Foreign Policy Blogs

Photo credit: uwehiksch on Flickr

With all the attention turned to the Trans-Pacific Partnership (TPP), currently negotiated by the U.S. with 12 Asian countries, few seem to notice anymore the equally important Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States. The two deals are similar in essence: They both seek to advance the beacon of free trade by tearing tariff and non-tariff barriers, with the promise of creating jobs and delivering a much-needed economic boost to the nations involved.

However, both trade agreements have been plagued by concerns raised by consumer groups, academics and politicians of all stripes over the so-called Investor State Dispute Settlement (ISDS), an arcane mechanism that allows aggrieved corporations to challenge the validity of government regulations that can impact their bottom line in extrajudicial tribunals. According to critics, the threat of expensive lawsuits from multinationals can leave governments afraid to act in citizens’ favor, a phenomenon known as regulatory chill. Activists are increasingly skeptical of any measure meant to protect the profits of corporations, seen as largely responsible for the near collapse of the financial system and the start of the Great Recession.

Adding insult to injury, the fact that trade negotiations are conducted in secret did not advance the cause for the TPP and the TTIP and an amendment to force the White House to make the texts public was struck down in the Senate. As expected, Capitol Hill has been the scene of some particularly thespian speeches given by opponents and proponents of the ISDS, most recently evidenced on May 22, when the Senate overwhelmingly rejected another anti-ISDS amendment from Senator Elizabeth Warren.

Far from the limelight of the U.S. media, the European Commission has also went into damage control mode over the ISDS, facing off a multipronged crusade mounted by member states, the European Parliament, businesses and the public. Many fear the same fate for the TTIP as that of the shelved copyright infringement treaty, ACTA, rejected after massive popular demonstrations. Indeed, the general mood in Europe is sour to say the least. A petition against the TTIP and the ISDS has gathered almost 2 million signatures in eight months, twice the number needed for the European Commission to take action on the demands of petitioners. Moreover, a public consultation to assess the concerns of businesses on the proposed trade deal received a record 150,000 replies, in which 88 percent of respondents were opposed to the ISDS.

Making matters worse, the governments of France and Germany have voiced strong opposition to the ISDS, threatening not to sign the trade deal in its current form. Paris expressed outrage, with the Secretary of State for Foreign Trade saying that his country would “never allow private tribunals in the pay of multinational companies to dictate the policies of sovereign states, particularly in certain domains like health and the environment.” German Environment Minister, Barbara Hendricks, told the German press she believes that ISDS is “simply not necessary.” Further afield, the European Parliament has echoed such concerns, fully aware that without its vote, scheduled during the week of June 8, the TTIP would be scuttled.

Cobbling together all the elements, it’s clear that the TTIP will survive only after lawmakers on both sides of the Atlantic significantly review the investor-state dispute mechanism. Cecilia Malmström, the European Union’s Trade Commissioner sought to dispel fears when she announced earlier in May a reform plan for the ISDS. Calling the ISDS “not fit for the 21st century,” she put forth a concept paper to revisit it across four areas: the protection of governments’ right to regulate; the creation of an appellate mechanism; the establishment of a clear code of conduct for judges to reduce conflicts of interest and the reassessment of the relationship between ISDS and domestic courts.

But neither the European Parliament nor the United States responded favorably to Malmström’s proposal. European lawmakers insisted that the plan doesn’t go far and deep enough, with one MEP calling it “trying to put lipstick on the ISDS pig,” while the U.S. Undersecretary for International Trade, Stefan Selig, lauded the status quo and rejected the need for any reform to the extrajudicial court system.

However, the European Parliament’s trade committee managed to scrape together enough support and on May 28 backed a resolution in support of the TTIP on the condition that Malmström’s ISDS proposal stays on the table and will be included in the final deal.

“Deplorably, the European Parliament took a very ambiguous stance on the infamous ISDS system. We have yet to see any facts justifying its inclusion in an EU-US trade deal,” said one of the opponents of the trade deal. Even if the non-binding resolution was approved, it will be a long uphill climb in the Parliament once the bill comes to a vote.

Do we really need the ISDS? The answer is far from clear, but so far the “no” camp has the upper hand in the debate. With lawmakers deeply divided on the topic of the ISDS, it’s obvious that the far-reaching deal that would cover 800 million citizens and $35 trillion in GDP, will be the result of fierce political infighting and pork barreling. Nevertheless, the voice of the European Union will carry significant weight across the Atlantic and will certainly impact the equally fierce negotiations on Capitol Hill.

One of Geller’s ads in San Francisco.

The current debate over political advertising in the Washington, D.C.-area transit system moves the issue from “free speech” to “public safety,” and probably toward the Supreme Court.

Charles M. Schultz’s first Peanuts cartoon, 1950

Pamela Geller, the president of American Freedom Defense Initiative (AFDI), sought to bring her message to the nation’s capital using one of the cartoons from her May 2015 “Draw the Prophet” event. The event, which took place in Garland, Texas, was attacked by two gunmen, for which ISIS later claimed responsibility. Geller’s request was denied after the Washington-area transit authority, WMATA, temporarily suspended all advocacy advertisements on May 28.

Debates over advertising on public transportation are not new. Geller has had transit ads run in New York and Washington before. In 2012, New York and Washington posted “Support Israel, Defeat Jihad” ads that referred to war between “the civilized man” and “the savage,” and were widely labeled hate speech. It wasn’t until recently that the New York transit authority voted to ban all political advertising.

On a legal level, these ads have experienced mixed success. In March 2015, a federal court decided Philadelphia‘s transit system could not refuse ads linking Muslims to Hitler.

That same month, however, a federal court held that the transit authority in Seattle could refuse ads from both sides of the Israel-Palestine conflict. Judge Paul Watford cited public safety in the majority decision: “Municipalities faced with the prospect of having to accept virtually all political speech if they accept any — regardless of the level of disruption caused — will simply close the forum to political speech altogether.”

The Boston transit authority has implemented similar measures as well. In May, a federal court found in favor of the city transit authority’s restrictions on ads that “demean or disparage” individuals or groups. The decision allowed the city to permit ads in favor of Palestinians while refusing ads from Geller’s group.

Outside the United States there are competing approaches.  The Supreme Court of Canada, for example, struck down in 2009 an effort by British Columbia Transit to ban all political advertising. Transport for London, on the other hand, prohibits ads on buses and trains that may cause “widespread or serious offence.” Ads that touch on “matters of public controversy and sensitivity” and political causes, as well as ads which undermine the 1999 Greater London Authority Act’s commitment to “promote good relations between persons of different racial groups [or] religious beliefs,” are not permitted.

The U.S. Constitution’s First Amendment protects fundamental freedoms in American society, including the freedom of speech and freedom of religion. The text of the Amendment actually states “Congress shall make no law…abridging the freedom of speech,” but Congress and the states have made many such abridgments, and the Supreme Court has agreed to some of these limits.

One such limit came about through Schenck v. United States (1919). Justice Oliver Wendell Holmes, Jr. wrote in the unanimous opinion,

“The most stringent protection of free speech would not protect a man in falsely shouting fire in a theatre and causing a panic. […] The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger….”

In other words, you can’t falsely shout fire in a theater.  You can’t create a clear and present danger.

In 2008, a Danish cartoonist was targeted for his depictions of the Prophet Muhammad.  A Swedish artist was attacked in 2010, and allegedly the intended target of a murder plot. In January 2015, 12 people were killed in Paris in an attack on the office of a French magazine. In May, two gunmen attacked the cartoonists event near Dallas. The winning cartoon is what Geller sought to bring to Washington.

With her application under review by WMATA, Geller, used inflammatory language to defend her position:

“Drawing Muhammad is not illegal under American law, but only under Islamic law. Violence that arises over the cartoons is solely the responsibility of the Islamic jihadists who perpetrate it. Either America will stand now against attempts to suppress the freedom of speech by violence, or will submit and give the violent the signal that we can be silenced by threats and murder.  We cannot submit to the assassin’s veto.”

But free speech remains an active area of litigation. In a recent Supreme Court decision, Justice Anthony Kennedy defended the marketing of pharmaceuticals, in part by referencing cases which permitted nudity in movies, advertising alcohol prices, and clothing with expletives. In the Court’s current term, it is expected to decide whether Texas can include the option of the Confederate flag on its license plates, and whether towns can restrict the size of church signs more than it restricts the size of other signs.  None of these, though, has the recent record of international terrorism and terrorist targets (public transportation) associated with it. Would depictions of Muhammad on a Washington bus or subway train be akin to shouting fire in a theater – would they create a “clear and present danger,” obvious targets for attack?

Transit authorities seem to think so. In a May 27 statement about an unrelated arrest on of a man for terroristic threats, WMATA’s police chief, Ron Pavlik offered that, “We have no greater responsibility than protecting Metro’s customers and employees. This case demonstrates the seriousness with which we take all threats.” That same mentality supported WMATA’s decision to temporarily suspend all “issue-oriented advertisements.” It also supports Philadelphia’s decision to do the same.

Still, with inconsistent results in different U.S. federal courts, and with some cities deciding to reject all political advertisements, a case rising to the Supreme Court seems inevitable.

Photo: http://upload.wikimedia.org/wikipedia/en/6/69/First_Peanuts_comic.png

Sunni tribal fighters in 2007 (Photo Credit: U.S. Army)

For several weeks in late 2004, U.S. Marines pushed their way through Fallujah, fighting street-by-street, house-by-house, room-by-room. In that desert city, on the banks of a polluted Euphrates River, they experienced some of the heaviest urban combat the Corps had seen since the Battle of Hue City, Vietnam, in 1968.

The second battle to retake Fallujah, code-named Operation Phantom Fury, eventually secured the longstanding Sunni stronghold, 35 miles west of Baghdad. But a low-intensity warfare campaign against insurgent forces continued, preventing the conditions for Iraqi government control.

In mid-2007, Daniel Green, now a Defense Fellow at The Washington Institute for Near East Policy, was sent to Fallujah as a mobilized U.S. Navy reservist to work as a tribal and leadership engagement officer for a Naval Special Warfare unit. He worked alongside then-Lieutenant Colonel William Mullen III, a Marine infantry officer who served as the battalion commander in charge of the city for most of 2007. Together, Green and Mullen were able to successfully build partnerships with local Iraqis, apply a counter-insurgency strategy to the city, and contribute to routing al Qaeda insurgents by bolstering the city’s security, political, and tribal structures.

In January 2014, however, Fallujah fell again to al Qaeda and affiliated militants, including ISIS.

Paul Nash of the Foreign Policy Association spoke with Dr. Green and Brigadier General Mullen about the current situation in Fallujah and their experience in countering the city’s insurgency nearly eight years ago. That experience is recounted in their book FALLUJAH REDUX: The Anbar Awakening and the Struggle with al-Qaeda, published by the U.S. Naval Institute Press.

[Note: All opinions, interpretations, and analyses expressed in this interview are the interviewees’ own and do not reflect those of the U.S. government, the U.S. Marine Corps, the U.S. Navy, or the U.S. Department of Defense.]

Q: When you left Fallujah, did you ever sense that the city might one day fall again to insurgents as it did last year?

Dr. Green: I felt at the time that al Qaeda had so thoroughly brutalized the Iraqi people that the Sunni Arab population would never again embrace them. I also felt that the idea of politically marginalizing the Sunni Arabs had clearly not worked and that the central government would genuinely try to incorporate them into a viable national government. I think none of us anticipated the Arab Spring and how much the chaos in Syria would allow al Qaeda in Iraq to reconstitute itself.

Brig. Gen. Mullen: I think I knew it was always a possibility. There was a good bit of optimism when we left, but it was also clear that the long-term prospects for the city, and Iraq in general, were entirely up to the Iraqis. When asked whether I thought we won in Iraq in the years immediately after 2007, I replied that we would not know for sure for at least 10 years or more. The key, in my mind, was that they needed a Nelson Mandela-type figure to lead the country to a better future. Instead, they got a Shia party hack.

Q: Based on your experience, what do you think is the key to getting local Iraqis off the fence and turned against the insurgents?

