American forces will need to undertake the unglamorous work of embedding with Afghan soldiers as advisers, living and fighting together. Kingpins and senior facilitators in the thriving poppy industry that helps to fuel the insurgency will need to be treated as military targets, as Qaeda and Taliban leaders are. Reconstruction projects should be focused on provinces and towns that are cooperating with the Afghan government, instead of making blanket commitments to increase foreign assistance across Afghanistan and possibly fostering a culture of dependence.
The current suggestion of “opening negotiations” with the Taliban may well win over some low- and mid-level supporters, but if history is any guide, offering the hand of peace to hardened fanatics is not likely to prove successful. Aggressive action against Taliban and Qaeda sanctuaries in Pakistan will need to continue. Pakistani officials will have to isolate any factions in their military and intelligence services that are sympathetic to the Taliban.
In a few weeks, the new commander in chief, Barack Obama, will assume the responsibility of leading a nation at a time of war. Time and flexibility are the two constants of military success. In a struggle with an adaptable, thinking enemy, there is no single template for success. More is not always better. One size does not fit all.
The singular trait of the American way of war is the remarkable ability of our military to advance, absorb setbacks, adapt and ultimately triumph based upon the unique circumstances of a given campaign. Thus it has been throughout our history. And thus it will be in Iraq and Afghanistan, if we have the patience and wisdom to learn from our successes, and if our leaders have the wherewithal to persevere even when it is not popular to do so.
6) How to Stop the Pirates
By Richard Halloran
Pirates armed with guns and grenades grabbed headlines around the world last week by hijacking the 320,000 ton Saudi Arabian tanker Sirius Star 450 miles off the coast of Somalia in East Africa and holding hostage the crew of 25. The piracy was bold as the captured ship was the largest ever taken and was seized the farthest from land.
In striking contrast, five pirates armed with long knives recently boarded a tug towing a barge in the Straits of Singapore off the coast of Malaysia as she headed from Singapore to Thailand. The pirates stole personal belongings of the crew of seven, then put them ashore unharmed.
While piracy near Somalia has soared in number and audacity, that in the South China Sea in Southeast Asia has been on a steady decline, largely due to the concentrated anti-piracy operations of Indonesia, Singapore, and Malaysia. Thailand has just joined the campaign while the US and Japan have supported the Southeast Asians in the background.
The International Maritime Bureau (IMB) in Kuala Lumpur, Malaysia, which tracks piracy worldwide, reported 49 incidents in Southeast Asia during the first nine months of 2008, down from 133 in the same period of 2004. Piracy around the Indonesian archipelago was third in the world, behind Somalia and Nigeria, on Africa's west coast, but had dropped to 23 incidents from 70 in 2004.
The IMB asserted that "the number of attacks has dropped due to the increase and constant patrols by the littoral states." Patrols at sea begin in 2004, those in the air in 2005. Moreover, the bureau said, "all except two of these cases were low level incidents aimed at theft of valuables and stores."
In addition, a lash-up between pirates and terrorists in Southeast Asia, long feared by American and Southeast Asian officials, has so far failed to materialize. Even so, intelligence agencies continue to watch this closely.
A critical part of the US support has been erecting radar sites for Southeast Asian nations to track ships.If a ship deviates from its plotted course, that may be a sign it is under attack. The US has also encouraged Southeast Asians to share such intelligence.
The IMB said the US had given Indonesia five radar stations to provide surveillance in the Straits of Malacca and four to watch the Straits of Makassar, with three more coming. Radar stations have either been given to Malaysia, Thailand, and the Philippines or are on the way.
Although piracy in that region has declined, said Captain Jeffrey Breslau, spokesman for the US Pacific Command in Hawaii, "Maritime security remains a central theme of this command's theater security cooperation program."
"The focus of discussions regarding maritime security is on partnership and cooperation among regional nations," Breslau said. "Most countries realize that building a collective capacity to defeat or deter piracy serves to promote regional stability as well as prosperity."
The Strait of Malacca and the South China Sea are important to the US for military operations and to the economies of most Asian nations. They comprise the primary passageway for US warships between the Pacific and Indian oceans. If that sea lane was closed, ships would need to sail routes three to five times longer.
Over the last two decades, that passage has become the world's most travelled sea line of communication. Between 50,000 to 70,000 ships a year transit this passage, more than through the Suez and Panama Canals combined, particularly carrying Persian Gulf oil to China, Japan, South Korea, and Taiwan.
US officers said getting Southeast Asian nations to work together meant overcoming issues of sovereignty. Those nations, once ruled by the US, France, Britain, Portugal, or the Netherlands, are jealous of the independence gained after World War II and suspicious of any encroachment on sovereignty.
The officers said they have sought first to get agencies within a nation to work together. In Indonesia, for example, 13 agencies are engaged in maritime security. Second is to get each nation to work with its next door neighbors.
Third is to foster a process in which decisions can be made rapidly. In cultures that prizes consensus, this takes patient explanation. Fourth is interdiction of a suspected pirate and communicating in a timely manner with another nation's forces.
"An advantage we have in the Pacific," said one officer, "is that we have functioning governments ashore. The first step to stopping piracy begins ashore. Without that, pirates can live and operate freely, as you see in Somalia."
Friday, November 21, 2008
Capitalism without capital!
Thanksgiving is drawing near and I want to wish everyone the Happiest of Thanksgivings. These are not the happiest of times and I hope everyone has something they can be grateful for.
As for myself, I am grateful to be healthy, have a wonderful family and many friends and live in a beautiful part of the world. I still have the opportunity to be productive and intend to continue speaking my mind and posting my thoughts.
Apparently Hillary has accepted the Sec.of State post. She can't be worse than Albright or Christopher and might even be an improvment over Rice. What is ironic is how Doris Kearn Goodwin's book about Lincoln's Cabinet has become a guidepost for Obama. Secondly, Clinton and Obama tore into each other's foreign policy experience during the campaign. Apparently politicians have become adept at saying anything to win whether they believe it or not.
What is ahead - a world of conflict or order? (See 1 below.)
As one force begets another, The Economist sees a very restrained American consumer, a long and deep recession. What are the consequences for the world as the consumer, states and the federal government all try to rebuild their respective balance sheets, purchasing power and credibility. (See 2 below.)
Comment from a long time friend and fellow memo reader: Dick, a long overdue hello! We are a consumerist society which led us to become a nation that lacks capital. Thus we are trying to push on a string --- Capitalism without capital.
More views about Waxman. (See 3 below.)
Strassel deems Obama's ploy of pitting McCain against McConnell an interesting move. Will McCain revert to being the Republican's Peck's Bad Boy and will the press and media relish supporting him in that role? (See 4 below.)
Dick
1) World confronts a choice between chaos and order
By Philip Stephens
It seems only yesterday that scarcity was the story. Energy and commodity prices were heading into the stratosphere. The oil was running out, food shortages loomed, Russia was resurgent and China was marching into Africa amid a scramble for dwindling resources.
Now? Prices everywhere are falling as recession bites. Investment banks have disappeared; and the global credit system is on life-support. The big threat is deflation rather than inflation. The oil price has slumped, wiping the smirk from authoritarian leaders such as Russia’s Vladimir Putin and Venezuela’s Hugo Chávez.
When Barack Obama won the Democratic nomination for the presidency he expected Iraq and healthcare would be the priorities of his presidency. No one told him the banks were facing bankruptcy and the US an economic shock as severe as any since the Great Crash.
The scale and speed of this turnround offers a stiff warning of the perils of seeking to peer beyond the present. Think back also to all that stuff a few years ago about the unipolar moment and the new American imperium. The mistake always is to project the here-and-now into an indefinite future. History rarely travels in straight lines.
So what should the president-elect make of the hefty tome that has landed on his desk courtesy of the cleverest minds at the US National Intelligence Council? After all, Global Trends 2025*, the NIC’s four-yearly exercise in crystal ball-gazing, tries to map the contours of the world more than 15 years hence.
The answer is that Mr Obama would do well to read it closely: not because he gets a top-secret version denied to the rest of us; nor because the authors have discovered the philosopher’s stone of forecasting, but because understanding the forces driving political and economic change should be the starting point for his decisions as president.
The NIC does not pretend to have all the answers. Its stated purpose is to explore the forces and factors driving events rather than to predict the destination. The authors rightly eschew the determinism peddled by the snake oil salesmen of futurology. The world may be travelling in this or that direction now, but that does not mean the trajectory is preordained.
One of the report’s important messages is that political leaders, and Mr Obama most particularly, have the capacity to chart alternative paths. Another – this one implicit – is that the decisions taken in the White House during the next four or eight years will be critical.
At first glance, the core conclusion – that the world is witnessing the emergence of a new multipolar system – seems unremarkable. But it matters that the president-elect is being told by his foremost intelligence analysts that the US faces relative decline. There are plenty of people in Washington who dismiss such a prospect as the malevolent thinking of woolly-headed Europeans; the more so, perhaps, when France’s Nicolas Sarkozy keeps trumpeting it.
In the NIC’s view, the rise of China, India and the rest will mean that by 2025 the US will be “one [my emphasis] of a number of important actors on the world stage, albeit still the most powerful”. For more than 200 years, even when challenged, the US has been a rising power. The adjustment will not be easy.
New great power rivalries, though, are only one part of the emerging picture. Nations face challenges from non-state actors empowered by globalisation. Businesses, religious zealotry, criminal networks and non-governmental organisations are all testing state power.
Overlay these changes, geopolitical and societal, with an array of transnational forces – climate change, terrorism, unconventional weapons proliferation, demographic bulges, migration, resource competition – and you begin to see how complicated things are getting. Add in all the unknowns – of both the known and unknown variety – and you start to get a headache. The other day Mr Obama said that sometimes he asks himself where on earth he should start as president. Reading the NIC report one can understand why.
What can be said with moderate certainty is that a global system designed in 1945 will not survive the coming age of discontinuities. An order centred around the political, cultural and economic hegemony of the west can scarcely outlive the redistribution of global power.
The rising powers are unlikely to want to tear down the system as did, for example, Germany and Japan during the 20th century. More likely, the trend will be towards fragmentation and instability as the new powers take what they want from the existing order while preserving a freedom of manoeuvre outside it.
This “multipolarity without multilateralism” points to the absence of any over-arching system of global governance. Instead, current trends point to a “patchwork of overlapping, often ad hoc and fragmented efforts” with shifting coalitions of member nations and international organisations undermining the capacity of the United Nations for effective multilateral action. In this respect, the NIC adds, speaking of the “the international order” may become something of a misnomer.
The key phase in the last paragraph, though, is “current trends”. The extent to which coherence prevails over chaos in a changing system will depend to a large extent on the decisions taken between now and then by political leaders. To do nothing is to invite disorder. Doing something demands the imagination to create a new and inclusive architecture.
As for the US, its relative decline should neither be exaggerated nor underestimated. Its power will be constrained by the economic and military muscle of other great powers and, perhaps, by disenchantment among its own citizens with America’s role as global policeman.
On the other hand, the enthusiastic clamour that has greeted Mr Obama’s victory testifies to the fact that much of the world still sees the US as an essential guardian of security. For the next two decades at least America will remain the only real superpower. Decisions taken in Washington will have a greater impact than those of any other global actor on how the international system evolves.
This is what the political scientists call human agency. Look back at the past century and most of the good and the bad flowed from the ideas and decisions of political leaders. The same will be true of the coming decades. Bad outcomes, as the NIC concludes, are not inevitable.
2) The end of the affair: America’s return to thrift presages a long and deep recession
DEBBIE JEFFRIES could see it coming. When she manned the cash register at Linens ’n Things, the household-goods chain where she has worked for 14 years, a customer would sometimes open her wallet and display 15 credit cards. “That people can pull out that many credit cards—that’s insane. You say, whoa, maybe that’s why we’re here. We have so much debt.”
Ms Jeffries cut up her own credit card several years ago when the balance became unmanageable, but still became an indirect victim of the credit crunch that is now dragging America into recession. Linens ’n Things filed for bankruptcy protection in May; in October, unable to find a buyer for its stores, it began to liquidate itself. A sign in the window of Ms Jeffries’ store in suburban Maryland invites anyone interested in buying the fixtures to see the manager. Ms Jeffries expects to be out of a job by the end of December.
An important reason why the American economy has been so resilient and recessions so mild since 1982 is the energy of consumers. Their spending has been remarkably stable, not only because drops in employment and income have been less severe than of old, but also because they have been willing and able to borrow. The long rise in asset prices—first of stocks, then of houses—raised consumers’ net worth and made saving seem less necessary. And borrowing became easier, thanks to financial innovation and lenders’ relaxed underwriting, which was itself based on the supposedly reliable collateral of ever-more-valuable houses. On average, consumers from 1950 to 1985 saved 9% of their disposable income. That saving rate then steadily declined, to around zero earlier this year At the same time, consumer and mortgage debts rose to 127% of disposable income, from 77% in 1990.
Those forces have now reversed. The stockmarket has fallen to the levels of a decade ago. House values have fallen 18% since their peak in 2006. Banks and other lenders have tightened lending standards on all types of consumer loans.
As a consequence, consumer spending fell at a 3.1% annual rate in the third quarter (in part because tax rebates boosted spending in the second), the steepest since the second quarter of 1980 when Jimmy Carter briefly imposed credit controls. More such declines are likely to follow. Richard Berner of Morgan Stanley projects that in the 12 months up to the second quarter of next year real consumer spending will fall by 1.6%—a post-war record. “The golden age of spending for the American consumer has ended and a new age of thrift likely has begun,” he says.
Even before this crisis hit, saving was bound to rise. Baby-boomer Americans have saved far less than their parents, according to McKinsey Global Institute, the consultancy’s affiliated think-tank, and are unprepared for retirement. Drawn out over many years, a rise in saving would be a good thing. But compressed into a matter of months, it would be downright dangerous. But the possibility cannot be dismissed. Bruce Kasman and Joseph Lupton of JPMorgan predict that the saving rate will jump to around 4.5% by the end of next year, the sharpest jump in so short a time in the post-war period.
Patricia Baker, a part-time hostess at a Maryland country club, is spending $1,000 on Christmas this year compared with $3,000 last year. She worries about the economy. People at the club still play golf, but instead of ordering lunch and a beer, many just buy crackers and a soda. She also has less to spend. Illness kept her husband off work for a bit, and they fell behind on payments on their two credit cards. The credit-card company docked his wages to pay off the first, and she is still battling over the second. She expects her monthly mortgage payment to reset next year from $1,700 to $2,000 or more, and doubts she can find anything better: “Banks aren’t going to touch anyone that doesn’t have perfect credit.” She now pays cash—as she did for two pillows in the Linens ’n Things closing sale.
This compulsory return to thrift will be deeply painful; consumer spending and housing are almost three-quarters of GDP. Of the 1.2 million, or 0.9%, decline in jobs since December, about 700,000 are directly related to consumers: retail trade, transportation manufacturing and home-building. The rise in unemployment, from 4.4% in 2006 to 6.5% in October, is nearing that of 2001-03 and is not over. On November 19th Federal Reserve policymakers disclosed they expect the recession to last until mid-2009. Their inflation worries have evaporated; indeed, consumer prices plunged a record 1% in October from September, and by 0.1% excluding fuel and food, the first such decline since 1982. The Fed’s vice-chairman, Donald Kohn, said outright deflation “is a risk out there but it’s still small”.