Dr. Green: I believe there needs to be an overarching political rationale for the Sunni Arab population to once again turn against al Qaeda and ISIS. A political program of reconciliation between Iraq’s factions must be real, and it must be enshrined in Iraq’s constitution otherwise it will not be enduring. Additionally, Fallujah was pacified in 2007 by having the Iraqi army, Iraqi police, and the Sunni Arab tribes working together, mentored by U.S. military personnel. The strengths of one compensated for the weakness of another. These forces must work in concert and have their actions synchronized.

Brig. Gen. Mullen: You need to instill a sense of personal security and the feeling that when they do climb down off the fence, they are coming down on the winning side because it is a matter of life and death for them. If they can also feel like they are part of making a difference, that helps.

Q: Does the current situation in Fallujah differ from the one you encountered in 2007?

Dr. Green: My sense is that the residents of the Fallujah area only welcomed ISIS as a temporary measure to exert pressure on Iraq’s central government to not mistreat them and their interests. Local residents have also been coerced by ISIS and suppressed by them. I believe that the Sunni Arab population, at its heart, does not truly support ISIS but is only doing so out of short-term political calculations or because it is unable to turn against them due to intimidation. Any strategy going forward needs to factor these conditions into a comprehensive strategy.

Brig. Gen. Mullen: Since I have not stepped foot in Iraq since late October 2007, it is hard to say. News reports can be inaccurate. It seems that ISIS rolled into town and found a very sympathetic population that felt alienated by actions the Maliki government either took or neglected to take. I think I am also seeing some of the “buyer’s remorse” that Dan and I saw in Fallujah because ISIS is actually worse than al Qaeda was – and that is saying something. Al Qaeda learned from its mistakes in Iraq and sought to avoid them elsewhere. ISIS seems to think that al Qaeda in Iraq was too easy on people and has doubled down. That will not end well for ISIS.

Q: Do you feel ISIS can be confronted using the same strategy that worked so well in 2007? Or does the current situation call for something fundamentally different?

Dr. Green: In many respects, ISIS now operates like a conventional army, and so any solution informed by our experiences in 2007 will have to take that into account. Additionally, the Sunni Arab community has been marginalized twice since U.S. forces initially invaded Iraq. Any effort to convince them to turn against ISIS will need to factor that into any political strategy to integrate them into Iraq’s political structures. Finally, we obviously do not have the same numbers of troops there, so our ability to work with, and through our Iraqi partners is paramount and must be constantly improved.

Brig. Gen. Mullen: I believe it can, and it may work even faster due to how harsh ISIS has been. You do not torture and kill Al-Anbari tribe members without some form of retribution coming back at you. The Sunni piled on the bandwagon in the initial ISIS wave of success, and now that the tide is beginning to recede and ISIS is having fiscal difficulties as well as taking substantial losses, I believe we are once again approaching a tipping point. When the situation tips, the weak-willed will scatter like rats from a sinking ship, and the zealots will probably die very hard deaths at the hands of the people they have been abusing since last fall. The Sunni in Iraq neither forgive nor forget. Neither do the Shia, and they now have mass graves being uncovered in Tikrit to add to their desire for revenge.

Q: Do you think the Iraqi government could have done anything to prevent the emergence of a new insurgency? And is it now handling the situation in the most effective manner?

Dr. Green: I think it is very hard for a society emerging out of the shadows of dictatorship, especially one supported by a minority group, to then become magnanimous toward that same group once the formerly oppressed are now in power. In order for Iraq to go forward, a spirit of magnanimity, political tolerance, and inclusion, as well as a focus on decentralization, must be adopted. These efforts must be closely aligned with a security strategy that is highly synchronized and methodical, and one that brings together military, police, and tribal forces. I believe more efforts must be made to reform Iraq’s central government in order for it to be more inclusive of the Sunni Arabs and to empower local government through greater decentralization.

Brig. Gen. Mullen: I absolutely think more could have been done. And I have said before that if we had a list of things not to do in order to avoid a result like we have today, Maliki has not only done every one of them but has even added a few items of his own. He was the last person on earth who the Iraqis needed as their prime minister. Prime Minister Albadi seems to understand all this, and if he can get a truly inclusive government going – he seems to be off to a solid start – then they can beat ISIS and restore Iraq to some semblance of order.

Q: What role, if any, do you think American forces should play in Fallujah today?

Dr. Green: I believe we should serve as behind-the-scenes catalysts, facilitators, and coordinators of Iraqi efforts to address the underlying political problems of the country. And once progress has been made in this respect, we should work to bolster and empower an integrated security plan to secure the rest of the country.

Brig. Gen. Mullen: I think we should do as little as humanly possible. The Iraqis (both Sunni and Shia together) have to do this, to be seen doing it, and to fully understand that THEY did it together. That would be enormous and would go a long way towards the reconciliation that is needed after 30 years of horrendous Sunni rule under Saddam, and then the years since 2003 of sectarian torture and killings that have gone both ways. The reconciliation model used for Rwanda would be a good start.

The U.N.-administered camp at Mazrak, northwest Yemen is now stretched beyond capacity after a Saudi military offensive against the Houthis starting early November uprooted a fresh wave of IDP families. (Photo credit: Hugh Macleod/IRIN)

Yemen had drawn little attention in the United States, or in many other parts of the world, until recent events thrust it into the headlines. It has an arguably strategic location on the Bab e-Mandeb, the strait controlling access to the southern end of the Red Sea (and, ultimately, the Suez Canal), and still it managed to remain ignored.

Yemen is the poorest country in the Arab world. Although much smaller geographically, its population is nearly equal to that of neighboring Saudi Arabia. It has a little oil, discovered only in the 1980s, but it is already running out. It has a little water; that is running out as well. Remittances from Yemenis working abroad are a major source of revenue.

For a while, it was two countries: Yemen (sometimes called North Yemen) and South Yemen. North Yemen suffered a civil war in the 1960s, after the army overthrew the monarchy and declared a republic. Nasser’s Egypt intervened to support of the new government’s fight against the traditionalist tribes of the north (northern North Yemen), who remained loyal to the royal family. This came to be known as Egypt’s Vietnam. Egypt cut off its participation after defeat in the Six-Day War (1967) forced it to change its priorities.

South Yemen grew from the British protectorate of Aden, which was granted independence as a separate country in 1967. South Yemen became a Soviet client state and still did not manage to attract much attention. In January 1986, a brief civil war erupted there among rival factions of the ruling party. (It actually began with a shootout at a politburo meeting.) In less than two weeks, the conflict had killed up to 10,000 people, including much of the political elite.

South Yemen never really recovered, and in 1990 it voluntarily merged with North Yemen to form today’s Yemen. While the North’s government considered this a natural outcome, a number of South Yemenis resented it. Yet another civil war, started by southern separatists, erupted in 1994, and separatist sentiments persist in the south to this day.

Thus, the fact that there is fighting in Yemen today is tragic but not really novel. Today’s conflict brings a complex array of old and new actors to the scene. It is often portrayed as a proxy war between Saudi Arabia and Iran and as part of a greater struggle between Sunni and Shiite Muslims, but that is a distortion. Saudi Arabia and Iran do play key roles in the conflict, and their action affect the calculations of internal players, but no one in Yemen is fighting on behalf of either of them and the fight is not about religion. Who are the leading players in today’s drama?

The Houthis

The Houthis are not so much an organization as a clan — or at least a clan-based organization — from the northern province of Sa’dah. Traditional in their ways and highly chary of their independence, they formed the backbone of the 1960s rebellion against the military regime, and they have rebelled against the government of the united Yemen a half dozen times in just the past 15 years.

Religiously, the Houthis are Zaydis, or Fiver Shiites. Fivers were once the predominate branch of Shiism, but then, in the 16th century, the Safavid dynasty made Twelver Shiism the official state religion of Iran. Now the Shiites of Iran, Iraq, Bahrain, and Lebanon are Twelvers. Fivers are prominent only in Yemen, where they constitute at least two-fifths of the population. The original split between the Fivers and the Twelvers was rooted in a dispute over how many of Muhammad’s successors were true Imams. Theologically, the Fivers are probably as close to the Sunnis as they are to the Twelver Shiites of Iran, but today’s conflicts and alliances have little to do with theology. Fivers do, however, say they have a religious obligation to oppose unjust rule.

Although the Houthis have some (frankly, offensive) Iranian-inspired slogans, they are fighting for their own issues, namely against corruption and what they view as an overbearing central government. They do not appear to take direction from Tehran, and they accept Iran’s support because Iran offers it and no one else does. In fact, last September, they seized Yemen’s capital despite Iranian efforts to dissuade them.

Iranian support in the country is a way to annoy and distract Saudi Arabia. In the 1960s, however, when secular-socialist pan-Arab Nasserites were seen as the main threat, it was actually Saudi Arabia that armed and supported the Houthis. The Houthis have offered to cooperate with rival factions a number of times. They did not immediately depose the government when they seized the capital in September 2014, but merely forced themselves into the ongoing debate over a new constitution, from which they had been excluded.

On the other hand, they are not particularly skilled at cooperation. At one point, when they failed to get their way in the constitutional talks, they kidnapped the president’s chief of staff and threatened to hold him hostage until the government conceded the point. Eventually, they did put the president, prime minister and cabinet under house arrest. Once in power, they became more dictatorial, embodying the qualities they claimed to be fighting against. In February, al-Hadi escaped to Aden and proclaimed himself president again, and the current stage of the fight began. The Houthis began advancing to the south, and in March a Saudi-led coalition began their bombing campaign in support of al-Hadi.

Ali Abdullah Saleh

Ali Abdullah Saleh became president of North Yemen in 1978 and was the only president that the united Yemen knew until 2012. Like the Houthis, he is technically a Zaydi, but he is of a more Westernized variety, a secular nationalist at heart. The Houthis rebelled against his rule repeatedly. Although widely viewed as corrupt and a poor administrator, Saleh is highly adept at playing factions off one another.

After the rise of Al Qaeda in the Arabian Peninsula (AQAP), Saleh permitted the United States to conduct drone attacks against the group. He also enjoyed increased military assistance from the United States, but he focused his own military efforts against the Houthis rather than AQAP. He viewed the Houthis as the greater threat to his own rule — a position vindicated by recent events — and, according to some analysts, he did not want to defeat AQAP outright. The new support that he was receiving from the United States was a direct result of AQAP’s presence in his country, and he understood that the United States would lose interest and turn its attention elsewhere if the group were actually eliminated. The Houthis have been much more vigorously anti-AQAP than Saleh.

In 2011, during the so-called Arab Spring, massive demonstrations formed in the capital, demanding that Saleh leave. A central city square was occupied for months. The demonstrators, mostly students in the beginning, attracted a broader cross section of society. A rival family, al-Ahmar, from Saleh’s tribe split with him. The army divided, with some units remaining loyal to Saleh personally and others to the al-Ahmar family. Houthis launched attacks against the presidential palace. Saleh was seriously injured by a bomb. With the prospect of civil war growing, the Gulf Cooperation Council mediated a solution. Saleh voluntarily stepped down and his vice president, Abd Rabbuh Mansour al-Hadi, a southerner, was “elected” in an election in which he was the only candidate.

Saleh, however, was not finished. Key units of the military remained loyal to him, even out of office. After the Houthis seized the capital in 2014, Saleh made common cause with them against al-Hadi, despite the fact that they had rebelled against him six times. He brought with him the elite divisions of the army and the entire air force. This is what allowed the Houthis to move so swiftly into southern Yemen after al-Hadi fled to Aden.

Today’s Yemen was formed from the merger of the former Yemen (North Yemen)and South Yemen (much of which lies to the east). (Map: CIA)

Saudi Arabia

The Saudis are backing the forces of President al-Hadi with aerial bombardments, but they are not popular on either side of the Yemeni divide. They have depicted the Houthi advances as an Iranian maneuver to encircle the Arab heartland. They are also concerned that a Houthi victory could inspire Saudi Arabia’s own Shiite minority. (Saudi Arabia’s Shiite minority and its oil deposits are both concentrated in its Eastern province.) They have apparently intervened for these reasons.