The risk is that the recession will be longer and the recovery weaker than expected as consumers retrench. Until 1982 recessions were often induced by the Fed to weaken demand and reduce inflation. Declines in GDP were dominated by business inventories and interest-sensitive spending such as cars and houses. Once the Fed eased money, spending sprang back.
Since then inventories have become less important to the business cycle and deregulation and financial innovation mean higher interest rates take longer to affect spending. Expansions are marked by sizeable growth in assets and debt. When the cycle turns, falling asset values and debt reduction weaken the kick of lower rates, producing anaemic recoveries with rising unemployment. The Fed has already lowered its interest-rate target to 1%, but it is fighting gale-force headwinds as lenders reduce their loan portfolios. Citigroup recently told many of its credit-card holders that it was raising their interest rates by up to three percentage points.
Lenders once routinely pooled credit-card, student and car loans into securities and sold them to capital-markets investors. Joseph Astorina of Barclays Capital says no one wants to buy such securities now for fear that some overextended investor will dump its own holdings a week later, driving their values down sharply. The issuance of credit-card-backed securities, which averaged $8 billion a month in 2007, was zero in October, he says.
Alan Greenspan, the former Fed Chairman, told The Economist this week that banks were satisfied with capital equal to 10% of their assets in the past. Now, to soothe depositors and investors, they will need a much higher ratio—perhaps around 15%. Until they get there, through a combination of raising new capital, reducing dividends and share buybacks, and shedding assets, lending will be constrained.
This makes a strong case for more government stimulus. Lawrence Summers, the former treasury secretary and a candidate for the same post under Barack Obama, said on November 17th that it should be “speedy, substantial and sustained over a several-year interval”. Fiscal stimulus at this stage would replace some of the demand which has been wiped out by the credit crunch. It won’t prevent a recession; but without it, the recession is guaranteed to be far worse.
3)The Waxman Democrats: What the coup against Dingell means for business.
John Dingell's fall from power yesterday is an important inflection point in the history of the modern Democratic Party. The House purge marks the final triumph of the Congressional generation that came of political age during the 1970s over the last lion of New Deal liberalism, and it is symbolic of the party's change in culture and policy priorities in the Barack Obama era.
Sitting chairmen are nearly impossible to depose, never mind one with the seniority and record of Mr. Dingell, who has served longer than anyone else in the House. The Democratic caucus nonetheless stripped him of his 28-year position atop the Energy and Commerce Committee, which has great power over the climate change and health-care bills that Mr. Obama hopes to pass next year. Instead, California's Henry Waxman, who was elected by a reported 137 to 122, will do the honors. (We say "reported" because the vote was by secret ballot, which in a rich irony Democrats want to prevent for union organizing votes.)
Speaker Nancy Pelosi claimed to be neutral, though it was clear all along that she was twisting arms on Mr. Waxman's behalf. "I assume that not playing a role is playing a role," as Charlie Rangel, another venerable committee chairman, put it yesterday. Ms. Pelosi loathes Mr. Dingell's independence -- especially on environmental matters.
That fissure neatly separates the Waxman Democrats from the old vanguard that Mr. Dingell represents. He was first elected in 1955 and has always tried to protect his hometown Detroit auto makers from the eco-mandates that ultimately helped to land them in their present predicament. Mr. Dingell's rough-hewn candor about the realities of "doing something" about climate change also helped to make him a green pariah. He knows that carbon regulation and taxes will fall most heavily on domestic manufacturing and Midwest states that rely on coal-fired power. His sympathies lie with the people who work near (or in) factories and drive Fords or Chevys.
Mr. Waxman, speaking for the upscale precincts of Beverly Hills, wants to phase out coal and cars that use gasoline. The coastal elites who now dominate Democratic politics will happily trade the blue collar for the green collar.
We should add that Mr. Dingell is hardly some business apologist. At Energy and Commerce in the 1980s and early 1990s, Mr. Dingell would burn the paint off the committee room walls with his interrogations of energy, insurance and drug company executives. The irony is that Democrats have found, in Mr. Waxman, an even more extreme antibusiness tribune, who will no doubt use his new powers to go after any concern that turns a profit but refuses to pay his party the obeisance of campaign cash and regulatory submission. In short, the Democrats have ousted the dean of the House for the spleen of the House.
Meanwhile, in another sign of the Waxman ascendancy, President-elect Obama has named Philip Schiliro, a Waxman loyalist and his former chief of staff, as the new White House director of Congressional relations. Robert Sussman, who leads the transition's Environmental Protection Agency "review team," has been an astringent critic of Mr. Dingell on carbon regulation. And Carol Browner, Al Gore's protégé turned Clinton EPA administrator turned director of Mr. Obama's "energy working group," is another old Dingell foe.
It's obvious who now pulls the Democratic levers of power, and anyone in the energy or health-care business had better erect the barricades. In the small favors department, Mr. Waxman will allow Mr. Dingell to hold the title "chairman emeritus."
4)Obama's Senate Play If the president wants 60 Senate votes, he'll have to fight for them one by one.
By KIMBERLEY A. STRASSEL
Contrary to most reporting, Mr. Obama's meeting with his rival wasn't aimed at a cabinet post, or even at a show of national healing. It was directed, pure and simple, at co-opting Mr. McCain's help against what Mr. Obama understands is now his biggest obstacle: Senate Minority Leader McConnell.
Cynical? Nah. If Mr. Obama has demonstrated anything, it is that he always has a smart eye on the future. He knows his big agenda is headed straight for the bitter trenches of the Senate. Democrats aren't likely to get the 60 seats they need to automatically cut off a filibuster. They will have to pick off Republicans.
Standing in the way is Mr. McConnell, one of the shrewdest Senate operators in recent history, and a man who knows the institution inside-out. He also knows what his members want, and what he can demand in return.
The minority leader is already crafting ways to keep his caucus together to block Mr. Obama's more destructive proposals. If the new president wants 60 votes, he's going to have to fight for them, vote for vote.
And Mr. Obama is betting Mr. McCain is ripe for some easy picking. The Arizonan wore his conservative cloak heavily in the campaign. While his concession speech was certainly gracious, it also hinted at a man itching to get back his reputation as a "maverick." His presidential ambitions now finished, Mr. McCain will also be looking to use his remaining Senate time to ensure his place in political history.
A few of the passions to which Mr. McCain will turn to cement his legacy are shared by the president-elect. The most obvious is global warming. Senate Democrats' most recent attempt to break a filibuster on climate-change legislation, in June, had the support of at least 54 senators. After this month's Senate reshuffle, Harry Reid is going to be tantalizingly close to breaking the barrier. Mr. Obama wants Mr. McCain's help.
The question is this: What else might Mr. McCain be prevailed upon to fulfill his pledge to help the new president? He won't likely budge on issues that he has used to build a career -- say, controlling spending and earmarks. But others? He ran on a free market health-care plan, but it wasn't a comfort zone. He promised to retain the Bush tax cuts but once voted against them. He was the architect of the Gang of 14, a Senate dodge on stalled Bush judicial nominees. On these questions and more, Mr. Obama's hope is not just to win over Mr. McCain, but to set him up as an example that other GOP members should follow.
If the Democrat has any grasp of history, he also knows Mr. McCain and Mr. McConnell are not pals. This grump dates back more than 10 years, when Mr. McCain tried to pass a federal settlement for tobacco-related lawsuits. Mr. McConnell, who hails from the tobacco state of Kentucky, was instrumental in blocking that bill.
– William Snyder The minority leader also annoyed Mr. McCain by refusing to join his campaign-finance pilgrimage. As head of the National Republican Senatorial Committee in the late 1990s, Mr. McConnell stymied Mr. McCain's efforts to outlaw money. When Mr. McCain finally birthed his campaign-finance baby, it was Mr. McConnell who sued to have it repealed. While the minority leader was a soldier in the recent McCain run, the Arizonan is known for nursing grudges. He may not go out of his way to help Mr. McConnell. He might, in fact, use his super-senator status to trump him. This, at least, is Mr. Obama's hope.
Finally, the new president knows he can count on help from the media. Mr. McCain once joked that the press corps was his true "base," only to see that constituency turn on him when he dared to act like a Republican. From the sounds of the cooing noises that greeted his concession speech, the media are now urging Mr. McCain to get back in their good graces. They will help by making sure that on any occasion Mr. McCain joins with his party he is ignored, while any time he strikes out on his own he is elevated to the "Republican standard bearer," who is "leading" his party in a bipartisan direction. We're about to discover if Mr. McCain's long-term memory for slights extends to the Fourth Estate.
The McCain wooing is in line with a broader Obama strategy to make nice for votes. Sen. Dick Lugar has been mentioned as a potential secretary of state, the mere suggestion of which might win Mr. Obama some gratitude. Independent Joe Lieberman was just allowed to keep his top job as chairman of the Homeland Security Committee, despite the desire of many Democrats to exact retribution for his support for Mr. McCain's presidential campaign. Mr. Lieberman singled out "an appeal by President Obama himself" as the key factor in his rescue. He will be reminded of that help often.
As for Mr. McConnell, he was just unanimously re-elected by his caucus to the top post. Let the games begin.
As for myself, I am grateful to be healthy, have a wonderful family and many friends and live in a beautiful part of the world. I still have the opportunity to be productive and intend to continue speaking my mind and posting my thoughts.
Apparently Hillary has accepted the Sec.of State post. She can't be worse than Albright or Christopher and might even be an improvment over Rice. What is ironic is how Doris Kearn Goodwin's book about Lincoln's Cabinet has become a guidepost for Obama. Secondly, Clinton and Obama tore into each other's foreign policy experience during the campaign. Apparently politicians have become adept at saying anything to win whether they believe it or not.
What is ahead - a world of conflict or order? (See 1 below.)
As one force begets another, The Economist sees a very restrained American consumer, a long and deep recession. What are the consequences for the world as the consumer, states and the federal government all try to rebuild their respective balance sheets, purchasing power and credibility. (See 2 below.)
Comment from a long time friend and fellow memo reader: Dick, a long overdue hello! We are a consumerist society which led us to become a nation that lacks capital. Thus we are trying to push on a string --- Capitalism without capital.
More views about Waxman. (See 3 below.)
Strassel deems Obama's ploy of pitting McCain against McConnell an interesting move. Will McCain revert to being the Republican's Peck's Bad Boy and will the press and media relish supporting him in that role? (See 4 below.)
Dick
1) World confronts a choice between chaos and order
By Philip Stephens
It seems only yesterday that scarcity was the story. Energy and commodity prices were heading into the stratosphere. The oil was running out, food shortages loomed, Russia was resurgent and China was marching into Africa amid a scramble for dwindling resources.
Now? Prices everywhere are falling as recession bites. Investment banks have disappeared; and the global credit system is on life-support. The big threat is deflation rather than inflation. The oil price has slumped, wiping the smirk from authoritarian leaders such as Russia’s Vladimir Putin and Venezuela’s Hugo Chávez.
When Barack Obama won the Democratic nomination for the presidency he expected Iraq and healthcare would be the priorities of his presidency. No one told him the banks were facing bankruptcy and the US an economic shock as severe as any since the Great Crash.
The scale and speed of this turnround offers a stiff warning of the perils of seeking to peer beyond the present. Think back also to all that stuff a few years ago about the unipolar moment and the new American imperium. The mistake always is to project the here-and-now into an indefinite future. History rarely travels in straight lines.
So what should the president-elect make of the hefty tome that has landed on his desk courtesy of the cleverest minds at the US National Intelligence Council? After all, Global Trends 2025*, the NIC’s four-yearly exercise in crystal ball-gazing, tries to map the contours of the world more than 15 years hence.
The answer is that Mr Obama would do well to read it closely: not because he gets a top-secret version denied to the rest of us; nor because the authors have discovered the philosopher’s stone of forecasting, but because understanding the forces driving political and economic change should be the starting point for his decisions as president.
The NIC does not pretend to have all the answers. Its stated purpose is to explore the forces and factors driving events rather than to predict the destination. The authors rightly eschew the determinism peddled by the snake oil salesmen of futurology. The world may be travelling in this or that direction now, but that does not mean the trajectory is preordained.
One of the report’s important messages is that political leaders, and Mr Obama most particularly, have the capacity to chart alternative paths. Another – this one implicit – is that the decisions taken in the White House during the next four or eight years will be critical.
At first glance, the core conclusion – that the world is witnessing the emergence of a new multipolar system – seems unremarkable. But it matters that the president-elect is being told by his foremost intelligence analysts that the US faces relative decline. There are plenty of people in Washington who dismiss such a prospect as the malevolent thinking of woolly-headed Europeans; the more so, perhaps, when France’s Nicolas Sarkozy keeps trumpeting it.
In the NIC’s view, the rise of China, India and the rest will mean that by 2025 the US will be “one [my emphasis] of a number of important actors on the world stage, albeit still the most powerful”. For more than 200 years, even when challenged, the US has been a rising power. The adjustment will not be easy.
New great power rivalries, though, are only one part of the emerging picture. Nations face challenges from non-state actors empowered by globalisation. Businesses, religious zealotry, criminal networks and non-governmental organisations are all testing state power.
Overlay these changes, geopolitical and societal, with an array of transnational forces – climate change, terrorism, unconventional weapons proliferation, demographic bulges, migration, resource competition – and you begin to see how complicated things are getting. Add in all the unknowns – of both the known and unknown variety – and you start to get a headache. The other day Mr Obama said that sometimes he asks himself where on earth he should start as president. Reading the NIC report one can understand why.
What can be said with moderate certainty is that a global system designed in 1945 will not survive the coming age of discontinuities. An order centred around the political, cultural and economic hegemony of the west can scarcely outlive the redistribution of global power.
The rising powers are unlikely to want to tear down the system as did, for example, Germany and Japan during the 20th century. More likely, the trend will be towards fragmentation and instability as the new powers take what they want from the existing order while preserving a freedom of manoeuvre outside it.
This “multipolarity without multilateralism” points to the absence of any over-arching system of global governance. Instead, current trends point to a “patchwork of overlapping, often ad hoc and fragmented efforts” with shifting coalitions of member nations and international organisations undermining the capacity of the United Nations for effective multilateral action. In this respect, the NIC adds, speaking of the “the international order” may become something of a misnomer.
The key phase in the last paragraph, though, is “current trends”. The extent to which coherence prevails over chaos in a changing system will depend to a large extent on the decisions taken between now and then by political leaders. To do nothing is to invite disorder. Doing something demands the imagination to create a new and inclusive architecture.
As for the US, its relative decline should neither be exaggerated nor underestimated. Its power will be constrained by the economic and military muscle of other great powers and, perhaps, by disenchantment among its own citizens with America’s role as global policeman.
On the other hand, the enthusiastic clamour that has greeted Mr Obama’s victory testifies to the fact that much of the world still sees the US as an essential guardian of security. For the next two decades at least America will remain the only real superpower. Decisions taken in Washington will have a greater impact than those of any other global actor on how the international system evolves.