The new Saudi king, Salman bin Abd al-Aziz, came to the throne in January of this year, upon the death of his brother. He named his son, Muhammad bin Salman, minister of defense and deputy crown prince. Muhammad bin Salman, who is 29 years old and has neither military experience nor a military education, has become the public face of the Yemeni war within Saudi Arabia.

The Pakistanis, who were invited to participate in the Saudi-led coalition but refused, have described Saudi Arabia’s intervention as a panicked reaction to local events. They also say that the Saudis have no plan for victory. Saudi Arabia’s reputation for being cautious and risk-averse is giving way to a new reputation for being impulsive and rash.

The United States has pressed the Saudis to halt their air campaign for fear of triggering a larger regional conflict, but it has also enabled the campaign by providing logistical, material, and intelligence support. The latter probably reflects a perceived need to bolster relations with Saudi Arabia given Saudi suspicions that U.S. negotiations with Iran over the latter’s nuclear program might reflect some sort of pro-Iranian shift in U.S. policy toward the Middle East.

Al Qaeda in the Arabian Peninsula

AQAP is viewed as the most dangerous member of the network of local al Qaeda affiliates. The group operates primarily in the eastern regions of the former South Yemen. It was formed in January 2009 through the merger of al Qaeda’s Yemeni and Saudi affiliates. The Saudis, having been crushed and pushed out of their own country, merged with and revitalized the Yemeni group. AQAP has focused primarily on local issues and enemies, like other al Qaeda affiliates, but over the years it has expanded into the broader international arena to an unusual degree. It was behind the failed “underwear bomber” over Detroit in 2009, another failed attempt to destroy an airliner in 2010, and the attack on the Charlie Hebdo editorial offices in Paris earlier this year. The group publishes an English-language online magazine for terrorists. Still, its primary focus has remained local.

AQAP has not been a principal player in the fight between the Houthis and the forces of President al-Hadi, but it has benefited from the disruption. It has taken advantage of the chaos to extend its area of control, and it has forged new alliances with Sunni tribes, including some that actively fought it in the past, that object to the expansion of Houthi control.

The Islamic State in Iraq and Syria

The Islamic State in Iraq and Syria (ISIS), sometimes called the Islamic State, is the newest newcomer to the cast. It has announced a presence in Yemen only since the beginning of the current fighting. The group’s suicide bombers have attacked a Zaydi mosque in Yemen as well as a Shiite mosque in Saudi Arabia. This is in an apparent attempt to fuel further sectarian violence in the region. So far, ISIS has thrived only in places already wracked by war and political chaos.

What Future?

More bombing is not what Yemen needs. Unlike ISIS in Iraq, the Houthis are deeply rooted in Yemeni society, or at least in a portion of it. The bombing will most likely escalate the conflict, driving the Houthis closer to Iran, which is the opposite of the outcome that the Saudis want. A preferable approach would be to neutralize the Houthis as a threat. Reconciliation in a broad-based government will be difficult — there is a great deal of mistrust, and U.N.-sponsored efforts have made little headway — but the longer it is delayed, the more difficult it will become.

(Photo: Aitor Escauriaza via Flickr)

The 2016 U.S. Presidential Race: A Cheat Sheet
The Atlantic
By David A. Graham

Spanning both party’s entire fields, including no-brainers like Hillary Clinton and no-names like Lincoln Chafee, The Atlantic brings you an all-encompassing cheat sheet to 2016 hopefuls for President of the United States.

Special Report: Russian fighters, caught in Ukraine, cast adrift by Moscow
Reuters
By Maria Tsvetkova

The story of two Russian special forces soldiers captured fighting in Ukraine depicts the murky war Vladimir Putin helped engage to support rebels seeking closer with Russia.

For a new American ambassador, India is a kind of homecoming
The Washington Post
By Annie Gowen

The Washington Post highlights U.S. Ambassador to India Richard Verma’s recent appointment to the post and why the Bethesda lawyer’s Punjabi roots might build relations with the Asian country.

Why the Press Is Wrong About Bernie Sanders
Columbia Journalism Review
By Steve Hendricks

Steve Hendricks pens an opinion piece for the Columbia Journalism Review examining Democratic presidential hopeful Bernie Sanders, and why the U.S. press consistently writes off underdog candidates.

What Humanity’s Impact on Earth Will Look Like to Future Geologists
New Republic
By David Biello

David Biello for New Republic envisions what shape humans today will leave the earth in for future generations to discover.

Blogs:
Climate change latest battleground in India-Pakistan relations by Scott Bleiweis
Ben Bernanke’s Monetary Policy: Bubble Double Toil and Trouble? by Patricia L Schouker
Getting the Motives Right by Hussein Rashid
U.S. Confronts China Over Airspace in South China Sea by Gary Sands
Mangoes Fly in Venezuela, But Economic Improvements Remain Unlikely for 2015 by Gary Bearden

The changes observed in the capital market over the last 30 years, its growing role in financing the economy, and the amplification of the business cycle have drawn attention to the relative importance of asset prices and wealth dynamics in the economy. There is much in economics that can and should be celebrated, and Arthur M. Okun’s book, Equality and Efficiency: The Big Tradeoff and the recent event dedicated to it, is one of those things.

Attending this event dedicated to Okun at the Brookings Institute in Washington, D.C., allowed me to take a step back and focus on a crucial issue that has influenced and changed a number of decisions and policies: the market bubble.

In his book, Okun emphasizes that the markets needs a place, and the market needs to be kept in its place. To achieve this, as Ben Bernanke noted in a 2002 speech at the National Association for Business Economics in New York, we must “use the right tool for the job.” Bernanke’s speech back in 2002 can help shed some light on the question of how asset prices have been taken under consideration in the past by the Fed. It also helps explain how these prices will affect monetary policy in the future.

Should monetary policy react to changes in prices of financial and real estate assets? The answer, in theory, would be that an increase in the interest rates could have consequences and make shares less attractive investments, which could end up being a signal of inflation or speculation. However, significant changes in asset prices, such as financial bubbles, could jeopardize price stability, as well as affect financial stability, thereby have significant impact in the economy.

Ben Bernanke called this phenomenon the “Internet bubble.” This has also been referred to as “the irrational exuberance effect” by Alan Greenspan in the 1990s and has been interpreted as a warning that the market may be currently overvalued.

The appearance of a financial bubble disrupts the tasks of a central bank. These bubbles are popping not because they were unpredictable but because they were unpredicted.

Part of this is because there are several channels though which the policy rate can influence asset prices or valuations. These are:

• The changes in interest rate alter the expectations of agents relating to economic growth and profit outlook.
• Monetary policy decisions can change the various discount rate that economic agents apply to their expectations of future earnings and interest flows or income generated by the assets they hold (housing).
• The changes in interest rate may lead to portfolio shifts between assets that may in turn affect their relative prices.

To date, economics has been two-parts wonder drug and one-part snake oil, and this strategy has proven to be weak when dealing with financial imbalances and bubbles. Ben Bernanke recalls the tools a central bank has to regulate the prices of financial assets and classifies them in two categories:

• The “lean against the bubble”: The Fed must take into account asset prices for its macroeconomic policy and prevent the formation of a financial bubble. For instance, increasing the interest rate from 25 to 50 points the interest rate to discourage the excessive increase in asset prices – because an increase is a signal that calms the economy.
• The “aggressive bubble popping”: a vigorous increase in interest rate prevention to avoid the formation of bubbles detached from economic reality.

For Bernanke, monetary policy is not the right instrument to fight against the bubbles in asset markets or in real estate. There is a problem of identifying the bubbles: the price of shares should match the expected dividends discounted by investors and the risk of holding this action. But even retrospectively, studies have difficulty assessing the link between share price and economic fundamentals. Troubles have their roots in reluctance to face up to these ineluctable choices.

Even if we can measure the bubbles imprecisely, does an action from a central bank have an effect? For example, if the Fed decides to increase its interest rate by 25 or 50 points, Bernanke reiterated in his last article that the expected effect would be multiplied by three or six empirically on financial assets.

In other words, a 0.25 percent increase in the interest rate results in a decrease in approximately one percent of the share price, which is low. Indeed, investors expect returns of 15 percent, 20 percent or even 30 percent per year. In the short term, an increase of the interest rate 0.25 or 0.5 percent, unless accompanied by a decline in economic activity, would have no real effect. David Wessel, the Director of the Hutchins Center on Fiscal and Monetary Policy at Brookings, has said that getting the timing of the rate hike right is one “really tricky” issue. It’s an art, not a science, and easy to mess up. Too early and recovery could be choked off. Too late and inflation could sap the Fed’s credibility.

On the other hand, a violent increase in interest rate will weaken the whole economy. Timing of the burst is what will determine who in the market would have a harder fall. There is no way to direct the action of monetary policy to a single sector of the economy, leaving the rest of the economy unscathed. The explosion of a specific bubble by an increase in interest rate will be at the risk of stifling the economy as a whole.

Bernanke’s position is widely debated among researchers and economists, partly because it is difficult to estimate the value of asset prices. There, what matters is not only the level of asset prices but their deviation from a hypothetical value, which by definition is difficult to measure. It is unclear whether bullish momentum actions would be the consequence of fundamental changes or if prices will move forward pathologically.

A central bank does not intervene in the event of rising asset prices but takes into account the impact of inflation risks. So if a central bank can respond when the bubble bursts and the financial and monetary stability is threatened, this asymmetric response will have a cost. An intervention can provoke the problem of “moral hazard”: As economic agents believe the central bank will use its safety net, they will be drawn to invest in riskier projects to increase the profitability of their investments, bearing in mind that potential losses will be limited.

Bernanke advocated a systematic and symmetric reaction is also a problem because the Fed can be wrong in the estimation of asset prices.

Still, one question remains: Should asset prices be taken into account in the definition of price stability? Asset prices are an indicator of future inflation, particularly housing prices. It is difficult to measure the effect of wealth. Moreover, inflation can either lower or be limited and asset prices will still increase. What action a central bank should take may be less clear when central bankers have too many contradictory objectives.

For Bernanke, if monetary policy does not respond directly to changes in asset prices, it must clearly consider all the consequences of these global changes on supply and demand, and on trust and economic expectations. In addition, a central bank is responsible for the proper functioning of financial markets and should perform its role of lender of last resort to increase liquidity following drop in share price.

Bubbles arise because of uncertainty and incomplete information provided to economic actors. These deficiencies make the behavior seem like rational agents who prefer to follow the participants and expect to be better informed. Therefore, the increased transparency of company accounts must be the priority so that investors are well informed about the actual health of companies. Similarly, it is to develop the skills required for a more detailed analysis and to allow the greatest number to be properly informed.

One goal of transparency is to enable better differentiation of the solvency of borrowers. A fight against contagion effects of a decline in confidence.

Bernanke insists that financial liberalization must be done in a healthy way, such as a “principle of policy targeting” approach, which looks at the policy intervention at the source of the problem. Sensible as far as it goes, it is a powerful tool for liberalization without worries about adverse effect.

Thus, Bernanke stresses caution for action by the central bank in relation to asset prices. Certainly, as a Fed governor, it is difficult to hold a different position, but his argument seems persuasive because neither identifying a bubble nor the means of a central bank seem to allow appropriate actions.

However, asset prices should be monitored by central banks given the complementary nature of the goals of price stability and financial stability, without including asset prices in monetary policy rule.

Designing a better balance between states and markets doesn’t mean that we jettison conventional economics. It requires that we actually pay more attention to it. The economics we need is not that of the “rule of thumb” but rather a result derived from theory. Beware any salesman who offers a “sure thing.”  As Okun concluded in his recent talk, “instead of compromising, we are polarizing. The nation solely needs a serious dialogue and a major educational undertaking to develop the enlightened attitudes of compromise.” It’s an economy that recognizes its limitations and flaws and know that the right message depends on the context.

Still, as Bernanke said, “I have an open mind on this question. We’re learning. All central bankers are learning.”

An Aga Khan health center in Afghanistan.

By Hussein Rashid

The recent attack against Ismaili Muslims in Karachi, Pakistan, will be read by most as part of a simple narrative of an ongoing Sunni-Shi’ah conflict. Unfortunately, as consistent fear-mongering has demonstrated with Sharia, bandying about non-English words conveys a facade of knowledge without any guarantee of any actual understanding. As is the case with most political violence, here is more to this attack than a simple retelling of a religious clash. There is a deeper history that is masked by using inappropriate vocabulary, and misusing it is allowing the most extreme voices to set the agenda.

Contrary to popular opinion, history shows that there is not a 1,400-year old conflict between Sunni and Shi’ah. Instead, we need to understand the violence in Pakistan as having a strong political rationale. To miss what this attack was about allows slogans about Islam to triumph over real knowledge of the religion and region, dishonors the victims of terrorism and ultimately weakens U.S. national security.

The Ismaili community is a small Shi’ah community that is different from the Ithna’ashari, or Twelver, Shi’ah community that dominates in Iraq and Iran. It is the only Shi’ah community to have a present, living Imam, (a divinely appointed successor to Prophet Muhammad) in the Aga Khan.
The office of the Shi’ah Imam, not to be confused with the Sunni imam, or prayer leader, represents one of the greatest threats to movements like Daesh, otherwise known as the Islamic State in Iraq and Syria (ISIS). Daesh has a nihilist vision of an Islam that can only destroy, not construct, and their use of grandiose titles like “Islamic State” and “caliph” are flailing attempts to show they can build, not just kill. Shi’ah communities, like Sufi orders, offer an alternative authority structure and vision of what it means to be Muslim to the nihilists. There are important theological differences, and these are manifest in the histories that are told and the actions that communities take.

The key is that as long as Shi’ah and Sufi groups exist, with their structures, hierarchies, and well-established means of interacting with the outside world, nihilists cannot claim to be the sole and logical representation of “Islam” in the world. The Aga Khan, for example, established one of the largest hospital networks in Pakistan, a constructive and ethical engagement with the faith. This story is less often told in the media when juxtaposed against ISIS’ atrocities.

Even a week after the attacks in Pakistan, we still do not know who is responsible for them. There are many groups who want to claim credit for these attacks because these nihilist groups offer nothing but death, and they reap political benefits if they can say they are the most destructive. They are operationally interchangeable and can only compete in the realm of body counts. They benefit when we describe Muslim communities as “sects” because that implies a true Islam to which they can lay claim. This naming is not part of the Muslim tradition — it only gives the nihilists legitimacy.

All of these groups are the spawn of the Wahhabi movement. This movement, which originated in the 18th century, and eventually rose to power by allying with the British Empire to kill rival Muslims, cannot be considered Sunni. It represents an innovation, creating a new community of interpretation.

The terrorist attack that killed 47 Muslims, many women and children, continues to demonstrate the depravity of nihilist groups. However, to read it as part of an ongoing conflict rooted in theology makes too easy an analogy between Christianity and Islam and misses the deeper lessons. We need to move beyond simple labels of Sunni and Shi’ah, and not give the most depraved elements of a society and opportunity to claim legitimacy for themselves.

Hussein Rashid is a professor of religion at Hofstra University, a term member at the Council on Foreign Relations and a Fellow with the Truman National Security Project. He works at the intersection of religion, art and national identity. Views expressed are his own.

A farmer in Patiala, India shows damage to wheat caused by unseasonably heavy rains in April 2015. While India and Pakistan don’t see eye to eye on pretty much anything, climate change dangers may help finally bring them together. Photo: Getty Images via aljazeera.com

Relations between India and Pakistan have been notoriously frosty for decades. But the two long-time adversaries will soon need to work together to effectively combat literal frost: in other words the effects of climate change.

Neil Bhatiya, a policy associate at the Century Foundation, reports that monsoon-level rains pounded Pakistan this past April — much earlier than expected — and resulted in at least 37 deaths. At the same time, unusually heavy spring rain also decimated wheat crops in India. Farming remains critically important to both countries’ economies: The World Bank estimates that about 47 percent of India’s, and 45 percent of Pakistan’s, workforce is employed in the agriculture and rural development sector.

In addition to impacts on the economy, both Mumbai and Karachi are susceptible to problems caused by rising sea levels. Just this week India suffered a debilitating heat wave that killed over 500 people. If these recent extremes are signs of things to come — and the Intergovernmental Panel on Climate Change predicts a higher rate of severe weather events in the next century — India and Pakistan could face significant environmental, economic and societal upheaval.

The situation may not be not as grim as it seems. Cooperation has already taken place between the two neighboring countries on the the Indus Waters Treaty, a scheme to share river resources that has been in place since the 1960s. Leadership in India and Pakistan have made some progress in developing renewable energy sources, notably solar.

Thus far these efforts have been pursued separately. India and Pakistan must somehow find a way to pool their ideas and initiatives. If they can, as Bhatiya writes, such interaction could “serve as confidence building measures for climate change cooperation an important cornerstone of the bilateral relationship, to the benefit of the region as a whole.”

Enemies for so long, India are linked by their geography and potential to be devastated by climate change. If anything could bring them together, it should be this.

Chinese construction on the previously submerged Hughes Reef. Photo: Tuoi Tre

I had not given much thought to the flight plan of the airline I recently booked to go back to the U.S. from Vietnam, but recent events in the airspace over the South China Sea prompted an online search. As I discovered, my commercial flight will be flying not far from where a U.S. surveillance plane was warned on Wednesday to leave by a Chinese radar operator.

The P8-A Poseidon, the U.S. military’s most advanced surveillance aircraft, was flying near artificial islands which China is constructing, and the order is thought to have come from an early warning radar station on Fiery Cross Reef in the Spratly Island chain, on which the Chinese have been constructing military facilities, which include a 10,000-foot runway. New satellite images show heightened reclamation work by China at seven sites in the Spratlys, adding around 2,000 acres of land since March 2014. Beijing claimed last month that the new islands would benefit provide weather forecasting and search and rescue facilities for the benefit of other countries, while admitting the islands could also be used for military purposes.

Also on board the P8-A Poseidon was a television crew from CNN, which recorded the American pilot insisting they were flying over international airspace. A commercial flight operated by Delta was also in contact with the Chinese radar operator during the confrontation with the U.S. military aircraft, and assured of safe passage. Following the incident, both Beijing and Washington accused each other of taking potentially dangerous actions, sparking memories of the 2001 collision between another U.S. surveillance plane and a Chinese fighter aircraft. In the 2001 confrontation, the Chinese pilot was killed while the American surveillance crew were detained on Hainan island.

The latest confrontation, along with earlier warnings to Philippine military aircraft to evacuate airspace in the same area, are igniting concern among claimant nations to the waters (Brunei, Malaysia, the Philippines, Vietnam, and Taiwan), as well as the Obama Administration. While China has not officially declared an Air Defence Identification Zone (ADIZ) in the South China Sea, it claims the right to establish an ADIZ — similar to the East China Sea Air Defense Identification Zone it introduced in November 2013. The U.S. response back then was similarly confrontational, as American B-52 bombers were ordered to fly through the zone. Both military and commercial aircraft operating in ADIZs are required to identify themselves or be subject to military intervention.

As tensions of claims to sovereignty in the South China Sea have escalated, the U.S. has repeatedly expressed its desire for freedom of navigation in the waters, which see around $5 trillion in shipments. To reinforce this message, the Pentagon is actively considering the deployment of military aircraft and ships to within 12 nautical miles to patrol the disputed waters and airspace of the Spratly archipelago.

In an apparent response to Wednesday’s confrontation, Chinese embassy spokesman Zhu Haiquan hoped “relevant parties” would not to take sides “and refrain from playing up tensions.” Chinese Foreign Ministry spokeswoman Hua Chunying added, “Freedom of navigation does not give one country’s military aircraft and ships free access to another country’s territorial waters and airspace,” according to Xinhua, China’s state-owned news agency.

Given China’s claim to some 90 percent of the South China Sea, how far Beijing is willing to prevent free access to any country’s military and ships remains to be seen.   “Freedom of Navigation” exercises were conducted by the U.S. military last year, and the combat ship USS Fort Worth just completed a week-long patrol near the disputed Spratly Islands, where it encountered numerous Chinese warships.

Other regional actors such as the Japanese may become more involved, should they decide to join the U.S. in conducting joint maritime air patrols.  Japan held its first joint naval exercise with the Philippines last week in the South China Sea, and has promised to supply Manila with 10 coastguard vessels by the end of the year.  Last week, foreign and local journalists were invited by Manila to tour the Thitu Island, the largest island occupied by the Philippines in the South China Sea.  Japan also conducted search and rescue training with Vietnam this week, and is supplying used navy patrol boats to Hanoi.

While the latest incident ended relatively quickly, the International Crisis Group warned in a report released last week that clashes in the South China Sea were “becoming more heated and the lulls between period of tension are growing shorter.” With the flight of the surveillance plane, Washington made it clear it would not tolerate any further restrictions to international airspace over the South China Sea, with Daniel Russel, the top U.S. diplomat for East Asia, saying, “Nobody in their right mind is going to try to stop the U.S. Navy from operating.”

How far Washington will go to preserve freedom of navigation and how far Beijing is willing to assert sovereignty over the 90 percent of the South China Sea it claims remains to be seen. But small-scale skirmishes will continue, and despite warnings in the Global Times, a Chinese state-owned newspaper, that construction of the artificial islands is the country’s “most important bottom line,” and that “war is inevitable” unless Washington stops demanding Beijing halt the construction, China is not prepared for conflict with the United States, and the U.S. is not prepared to go to war with China over small piles of sand. Wednesday’s provocation was a carefully crafted combination of hard and soft power from Washington, using not a B-52 bomber but a surveillance plane, and using a television crew to curry international favor.  Sometimes using soft power to shame proves vastly more effective than forcing a country to save face with a military challenge.

This actually is an ordinary mango. Photo Credit: Wee Keat Chin via Flickr

By Gary Bearden

What does a mango thrown at the head of Venezuelan President Nicolas Maduro tell us about Venezuela’s economic future? Not much. The mango, thrown on Wednesday, April 22, was just an ordinary mango. But the president’s curious response to the situation sheds light on what the country should expect in 2015 as it limps through an economic crisis and into legislative elections at the end of the year.

While Maduro and his United Socialist Party of Venezuela (PSUV) are already known for their populist programs and appeal, the president still made headlines by rewarding Marleny Olivio, 52, with a free apartment after she struck him in the head with the fruit. Far from exercising fiscal restraint, given the country’s economic uncertainty, Maduro’s response to the situation bodes poorly for a return to pragmatic spending policies and a potential recovery in 2015.

National Assembly elections do not yet have a date for 2015, but historically low popularity ratings for both Maduro and the PSUV ensure that Caracas will try to bolster public support by ramping up public spending and increasing their harassment of the private sector. To distract Venezuelans from the deepening crisis over the recent holiday season, for instance, Maduro launched “Operation Merry Christmas.” Armed with nearly 30,000 state inspectors, Caracas forced stores nationwide to cut prices on toys and electronics by up to 80 percent. Lucky Venezuelans were even able to purchase computers for as little as $75 before vendors sold out. Considered a success for holiday morale, the program simultaneously exacerbated shortages the country was already facing. Private companies remain trapped between suffering losses under the government’s pricing restrictions and currency controls, and exiting the market and risking the nationalization of their assets in the country.

While the short term benefits to consumers are obvious, unconstrained state spending, combined with the Maduro regime’s hostility toward the private sector, are exacerbating the everyday struggles of Venezuelan citizens and worsening the country’s economic outlook. Producers and stores are unwilling to keep goods in stock if they know the government will force them to sell at below market pricing. As a result, consumers in the South American country could soon face inflation rates between 150 and 200 percent, in addition to hours long queues for access to the most basic goods such as flour and cooking oil. The government even introduced fingerprint scanners in March as a means of rationing purchases throughout the country. Moreover, what began as rumors of toilet paper shortages in Venezuela, have since turned into a sad truth as some hotels even ask guests to bring their own supply when planning a stay.