This is what the political scientists call human agency. Look back at the past century and most of the good and the bad flowed from the ideas and decisions of political leaders. The same will be true of the coming decades. Bad outcomes, as the NIC concludes, are not inevitable.
2) The end of the affair: America’s return to thrift presages a long and deep recession
DEBBIE JEFFRIES could see it coming. When she manned the cash register at Linens ’n Things, the household-goods chain where she has worked for 14 years, a customer would sometimes open her wallet and display 15 credit cards. “That people can pull out that many credit cards—that’s insane. You say, whoa, maybe that’s why we’re here. We have so much debt.”
Ms Jeffries cut up her own credit card several years ago when the balance became unmanageable, but still became an indirect victim of the credit crunch that is now dragging America into recession. Linens ’n Things filed for bankruptcy protection in May; in October, unable to find a buyer for its stores, it began to liquidate itself. A sign in the window of Ms Jeffries’ store in suburban Maryland invites anyone interested in buying the fixtures to see the manager. Ms Jeffries expects to be out of a job by the end of December.
An important reason why the American economy has been so resilient and recessions so mild since 1982 is the energy of consumers. Their spending has been remarkably stable, not only because drops in employment and income have been less severe than of old, but also because they have been willing and able to borrow. The long rise in asset prices—first of stocks, then of houses—raised consumers’ net worth and made saving seem less necessary. And borrowing became easier, thanks to financial innovation and lenders’ relaxed underwriting, which was itself based on the supposedly reliable collateral of ever-more-valuable houses. On average, consumers from 1950 to 1985 saved 9% of their disposable income. That saving rate then steadily declined, to around zero earlier this year At the same time, consumer and mortgage debts rose to 127% of disposable income, from 77% in 1990.
Those forces have now reversed. The stockmarket has fallen to the levels of a decade ago. House values have fallen 18% since their peak in 2006. Banks and other lenders have tightened lending standards on all types of consumer loans.
As a consequence, consumer spending fell at a 3.1% annual rate in the third quarter (in part because tax rebates boosted spending in the second), the steepest since the second quarter of 1980 when Jimmy Carter briefly imposed credit controls. More such declines are likely to follow. Richard Berner of Morgan Stanley projects that in the 12 months up to the second quarter of next year real consumer spending will fall by 1.6%—a post-war record. “The golden age of spending for the American consumer has ended and a new age of thrift likely has begun,” he says.
Even before this crisis hit, saving was bound to rise. Baby-boomer Americans have saved far less than their parents, according to McKinsey Global Institute, the consultancy’s affiliated think-tank, and are unprepared for retirement. Drawn out over many years, a rise in saving would be a good thing. But compressed into a matter of months, it would be downright dangerous. But the possibility cannot be dismissed. Bruce Kasman and Joseph Lupton of JPMorgan predict that the saving rate will jump to around 4.5% by the end of next year, the sharpest jump in so short a time in the post-war period.
Patricia Baker, a part-time hostess at a Maryland country club, is spending $1,000 on Christmas this year compared with $3,000 last year. She worries about the economy. People at the club still play golf, but instead of ordering lunch and a beer, many just buy crackers and a soda. She also has less to spend. Illness kept her husband off work for a bit, and they fell behind on payments on their two credit cards. The credit-card company docked his wages to pay off the first, and she is still battling over the second. She expects her monthly mortgage payment to reset next year from $1,700 to $2,000 or more, and doubts she can find anything better: “Banks aren’t going to touch anyone that doesn’t have perfect credit.” She now pays cash—as she did for two pillows in the Linens ’n Things closing sale.
This compulsory return to thrift will be deeply painful; consumer spending and housing are almost three-quarters of GDP. Of the 1.2 million, or 0.9%, decline in jobs since December, about 700,000 are directly related to consumers: retail trade, transportation manufacturing and home-building. The rise in unemployment, from 4.4% in 2006 to 6.5% in October, is nearing that of 2001-03 and is not over. On November 19th Federal Reserve policymakers disclosed they expect the recession to last until mid-2009. Their inflation worries have evaporated; indeed, consumer prices plunged a record 1% in October from September, and by 0.1% excluding fuel and food, the first such decline since 1982. The Fed’s vice-chairman, Donald Kohn, said outright deflation “is a risk out there but it’s still small”.
The risk is that the recession will be longer and the recovery weaker than expected as consumers retrench. Until 1982 recessions were often induced by the Fed to weaken demand and reduce inflation. Declines in GDP were dominated by business inventories and interest-sensitive spending such as cars and houses. Once the Fed eased money, spending sprang back.
Since then inventories have become less important to the business cycle and deregulation and financial innovation mean higher interest rates take longer to affect spending. Expansions are marked by sizeable growth in assets and debt. When the cycle turns, falling asset values and debt reduction weaken the kick of lower rates, producing anaemic recoveries with rising unemployment. The Fed has already lowered its interest-rate target to 1%, but it is fighting gale-force headwinds as lenders reduce their loan portfolios. Citigroup recently told many of its credit-card holders that it was raising their interest rates by up to three percentage points.
Lenders once routinely pooled credit-card, student and car loans into securities and sold them to capital-markets investors. Joseph Astorina of Barclays Capital says no one wants to buy such securities now for fear that some overextended investor will dump its own holdings a week later, driving their values down sharply. The issuance of credit-card-backed securities, which averaged $8 billion a month in 2007, was zero in October, he says.
Alan Greenspan, the former Fed Chairman, told The Economist this week that banks were satisfied with capital equal to 10% of their assets in the past. Now, to soothe depositors and investors, they will need a much higher ratio—perhaps around 15%. Until they get there, through a combination of raising new capital, reducing dividends and share buybacks, and shedding assets, lending will be constrained.
This makes a strong case for more government stimulus. Lawrence Summers, the former treasury secretary and a candidate for the same post under Barack Obama, said on November 17th that it should be “speedy, substantial and sustained over a several-year interval”. Fiscal stimulus at this stage would replace some of the demand which has been wiped out by the credit crunch. It won’t prevent a recession; but without it, the recession is guaranteed to be far worse.
3)The Waxman Democrats: What the coup against Dingell means for business.
John Dingell's fall from power yesterday is an important inflection point in the history of the modern Democratic Party. The House purge marks the final triumph of the Congressional generation that came of political age during the 1970s over the last lion of New Deal liberalism, and it is symbolic of the party's change in culture and policy priorities in the Barack Obama era.
Sitting chairmen are nearly impossible to depose, never mind one with the seniority and record of Mr. Dingell, who has served longer than anyone else in the House. The Democratic caucus nonetheless stripped him of his 28-year position atop the Energy and Commerce Committee, which has great power over the climate change and health-care bills that Mr. Obama hopes to pass next year. Instead, California's Henry Waxman, who was elected by a reported 137 to 122, will do the honors. (We say "reported" because the vote was by secret ballot, which in a rich irony Democrats want to prevent for union organizing votes.)
Speaker Nancy Pelosi claimed to be neutral, though it was clear all along that she was twisting arms on Mr. Waxman's behalf. "I assume that not playing a role is playing a role," as Charlie Rangel, another venerable committee chairman, put it yesterday. Ms. Pelosi loathes Mr. Dingell's independence -- especially on environmental matters.
That fissure neatly separates the Waxman Democrats from the old vanguard that Mr. Dingell represents. He was first elected in 1955 and has always tried to protect his hometown Detroit auto makers from the eco-mandates that ultimately helped to land them in their present predicament. Mr. Dingell's rough-hewn candor about the realities of "doing something" about climate change also helped to make him a green pariah. He knows that carbon regulation and taxes will fall most heavily on domestic manufacturing and Midwest states that rely on coal-fired power. His sympathies lie with the people who work near (or in) factories and drive Fords or Chevys.
Mr. Waxman, speaking for the upscale precincts of Beverly Hills, wants to phase out coal and cars that use gasoline. The coastal elites who now dominate Democratic politics will happily trade the blue collar for the green collar.
We should add that Mr. Dingell is hardly some business apologist. At Energy and Commerce in the 1980s and early 1990s, Mr. Dingell would burn the paint off the committee room walls with his interrogations of energy, insurance and drug company executives. The irony is that Democrats have found, in Mr. Waxman, an even more extreme antibusiness tribune, who will no doubt use his new powers to go after any concern that turns a profit but refuses to pay his party the obeisance of campaign cash and regulatory submission. In short, the Democrats have ousted the dean of the House for the spleen of the House.
Meanwhile, in another sign of the Waxman ascendancy, President-elect Obama has named Philip Schiliro, a Waxman loyalist and his former chief of staff, as the new White House director of Congressional relations. Robert Sussman, who leads the transition's Environmental Protection Agency "review team," has been an astringent critic of Mr. Dingell on carbon regulation. And Carol Browner, Al Gore's protégé turned Clinton EPA administrator turned director of Mr. Obama's "energy working group," is another old Dingell foe.
It's obvious who now pulls the Democratic levers of power, and anyone in the energy or health-care business had better erect the barricades. In the small favors department, Mr. Waxman will allow Mr. Dingell to hold the title "chairman emeritus."
4)Obama's Senate Play If the president wants 60 Senate votes, he'll have to fight for them one by one.
By KIMBERLEY A. STRASSEL
Contrary to most reporting, Mr. Obama's meeting with his rival wasn't aimed at a cabinet post, or even at a show of national healing. It was directed, pure and simple, at co-opting Mr. McCain's help against what Mr. Obama understands is now his biggest obstacle: Senate Minority Leader McConnell.
Cynical? Nah. If Mr. Obama has demonstrated anything, it is that he always has a smart eye on the future. He knows his big agenda is headed straight for the bitter trenches of the Senate. Democrats aren't likely to get the 60 seats they need to automatically cut off a filibuster. They will have to pick off Republicans.
Standing in the way is Mr. McConnell, one of the shrewdest Senate operators in recent history, and a man who knows the institution inside-out. He also knows what his members want, and what he can demand in return.
The minority leader is already crafting ways to keep his caucus together to block Mr. Obama's more destructive proposals. If the new president wants 60 votes, he's going to have to fight for them, vote for vote.
And Mr. Obama is betting Mr. McCain is ripe for some easy picking. The Arizonan wore his conservative cloak heavily in the campaign. While his concession speech was certainly gracious, it also hinted at a man itching to get back his reputation as a "maverick." His presidential ambitions now finished, Mr. McCain will also be looking to use his remaining Senate time to ensure his place in political history.
A few of the passions to which Mr. McCain will turn to cement his legacy are shared by the president-elect. The most obvious is global warming. Senate Democrats' most recent attempt to break a filibuster on climate-change legislation, in June, had the support of at least 54 senators. After this month's Senate reshuffle, Harry Reid is going to be tantalizingly close to breaking the barrier. Mr. Obama wants Mr. McCain's help.
The question is this: What else might Mr. McCain be prevailed upon to fulfill his pledge to help the new president? He won't likely budge on issues that he has used to build a career -- say, controlling spending and earmarks. But others? He ran on a free market health-care plan, but it wasn't a comfort zone. He promised to retain the Bush tax cuts but once voted against them. He was the architect of the Gang of 14, a Senate dodge on stalled Bush judicial nominees. On these questions and more, Mr. Obama's hope is not just to win over Mr. McCain, but to set him up as an example that other GOP members should follow.
If the Democrat has any grasp of history, he also knows Mr. McCain and Mr. McConnell are not pals. This grump dates back more than 10 years, when Mr. McCain tried to pass a federal settlement for tobacco-related lawsuits. Mr. McConnell, who hails from the tobacco state of Kentucky, was instrumental in blocking that bill.
– William Snyder The minority leader also annoyed Mr. McCain by refusing to join his campaign-finance pilgrimage. As head of the National Republican Senatorial Committee in the late 1990s, Mr. McConnell stymied Mr. McCain's efforts to outlaw money. When Mr. McCain finally birthed his campaign-finance baby, it was Mr. McConnell who sued to have it repealed. While the minority leader was a soldier in the recent McCain run, the Arizonan is known for nursing grudges. He may not go out of his way to help Mr. McConnell. He might, in fact, use his super-senator status to trump him. This, at least, is Mr. Obama's hope.
Finally, the new president knows he can count on help from the media. Mr. McCain once joked that the press corps was his true "base," only to see that constituency turn on him when he dared to act like a Republican. From the sounds of the cooing noises that greeted his concession speech, the media are now urging Mr. McCain to get back in their good graces. They will help by making sure that on any occasion Mr. McCain joins with his party he is ignored, while any time he strikes out on his own he is elevated to the "Republican standard bearer," who is "leading" his party in a bipartisan direction. We're about to discover if Mr. McCain's long-term memory for slights extends to the Fourth Estate.
The McCain wooing is in line with a broader Obama strategy to make nice for votes. Sen. Dick Lugar has been mentioned as a potential secretary of state, the mere suggestion of which might win Mr. Obama some gratitude. Independent Joe Lieberman was just allowed to keep his top job as chairman of the Homeland Security Committee, despite the desire of many Democrats to exact retribution for his support for Mr. McCain's presidential campaign. Mr. Lieberman singled out "an appeal by President Obama himself" as the key factor in his rescue. He will be reminded of that help often.
As for Mr. McConnell, he was just unanimously re-elected by his caucus to the top post. Let the games begin.
Thursday, November 20, 2008
Will Waxman wax the auto industry with green laws?
Even the IAEA now agrees Iran has enough nuclear material to make one bomb. (See 1 below.)
My friend Toameh writes: Israel tells Jordan, Hamas will be spared for the time being. Hamas also wants to maintain the cease fire while it continues to arm and shell Israel. Hudna means Arabs arm under the cover of a cease fire so when they choose to end it they will be in a better armed position.(See 2 below.)
Matt Miller has learned to embrace trillion dollar deficits. I interviewed him when he was an applicant for a White House Fellowship. Matt was then employed by Goldman Sachs. Did Matt stay in DC too long. (See 3 below.)
With the market plunging I am starting to hear noises that it is now Obama's Market and more are getting upset beause Obama has not come out saying: 'In view of circumstances I will renounce raising taxes for the forseeable.' Probably the reason Obama has been quiet is that he is busy selecting his cabinet and is conflicted by the fact that he has not taken office. Meanwhile Pelosi is busy stacking her kind of ultra liberals on important committees. Now that Waxman has ousted Dingle the auto industy could be dead for sure because Waxman will probably demand the industry be subjected to more green legislation which can only raise the cost of making cars. Will Henry make sure his committee waxes the industry? (See 4 below.)
As the zanies take control it should be a fabulous four years of steeper and deeper economic depression. Go liberals - your day in the sun is here. Run in defeat conservatives. You brought it on yourself by defending extremism and acting and governing like liberals!
Caroline Glick suggests civilization is about to walk off a Somali plank. Potential Human Rights violations are preventing a rational course of response action. The Somali pirates could probably hire some trial lawyers, bring a class action suit and recover millions because they can claim their own rights have been violated. Political correctness has bitten itself in the "arse" it would seem. (See 5 below.)
Some views on Clinton as Secretary of State. (See 6 below.)