Perhaps under conditions of high oil prices and revenues, the government’s populist spending might be sustainable. Under current economic conditions, however, Caracas cannot maintain this course and expect a positive outcome. Venezuela’s foreign reserves have fallen 15 percent in the first four months of 2015 to less than $21 billion, jeopardizing the government’s ability to meet its foreign debt obligations and continue financing vital imports such as food. Indeed, estimates indicate that Caracas will need to pay an additional $8.4 billion on foreign debt by the end of 2015 while balancing outstanding payments to the private sector that have reached as high as $10 billion in late April. Oil revenue makes up virtually all of Venezuela’s export income and has risen slightly in April, but remains at about half of what it was a year ago. Without a significant and swift increase, Caracas is on borrowed time.

Yet for two main reasons, the Maduro administration likely sees no alternative than to keep costly populist programs largely in place through 2015. First, many subsidy programs have become too popular for the government to reform. The state subsidy on gasoline, for instance, costs the government upwards of $15 billion each year. Outside of highlighting the issue as wasteful spending, Maduro has done little to address the program that gives Venezuelans access to gasoline at less than 10 cents per gallon. The last time the government tried to address the program resulted in the 1989 crisis known as “Caracazo.” Dozens of Venezuelans died and thousands more were injured in violent protests. Given today’s high social tension, taking steps to curtail the program could yield a similar result. Even popular ex-President Hugo Chavez, who remains a popular figure today, was unable to reform the expensive subsidy program during his time in office.

Second, the Maduro government likely feels that it needs to use every populist tool at its disposal to maintain voter support in the run up to 2015’s National Assembly elections as Maduro’s popularity has plunged to about 25 percent. A two-thirds opposition majority would allow them to unseat the president through a referendum, but this is unlikely given residual support for the PSUV. On the other hand, a simple majority in the 165-member legislative body is a real possibility that could frustrate Maduro’s agenda and even force him to reconcile with opposition policies in the longer term. The administration has hinted at its concerns by “updating” the population statistics that are linked to seat allocation in the Assembly, demonstrating a heavy bias toward districts that traditionally vote for the PSUV and against those that are pro-opposition.

It should not be forgotten that Chavistas under the current and previous administration, have proven their willingness to use force against anti-government demonstrations in the past, despite President Maduro’s generous treatment for Ms. Olivio and her mango. Venezuelans recall the government’s response to mass opposition protests in 2014 when a brutal crackdown resulted in over 40 citizen deaths. Moreover, having reacquired decree powers from the National Assembly in March, Maduro retains the ability to delay or cancel elections if he deems them a threat to national security. This possibility is hopefully a remote one as international observers are sure to be on hand after last year’s violent outburst. Should the country take yet another step away from democracy during the upcoming elections, Venezuela may find more regional powers aligning with Washington in support of sanctioning the Maduro administration.

In the meantime, Venezuelans and investors should not expect an economic solution to come from President Maduro for the remainder of 2015. Instead, President Maduro is more likely to be found preparing new apartments to trade for an outpouring of fruit from distressed citizens. As opposition blog Dolar Today quipped following the incident, “If for a mango they give you apartments, then you know what to do: throw him a pineapple!”

Gary Bearden is a foreign policy professional and current Political Risk Fellow with Young Professionals in Foreign Policy (YPFP). He has professional and living experience in Eastern Europe, North Africa and Latin America, holds three Bachelors degrees from Ohio State University and a Master of Science in Foreign Service from Georgetown University.

The opinions expressed in this article are the author’s own and do not reflect the views of their employer or Young Professionals in Foreign Policy.

Photo by John Pemble via Flickr

On the eve of the Israeli elections back in March, Israeli Prime Minister Netanyahu proclaimed that there would be no Palestinian state under his watch. This created an international outcry and he quickly walked the statement back after a great success on election day.

On Wednesday, he met with European Union Foreign Policy Chief Federica Mogherini and, for the first time since the election, outright proclaimed his commitment to a two-state solution. “We want a peace that would end the conflict once and for all… I don’t support a one-state solution, I don’t believe that’s a solution at all, I support the vision of two states for two peoples.”

Netanyahu has, however, taken numerous steps in recent days to imply otherwise:

• On Jerusalem Day, he vowed that Israel’s capital city would never be divided.
• He appointed Deputy Prime Minister and Interior Minister Silvan Shalom, a man who does not support a two-state solution, to be responsible for negotiations with the Palestinians (should they resume down the road).
• He appointed HaBayit HaYehudi’s Ayelet Shaked as Justice Minister. Less than one year ago, Shaked proclaimed in a Facebook post that “the entire Palestinian people is the enemy… including its elderly and its women, its cities and its villages, its property and its infrastructure.”
• His newly reappointed Defense Minister Moshe Ya’alon launched a three-month trial program that would have segregated buses for Israelis and Palestinians in the West Bank. Netanyahu nixed it after one-day, deciding ultimately that it was “unacceptable.”

But words matter, and how Bibi talks about the future matters. When he speaks to a delegation from the EU, his words are reported. Israelis now know that he is (still) committed to the peace process (again), at least on paper.

Wonder what he says to international delegations when the cameras are not rolling? This week, we might have gained some insight.

Wisconsin Governor and presumptive GOP presidential candidate Scott Walker visited Israel last week on a five-day “listening tour.” He released no itinerary and spoke to no press. But he did allow his trip to be livetweeted by one of his tour guides, Matt Brooks, Executive Director of the Republican Jewish Coalition.

Walker met with Zionist Union leader Isaac Herzog, Jewish Agency chairman Natan Sharansky, Habayit Hayehudi leader Naftali Bennett, Knesset Speaker Yuli Edelstein, National Infrastructure Minister Yuval Steinitz, Israel Defense Forces and former Deputy Chief of Staff Uzi Dayan, U.S. Ambassador Dan Shapiro and of course Prime Minister Benyamin Netanyahu. Peter Beinart astutely points out that Walker, despite going on this educational trip to Israel, never met with any Palestinians (Israeli citizens or otherwise).

What that means is that Walker got a very Jewish Israeli side of the conflict. That’s fine — he is entitled to speak with whoever he wants. And likewise, he is not required to meet with anybody he doesn’t want to speak with.

But here’s where we get some insight into what Netanyahu and his allies are likely saying behind closed doors. Walker came home last week and paid a visit to Sean Hannity. When the subject of his trip to Israel came up, Walker’s comment on the two-state solution was that, “it’s not the time for that now.” He declared that Israel would “need defensible and secure borders and they’re a long way off from having that happen.” He continued: “We were looking there and you could see [from] a helicopter up in the air you could see how close the threats were from Hezbollah, the Islamic State, down to the problems in Gaza.”

Walker’s fresh perspective on the two-state solution is not exactly nuanced. The fact that Israel needs “defensible and secure borders” could realistically be an argument in favor of a two-state solution. While some argue that the settlements act as a safety net, functioning like a “bulletproof vest for Israel” (that’s according to Silvan Shalom, Israel’s new point person or Palestinian negotiations), they also keep Israel from having a true border, which can then be fully defended and secured.

While talking about the two-state solution, Walker also brings Hezbollah and the Islamic State into the mix, with a vague mention to “the problems in Gaza.” Maybe Walker believes that a two-state solution will be more viable once we see a major shift toward stability and peace in the Middle East. If that is the case, then “long way off” should be taken quite seriously.

Walker pontificating on the future of Israel and the Middle East, however, is not really the point. The point is that Walker just went on a listening tour to Israel and while there, he met behind closed doors with top Israeli officials, including Prime Minister Netanyahu. And the first real comment Walker made following his trip was to say that the two-state solution is not viable, at least for the foreseeable future.

Did he hear from these top Israeli leaders how much they yearn to find a way toward a two-state solution, and then return home and and offer Hannity a completely different take? Maybe. But probably not.

Follow me on Twitter @jlemonsk.

From left front: Falah Mustafa Bakir, Qubad Talabani, and President Masoud Barzani meet with President Barack Obama and Vice President Joe Biden (third and fourth from right front) in the White House, May 5, 2015.

After a perilous roller coaster ride in 2014, the question of independence for the Kurdistan Region moves back to the front burner.

With the Islamic State in Iraq and Syria’s (ISIS) latest victory in Ramadi, contentions its rapid advances had stalled must be revisited. In the wake of the visit to Washington by Kurdistan Regional Government’s (KRG) president, Masoud Barzani, the question of KRG priorities and strategies might once again be changing.

The Islamic State’s blitzkrieg into Mosul last summer, and the failure of the Iraqi Army to do anything but flee, created a new capital for the self-described caliphate.  It caused a humanitarian disaster for Yezidis, Christians and others. And it fomented an urgency among many in the Kurdistan Region of Iraq, who sensed that Baghdad could not defend the country, and so the Kurdistan Region (KR) would have to defend itself – independently.

ISIS’s pivot to Kurdistan later in the summer, threatening its capital, Erbil, was frightful and sobering. Even with the dedicated efforts of the Region’s militia (the peshmerga), the KRG and its people recognized it needed significant outside help from Europe, the United States and elsewhere to defend itself.

In September 2014, Haider al-Abadi became Iraq’s prime minister, replacing Nouri al-Maliki, in whom the KRG had no confidence. In December, Erbil and Baghdad reached an agreement that was supposed to resolve the struggle over oil exports and finances between Baghdad and Erbil. But it is not clear that the KRG believes Baghdad has lived up to its end of the agreement.

In May 2015, Barzani brought specific goals and a clear message to Washington. He spoke at the Atlantic Council and the Council on Foreign Relations (CFR). At each, he was pressed on the relevant issues:  does he believe he will get the necessary weapons that have been promised?  what is the status of Baghdad-Erbil relations?  What role do Iran and Turkey play in all this calculus? What is the status of the extra-constitutional extension of his term limits? And will – or when will — the Kurdistan Region make a formal move toward independence?

Barzani’s answers were clear. The Kurdistan Region is grateful, he emphasized, for the U.S. and allied air strikes against ISIS, and for humanitarian aid for the 1.5 million refugees. But, he continued, the peshmerga need the weapons that Western states have promised, in order to fight ISIS. Washington is debating whether to deliver the weapons directly, or continue to deliver them through Baghdad. Barzani said after his meetings at the White House, he was confident they would be received.

The defeat of ISIS is the first priority, Barzani clarified. Defending the Region but allowing ISIS to survive in Syria or other parts of Iraq would not be sufficient, he said, since they would remain a threat. The defeat of ISIS, Barzani explained, is a necessary step before the inevitable task ahead. The Kurdistan Region needs and is entitled to self-governance. After the defeat of ISIS, it will hold a referendum for the people to decide whether to voluntarily remain part of Iraq.  On May 6, Barzani elaborated:

“Right now our country is in a fight against ISIS. The fight is not over. But the – that’s why the issue of referendum has been delayed. Of course, the referendum will take place. The first step for that has taken place, when the parliament in Kurdistan approved the establishment of the Commission for Elections and for Referendum. That was the first step. It will take place when the security situation is better, when the fight against ISIS is over. And of course, the people of Kurdistan have to be given the opportunity to exercise their right to self-determination for them to tell us and to tell the rest of the world what do they want, what’s their dream, what’s their aspirations.”

Barzani repeated this plan two days later:

“Of course, right now, the priority for all of us is fighting ISIS, to continue to push them out and away from our areas. But the process for the referendum to take place for the people of Kurdistan to determine their future and for the people of Kurdistan to exercise the right to self-determination is a process that has happened.  It will not stop and we will not step back on that process. We are determined, and we insist on continuing the path.”

What does the KRG need for independence?

The KRG and the Kurdistan Region need what any new or existing country needs: self-identity, security, an economy and international recognition. None of these is without complications.

Self-identity the Kurds have, but with some qualifications. The Kurds themselves have a clear awareness of their history and geography. They were promised, and then denied, their own state after World War I. Since the 1991 Gulf War, and especially since 2003, they have governed themselves with considerable autonomy, some material success, and efforts toward democracy. But most of the Middle East’s 30-35 million Kurds live outside the Kurdistan Region of Iraq, in neighboring Turkey, Iran, and Syria. Assyrians in Iraq, even before the rise and expansion of ISIS, had demands for their own autonomy, including in “disputed territories” controlled by the KRG.

Security is a more difficult matter. The risk from ISIS persists. Western air strikes on ISIS have provided vital assistance. Risks of terrorist attacks from ISIS inspiration continue as well, as arrests this week and in recent months demonstrate.