Have a great weekend while you ponder the auto industry about to go off a cliff because of the past stupidity of management, labor and Congress. Somali pirates can wreck world shipping with legal impugnity, Iran now has enough nuclear material to build a bomb, we have elected a president whose claim to fame was being chief editor of The Harvard Law Review and the market is collapsing around out feet. Alice in Wonderland has finally been bested.
What we are actually witnessing is a collapse not only of our market but also the culmination of irrationaland undending attacks on our culture. The liberation of a citizen's rights to trump normal behaviour and simple order. People who can walk around naked and indulge in drugs. The forcing of a dating service to accept ads against its belief, spending with abandon, tranferring from the productive to the unproductive because of disparity of entitlements, an education system and family unit in shambles. Most importantly of all, an attack on those who embrace religion as being dangerous.
This is what the world's most powerful republic and capitalistic system has come to be. It should be no surprise because we have been working at accomplishing this debauchery for decades. We have been rending the fabric of our society in the mistaken belief unbridled freedom should be our ultimate goal.
Dick
1)Iran has enough nuclear material for a single A-Bomb – IAEA
Iran has now produced roughly enough nuclear material to make, with added purification, a single atom bomb, according to nuclear experts analyzing the latest report from global atomic inspectors.
This is the conclusion contained in the report leaked by the International Atomic Energy Agency (IAEA) in Vienna Wednesday, Nov. 19, for submission to the agency’s board Nov. 27-28. This alarming development is headlined by the New York Times and Bloomberg website Nov. 20, but does not rate Israeli official comment or a mention in the its media.
In the last few weeks, Iran has doubled or even trebled the pace of its uranium enrichment process. Nuclear watchdog sources report that in October, Iran was known to have accumulated 480 kilos of low grade 5 percent enriched uranium, a short step from “break-out” to weapons grade (90 percent) material.
By mid-November, the Iranians topped this up to 630 kilos, adding 150 kilos in six weeks. By the end of 2009, Iran will have enough enriched uranium for 2-3 nuclear bombs.
Tehran has thus jumped three months ahead of US and Israeli intelligence estimated timeline of February 2009 as the timeline for a sufficiency of enriched uranium to build a bomb. The experts ask how long until Iran has the know-how for further purifying the fuel and perfecting the design for an atomic warhead. DEBKAfile’s sources report that Tehran acquired this technology some years ago from the Pakistani nuclear smuggler Dr. A.Q. Khan.
2) Israel to Jordan: We don't plan to topple Hamas in Gaza soon
By KHALED ABU TOAMEH
Prime Minister Ehud Olmert and Defense Minister Ehud Barak assured Jordan's King Abdullah this week that Israel does not intend to launch a major offensive to bring down the Hamas regime in Gaza in the near future, Jordanian sources told The Jerusalem Post on Thursday. The two Israeli leaders did not rule out a range of less dramatic military operations against Hamas and other terror operatives in the Strip.
Abdullah on Thursday briefed Palestinian Authority President Mahmoud Abbas in Aqaba on the results of the secretive Tuesday meeting.
The Prime Minister's Office on Thursday refused to confirm that the meeting had even taken place. But Foreign Minister Tzipi Livni did respond to news of the talks, at which Abdullah cautioned his Israeli guests that a large-scale military operation in Gaza would have serious repercussions for his country and the region.
While Israel respected the importance of its relations with its Arab peace partners, and heeded their concerns, Livni said, it would continue to act according to its own interests.
"Israel does indeed have strategic ties with its neighbors, Egypt and Jordan, and listens to their needs, but the bottom line remains that the country acts according to the interests of the Israeli citizen," she said, during a visit to the Tefen Industrial Park.
Abdullah is also understood to have relayed to Olmert and Barak a message from Hamas in which the movement emphasized its keenness on maintaining the truce with Israel.
Top Jordanian security officials have been holding a "frank dialogue" with Hamas representatives in the past few weeks in a bid to ease tensions between the two parties.
Tuesday's meeting was arranged after the Jordanians said they received information according to which Israel was planning a major operation in the Gaza Strip - not only to stop the rocket attacks, but also to topple the Hamas regime, the sources said.
According to the information, a large-scale action was envisaged that might claim the lives of many Israelis and Palestinians - and stir unrest on the Arab and Muslim street.
The Israeli military drive, the Jordanians were told, was also aimed at restoring the regime of Palestinian Authority President Mahmoud Abbas to the Gaza Strip after eliminating the Hamas leadership and overthrowing their government.
The Jordanians' biggest fear was that Olmert and Barak were each planning to embark on such an "adventure" for reasons related to the upcoming general elections in Israel, the sources said.
The Jordanian monarchy has good reason to fear the consequences of such an operation, the sources noted. In the past, IDF operations in the West Bank and Gaza Strip, which sometimes resulted in the killing of dozens of Palestinians, triggered a wave of protests throughout the kingdom and the rest of the Arab world.
In Jordan, where more than two-thirds of the population is Palestinians, the protests were always tolerated by the authorities, largely because they did not pose a threat to the regime.
But Abdullah and his government fear that any Israeli attempt to overthrow the Hamas regime would spark an unprecedented wave of violence in the kingdom.
Jordanian sources pointed out on Thursday that US-led efforts to get rid of the Hamas government over the past two years had backfired, earning the movement even greater support and sympathy among the Palestinians.
"There's a feeling that Hamas continues to be popular among a majority of Palestinians," said a retired Jordanian government official.
"Hamas owes its strength and popularity to the Americans - who have been waging a public campaign, with the help of the Palestinian Authority, to remove the Islamist government from power. In the end it was Hamas that managed to kick the Palestinian Authority out of the Gaza Strip."
Relations between Hamas and Jordan were strained after the late King Hussein deported Hamas leaders and closed down their offices in Amman about 10 years ago. The tensions reached their peak two years ago when the Jordanians announced that they had thwarted an attempt by Hamas to smuggle weapons into the kingdom for launching terror attacks on Israel.
The Jordanian monarch is hoping that the talks with Hamas will send a message to the disgruntled Palestinian refugees living in the kingdom that Jordan is not involved in the US "conspiracy" to bring down the democratically-elected government of Hamas, the sources said.
The Jordanians are convinced that Hamas remains an influential player in the West Bank despite the massive crackdown on its supporters by Abbas's security forces over the past few weeks. "Abbas is still too weak and he hardly has any credibility among his people," the former government official said. "I'm afraid that if we hold a free election tomorrow in the West Bank, Hamas would win."
Another reason why the Jordanians are worried about the ongoing efforts to bring down Hamas is because of the movement's strong ties with the Muslim Brotherhood organization in the kingdom. Together with Hamas supporters in Jordan, the Muslim Brotherhood has been trying in recent weeks to organize a series of protests against the continued blockade on the Gaza Strip.
Anti-Israel and anti-US protests in Arab capitals are often directed also against the Arab heads of state under the pretext that they are pawns in the hands of Washington. The Arab leaders are also accused by their constituents of failing to use their good offices with the US to exert pressure on Israel.
Unlike the majority of the Arab leaders, Abdullah is in a much more vulnerable situation because of his country's peace treaty with Israel and because of the Palestinian majority in the kingdom. The same applies to Egypt's President Hosni Mubarak, who is also worried about the repercussions of an Israeli military offensive so close to his country.
In addition to Hamas and the Muslim Brotherhood, the sources said, the Jordanians are also worried about Al-Qaida's ongoing efforts to destabilize the monarchy. Jordan is particularly concerned that a US pullout from Iraq would embolden Al-Qaida and other radical Islamist groups - posing a major threat to the kingdom's security.
According to diplomatic officials in London quoted by the paper, Abdullah stressed the need for continued peace negotiations and progress towards a two-state solution, which he said was the only option for achieving peace in the region. He also reportedly emphasized that Jordan had a strategic interest in the establishment of a Palestinian state.
Al-Hayat also reported that Abdullah asked Olmert to take immediate steps to ease the suffering of the Palestinian people to create an atmosphere conducive to progress in the peace talks. He stressed the need for Israel not to increase tension, particularly in Gaza.
Olmert's spokesman, Mark Regev, said he was not commenting on media reports regarding the visit to Amman.
3) How to love trillion-dollar deficits
By Matt Miller
This reformed fiscal conservative has stopped worrying about the nation's ballooning deficit. You should too.
We're looking at a mind-boggling, trillion-dollar budget deficit next year and I say keep the red ink rolling.
My wife, who's heard me rail against deficits since I served as a budget hawk back in Bill Clinton's White House, thinks I've lost my mind - or at least my principles. I used to be a deficit fetishist, an oddball who read one of Pete Peterson's budget doomsday books on his honeymoon, and who has bored countless friends with filibusters on our fiscal follies. But I've changed.
What's a fallen fiscal conservative to say? When a character in Hemingway's The Sun Also Rises was asked how he went bankrupt, he famously replied, "Slowly, then suddenly."
My journey into the heart of the New Deficit Indifference feels the same. I came of age as an economics student just as Ronald Reagan was on his way to quadrupling the national debt. I imbibed the wisdom that deficits crowd out private investment, hurt productivity growth and living standards, and pass big burdens to the next generation. All because politicians were afraid to make a few unpleasant choices!
By 1992 I was the kind of New Democrat who thought Ross Perot performed a tremendous public service when his charts and graphs proved that 20% of the electorate could be roused to care about our fiscal mess. In the early Clinton White House I was the resident deficit monomaniac, the guy who griped that we weren't moving fast enough to shrink the debt even as we skimped on needed investments in health care, infrastructure and education.
I even wanted to go the next step and teach the public about a few sensible steps to slow the growth of Medicare and Social Security. Yet Bill Clinton, helped by a booming economy, ultimately turned a tide of red ink into unprecedented surpluses.
Now, of course, our fiscal situation has grown dire. Indeed, before the credit crisis hit us, I would have said the absence of a successor to Perot's voice was one of the consequential gaps of the 2008 campaign. After all, the costly retirement of the Baby Boomers isn't far off in the future anymore; it's upon us. The fiscal hole is deeper than ever, with Uncle Sam sporting $50 trillion in unfunded health care and pension liabilities.
In short, we're spending beyond our means, saving next to nothing as a nation, and thus dooming our kids to ruinous tax hikes and spending slashes unless we start to pay our own way.
In the face of all this, how can a deficit hawk like me now blithely countenance the coming trillion-dollar gap? It's apt to invoke the godfather of deficit spending himself. "When the facts change, I change my mind," John Maynard Keynes once growled when grilled about an inconsistency. "What do you do, sir?"
In ways that 9/11 didn't, today's economic meltdown really does change everything, at least for a few years. Every day brings fresh proof that the credit crunch and the exhaustion of debt-fueled consumer spending threatens to dangerously collapse aggregate demand. There's simply no way to avoid a major recession without the federal government stepping in to bolster demand until we work through the subprime hangover.
Toss in reasonable down payments by the Obama administration on expanded health coverage, green energy, infrastructure and schools, and the only question is how the new president can manage appearances so that this trillion dollar milestone doesn't become a political millstone to boot.
The key (and here you'll see I haven't really changed my stripes) is to enact a long-term framework for fiscal sanity even as we test the limits of how much debt the Treasury can peddle.
Bob Litan of the Brookings Institution suggests building such triggers into Obama's blueprint from the start. Once unemployment gets back beneath 6%, for example, we could require a supermajority vote in Congress to run deficits higher than, say, 2% or 3% of GDP (by comparison, the trillion dollar figure will push us toward 7%, an all-time high).
Yes, promises like this can be broken. But given the extraordinary circumstances, writing this kind of future restraint into law would tell world markets that we know the debt spree has to end. Obama could also set up a bipartisan commission on Social Security and Medicare with a view to building consensus for action in a second term, by which time the current crisis will, with luck, be a fading memory.
All this will push conventional thinking past the breaking point on everything from how much federal debt markets can absorb to how much cash can be spent on infrastructure fast and wisely. The defining drama of the next six months will be the fight to get this framework right and sell it to skeptical publics here and abroad. In the meantime, I'm putting my zeal for budget rectitude on the back burner. For the economy's sake, we're all deficit-addicted Keynesians now.
4) Dingell Buried: Henry Waxman's victory is the biggest gift Obama could have asked for.
By Christopher Beam
Out: Rep. John Dingell of Michigan, the tough, cantankerous eminence grise of the House Democratic caucus (he's 82), who was so deferential to Detroit as chairman of the House energy and commerce committee that Lee Iacocca once said he "stood up for the auto industry beyond the call of duty." In: Rep. Henry Waxman of California, the tough, mustachioed eminence slightly less grise of House Democrats (he's 69) known for his relentless investigations and aggressive proposals for combating climate change. Waxman's mustache—it even has a nickname—haunts Rick Wagoner's dreams.
Barack Obama's own transition team could not have hoped for a better outcome. In fact, there are signs it did more than just hope.
Dingell's ouster came after the Democrats' Policy and Steering Committee voted 25-22 in favor of Waxman's candidacy. In charge of the steering committee is Waxman's fellow California Democrat, House Speaker Nancy Pelosi. And ousting the leader of the House's most powerful panel—environmental issues, health care, and consumer protection all fall under commerce's purview—is generally not done without permission from the top.
Of course, Waxman and Dingell did their part. As early as the 1980s, Waxman was fighting the attempts of then-Chairman Dingell, working with the Reagan administration, to weaken auto-emissions standards. Dingell, meanwhile, quashed Waxman's acid-rain legislation. More recently, Dingell's 2007 pro-coal, anti-regulatory energy independence legislation prompted Waxman to circulate a letter signed by 11 fellow committee members: "We have serious concerns about the direction the Committee is heading."
At the same time, Dingell could have been helpful to Obama as chairman on some issues. He's been a stalwart liberal almost across the board. He helped to pass Medicare in 1965 and has for years supported a national health insurance system. He and Waxman teamed up to produce the 1990 Clean Air Act. Other accomplishments he touts are the Endangered Species Act and the State Children's Health Insurance Program.
But on climate legislation, Dingell would not have been a help. Obama has pledged to make addressing climate change a priority—a commitment he reiterated in a video address this week. And some Senate Democratic leaders, normally moderate checks on their wild-eyed House counterparts, appear eager to take on clean energy and fuel efficiency.
Dingell isn't opposed to all energy regulation. In his proposed fuel efficiency legislation in 2007, he supported "incentives" for auto manufacturers but opposed forcing them to adapt. He supports cap-and-trade, but his version is more industry-friendly than Waxman's, which would actually put the Environmental Protection Agency in charge. The difference between Dingell and Waxman is best captured by the fear struck in the hearts of energy sector sympathizers: Dingell's plan would "dramatically raise energy prices," according to the Competitive Enterprise Institute, while Waxman's "would send us back to the Stone Age."
Waxman is a better fit for an Obama-led Democratic charge. He's crazy, but unlike Dingell, he's happy-crazy. Dingell's craziness is darker. He was known for strong-headed, Lyndon Johnson-style political arm-twisting. He leaked dirt about his enemies and fed the news cycle to keep favorable coverage alive. He sometimes went overboard, as with his hearings alleging scientific fraud against Nobel Prize-winner David Baltimore, who was later exonerated, and AIDS researcher Robert Gallo, whose allegations were also dropped. Waxman is tough, too, but in a matter-of-fact, bury-you-with-evidence kind of way. He's a famed tightwad with a righteous streak, but he's not a drama queen. As head of the House oversight committee, he earned the moniker the "Mustache of Justice."