More significant security concerns may be related to the question of international recognition. Most critically, the KRG can only move forward if it knows that it has the support of the United States, or Baghdad, or both. It must know how Turkey and Iran will react toward their own Kurdish areas, and toward the KR itself. The name of a new country may be challenged, as Greece challenged the newly independent “Macedonia” after the breakup of Yugoslavia. Ideally, there will need to be at least an informal arrangement with the Kurdish areas in Syria. At the Atlantic Council and CFR, Barzani emphasized that any process would have to be diplomatic and peaceful, but that a vote on independence was inevitable.

Peshmerga soldier battles the Islamic State, December 2014.

Finally, security and international recognition are essential for any newly-independent Kurdistan economy. The KRG will have to provide its own funding; this means exporting oil. Since the KR is landlocked, that means exports through Turkey or Iraq. The United States and others will need to permit such sales on the world market, and the KRG will need legitimate buyers.

The new government will also need local and international legitimacy. After the celebration, the citizens’ demands will include real democracy.  The Barzani and Talabani families have done much in setting the KRG in the right direction, and in continuing to pledge a democratic future.  They will be challenged to sustain and improve their respectable treatment of religious minorities; to balance internal security concerns with protections for ethnic minorities; to minimize corruption; to resolve finance, oil, border, security questions within transparent rule of law, to develop a rich civil society, free and fair elections, and capable political parties, and to nurture a political environment of freedom of speech and freedom of the press in law and in fact.  This was a difficult list for Central and Eastern Europe in the 1990s; it may prove Herculean amidst the challenges of the Middle East.

Change of Plans?

A resurgence of the Islamic State, though, might force the KRG to reprioritize its “defeat Daesh, then vote on independence” strategy. Erbil may rely on good relations with the current Iraqi prime minister, but can it rely on the next one? Will Baghdad be able to coordinate support from Shiite militias, Sunni tribes, the Iraqi Army, and Western air strikes? Will Baghdad devote more resources to protecting Karbala and Najaf, at the expense of Sunni or Kurdish areas?  If Baghdad cannot protect major cities like Mosul and Ramadi from ISIS – will the Kurds decide they are better off alone?

Barzani laid out his priorities (without a specific timeline): defeat ISIS, then a referendum.  There is no evidence so far that the Obama administration is ready to give up the Bush/Obama commitment to a single, unified, peaceful, democratic Iraq.  But last summer the facts on the ground changed quickly and frequently. The question now will not be how vigilant are Erbil, Washington, and others, but how agile.

Photo 1:  WhiteHouse.gov, https://www.flickr.com/photos/whitehouse/17384259745/

Photo 2: Voice of America, http://gdb.voanews.com/80D2A2EC-6AE0-47ED-ADC4-381FC85F54D2_mw1024_s_n.jpg

Road to South Ossetia’s capital, Tskhinvali, courtesy Nir Nussbaum/Flickr

Just over two months ago, newspapers and other media outlets provided substantial coverage of Russia’s activities in Crimea, more specifically the “celebration” marking one year since Russia’s annexation of the region. Someone in the Kremlin perhaps saw an opportunity to take advantage of the media hubbub: That same day, March 18, Russia also effectively grew by about 50,000 people and 3,900 sq. km.

This sudden growth spurt comes as a result of a Treaty on Alliance and Integration signed by Russia and South Ossetia. “A joint defense and security zone will be created between our two countries, our customs agencies will be integrated, and border crossings for our citizens will become open,” Vladimir Putin said.

The EU, unsurprisingly, did not see it that way. A statement issued by Federica Mogherini, High Representative of the EU for Foreign Affairs and Security Policy, noted:

Like previous agreements signed between the Russian Federation and the two Georgian breakaway regions of Abkhazia and South Ossetia, this “treaty” – which includes references to a transfer of powers in some areas – clearly violates Georgia’s sovereignty and territorial integrity, principles of international law and the international commitments taken by the Russian Federation, including the 12 August 2008 Agreement and its Implementing Measures of 8 September 2008 and has no legal standing.

One commentator wondered whether the agreement was political homework for South Ossetia’s politicians, set by the Kremlin. There was disagreement among those in parliament; RFE/RL reported on dissent in the ranks over the degree of cooperation expected by Russia, just one week before the treaty was signed. But whoever gained top marks from the Kremlin would likely succeed in future political endeavors, a tempting carrot to dangle.

Was this treaty entered into willingly? There’s a short summary of the history of South Ossetia over at FPRI. Given many South Ossetian’s misgivings about Georgia, the biggest benefit in choosing Russia as a protector is clearly security: The 2008 conflict demonstrated Russia’s might in the region. However, as Larisa Sotieva noted, “Albeit rarely, some have even been heard to question what difference it would make – to lose ones’ identity as a nation to Georgia or to the vastness of Russia?” When you believe yourself to be between a rock and a hard place, which do you choose?

Georgia too is feeling the repercussions, and in such a way that should concern Western leaders. Although it issued a nicely-worded statement on South Ossetia, the EU has not delivered tangible benefits (such as visa-free travel to EU states) for Georgians. Ghia Nodia, a political scientist at a Georgian University warns that “Putin looks like a strong guy who’s getting his way, so people think, what exactly are the benefits from Europe? Maybe it’s silly to resist Russia so much.”

While the events of March 2015 may not have registered on the global radar, it seems that calling them a “blip,” an anomaly, is misguided. But getting drawn into another conflict over a territory that seems to have sealed its own fate with open eyes is also not a path many wish to go down.

Demonstrators march in Sao Paulo against corruption and the government of president Dilma Rousseff. Photograph: Bosco Martin/EPA Brazilian president Dilma Rousseff’s Workers Party is on the defensive as the Petrobras case threatens to expose political corruption. Photograph: Jonathan Ernst/Bloomberg State-controlled oil giant Petrobras has racked up the corporate world’s biggest debt – estimated at around €137 billion by Moody’s. Photograph: Sergio Moraes/Reuters

The concept of the fair market and protection for consumers is based on the idea that inefficient and corrupt practices by large private companies and wayward government officials increases the cost to the consumers and the public. When the construction of a facility meant to benefit the public goes overbudget, the public ends up bearing most of the burden. The companies involved may also lose investment. Competitors, meanwhile, do not to benefit from a market fixed against their products or services, and the company that might have been able to do the job right in the first place may lose business or go bankrupt if unable to compete in a fair market. Consumer protection agencies, government-run officials, and ombudsmen defend the public’s interest, not to mention the interests of the consumer, in challenging corrupt practices in order to balance out the market and actors within it.

The Economist recently published an article on how necessary compliance measures have become such a large industry that the benefit of the enforcement action may cost the affected parties more than the offense itself. The author’s recommendations on how to streamline enforcement is rooted in a sound argument, but the example used, namely the fine given to the German company Siemens  for handing out bribes in emerging markets, should be discussed in further detail.

Often companies investing in foreign countries are not wholly limited their home country’s laws, in this case Germany, as they are subject to the laws of that jurisdiction. In some emerging economies, it is well known by local industry and foreign investors that some investment is limited by corruption. So, in order to do business in many emerging economies, companies like Siemens bribed local officials so as to crack into those growing markets. While entirely illegal in the EU and enforced by German officials, in some countries the lack of enforcement and acknowledgement of consumer protection goals leaves those who wish to play fair on the losing end of their investment.

Brazil is one of the best examples of an emerging market that has been trying to change the way business is conducted. The clearest example of this can be found in the country’s ongoing Petrobras scandal, which may even bring down the government because Brazilians are openly refusing to accept companies, not to mention a government, that wants to keep corrupt practices alive. It involves several high-ranking oil company officials, as well as other large Brazilian companies and the ruling PT party, and it illustrates how corruption and a complete lack of consideration for the public’s interests has driven an entire society into a downward economic spiral. (A detailed account in English can be read here.)

Brazilians were livid when they found out that government officials and kickbacks to Petrobras executives had raised the cost of national projects several times over. Protests broke out when investigators showed that the members of the governing PT party were profiting from the same scheme. The costs of living for the average Brazilian heavily outstripped their real wages and little action and investments were going towards improving this situation. With the revelations of corruption, Brazil’s legal community has gone not only after Petrobras, but also the other companies involved in the scandal, the country’s ruling party, and possibly the president herself.

Brazil’s burgeoning judicial independence will play a huge role in this case as resolving the Petrobas scandal is a matter of overturning a tradition of corruption in the country so that consumer protection and a respect for the public becomes a principle legal standard. Hopefully, once the culture is changed and consumer protection and public trust is achieved, the issues of an overbearing compliance industry can be addressed.

63 percent of Brazilians favor the impeachment of Brazilian President Dilma Rousseff. (Photo by Eraldo Peres/AP)

The calls for the impeachment of Brazilian President Dilma Rousseff may not be fading away anytime soon, after allegations by a convicted currency dealer recently surfaced as part of a congressional commission. The commission is looking into alleged corruption at Petrobras, Brazil’s state-run oil company, which transpired during the ten-year period Dilma served as chairwoman of the national oil company. Brazilian prosecutors accuse Petrobras executives and two dozen engineering firms of inflating their service contracts as much as 6.2 billion reais ($2.1 billion) so the excess funds could be transferred to personal bank accounts and also to political parties. Thirty-four politicians in office are also being investigated by the Supreme Court in Brasilia on suspicion of receiving bribes.

The currency dealer, Alberto Youssef, alleges Dilma and former President Luiz Inácio Lula da Silva knew about the alleged scheme, “It is my understanding that [they] knew everything.” Last month, Youssef was convicted of money laundering and sentenced to three years in prison — a reduced sentence given his cooperation with investigators. Youssef came under investigation after prosecutors uncovered evidence he had given a luxury automobile to a Petrobras executive. Youssef has also implicated the Brazilian unit of Toshiba, the Japanese conglomerate, of paying bribes to win contracts with Petrobras.

Nestor Cerveró, a former Petrobras director, has also been arrested and charged with money laundering and bribery.  Last week, Cerveró declined to answer prosecutor’s question while denying all charges against him.

Will these latest allegations by a convicted money launderer be enough to topple the President?  The majority of Brazilians are likely to believe the allegations by Youssef, as close to 70 percent hold  President Rousseff responsible for the corruption. Recent polls show 63 percent of respondents favor impeaching the president, and 65 percent rating her government’s performance as negative.  In March, the corruption scandal at Petrobras brought out the largest demonstrations since those which helped topple the military dictatorship in 1985.

Earlier attempts by an opposition party in March to put forward a petition to investigate President Rousseff resulted in being overturned by the Supreme Court due to “technical errors.” The opposition is also looking at allegations Dilma violated a fiscal responsibility law to splurge on her reelection campaign. Many analysts believe the likelihood of Dilma being impeached are low, as Brazilian law states impeachment can only occur if the alleged offense takes place during the current term of presidential office.

As always, many political events are being driven by economic considerations. Brazil’s Finance Minister Joaquim Levy is doing his best to avoid a credit downgrade through austerity programs intended to reduce the government deficit by increasing revenues and cutting spending. Yet Levy is facing growing opposition from a Congress who believe his programs will fail to stem the recession and will only harm the population. Levy’s attempts at trying to rein in one of the world’s most generous pension systems, which spends over 10 percent of GDP on retirees, suffered a major setback last Wednesday, after the lower house of Congress passed an amendment to increase pension outlays by 40 billion reais ($13.34 billion) within ten years. The amendment is yet to clear the Senate and a potential veto by Dilma, who saw lawmakers from allied parties and from her own Workers’ Party vote for the amendment.

Public anger has also been fueled by an outbreak of dengue fever — some 229 have been killed by the mosquito-borne virus so far this year — an increase of 45 percent from this time last year.  Over 750,000 cases of the virus have been reported and are serving to remind Brazilians of the sad state of their health care system, which has been highlighted in recent polls as the country’s biggest problem. Last June, in a nationwide poll by Datafolha, over 87 percent of those polled were unhappy with the health care system.

With many Brazilians still struggling financially because of the economic downturn and angry about the poor state of their health care, the calls for impeachment could grow louder should the new finance minister not be able to quickly turn the economy around. If the direct link of Dilma to the corruption alleged by Youssef is firmly planted in the minds of Brazilians, and former President Lula, himself implicated by Youssef, fails to back Dilma, the opposition and the masses could again turn to the streets in protest, and force Dilma to make a graceful exit.  Yet before taking to the streets with calls for impeachment, Brazilians would do well to ponder the bagunça (mess) this would create afterwards, and carefully consider the alternatives.

Photo Credit: CH’7K via Flickr

Dr. Philippa “Pippa” Malmgren is the Founder of DRPM Group, a firm based in London that researches risks that are not easily quantified, namely politics, policy, and geopolitics. She also founded H Robotics, a manufacturing firm in the U.K. A graduate of the London School of Economics, Dr. Malmgren is a member of the Council on Foreign Relations, Chatham House, and the Institute for International Strategic Security. She has written for Wired, The International Economy, and Monocle.

Dr. Malmgren served as an adviser on international economic issues for George W. Bush during his first presidential campaign. She subsequently joined the Bush White House, where she was Special Assistant to the President for Economic Policy on the National Economic Council and a member of the President’s Working Groups on Financial Markets and Corporate Governance. She also served as a member of the White House Office of the Homeland Defense Working Group on Terrorism Risks to the Economy.

Paul Nash of the Foreign Policy Association spoke with Dr. Malmgren about her new book Signals: The Breakdown of the Social Contract and the Rise of Geopolitics, which was published recently in the U.K. by Grosvenor House Publishing Limited.

Q: In your new book, you say that economic signals are everywhere, from magazine covers to grocery stores to military events. What exactly do you mean by “signals”?

PM: Too often we think about economic data to the exclusion of other important information that matters. There are lots of sources of information that signal what is happening in the world economy. For example, military events like the recent near misses between American spy planes and the fighter jets of China and Russia are an important signal that the peace dividend is eroding and a new conflict premium is becoming apparent. That has economic and geopolitical implications. I find that magazine covers and artwork are good signals, which can reveal important things about the state of the world economy. Record prices for artwork and hard assets reveal a loss of faith in savings. This is not surprising given that governments now penalize savers with negative returns. One problem with data points is that they are backward looking and only serve to confirm the past. If you want to prepare for the future, you have to widen the “signals,” or sources of telling information you consider, well beyond numbers.

Q: How is one able to recognize these signals and know what they mean, or how to interpret them?

PM: No one can predict the future. When I served in the White House, everybody assumed we had a crystal ball. But I really looked and there isn’t one there. The best you can do is to raise your level of awareness and preparedness. For example, when I saw that food prices were rising in Ukraine for three years, I assumed this would destabilize that country. Sure enough, Ukraine has descended into a difficult mess. Similarly, the rising bread price that preceded the outbreak of the Arab Spring was an important signal. Global food prices at that time were steady or falling.

But people don’t care about aggregate food prices. They care a lot when the price of their core food staples starts to rise. There’s a pretty strong correlation between rising prices for core foodstuffs and social unrest, and yet few people really look at this, either in markets or in foreign policy circles. I mean who follows the price of onions in India or Pork in China? Yet if these prices rise, it is sometimes enough to threaten social stability.

Q: Can signals be misread? And how do you make allowances for those signals you may have missed altogether?

PM: Sure, signals can be misread. The key thing is that everybody will (and should) interpret signals differently. They will (and should) also act on them differently. There is no one right answer for all of us. It is the diversity of opinion and capability that makes the economy strong. After all, it is a marketplace with buyers and sellers of every signal and every idea. Some will be right. Some will be wrong. And yet humans love to approach things in a binary way, asking questions like: Will the market go up or down, should I be long or short, will a country like China or Russia become a more open or a more closed society? But the reality is that some things rise in a falling market, some countries can become more open on some aspects while simultaneously becoming more closed on others. The answer is to be more focused on differences of opinion and dissent, and wary of assumed outcomes. What John Stuart Mill observed in his day still holds true: “That so few now dare to be eccentric, marks the chief danger of the time and all good things which exist are the fruits of originality.”

Q: Can signals replace the complex mathematical models that governments or corporations use to inform their decisions?

PM: John F. Kennedy hired Robert McNamara to be the secretary of defense because he thought that his heavy use of math and data at Ford (in logistics and supply chain management) could make government more efficient. In some ways, the management of data has improved the workings of government. But when it came to a mathematical analysis of what was happening in the war in Vietnam, that approach ended in tears and a lot of spilled blood and treasure. McNamara wrote: “We were wrong, terribly wrong. We owe it to future generations to explain why.” The point is that not everything that matters can be measured, as Einstein reminded us. Many things that matter need to be weighed rather than measured. The level of human pain is something we can weigh against other factors, but it is remarkably hard to measure.

Q: Can signals be integrated with Big Data? 

PM: Math and Big Data have their place. But there are other signals that ought not to be ignored just because they can’t be easily quantified. I love the quote by Daniel Yankelovich, the founder of modern polling, who said: “The first step is to measure whatever can be easily measured. This is OK as far as it goes. The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can’t be measured easily really isn’t important. This is blindness. The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide.”

So keep your eyes open for non-data signals. The willingness of a person to commit suicide over a public policy issue, for example, is something “big data” might find hard to reveal. Yet when a young vegetable seller in Tunisia or a Greek worker in Athens or a Buddhist priest in Tibet do this, it reveals a broader set of social pressures. 

Q: How can signals help governments make better public policy choices?

PM: The first thing is to understand that there is always a social contract between the government and the citizens. Citizens abide by the law and pay their taxes, and in exchange they expect the government to deliver certain outcomes, from reasonably frequent trash collection to a military.

These days, the social contract is under severe pressure because governments everywhere are too broke to fulfill the promises they have made. So they deliver less and tax more. In response, citizens who have faith and trust in a ballot box tend to use it, and those who don’t head to the streets. So it is important for government leaders to be alert to the limits of pain.

For example, in the eurozone there may well be a government commitment to the euro project, but if people begin to believe that the price of unification is that everyone from age 16 upward will never work, the public may decide the price is too high because it profoundly breaks the social contract. We may assume that Russia is [broken], and yet this does not preclude them from bringing nuclear weapons back onto the global landscape; in fact, being broke may encourage this outcome. Failure to adopt a tough stance might well break the social contract in Russia. We could make better public policy choices by being more alert to signals about the condition of the social contract.

Q: You say that innovation can alleviate wealth inequality in the United States and around the world. How does that happen?

PM: In my view, redistribution of income won’t work. The debt problem is simply too big. You could tax Americans 100 percent of their income – all of them – and still be left with a multiyear hole. So efforts to consolidate debt and spending (which have been remarkably limited so far) need to be accompanied by more growth. Happily this is occurring. For example, I see many signals that manufacturing is leaving China and Asia and re-shoring to the U.S. Midwest and Mexico. Wages in China are rising too high and too fast. Buyers care more about quality now and prefer more reliable products. So the innovations in additive manufacturing and 3D printing in the U.S., combined with China’s loss of relative competitiveness, is now challenging the Politburo. If they cannot make people rich before they get old, then they’ll face dissent. The government must support innovation of China’s business model as they move away from cheap exports to higher value-added domestic consumption.

People think of innovation far too narrowly. It is not just about some new iPhone. It is also about the ability of the citizens to redefine themselves and the work they do. It is about new business models. It is about redefining the social contract.

Q: What other signals are you seeing today in the global economy?

PM: I see signals that inflation is coming back onto the global economic landscape. It’s pretty unsurprising given that every major central bank in the world, including China’s, is doing its level best to create it. That’s the whole point of super low interest rates and quantitative easing. But even low-level inflation brings serious social problems. I think emerging markets are rendered increasingly unstable by cost pressures their citizens cannot easily manage. In the industrialized world, the rise of inflationary pressures means there is an ever deeper split between the rich, who see asset prices rise (the normal consequence of provoked inflation), and the poor who find their costs, like rent, go up (which is also a normal consequence of inflation).

This admittedly very mild inflation pressure is already enough to have enraged the leadership in China, Russia, and other emerging markets. Their view is that the U.S. and the West seek to default on them through inflation. This means much more than making a trading loss on their holdings of U.S. Treasuries. They think the U.S. is playing Russian roulette with price stability. A little higher inflation for emerging markets gives oxygen to social unrest. So they see it as the Goldfinger Problem: the U.S. defaulted through inflation in order to pay for the American Revolution; it inflated its way out of the Civil War debt this way; it “paid for” Vietnam and the Great Society Program through inflation, too. As Goldfinger says to James Bond: “Once is happenstance. Twice is coincidence. Three times is enemy action.” They are now inclined to reach for assets more aggressively in order to protect their populations from the consequences of price instability. The Chinese become more aggressive in the South China Sea because they can’t feed themselves and that’s where you find 10 percent of the world’s fish supply in a world that has record high protein prices. This draws the U.S. into the South China Sea more aggressively, too.

As a result of all this, we are seeing near misses between U.S. spy planes and Chinese fighter jets, and both countries agreeing to the establishment of a hotline between Beijing and Washington in case these planes come within less than a coat of paint of each other. The U.S. has recently announced its intention to move more military assets into the areas where China is building infrastructure in the South China Sea. It’s not hard to imagine uncomfortable results from all this.

Q: Can you talk a little more about what you call “the breakdown of the social contract and the rise of geopolitics”?

PM: I think there is a vice bearing down on every nation, every company, every family and every individual. People are caught between, on the one hand, the debt problem, which brings low growth, no income, and a loss of faith in the future, and inflation on the other hand, which raises the cost of living (even if only by a little bit). The combined pressure gives rise to a powerful political question: Why is the wealth in my society going to someone else and not to me? This question underpins social protests from the Arab Spring to election discussions in the U.S. Domestically, the inability of the government to meet everybody’s needs due to financial shortfalls means more social pressure as different parts of society jockey for the money.

Internationally, nations respond to a breakdown of the social contract by becoming more aggressive in seeking to protect their citizens from adverse outcomes.

Q: You argue that economic signals are now eliciting more than economic policy responses – that they’re also provoking military events.

PM: Yes, I think we are seeing a new twist on Clausewitz. He said, “War is a continuation of politics by other means.”

Today, I think, we are seeing military confrontation as a continuation of monetary policy by other means. The Federal Reserve and U.S. authorities will scoff at this notion. They say that U.S. monetary policy and quantitative easing have no spillover effects. This leaves emerging markets incredulous and outraged. Even if there were any such spillovers, the U.S. argues that emerging markets should just raise their interest rates and let their currencies appreciate.

Emerging markets are even more outraged and incredulous at the idea that they should have to take even more pain when the whole slowdown happened due to spending excesses and lax policy in the West. Their response is to gird for inflation by reaching for hard assets, from food to infrastructure. This creates a kind of new Great Game situation in which China and Russia focus on physical footholds wherever there are resources, from the Arctic to the Baltic, and from the Atlantic to the Pacific.

Q: What do you say to politicians or policymakers who tell you they “don’t do economics”?

PM: I say they had better “do economics” whether they like it or not, or else economics will “undo” them. There is no way to check out of the world economy. It touches our lives every day in multiple ways.

Here is an interesting example of the interface between economics and geopolitics. Russia’s prime minister recently said that if the West kicks Russia out of SWIFT, the “Russian response – economically and otherwise – will know no limits.” The defense community asks, “What is SWIFT?” because they don’t know anything about the international banking and money clearing system that it represents.The market crowd assumes Medvedev’s “no limits” language means he is threatening to announce that Russia has more gold than America and is therefore more creditworthy. But what Russia probably means is that it will put nuclear weapons and capabilities into places like Kaliningrad and Ukraine and establish a military presence in places like the Mediterranean and the Arctic. The old nuclear weapons treaties will no longer hold for Russia. Add to this Russia’s efforts to test the West by engaging in air and sea incursions, from Japan to Scandinavia, and from Britain to California. Nobody knows which planes or vessels are loaded.