Waxman's rise has broader implications, too. He's just the latest combative Democrat to rise in the Obamaverse. Like incoming Chief of Staff Rahm Emanuel, Waxman is a partisan. He also represents coastal creep in the legislative branch—the influence of the West and East over industrial Middle America. (Between Pelosi, Harry Reid, Barney Frank, and now Waxman, the power of pro-regulation liberals over hands-off Blue Dog Democrats is rising. And no, Chicago is not Middle America, although Obama's deference to coal could be a problem for the bicoastal mafia.) Lastly, Waxman's victory coincides with the failure (so far) of Detroit's Big Three to win a federal bailout. Dingell may have been the industry's last best hope to stave off profit-narrowing regulation. (His wife, Debbie Dingell, is an executive at General Motors.)
This doesn't mean Waxman can snap his fingers and make cars more efficient or carbon emissions more costly. As always, the question looms: Will he change the committee, or will the committee change him? He will have to twist arms and make compromises to win votes, and Dingell is not vanishing into the ether (he's now "chairman emeritus"). Meanwhile, congressional Republicans won't easily forget Waxman's grillings.
But signs suggest House Democrats are ready to be led; more than half of them voted for him. And unlike Dingell in the 1980s, Waxman will have the backing of an ambitious administration. So maybe it won't be just his fingers doing the snapping.
5) Civilization walks the plank
By Caroline B. Glick
A Somali pirate and a former US Defense Secretary are flying to London for vacation. One of them is stopped at immigration at Heathrow Airport and arrested on suspicion of committing war crimes. Which one do you think it was?
On Tuesday Somali pirates, sailing in little more than motorized bathtubs, armed with automatic rifles and RPGs, and sustained by raw fish and narcotics successfully hijacked the Sirius Star, a Saudi-owned oil tanker the size of a US aircraft carrier. The tanker was carrying some $100 million worth of crude oil. News of its capture caused global oil prices to rise by a dollar a barrel.
The next day, Somali pirates attempted to hijack the Trafalgar, a British frigate, but were forced to flee by a German naval helicopter dispatched to the scene. They did manage to hijack a Chinese trawler and a cargo ship from Hong Kong. They nearly got control of an Ethiopian ship, but it too was saved by the German navy that heeded its call for help in time.
Piracy is fast emerging as the newest old threat to stage a comeback in recent years. Over the past week and a half alone, 12 vessels have been hijacked. And according to the International Maritime Bureau, in the three months that ended on Sept. 30, Somali pirates attacked 26 vessels, capturing 576 crew members. Britain's Chatham house assesses the ransoms they netted at between $18 million and $30 million.
And with financial strength comes increased military sophistication. The US navy expressed shock at the pirates' successful hijacking of the Sirius Star. The pirates staged the hijacking much farther from shore than they had ever done previously.
Beyond the personal suffering incurred by thousands of crew members taken hostage in recent years, piracy's potential impact on global economic stability is enormous. In the Gulf of Aden, where the Somali pirates operate, US shippers alone transport more than $1.5 trillion in cargo annually.
One of the unique characteristics of pirates is that they appear to be equal opportunity aggressors. They don't care who owns the ships they attack. On August 21, Somali pirates hijacked the Iran Deyanat, a ship owned and operated by the Iranian Revolutionary Guards-linked Islamic Republic of Iran Shipping Line (IRISL). In September the US treasury Department designated IRISL as a company that assists Iran's nuclear weapons program and placed it under stiff financial sanctions.
Iran Deyanat's manifest asserted that its cargo included minerals. Yet shortly after the pirates went on board they began developing symptoms like hair loss that experts claim are more in line with radiation exposure. According to reports, some 16 pirates died shortly after being exposed to the cargo. Just this week, a second Iranian ship — this one apparently shipping wheat — was similarly captured.
Then too, in September pirates seized the Faina, a Ukrainian ship carrying 33 Russian-made T-72 tanks. The Ukrainians and Russians claimed that the tanks were destined for Kenya, but it later emerged that they may have been seized en route to Sudan. So ironically, in the case of both the Faina and the Deyanat, pirates may have inadvertently saved thousands of lives.
The international community is at a loss for what to do about the emerging danger of piracy. This is not due to lack of capacity to fight the pirate ships. On Monday an Indian naval frigate, the INS Tabar, sank a pirate "mother ship" whose fleet members were attacking the Tabar in the Gulf of Aden. NATO has deployed a naval task force while the American, French, German and other navies have aggressively worked to free merchant ships under attack by pirates.
As David Rivkin and Lee Casey explained in the Wall Street Journal on Wednesday, the problem with contending with piracy is not so much military, as legal and political. Whereas customary international law defined piracy as a threat against all nations and therefore a crime for which universal jurisdiction must be applied to perpetrators, in today's world, states are unwilling to apprehend pirates or contend with them because they are likely to find themselves in a sticky legal mess.
In centuries past, in accordance with established international law, it was standard practice for naval captains to hang pirates after capturing them. Today, when Europe has outlawed capital punishment, when criminal defendants throughout the West are given more civil rights than their victims, and when irregular combatants picked off of battlefields or intercepted before they attack are given — at a minimum — the same rights as those accorded to legal prisoners of war, states lack the political will and moral clarity to prosecute offenders. As Casey and Rivkin note, last April the British Foreign Office instructed the British navy not to apprehend pirates lest they claim that their human rights were harmed and request and receive asylum in Britain.
The West's perverse interpretations of human rights and humanitarian law, which bar it from handling one of the most acute emerging threats to the international economy, is a consequence of the West's abdication of moral and legal sanity in its dealings with international terror. In the 1960s and 1970s, when international terrorism first emerged as a threat to international security, the West adopted international treaties and conventions that tended to treat terrorism as a new form of piracy. Like piracy, terrorism was to be treated as an attack on all nations. Jurisdiction over terrorists was to be universal. Such early views were codified in early documents like the Convention for the Suppression of Unlawful Seizure of Aircraft from 1970 which established a principle of universal jurisdiction over aircraft hijackers.
Similarly, in the wake of the Sept. 11 attacks on the US, the UN Security Council passed binding Resolution 1373 that also compelled member states not only to treat terrorists as illegal combatants who must be universally denied any support of any kind, but to take action against anyone involved with or supporting terrorists in any way. That is, as in piracy, the tendency of states contending with terrorism has been view it as an act requiring universal jurisdiction, compelling all UN member states to prosecute offenders.
And yet, over the years, states have managed to ignore or invert international laws on terrorism to the point where today terrorists are among the most protected groups of individuals in the world. Due to political sympathy for terrorists, hostility towards their victims, or fear of terrorist reprisals against a state that dares to prosecute terrorists found on its territory, states have managed to avoid not only applying existing laws against terrorists. They have also refrained from updating laws to meet the growing challenges of terrorism. Instead, international institutions and "enlightened" Western states have devoted their time to condemning and threatening to prosecute the few states that have taken action against terrorists.
The inversion of international law from an institution geared towards protecting states and civilians from international law breakers to one devoted to protecting international menaces from states and their citizens is nowhere more evident than in the international community's treatment of Hamas-controlled Gaza.
One of the reasons the international community has failed so abjectly to take reasonable measures to combat terrorism is because international terrorism as presently constituted is the creation of Palestinian Arabs and their Arab brethren. Since the 1960s, and particularly since the mid-1970s, Europe, and to varying degrees the US, has been averse to contending with terrorism because their hostility towards Israel leads them to condone Palestinian Arab terrorism against Israel.
The international community's treatment of Hamas-controlled Gaza epitomizes this victory of politics over law. Both the US and the EU have labeled Hamas a terror group. That designation places Gaza, which is controlled by Hamas under the regime of UN Security Council Resolution 1373.
Among other things, Resolution 1373 requires states to "freeze without delay funds and other financial assets or economic resources of?entities owned or controlled directly or indirectly by [terrorists]." That is, the resolution requires UN member states to end all financial and other support for Hamas-controlled Gaza.
The resolution also requires UN member states to "cooperate [with other states] to prevent and suppress terrorist attacks and take action against perpetrators of such acts." This means that states are required to assist one another — and in the case of Hamas, to assist Israel — in combating Hamas and punishing its members and supporters.
While it can be argued that given the absence of a binding legal definition of terrorism, states that do not designate Hamas as a terrorist organization are not required to abide by the terms of 1373 in dealing with Hamas, it is quite clear that for states that do recognize Hamas as a terror group, 1373's provisions must be upheld. And yet, the EU and the US have willfully ignored its provisions. They have steadily increased their budgetary support for the Palestinian Authority while knowing full well that the Fatah-led PA in Judea and Samaria is transferring money to Hamas-controlled Gaza to pay the salaries of Hamas employees.
More disturbingly, the US and the EU as well as the UN demand that Israel itself sustain Hamas-controlled Gaza economically. The UN, EU and the US have consistently demanded that Israel provide Gaza with fuel, food, water, medicine, electricity, telephone service, port services, and access to Israeli markets in spite of the fact that international law actually prohibits Israel from providing such assistance, and in fact arguably requires Israel to deny it.
Recently, supported by the UN, and in connivance with Hamas, European leaders began supporting illegal moves to end Israel's maritime blockade of Gaza which was established to block weapons and terror personnel from entering and exiting the area. Expanding this trend, this week Navanathem Pillay, the UN's High Commissioner for Human Rights called for Israel to end its blockade of the Gaza Strip, perversely calling Israel's blockade a breach of international and humanitarian law.
This inversion of the aims of international law — from protecting states and innocent civilians from attack to protecting aggressors from retaliation — has brought about the absurd situation where terrorist ideologues and commanders like Sheikh Yusuf Qaradawi are feted in Britain while retired Israeli and American generals are threatened with arrest. Germany welcomed Iranian President and genocide proponent Mahmoud Ahmadinejad to visit and indicted former US defense secretary Donald Rumsfeld for crimes against humanity. Belgium allows Hamas and Hizbullah supporters like Dyab Abu Jahjah, who calls for attacks against Jews to operate freely, but indicted former prime minister Ariel Sharon for crimes against humanity.
The consequence of this absurd state of affairs is obvious. The international law champions who argue that international humanitarian law provides a non-violent means for nations to defend themselves against aggressors have perverted the purpose and meaning of international humanitarian law to such a degree that the only way for nations to protect themselves against pirates, terrorists and other international rogues is to ignore international law aficionados and secure their interests by force.
6) Why Obama Wants Hillary for His 'Team of Rivals'
By Karen Tumulty and Massimo Calabresi
To succeed at modern diplomacy, it helps to take the long view. As word trickled out that President-elect Barack Obama was considering Hillary Clinton for Secretary of State, Clinton was on the phone with the President of Pakistan. Asif Ali Zardari was calling with a long-overdue thank-you. Back in 1998, when Zardari's late wife Benazir Bhutto was powerless and out of favor with the United States, the then First Lady had received her at the White House, over the objections of both the State Department and the National Security Council. Bhutto eventually regained her influence, and before her assassination last December, became an important U.S. ally. But she had never forgotten that act of graciousness, Zardari told Clinton on Nov. 14. "To be treated with such respect was very important."
As he wrapped up his second week as President-elect, it was clear that Obama was taking the long view in both diplomacy and politics. How else to explain the fact that he had all but offered the most prestigious job in his Cabinet to a woman whose foreign policy experience he once dismissed as consisting of having tea with ambassadors? Or that Clinton might accept an offer from a man whose national-security credentials, she once said, began and ended with "a speech he made in 2002"? Nowhere did Obama and Clinton attack each other more brutally last spring than on the question of who was best equipped to handle international relations in a dangerous world. That they could be on the brink of becoming partners in that endeavor is the most remarkable evidence yet that Obama is serious about his declared intention to follow another Illinois President's model in assembling a "team of rivals" to run his government, in what could be a sharp contrast with the past 40 years of American Presidents. "I've been spending a lot of time reading Lincoln," Obama told Steve Kroft on 60 Minutes. "There is a wisdom there and a humility about his approach to government, even before he was President, that I just find very helpful."
And a shrewdness as well. The surprising proffer to Clinton came the same week that Obama sat down with John McCain in Chicago and helped engineer a commutation for Senator Joe Lieberman, who had backed McCain in the election and faced possibly being stripped of his committee chairmanship. The general amnesty campaign, part of a promise to change the way Washington works, impressed some longtime partisans. "It's brilliant," says a senior Republican Party official. "My hat is totally off to the guy." Viewed more cynically, bringing Clinton into the tent could co-opt a potential adversary in 2012 and put a leash on her globetrotting husband, who has a propensity for foreign policy freelancing. Which raises a question: Would this move, if it happens, be just the first manifestation of that new kind of politics that Obama was promising in his presidential campaign? Or proof that he understands the oldest kind all too well?
However smart it might ultimately prove to be, the Clinton offer is likely to induce grumbling among some Obama loyalists. The job Obama dangled in front of Clinton has excited a frenzy of speculation and leaking — exactly the kind of thing the no-drama Obama operation did not tolerate during the presidential campaign. And coming amid word that Obama is eyeing an array of former Clinton officials — including former Deputy Attorney General Eric Holder for the top job at Justice — even Democrats began to ask how much change Obama really represents. "What were the last two years all about?" asks one exasperated party strategist. "The restoration of the Clintons?"
But as with everything involving the Clintons, restoration is complicated. Negotiating Bill Clinton's portfolio has been one sticking point. The conundrum was on display on Nov. 16 even as Bill hailed his wife's potential to be "really great as a Secretary of State." He made that comment while giving a paid speech for the National Bank of Kuwait, which is the kind of thing for which he earned more than $10 million last year alone. Beyond his six-figure speaking fees, there are also a myriad of undisclosed contributions to the former President's far-flung charitable endeavors and to his presidential library, many of which have come from foreign interests that his wife would be dealing with as Secretary of State.
Team Clinton dismissed suggestions that there was anything in his donor files that could get in the way of her confirmation. As Bill told the Chronicle of Philanthropy in September, "The only reason I didn't want to [disclose] the library donors is that no previous President had. I suppose if Hillary were elected President, or maybe even if she had been nominated, we would have had to go back to the donors and at least disclose everyone that didn't object to it. But I wouldn't have any objection to it." (See pictures of Clinton and Obama battling in Pennsylvania.)
In negotiations with the Obama transition team, the Wall Street Journal first reported, the Clintons have offered to disclose the identities of all future donors to Bill's charitable activities, as well as givers of major past contributions. (What constitutes "major" is still under discussion, though a source involved in the conversation tells TIME that the figure is likely to be $1 million or more.) Trickier to manage is the role the former President would play going forward. Should his wife become the country's top diplomat, President No. 42 would probably be required to get clearance from both the White House counsel's office and the State Department's ethics boss before accepting future donations or giving paid speeches. (See pictures of Hillary Clinton meeting Michelle Obama.)
But just as worrisome as any financial arrangements would be Bill Clinton's ongoing relationships with world leaders and his predilection for offering advice — as he did in 2006, when Dubai sought help in a controversial attempt to acquire six terminals in U.S. ports. (Hillary, a leader in the effort to block the deal that she called an "unacceptable risk" to national security, later said she was unaware that Bill had been coaching the other side.) Ex-Presidents always have that potential; Jimmy Carter has complicated life for every President since he left office. But should Hillary get the job, it might prove difficult to distinguish whether her husband was speaking on the Obama Administration's behalf.
What's in it for Hillary? Her allies point out that the move would not be without its negatives. Friends like New York Congresswoman Louise Slaughter are counseling her not to take the job. They say she would be giving up important work in the Senate, particularly on the health-care-reform cause that is her passion. Others warn that her job description at Foggy Bottom would mean she'd lose her own voice. Against that, enthusiasts for the move point out, Clinton is smart, a fast and thorough study, and tough as nails. And with Obama focused on the economy, she could have a big role in repairing the U.S.'s image overseas. Says an Obama adviser who has not always been a Clinton fan: "She's a great team player."
And the harder truth is that Clinton's options as a Senator are limited, at least in the immediate future. In that chamber, she is just one of many presidential also-rans and a relatively junior member of an institution where power and advancement require seniority. Shortly after the election, she lobbied Health Committee chairman Edward Kennedy and majority leader Harry Reid to create a health-reform subcommittee for her to chair and was turned down. Her consolation prize — to head one of three ad hoc task forces that Kennedy has created — would not allow her to put much of a stamp of her own on any final legislation that emerges. And if there's anything a First Lady who became a Senator would understand, it's that opportunities don't always come to those who wait for them.
6a) No drama? With Hillary aboard? Forget it
By Gerard Baker
The Clintons have a knack of turning politics into their own personal stage. The President-elect must be aware of that.
When the man they call No Drama Obama met the Clinton Psychodrama in the Democratic primary campaign, it was bound to produce an epic for the ages. The iron self-discipline of the long-shot pretender proved just enough in the end to overcome the front-runner whose strengths were undermined by the self-indulgent incontinence characteristic of the Clinton political machine. It seemed a fitting catharsis for the modern Democratic Party when he won the primary.
And when Senator Obama cemented his victory over the summer by declining to offer her his vice-presidential slot, it appeared to douse once and for all the last embers of the Clinton family's ambitions.
From the Democratic convention, the word went out that Hillary - and even Bill - was finally resigned to a late life of public service, toiling diligently in the vineyard of President Obama's America, seeking nothing more than to serve the new leadership, loyally committed to a cause greater than their own self-advancement.
All right, maybe that was all a bit of a stretch. But with his election as president, Mr Obama surely demonstrated that the victory was his and his alone, and that the country would be spared the prospect of yet another chapter in the Clinton saga that has dominated American politics for the best part of two decades.
And yet, here we are, a couple of weeks after that historic election, and once again all we are talking about is - the Clintons.
It would be an understatement to say that the sudden and unexpected emergence of Senator Clinton's name as the President-elect's apparent choice to be his secretary of state has caused consternation among some of Mr Obama's most loyal followers.
They are aghast that, as they see it, having wisely steered clear of giving her the vice-presidency, their man has supposedly offered her what is, in all but the constitutional succession stakes, a much bigger job. The State Department is a vast bureaucracy that supports a Cabinet member who is the most frequently seen face of America in the world. One can only guess, by the way, what Joe Biden, the man who got the vice-presidential slot over Senator Clinton, in large part because of his foreign policy credentials, now thinks about the idea of sitting quietly in his vice-presidential office suite watching Mrs Clinton strut her global stuff on television.
Not that even Senator Clinton's strongest critics deny that there are good reasons for her to get the job. First, few doubt that she is qualified to do it. She demonstrated on the campaign trail the breadth of her intellectual reach, a genuine depth of knowledge on global affairs and the sort of energy needed for someone who might fly half a million miles in the course of a year.
What's more, it is not as though there was a great range of alternatives. John Kerry, first mooted for the job a while back, famously aloof and arrogant, might have proved a diplomatic disaster. Bill Richardson, the New Mexico Governor with the colourful past, was too risky for the global stage. Richard Holbrooke, the self-appointed dean of Democratic diplomacy, had alienated too many of the Obama foreign policy team through his disdainful dismissal of their inexperience during the primary campaign. Tony Lake, Senator Obama's principal foreign policy adviser in the campaign, said he didn't want the job. Tom Daschle, the former leader of the Senate Democrats and an early adopter of the Obama brand, seemed to lack the global heft to be the public face of the new president.
So why not go with the best qualified candidate? And one other reason for Mr Obama to pick Mrs Clinton was that there was no better way to signal the preternatural self-confidence that has propelled him so far so fast in politics than by nominating his former rival to the biggest government job outside the White House.
So what's the problem? The problem is that should Senator Clinton, by any chance, be looking to make her own mark in the next four years and subtly distinguish herself from the new president, there could hardly be a better perch from which to do it. Differences between the two during the primary campaign were sharpest over foreign policy. Mrs Clinton denounced Mr Obama's pledge to meet foreign dictators without preconditions and generally mocked his inexperience.
The Obama foreign policy team fought back by undermining Senator Clinton's claims to foreign policy experience. Gregory Craig, one of the earliest Obama supporters, who had himself served in the Clinton State Department in the 1990s, penned a famously damaging memo that dismantled all the instances of Mrs Clinton's professed involvement in key foreign policy decisions in that Administration.
What most troubles Obama loyalists is that a Clinton nomination threatens to destroy a feature of the new president's politics that has been essential to Senator Obama's success: its cohesion and unity of purpose. The No Drama title applied not just to the candidate but to the whole campaign, from the start. It was remarkably free of the usual tensions that permeate all political campaigns, at least in public.
And that is the risk in the Clinton nomination, should it come. You don't even have to believe that Senator Clinton will actively try to undermine the president. She's surely a loyal Democrat and a patriotic American who in any case understands that active pursuit of her own cause would do her more harm than good.
The problem is that the Clintons really can't help it. For all their protean talents, for all their political and intellectual skills, they have an unrivalled knack for making politics into very personal theatre, an unerring capacity to turn any crisis into a drama, one in which they play all the central roles. Another example of the Clinton dynastic principle at work was the appearance of Chelsea on the campaign trail with her mother. Who is to say that she won't continue the family tradition?
Nothing better illustrates the tendency than the very fact that the political class in Washington has spent the past week excitedly digesting the possibility of a Clinton nomination, while America's Other First Family semi-publicly debates the merits of it.
For President Obama the opportunity in Secretary of State Clinton is knowing that his message to the rest of the world is in capable political hands. For No Drama Obama, the danger is that American foreign policy for the next four years becomes the gaudy stage on which the latest act in the engrossing saga of Clinton Agonistes is played out.
My friend Toameh writes: Israel tells Jordan, Hamas will be spared for the time being. Hamas also wants to maintain the cease fire while it continues to arm and shell Israel. Hudna means Arabs arm under the cover of a cease fire so when they choose to end it they will be in a better armed position.(See 2 below.)
Matt Miller has learned to embrace trillion dollar deficits. I interviewed him when he was an applicant for a White House Fellowship. Matt was then employed by Goldman Sachs. Did Matt stay in DC too long. (See 3 below.)
With the market plunging I am starting to hear noises that it is now Obama's Market and more are getting upset beause Obama has not come out saying: 'In view of circumstances I will renounce raising taxes for the forseeable.' Probably the reason Obama has been quiet is that he is busy selecting his cabinet and is conflicted by the fact that he has not taken office. Meanwhile Pelosi is busy stacking her kind of ultra liberals on important committees. Now that Waxman has ousted Dingle the auto industy could be dead for sure because Waxman will probably demand the industry be subjected to more green legislation which can only raise the cost of making cars. Will Henry make sure his committee waxes the industry? (See 4 below.)
As the zanies take control it should be a fabulous four years of steeper and deeper economic depression. Go liberals - your day in the sun is here. Run in defeat conservatives. You brought it on yourself by defending extremism and acting and governing like liberals!
Caroline Glick suggests civilization is about to walk off a Somali plank. Potential Human Rights violations are preventing a rational course of response action. The Somali pirates could probably hire some trial lawyers, bring a class action suit and recover millions because they can claim their own rights have been violated. Political correctness has bitten itself in the "arse" it would seem. (See 5 below.)
Some views on Clinton as Secretary of State. (See 6 below.)
Have a great weekend while you ponder the auto industry about to go off a cliff because of the past stupidity of management, labor and Congress. Somali pirates can wreck world shipping with legal impugnity, Iran now has enough nuclear material to build a bomb, we have elected a president whose claim to fame was being chief editor of The Harvard Law Review and the market is collapsing around out feet. Alice in Wonderland has finally been bested.
What we are actually witnessing is a collapse not only of our market but also the culmination of irrationaland undending attacks on our culture. The liberation of a citizen's rights to trump normal behaviour and simple order. People who can walk around naked and indulge in drugs. The forcing of a dating service to accept ads against its belief, spending with abandon, tranferring from the productive to the unproductive because of disparity of entitlements, an education system and family unit in shambles. Most importantly of all, an attack on those who embrace religion as being dangerous.
This is what the world's most powerful republic and capitalistic system has come to be. It should be no surprise because we have been working at accomplishing this debauchery for decades. We have been rending the fabric of our society in the mistaken belief unbridled freedom should be our ultimate goal.
Dick
1)Iran has enough nuclear material for a single A-Bomb – IAEA
Iran has now produced roughly enough nuclear material to make, with added purification, a single atom bomb, according to nuclear experts analyzing the latest report from global atomic inspectors.
This is the conclusion contained in the report leaked by the International Atomic Energy Agency (IAEA) in Vienna Wednesday, Nov. 19, for submission to the agency’s board Nov. 27-28. This alarming development is headlined by the New York Times and Bloomberg website Nov. 20, but does not rate Israeli official comment or a mention in the its media.
In the last few weeks, Iran has doubled or even trebled the pace of its uranium enrichment process. Nuclear watchdog sources report that in October, Iran was known to have accumulated 480 kilos of low grade 5 percent enriched uranium, a short step from “break-out” to weapons grade (90 percent) material.
By mid-November, the Iranians topped this up to 630 kilos, adding 150 kilos in six weeks. By the end of 2009, Iran will have enough enriched uranium for 2-3 nuclear bombs.
Tehran has thus jumped three months ahead of US and Israeli intelligence estimated timeline of February 2009 as the timeline for a sufficiency of enriched uranium to build a bomb. The experts ask how long until Iran has the know-how for further purifying the fuel and perfecting the design for an atomic warhead. DEBKAfile’s sources report that Tehran acquired this technology some years ago from the Pakistani nuclear smuggler Dr. A.Q. Khan.
2) Israel to Jordan: We don't plan to topple Hamas in Gaza soon
By KHALED ABU TOAMEH
Prime Minister Ehud Olmert and Defense Minister Ehud Barak assured Jordan's King Abdullah this week that Israel does not intend to launch a major offensive to bring down the Hamas regime in Gaza in the near future, Jordanian sources told The Jerusalem Post on Thursday. The two Israeli leaders did not rule out a range of less dramatic military operations against Hamas and other terror operatives in the Strip.
Abdullah on Thursday briefed Palestinian Authority President Mahmoud Abbas in Aqaba on the results of the secretive Tuesday meeting.
The Prime Minister's Office on Thursday refused to confirm that the meeting had even taken place. But Foreign Minister Tzipi Livni did respond to news of the talks, at which Abdullah cautioned his Israeli guests that a large-scale military operation in Gaza would have serious repercussions for his country and the region.
While Israel respected the importance of its relations with its Arab peace partners, and heeded their concerns, Livni said, it would continue to act according to its own interests.
"Israel does indeed have strategic ties with its neighbors, Egypt and Jordan, and listens to their needs, but the bottom line remains that the country acts according to the interests of the Israeli citizen," she said, during a visit to the Tefen Industrial Park.
Abdullah is also understood to have relayed to Olmert and Barak a message from Hamas in which the movement emphasized its keenness on maintaining the truce with Israel.
Top Jordanian security officials have been holding a "frank dialogue" with Hamas representatives in the past few weeks in a bid to ease tensions between the two parties.
Tuesday's meeting was arranged after the Jordanians said they received information according to which Israel was planning a major operation in the Gaza Strip - not only to stop the rocket attacks, but also to topple the Hamas regime, the sources said.
According to the information, a large-scale action was envisaged that might claim the lives of many Israelis and Palestinians - and stir unrest on the Arab and Muslim street.
The Israeli military drive, the Jordanians were told, was also aimed at restoring the regime of Palestinian Authority President Mahmoud Abbas to the Gaza Strip after eliminating the Hamas leadership and overthrowing their government.
The Jordanians' biggest fear was that Olmert and Barak were each planning to embark on such an "adventure" for reasons related to the upcoming general elections in Israel, the sources said.
The Jordanian monarchy has good reason to fear the consequences of such an operation, the sources noted. In the past, IDF operations in the West Bank and Gaza Strip, which sometimes resulted in the killing of dozens of Palestinians, triggered a wave of protests throughout the kingdom and the rest of the Arab world.
In Jordan, where more than two-thirds of the population is Palestinians, the protests were always tolerated by the authorities, largely because they did not pose a threat to the regime.
But Abdullah and his government fear that any Israeli attempt to overthrow the Hamas regime would spark an unprecedented wave of violence in the kingdom.
Jordanian sources pointed out on Thursday that US-led efforts to get rid of the Hamas government over the past two years had backfired, earning the movement even greater support and sympathy among the Palestinians.
"There's a feeling that Hamas continues to be popular among a majority of Palestinians," said a retired Jordanian government official.
"Hamas owes its strength and popularity to the Americans - who have been waging a public campaign, with the help of the Palestinian Authority, to remove the Islamist government from power. In the end it was Hamas that managed to kick the Palestinian Authority out of the Gaza Strip."
Relations between Hamas and Jordan were strained after the late King Hussein deported Hamas leaders and closed down their offices in Amman about 10 years ago. The tensions reached their peak two years ago when the Jordanians announced that they had thwarted an attempt by Hamas to smuggle weapons into the kingdom for launching terror attacks on Israel.
The Jordanian monarch is hoping that the talks with Hamas will send a message to the disgruntled Palestinian refugees living in the kingdom that Jordan is not involved in the US "conspiracy" to bring down the democratically-elected government of Hamas, the sources said.
The Jordanians are convinced that Hamas remains an influential player in the West Bank despite the massive crackdown on its supporters by Abbas's security forces over the past few weeks. "Abbas is still too weak and he hardly has any credibility among his people," the former government official said. "I'm afraid that if we hold a free election tomorrow in the West Bank, Hamas would win."
Another reason why the Jordanians are worried about the ongoing efforts to bring down Hamas is because of the movement's strong ties with the Muslim Brotherhood organization in the kingdom. Together with Hamas supporters in Jordan, the Muslim Brotherhood has been trying in recent weeks to organize a series of protests against the continued blockade on the Gaza Strip.
Anti-Israel and anti-US protests in Arab capitals are often directed also against the Arab heads of state under the pretext that they are pawns in the hands of Washington. The Arab leaders are also accused by their constituents of failing to use their good offices with the US to exert pressure on Israel.
Unlike the majority of the Arab leaders, Abdullah is in a much more vulnerable situation because of his country's peace treaty with Israel and because of the Palestinian majority in the kingdom. The same applies to Egypt's President Hosni Mubarak, who is also worried about the repercussions of an Israeli military offensive so close to his country.
In addition to Hamas and the Muslim Brotherhood, the sources said, the Jordanians are also worried about Al-Qaida's ongoing efforts to destabilize the monarchy. Jordan is particularly concerned that a US pullout from Iraq would embolden Al-Qaida and other radical Islamist groups - posing a major threat to the kingdom's security.
According to diplomatic officials in London quoted by the paper, Abdullah stressed the need for continued peace negotiations and progress towards a two-state solution, which he said was the only option for achieving peace in the region. He also reportedly emphasized that Jordan had a strategic interest in the establishment of a Palestinian state.
Al-Hayat also reported that Abdullah asked Olmert to take immediate steps to ease the suffering of the Palestinian people to create an atmosphere conducive to progress in the peace talks. He stressed the need for Israel not to increase tension, particularly in Gaza.
Olmert's spokesman, Mark Regev, said he was not commenting on media reports regarding the visit to Amman.
3) How to love trillion-dollar deficits
By Matt Miller
This reformed fiscal conservative has stopped worrying about the nation's ballooning deficit. You should too.
We're looking at a mind-boggling, trillion-dollar budget deficit next year and I say keep the red ink rolling.
My wife, who's heard me rail against deficits since I served as a budget hawk back in Bill Clinton's White House, thinks I've lost my mind - or at least my principles. I used to be a deficit fetishist, an oddball who read one of Pete Peterson's budget doomsday books on his honeymoon, and who has bored countless friends with filibusters on our fiscal follies. But I've changed.
What's a fallen fiscal conservative to say? When a character in Hemingway's The Sun Also Rises was asked how he went bankrupt, he famously replied, "Slowly, then suddenly."
My journey into the heart of the New Deficit Indifference feels the same. I came of age as an economics student just as Ronald Reagan was on his way to quadrupling the national debt. I imbibed the wisdom that deficits crowd out private investment, hurt productivity growth and living standards, and pass big burdens to the next generation. All because politicians were afraid to make a few unpleasant choices!
By 1992 I was the kind of New Democrat who thought Ross Perot performed a tremendous public service when his charts and graphs proved that 20% of the electorate could be roused to care about our fiscal mess. In the early Clinton White House I was the resident deficit monomaniac, the guy who griped that we weren't moving fast enough to shrink the debt even as we skimped on needed investments in health care, infrastructure and education.
I even wanted to go the next step and teach the public about a few sensible steps to slow the growth of Medicare and Social Security. Yet Bill Clinton, helped by a booming economy, ultimately turned a tide of red ink into unprecedented surpluses.
Now, of course, our fiscal situation has grown dire. Indeed, before the credit crisis hit us, I would have said the absence of a successor to Perot's voice was one of the consequential gaps of the 2008 campaign. After all, the costly retirement of the Baby Boomers isn't far off in the future anymore; it's upon us. The fiscal hole is deeper than ever, with Uncle Sam sporting $50 trillion in unfunded health care and pension liabilities.
In short, we're spending beyond our means, saving next to nothing as a nation, and thus dooming our kids to ruinous tax hikes and spending slashes unless we start to pay our own way.
In the face of all this, how can a deficit hawk like me now blithely countenance the coming trillion-dollar gap? It's apt to invoke the godfather of deficit spending himself. "When the facts change, I change my mind," John Maynard Keynes once growled when grilled about an inconsistency. "What do you do, sir?"
In ways that 9/11 didn't, today's economic meltdown really does change everything, at least for a few years. Every day brings fresh proof that the credit crunch and the exhaustion of debt-fueled consumer spending threatens to dangerously collapse aggregate demand. There's simply no way to avoid a major recession without the federal government stepping in to bolster demand until we work through the subprime hangover.
Toss in reasonable down payments by the Obama administration on expanded health coverage, green energy, infrastructure and schools, and the only question is how the new president can manage appearances so that this trillion dollar milestone doesn't become a political millstone to boot.
The key (and here you'll see I haven't really changed my stripes) is to enact a long-term framework for fiscal sanity even as we test the limits of how much debt the Treasury can peddle.
Bob Litan of the Brookings Institution suggests building such triggers into Obama's blueprint from the start. Once unemployment gets back beneath 6%, for example, we could require a supermajority vote in Congress to run deficits higher than, say, 2% or 3% of GDP (by comparison, the trillion dollar figure will push us toward 7%, an all-time high).
Yes, promises like this can be broken. But given the extraordinary circumstances, writing this kind of future restraint into law would tell world markets that we know the debt spree has to end. Obama could also set up a bipartisan commission on Social Security and Medicare with a view to building consensus for action in a second term, by which time the current crisis will, with luck, be a fading memory.
All this will push conventional thinking past the breaking point on everything from how much federal debt markets can absorb to how much cash can be spent on infrastructure fast and wisely. The defining drama of the next six months will be the fight to get this framework right and sell it to skeptical publics here and abroad. In the meantime, I'm putting my zeal for budget rectitude on the back burner. For the economy's sake, we're all deficit-addicted Keynesians now.
4) Dingell Buried: Henry Waxman's victory is the biggest gift Obama could have asked for.
By Christopher Beam
Out: Rep. John Dingell of Michigan, the tough, cantankerous eminence grise of the House Democratic caucus (he's 82), who was so deferential to Detroit as chairman of the House energy and commerce committee that Lee Iacocca once said he "stood up for the auto industry beyond the call of duty." In: Rep. Henry Waxman of California, the tough, mustachioed eminence slightly less grise of House Democrats (he's 69) known for his relentless investigations and aggressive proposals for combating climate change. Waxman's mustache—it even has a nickname—haunts Rick Wagoner's dreams.
Barack Obama's own transition team could not have hoped for a better outcome. In fact, there are signs it did more than just hope.
Dingell's ouster came after the Democrats' Policy and Steering Committee voted 25-22 in favor of Waxman's candidacy. In charge of the steering committee is Waxman's fellow California Democrat, House Speaker Nancy Pelosi. And ousting the leader of the House's most powerful panel—environmental issues, health care, and consumer protection all fall under commerce's purview—is generally not done without permission from the top.
Of course, Waxman and Dingell did their part. As early as the 1980s, Waxman was fighting the attempts of then-Chairman Dingell, working with the Reagan administration, to weaken auto-emissions standards. Dingell, meanwhile, quashed Waxman's acid-rain legislation. More recently, Dingell's 2007 pro-coal, anti-regulatory energy independence legislation prompted Waxman to circulate a letter signed by 11 fellow committee members: "We have serious concerns about the direction the Committee is heading."
At the same time, Dingell could have been helpful to Obama as chairman on some issues. He's been a stalwart liberal almost across the board. He helped to pass Medicare in 1965 and has for years supported a national health insurance system. He and Waxman teamed up to produce the 1990 Clean Air Act. Other accomplishments he touts are the Endangered Species Act and the State Children's Health Insurance Program.
But on climate legislation, Dingell would not have been a help. Obama has pledged to make addressing climate change a priority—a commitment he reiterated in a video address this week. And some Senate Democratic leaders, normally moderate checks on their wild-eyed House counterparts, appear eager to take on clean energy and fuel efficiency.
Dingell isn't opposed to all energy regulation. In his proposed fuel efficiency legislation in 2007, he supported "incentives" for auto manufacturers but opposed forcing them to adapt. He supports cap-and-trade, but his version is more industry-friendly than Waxman's, which would actually put the Environmental Protection Agency in charge. The difference between Dingell and Waxman is best captured by the fear struck in the hearts of energy sector sympathizers: Dingell's plan would "dramatically raise energy prices," according to the Competitive Enterprise Institute, while Waxman's "would send us back to the Stone Age."
Waxman is a better fit for an Obama-led Democratic charge. He's crazy, but unlike Dingell, he's happy-crazy. Dingell's craziness is darker. He was known for strong-headed, Lyndon Johnson-style political arm-twisting. He leaked dirt about his enemies and fed the news cycle to keep favorable coverage alive. He sometimes went overboard, as with his hearings alleging scientific fraud against Nobel Prize-winner David Baltimore, who was later exonerated, and AIDS researcher Robert Gallo, whose allegations were also dropped. Waxman is tough, too, but in a matter-of-fact, bury-you-with-evidence kind of way. He's a famed tightwad with a righteous streak, but he's not a drama queen. As head of the House oversight committee, he earned the moniker the "Mustache of Justice."
Waxman's rise has broader implications, too. He's just the latest combative Democrat to rise in the Obamaverse. Like incoming Chief of Staff Rahm Emanuel, Waxman is a partisan. He also represents coastal creep in the legislative branch—the influence of the West and East over industrial Middle America. (Between Pelosi, Harry Reid, Barney Frank, and now Waxman, the power of pro-regulation liberals over hands-off Blue Dog Democrats is rising. And no, Chicago is not Middle America, although Obama's deference to coal could be a problem for the bicoastal mafia.) Lastly, Waxman's victory coincides with the failure (so far) of Detroit's Big Three to win a federal bailout. Dingell may have been the industry's last best hope to stave off profit-narrowing regulation. (His wife, Debbie Dingell, is an executive at General Motors.)
This doesn't mean Waxman can snap his fingers and make cars more efficient or carbon emissions more costly. As always, the question looms: Will he change the committee, or will the committee change him? He will have to twist arms and make compromises to win votes, and Dingell is not vanishing into the ether (he's now "chairman emeritus"). Meanwhile, congressional Republicans won't easily forget Waxman's grillings.
But signs suggest House Democrats are ready to be led; more than half of them voted for him. And unlike Dingell in the 1980s, Waxman will have the backing of an ambitious administration. So maybe it won't be just his fingers doing the snapping.
5) Civilization walks the plank
By Caroline B. Glick
A Somali pirate and a former US Defense Secretary are flying to London for vacation. One of them is stopped at immigration at Heathrow Airport and arrested on suspicion of committing war crimes. Which one do you think it was?
On Tuesday Somali pirates, sailing in little more than motorized bathtubs, armed with automatic rifles and RPGs, and sustained by raw fish and narcotics successfully hijacked the Sirius Star, a Saudi-owned oil tanker the size of a US aircraft carrier. The tanker was carrying some $100 million worth of crude oil. News of its capture caused global oil prices to rise by a dollar a barrel.
The next day, Somali pirates attempted to hijack the Trafalgar, a British frigate, but were forced to flee by a German naval helicopter dispatched to the scene. They did manage to hijack a Chinese trawler and a cargo ship from Hong Kong. They nearly got control of an Ethiopian ship, but it too was saved by the German navy that heeded its call for help in time.
Piracy is fast emerging as the newest old threat to stage a comeback in recent years. Over the past week and a half alone, 12 vessels have been hijacked. And according to the International Maritime Bureau, in the three months that ended on Sept. 30, Somali pirates attacked 26 vessels, capturing 576 crew members. Britain's Chatham house assesses the ransoms they netted at between $18 million and $30 million.
And with financial strength comes increased military sophistication. The US navy expressed shock at the pirates' successful hijacking of the Sirius Star. The pirates staged the hijacking much farther from shore than they had ever done previously.
Beyond the personal suffering incurred by thousands of crew members taken hostage in recent years, piracy's potential impact on global economic stability is enormous. In the Gulf of Aden, where the Somali pirates operate, US shippers alone transport more than $1.5 trillion in cargo annually.
One of the unique characteristics of pirates is that they appear to be equal opportunity aggressors. They don't care who owns the ships they attack. On August 21, Somali pirates hijacked the Iran Deyanat, a ship owned and operated by the Iranian Revolutionary Guards-linked Islamic Republic of Iran Shipping Line (IRISL). In September the US treasury Department designated IRISL as a company that assists Iran's nuclear weapons program and placed it under stiff financial sanctions.
Iran Deyanat's manifest asserted that its cargo included minerals. Yet shortly after the pirates went on board they began developing symptoms like hair loss that experts claim are more in line with radiation exposure. According to reports, some 16 pirates died shortly after being exposed to the cargo. Just this week, a second Iranian ship — this one apparently shipping wheat — was similarly captured.
Then too, in September pirates seized the Faina, a Ukrainian ship carrying 33 Russian-made T-72 tanks. The Ukrainians and Russians claimed that the tanks were destined for Kenya, but it later emerged that they may have been seized en route to Sudan. So ironically, in the case of both the Faina and the Deyanat, pirates may have inadvertently saved thousands of lives.
The international community is at a loss for what to do about the emerging danger of piracy. This is not due to lack of capacity to fight the pirate ships. On Monday an Indian naval frigate, the INS Tabar, sank a pirate "mother ship" whose fleet members were attacking the Tabar in the Gulf of Aden. NATO has deployed a naval task force while the American, French, German and other navies have aggressively worked to free merchant ships under attack by pirates.
As David Rivkin and Lee Casey explained in the Wall Street Journal on Wednesday, the problem with contending with piracy is not so much military, as legal and political. Whereas customary international law defined piracy as a threat against all nations and therefore a crime for which universal jurisdiction must be applied to perpetrators, in today's world, states are unwilling to apprehend pirates or contend with them because they are likely to find themselves in a sticky legal mess.
In centuries past, in accordance with established international law, it was standard practice for naval captains to hang pirates after capturing them. Today, when Europe has outlawed capital punishment, when criminal defendants throughout the West are given more civil rights than their victims, and when irregular combatants picked off of battlefields or intercepted before they attack are given — at a minimum — the same rights as those accorded to legal prisoners of war, states lack the political will and moral clarity to prosecute offenders. As Casey and Rivkin note, last April the British Foreign Office instructed the British navy not to apprehend pirates lest they claim that their human rights were harmed and request and receive asylum in Britain.
The West's perverse interpretations of human rights and humanitarian law, which bar it from handling one of the most acute emerging threats to the international economy, is a consequence of the West's abdication of moral and legal sanity in its dealings with international terror. In the 1960s and 1970s, when international terrorism first emerged as a threat to international security, the West adopted international treaties and conventions that tended to treat terrorism as a new form of piracy. Like piracy, terrorism was to be treated as an attack on all nations. Jurisdiction over terrorists was to be universal. Such early views were codified in early documents like the Convention for the Suppression of Unlawful Seizure of Aircraft from 1970 which established a principle of universal jurisdiction over aircraft hijackers.
Similarly, in the wake of the Sept. 11 attacks on the US, the UN Security Council passed binding Resolution 1373 that also compelled member states not only to treat terrorists as illegal combatants who must be universally denied any support of any kind, but to take action against anyone involved with or supporting terrorists in any way. That is, as in piracy, the tendency of states contending with terrorism has been view it as an act requiring universal jurisdiction, compelling all UN member states to prosecute offenders.
And yet, over the years, states have managed to ignore or invert international laws on terrorism to the point where today terrorists are among the most protected groups of individuals in the world. Due to political sympathy for terrorists, hostility towards their victims, or fear of terrorist reprisals against a state that dares to prosecute terrorists found on its territory, states have managed to avoid not only applying existing laws against terrorists. They have also refrained from updating laws to meet the growing challenges of terrorism. Instead, international institutions and "enlightened" Western states have devoted their time to condemning and threatening to prosecute the few states that have taken action against terrorists.
The inversion of international law from an institution geared towards protecting states and civilians from international law breakers to one devoted to protecting international menaces from states and their citizens is nowhere more evident than in the international community's treatment of Hamas-controlled Gaza.
One of the reasons the international community has failed so abjectly to take reasonable measures to combat terrorism is because international terrorism as presently constituted is the creation of Palestinian Arabs and their Arab brethren. Since the 1960s, and particularly since the mid-1970s, Europe, and to varying degrees the US, has been averse to contending with terrorism because their hostility towards Israel leads them to condone Palestinian Arab terrorism against Israel.
The international community's treatment of Hamas-controlled Gaza epitomizes this victory of politics over law. Both the US and the EU have labeled Hamas a terror group. That designation places Gaza, which is controlled by Hamas under the regime of UN Security Council Resolution 1373.
Among other things, Resolution 1373 requires states to "freeze without delay funds and other financial assets or economic resources of?entities owned or controlled directly or indirectly by [terrorists]." That is, the resolution requires UN member states to end all financial and other support for Hamas-controlled Gaza.
The resolution also requires UN member states to "cooperate [with other states] to prevent and suppress terrorist attacks and take action against perpetrators of such acts." This means that states are required to assist one another — and in the case of Hamas, to assist Israel — in combating Hamas and punishing its members and supporters.
While it can be argued that given the absence of a binding legal definition of terrorism, states that do not designate Hamas as a terrorist organization are not required to abide by the terms of 1373 in dealing with Hamas, it is quite clear that for states that do recognize Hamas as a terror group, 1373's provisions must be upheld. And yet, the EU and the US have willfully ignored its provisions. They have steadily increased their budgetary support for the Palestinian Authority while knowing full well that the Fatah-led PA in Judea and Samaria is transferring money to Hamas-controlled Gaza to pay the salaries of Hamas employees.
More disturbingly, the US and the EU as well as the UN demand that Israel itself sustain Hamas-controlled Gaza economically. The UN, EU and the US have consistently demanded that Israel provide Gaza with fuel, food, water, medicine, electricity, telephone service, port services, and access to Israeli markets in spite of the fact that international law actually prohibits Israel from providing such assistance, and in fact arguably requires Israel to deny it.
Recently, supported by the UN, and in connivance with Hamas, European leaders began supporting illegal moves to end Israel's maritime blockade of Gaza which was established to block weapons and terror personnel from entering and exiting the area. Expanding this trend, this week Navanathem Pillay, the UN's High Commissioner for Human Rights called for Israel to end its blockade of the Gaza Strip, perversely calling Israel's blockade a breach of international and humanitarian law.
This inversion of the aims of international law — from protecting states and innocent civilians from attack to protecting aggressors from retaliation — has brought about the absurd situation where terrorist ideologues and commanders like Sheikh Yusuf Qaradawi are feted in Britain while retired Israeli and American generals are threatened with arrest. Germany welcomed Iranian President and genocide proponent Mahmoud Ahmadinejad to visit and indicted former US defense secretary Donald Rumsfeld for crimes against humanity. Belgium allows Hamas and Hizbullah supporters like Dyab Abu Jahjah, who calls for attacks against Jews to operate freely, but indicted former prime minister Ariel Sharon for crimes against humanity.
The consequence of this absurd state of affairs is obvious. The international law champions who argue that international humanitarian law provides a non-violent means for nations to defend themselves against aggressors have perverted the purpose and meaning of international humanitarian law to such a degree that the only way for nations to protect themselves against pirates, terrorists and other international rogues is to ignore international law aficionados and secure their interests by force.
6) Why Obama Wants Hillary for His 'Team of Rivals'
By Karen Tumulty and Massimo Calabresi
To succeed at modern diplomacy, it helps to take the long view. As word trickled out that President-elect Barack Obama was considering Hillary Clinton for Secretary of State, Clinton was on the phone with the President of Pakistan. Asif Ali Zardari was calling with a long-overdue thank-you. Back in 1998, when Zardari's late wife Benazir Bhutto was powerless and out of favor with the United States, the then First Lady had received her at the White House, over the objections of both the State Department and the National Security Council. Bhutto eventually regained her influence, and before her assassination last December, became an important U.S. ally. But she had never forgotten that act of graciousness, Zardari told Clinton on Nov. 14. "To be treated with such respect was very important."
As he wrapped up his second week as President-elect, it was clear that Obama was taking the long view in both diplomacy and politics. How else to explain the fact that he had all but offered the most prestigious job in his Cabinet to a woman whose foreign policy experience he once dismissed as consisting of having tea with ambassadors? Or that Clinton might accept an offer from a man whose national-security credentials, she once said, began and ended with "a speech he made in 2002"? Nowhere did Obama and Clinton attack each other more brutally last spring than on the question of who was best equipped to handle international relations in a dangerous world. That they could be on the brink of becoming partners in that endeavor is the most remarkable evidence yet that Obama is serious about his declared intention to follow another Illinois President's model in assembling a "team of rivals" to run his government, in what could be a sharp contrast with the past 40 years of American Presidents. "I've been spending a lot of time reading Lincoln," Obama told Steve Kroft on 60 Minutes. "There is a wisdom there and a humility about his approach to government, even before he was President, that I just find very helpful."
And a shrewdness as well. The surprising proffer to Clinton came the same week that Obama sat down with John McCain in Chicago and helped engineer a commutation for Senator Joe Lieberman, who had backed McCain in the election and faced possibly being stripped of his committee chairmanship. The general amnesty campaign, part of a promise to change the way Washington works, impressed some longtime partisans. "It's brilliant," says a senior Republican Party official. "My hat is totally off to the guy." Viewed more cynically, bringing Clinton into the tent could co-opt a potential adversary in 2012 and put a leash on her globetrotting husband, who has a propensity for foreign policy freelancing. Which raises a question: Would this move, if it happens, be just the first manifestation of that new kind of politics that Obama was promising in his presidential campaign? Or proof that he understands the oldest kind all too well?
However smart it might ultimately prove to be, the Clinton offer is likely to induce grumbling among some Obama loyalists. The job Obama dangled in front of Clinton has excited a frenzy of speculation and leaking — exactly the kind of thing the no-drama Obama operation did not tolerate during the presidential campaign. And coming amid word that Obama is eyeing an array of former Clinton officials — including former Deputy Attorney General Eric Holder for the top job at Justice — even Democrats began to ask how much change Obama really represents. "What were the last two years all about?" asks one exasperated party strategist. "The restoration of the Clintons?"
But as with everything involving the Clintons, restoration is complicated. Negotiating Bill Clinton's portfolio has been one sticking point. The conundrum was on display on Nov. 16 even as Bill hailed his wife's potential to be "really great as a Secretary of State." He made that comment while giving a paid speech for the National Bank of Kuwait, which is the kind of thing for which he earned more than $10 million last year alone. Beyond his six-figure speaking fees, there are also a myriad of undisclosed contributions to the former President's far-flung charitable endeavors and to his presidential library, many of which have come from foreign interests that his wife would be dealing with as Secretary of State.
Team Clinton dismissed suggestions that there was anything in his donor files that could get in the way of her confirmation. As Bill told the Chronicle of Philanthropy in September, "The only reason I didn't want to [disclose] the library donors is that no previous President had. I suppose if Hillary were elected President, or maybe even if she had been nominated, we would have had to go back to the donors and at least disclose everyone that didn't object to it. But I wouldn't have any objection to it." (See pictures of Clinton and Obama battling in Pennsylvania.)
In negotiations with the Obama transition team, the Wall Street Journal first reported, the Clintons have offered to disclose the identities of all future donors to Bill's charitable activities, as well as givers of major past contributions. (What constitutes "major" is still under discussion, though a source involved in the conversation tells TIME that the figure is likely to be $1 million or more.) Trickier to manage is the role the former President would play going forward. Should his wife become the country's top diplomat, President No. 42 would probably be required to get clearance from both the White House counsel's office and the State Department's ethics boss before accepting future donations or giving paid speeches. (See pictures of Hillary Clinton meeting Michelle Obama.)
But just as worrisome as any financial arrangements would be Bill Clinton's ongoing relationships with world leaders and his predilection for offering advice — as he did in 2006, when Dubai sought help in a controversial attempt to acquire six terminals in U.S. ports. (Hillary, a leader in the effort to block the deal that she called an "unacceptable risk" to national security, later said she was unaware that Bill had been coaching the other side.) Ex-Presidents always have that potential; Jimmy Carter has complicated life for every President since he left office. But should Hillary get the job, it might prove difficult to distinguish whether her husband was speaking on the Obama Administration's behalf.
What's in it for Hillary? Her allies point out that the move would not be without its negatives. Friends like New York Congresswoman Louise Slaughter are counseling her not to take the job. They say she would be giving up important work in the Senate, particularly on the health-care-reform cause that is her passion. Others warn that her job description at Foggy Bottom would mean she'd lose her own voice. Against that, enthusiasts for the move point out, Clinton is smart, a fast and thorough study, and tough as nails. And with Obama focused on the economy, she could have a big role in repairing the U.S.'s image overseas. Says an Obama adviser who has not always been a Clinton fan: "She's a great team player."
And the harder truth is that Clinton's options as a Senator are limited, at least in the immediate future. In that chamber, she is just one of many presidential also-rans and a relatively junior member of an institution where power and advancement require seniority. Shortly after the election, she lobbied Health Committee chairman Edward Kennedy and majority leader Harry Reid to create a health-reform subcommittee for her to chair and was turned down. Her consolation prize — to head one of three ad hoc task forces that Kennedy has created — would not allow her to put much of a stamp of her own on any final legislation that emerges. And if there's anything a First Lady who became a Senator would understand, it's that opportunities don't always come to those who wait for them.
6a) No drama? With Hillary aboard? Forget it
By Gerard Baker
The Clintons have a knack of turning politics into their own personal stage. The President-elect must be aware of that.
When the man they call No Drama Obama met the Clinton Psychodrama in the Democratic primary campaign, it was bound to produce an epic for the ages. The iron self-discipline of the long-shot pretender proved just enough in the end to overcome the front-runner whose strengths were undermined by the self-indulgent incontinence characteristic of the Clinton political machine. It seemed a fitting catharsis for the modern Democratic Party when he won the primary.
And when Senator Obama cemented his victory over the summer by declining to offer her his vice-presidential slot, it appeared to douse once and for all the last embers of the Clinton family's ambitions.
From the Democratic convention, the word went out that Hillary - and even Bill - was finally resigned to a late life of public service, toiling diligently in the vineyard of President Obama's America, seeking nothing more than to serve the new leadership, loyally committed to a cause greater than their own self-advancement.
All right, maybe that was all a bit of a stretch. But with his election as president, Mr Obama surely demonstrated that the victory was his and his alone, and that the country would be spared the prospect of yet another chapter in the Clinton saga that has dominated American politics for the best part of two decades.
And yet, here we are, a couple of weeks after that historic election, and once again all we are talking about is - the Clintons.
It would be an understatement to say that the sudden and unexpected emergence of Senator Clinton's name as the President-elect's apparent choice to be his secretary of state has caused consternation among some of Mr Obama's most loyal followers.
They are aghast that, as they see it, having wisely steered clear of giving her the vice-presidency, their man has supposedly offered her what is, in all but the constitutional succession stakes, a much bigger job. The State Department is a vast bureaucracy that supports a Cabinet member who is the most frequently seen face of America in the world. One can only guess, by the way, what Joe Biden, the man who got the vice-presidential slot over Senator Clinton, in large part because of his foreign policy credentials, now thinks about the idea of sitting quietly in his vice-presidential office suite watching Mrs Clinton strut her global stuff on television.
Not that even Senator Clinton's strongest critics deny that there are good reasons for her to get the job. First, few doubt that she is qualified to do it. She demonstrated on the campaign trail the breadth of her intellectual reach, a genuine depth of knowledge on global affairs and the sort of energy needed for someone who might fly half a million miles in the course of a year.
What's more, it is not as though there was a great range of alternatives. John Kerry, first mooted for the job a while back, famously aloof and arrogant, might have proved a diplomatic disaster. Bill Richardson, the New Mexico Governor with the colourful past, was too risky for the global stage. Richard Holbrooke, the self-appointed dean of Democratic diplomacy, had alienated too many of the Obama foreign policy team through his disdainful dismissal of their inexperience during the primary campaign. Tony Lake, Senator Obama's principal foreign policy adviser in the campaign, said he didn't want the job. Tom Daschle, the former leader of the Senate Democrats and an early adopter of the Obama brand, seemed to lack the global heft to be the public face of the new president.
So why not go with the best qualified candidate? And one other reason for Mr Obama to pick Mrs Clinton was that there was no better way to signal the preternatural self-confidence that has propelled him so far so fast in politics than by nominating his former rival to the biggest government job outside the White House.
So what's the problem? The problem is that should Senator Clinton, by any chance, be looking to make her own mark in the next four years and subtly distinguish herself from the new president, there could hardly be a better perch from which to do it. Differences between the two during the primary campaign were sharpest over foreign policy. Mrs Clinton denounced Mr Obama's pledge to meet foreign dictators without preconditions and generally mocked his inexperience.
The Obama foreign policy team fought back by undermining Senator Clinton's claims to foreign policy experience. Gregory Craig, one of the earliest Obama supporters, who had himself served in the Clinton State Department in the 1990s, penned a famously damaging memo that dismantled all the instances of Mrs Clinton's professed involvement in key foreign policy decisions in that Administration.
What most troubles Obama loyalists is that a Clinton nomination threatens to destroy a feature of the new president's politics that has been essential to Senator Obama's success: its cohesion and unity of purpose. The No Drama title applied not just to the candidate but to the whole campaign, from the start. It was remarkably free of the usual tensions that permeate all political campaigns, at least in public.
And that is the risk in the Clinton nomination, should it come. You don't even have to believe that Senator Clinton will actively try to undermine the president. She's surely a loyal Democrat and a patriotic American who in any case understands that active pursuit of her own cause would do her more harm than good.
The problem is that the Clintons really can't help it. For all their protean talents, for all their political and intellectual skills, they have an unrivalled knack for making politics into very personal theatre, an unerring capacity to turn any crisis into a drama, one in which they play all the central roles. Another example of the Clinton dynastic principle at work was the appearance of Chelsea on the campaign trail with her mother. Who is to say that she won't continue the family tradition?
Nothing better illustrates the tendency than the very fact that the political class in Washington has spent the past week excitedly digesting the possibility of a Clinton nomination, while America's Other First Family semi-publicly debates the merits of it.
For President Obama the opportunity in Secretary of State Clinton is knowing that his message to the rest of the world is in capable political hands. For No Drama Obama, the danger is that American foreign policy for the next four years becomes the gaudy stage on which the latest act in the engrossing saga of Clinton Agonistes is played out.
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