So the West has to respond as if it is a nuclear threat, even if it isn’t. You might say Russia is pulling a “Ronald Reagan trick” on the U.S. Where Reagan forced them to spend (on defense) beyond their means, Russia is now forcing the U.S. and the West to do the same at the very moment there are fewer financial resources to support this. Economics and geopolitics are deeply intertwined.

Q: Is it fair to say that as economic factors are changing the balance of power between the state and the citizen, they are also causing a realignment of international political interests?

PM: I think they are. Consider this. The postwar international economic system is built on certain basic ideas. It is a U.S. dollar-based system of free trade and (relatively) free markets, supported by certain rules of the game and certain institutions like the IMF and the World Bank. Ever since the financial crisis, the U.S. and the West with Japan have focused on repairing that system. China, Russia, and others have focused on replacing it. Why? Because they feel the old system is no longer serving their interests. Meanwhile, those in the old system are surprised that anybody feels their interests are not being served. Those who want a new system are surprised that anybody thinks that the old system is still worth repairing.

This has serious practical consequences. For example, in the old days China recycled its savings into the U.S. debt market and thereby helped to drive down interest rates and drive up the size of houses and mortgages in the U.S., which led to more purchases of stuff from China and more jobs and savings for them. It was a “perfect circle.” It permitted the U.S. (and the West) to live beyond its means, and China to grow faster than normal. This perfect circle cracked under the burden of debt. Now China says: forget recycling to the U.S. – let’s put our money directly into global infrastructure that will help us generate more GDP and potentially shore up our influence over the global supply chain. One new institution they have created to do this is the Asian Infrastructure Investment Bank. The U.S. was shocked and angry when Britain decided to join the new entity. Now some 54 countries have joined. The U.S. will not have a seat at that table. All this constitutes a profound shift in the balance of power within the system and a substantial change of the system itself.

Q: Are some states – countries like Russia and China – beginning to come together in ways that pose a real threat to the supremacy of the United States?

PM: I think the U.S. remains the main superpower in the world today. It is winning back some of its lost competitiveness, while emerging markets become less productive and less competitive. I never bought into the “U.S. is toast and China is the future” story. Both countries have their strengths and weaknesses. Both are internationalizing. Both are becoming more sophisticated economies. But they are also more competitive and more confrontational with each other. The prospects for difficult conflicts are growing. It is no longer true that the alignment of their interests outweighs whatever misaligned interests may exist.

People worry about the demise of the U.S. I have the opposite worry. I am concerned about a billion Chinese workers who were expecting a better future. We cannot expect to say: I am terribly sorry but you lost your competitiveness – come back when you have a new business model. They may not go home quietly. And why should they? The promise of a better life is real. The question is: How should they get there?

Also, what does “supremacy” mean in a world where technology has transformed the battlefield. This is a world in which wars are fought in cyberspace and in space with high altitude satellites. This is a world in which the commercial competition for ownership of commodities and industrial intelligence may be more worth fighting for than wars with boots on the ground.

China and Russia are certainly compelling former U.S. allies to think about which side they are on. Countries like Australia, Singapore, Saudi Arabia and even Britain are tied to the American defense stance but increasingly dependent on China’s economy. As the U.S. and China become more confrontational, countries will feel the pressure to choose sides. We see the same thing in Germany. Germany sees that its economic future lies to the east now that growth in the eurozone is impaired. Germany depends on Russia for energy. The U.S. asked Germany to join the famous Five Eyes spying program in an attempt to strengthen their relationship.

Russia has offered Greece cash to leave the euro, the European Union, and NATO, and to join the new Eurasian Economic Union. Greece is split between a U.S.-based defense policy and a need for Russian cash.

Saudi Arabia is a U.S. defense ally. But the U.S. supports opening up to Iran and permitting them to have some kind of nuclear capability. The U.S. supported the rebels in the Arab Spring, which is obviously not helpful from the Saudi royal family’s perspective. Meanwhile, China has become a bigger buyer of its oil than the U.S. So Saudi Arabia is drifting out of the U.S. relationship and into a new one with China.

But the flip side is that manufacturing is moving back to the U.S. from China. The Chinese are becoming less competitive very rapidly due to higher costs and higher wages. The idea that China is on a linear trajectory in which it displaces the U.S. is not quite right either.

Q: Do you think the high levels of U.S. government debt held by foreigners should concern Americans?

PM: Americans, generally speaking, have no idea they owe money to foreigners. I mean nobody they know has actually taken out a loan from a Chinese bank, right? Plus, Americans tend to think there are U.S. dollars and then there is Monopoly money. Why would anyone prefer Monopoly money? It’s hard to fix a problem you don’t know you have.

Also, almost every other government has an overwhelming debt problem, including China. Relatively, the U.S. has more capacity to earn and to grow than many other less flexible and less dynamic economies. So Americans are perhaps right to be less concerned than some others about their debt problems. This does not mean the U.S. gets a free pass. But it does mean the market does not punish the U.S. as hard as some might expect.

Q: Since the end of the Cold War, there’s been a general sense that the world is now a safer place because the threat of nuclear war between two rival superpowers has greatly subsided. Do you think that’s actually the case?

PM: I think that nuclear weapons are definitely back on the landscape. Russia is bringing nuclear weapons back to the negotiating table. The interesting thing is that the Western defense community wonders why. I mean Russia is supposed to be small and weak and broke, right? The problem is that this may be exactly why a nation falls back on hard power. I follow the various occasional news stories about their reintroduction. For example, Russia has threatened Denmark with nuclear weapons. General Breedlove, the head of NATO, says Russia’s rhetoric and actions regarding nuclear capability “give pause to NATO’s decision-making.”

I think we are also witnessing the nuclearization of the Middle East. If Iran and Israel are nuclear weapons powers, then everybody else wants to be too. Saudi Arabia will be working with both Russia and China, who are keen to export nuclear capability from a revenue perspective and keen to become more deeply tied into the region from a strategic perspective. Turkey and Egypt will follow suit.

Lastly, we should pay more attention to hypersonic technology. Nuclear weapons now may be just as destructive as they ever were. But the ability to deliver them at speed has been enhanced by modern technology. The Cuban Missile Crisis lasted ten days. These days, nuclear weapons can be delivered in minutes and seconds. Time is no longer a luxury. We need to think about managing the relationships and the dialogue well in advance of something really confrontational. As I understand it, we no longer have a hotline between Moscow and Washington. Maybe we should think about that.

Q: What does the world need in order to achieve greater geopolitical stability and security?

PM: We have to think seriously about whether the current infrastructure and rules of the game really serve the national interests of the participants. If they don’t, the system will inevitably erode. We should try to align national interests. Right now more and more countries are getting caught in the crossfire between the U.S. and China, and the U.S. and Russia. China asks Australia, Singapore, and the U.K. “Which side are you on?” In each, the economy is tied to China but the defense policy is tied to the U.S. As the U.S. and China go nose-to-nose in space and on the high seas, these countries will increasingly need to either choose sides or act as interlocutors who can talk both the U.S. and China out of doing anything stupid.

We also have to understand that weakened budgets lead to weakened borders. For example, Greece has thrown open all the detention centers for illegal immigrants because they have no cash. Now the refugee problems in the Mediterranean are exploding. The Sykes Picot Treaty borders of the Middle East are disintegrating and further contributing to this. Weak economies are also encouraging an exodus of talent, which seeks to traverse borders in search of better opportunities.

At the heart of all these forces lies economics. Stronger economics would improve geopolitics.

Relief efforts continue in Nepal. Photo Credit: Rajan Shrestha via Wikimedia Commons

The Crusades: A Complete History
By Jonathan Phillips
History Today

The crusades may not be recent history, but the number of times they’ve been appropriated by politicians in the past few years you’d think they might be. Phillips provides a fairly comprehensive history of these wars and the logic behind them.

Nepal’s Aid System is Broken. So These Lifesavers Hacked It.
By Abe Streep
Wired

As governments and international NGOs struggled to provide aid in the aftermath of the devastating earthquake in Nepal, a number of ad hoc, unregistered and unlicensed efforts have sprung up to fill the void these larger organizations have left. Wired looks at one of them, which was borne out of an bed-and-breakfast called the Yellow House.

How PTSD Became a Problem Far Beyond the Battlefield
By Sebastian Junger
Vanity Fair

Junger, who has experience with PTSD on a personal level as well, explores the history of the disorder, its effects and why it’s so prevalent in Western societies. Ultimately, he notes, it boils down to making society feel more inclusive for soldiers who have left the perils of war to return home.

The Killing of Osama bin Laden
By Seymour M. Hersh
The London Review of Books

Love it or leave it, Hersh’s “alternative narrative” of the killing of Osama bin Laden at his compound in Abbottabad has sparked conversations the world over. Hersh’s account posits that bin Laden had been held by Pakistani officials for a number of years and tries to poke holes in the official narrative presented by the Obama administration. Agree with him or not, it’s worth a read to see what all the fuss is about.

Theorizing the Drone
By Grégoire Chamayou
Longreads

What does the rise of the drone mean for modern warfare? How does it, if it does at all, change the moral calculations in war? What even counts as a drone? These are just a few of the questions French philosopher Grégoire Chamayou tries to answer in these four chapters republished by Longreads from his book Theorizing the Drone.

Blogs:

Climate Change: A Generational Challenge by Elly Rostoum
Turkmenistan and Europe’s pipe dreams by Mark Varga
International Security: We’re Doing It Wrong by Oliver Barrett
Turkey Cracks Down on NGOs by Gary Sands
Countering the Sunni-Shia Divide by Ali G. Scotten

Over at FPA.org:

Great Decisions 2015 Spring Updates by Eugene Steinberg, Paul Mutter, Daniel R. Donovan, Hannah Gais, and Jordan Stutts

A Japan Ground Self-Defense Force member guides a Cobra anti-tank helicopter onto a forward aircraft refueling point at Yakima Training Center, Wash., Sept. 4. The exercise was part of Operation Rising Thunder, a combined operation between the Army and Japan designed to increase interoperability between the two nations. (U.S. Army photo by Sgt. Cody Quinn, 28th Public Affairs Detachment)

On July 1, 2014, the Japanese government, under Prime Minister Shinzo Abe, outlined a reinterpretation of its pacifist constitution. Put in place in the aftermath of World War II, Article 9 of the Japanese constitution has been the centerpiece of its post-war pacifist identity since 1947, and details the unequivocal renunciation of war, except in the case of self-defense, as a means to settle disputes with other states. It reads:

“Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.”

“In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.”

The ghosts of World War II still linger ominously over Japanese society. The dangers of imperial ambition and aggressive military expansion have been ingrained within each new generation. However, as Japan pushes into the 21st century, younger generations have lost the emotional connection to the memories of the war and the political philosophy that developed in its wake. They have become increasingly nationalistic, embracing the proud traditions of Japanese history and culture and in a way aspiring to reach that pinnacle once more. Prime Minister Abe has successfully tapped into this new wave of enthusiasm cascading over Japanese society, and it has become the driving force behind Japan’s march toward rediscovering its power and influence.

In the decades since the end of World War II, the U.S., recognizing the shifting interests within the geopolitical landscape of South East Asia, encouraged Japan to increase its defense posture – working over time to slowly move them toward military normalization.

Historically, Japan has resisted contributing to regional defense initiatives, choosing instead to rely more on the Treaty of Mutual Cooperation and Security, between the U.S. and itself (an agreement that guaranteed the U.S. would protect Japan from military aggression); however, this position began to shift in the 1990s following the rise in Chinese military power, and in the recent decade has caused Japan to alter course from its pacifist doctrine. Japan is not only witnessing the emergence of a more assertive China, which is looking to exert its dominance over the region, but also a belligerent and unpredictable North Korea that is experimenting with new and more advanced weapons systems (i.e., nuclear weapons, medium and long range ballistic missile).

Even though Japan’s pacifist constitution restricts its ability to maintain a standing military, its constitution allows for the creation of a self-defense force. While the acquisition of military hardware and the build up of troops began as a humble undertaking, it has since blossomed into a highly advanced and formidable military force.

Japan’s Maritime Self-Defense Force, arguably its most important “military” branch, consists of an amalgam of highly sophisticated naval weapon systems. The Soryu-class submarine is among the worlds most advanced non-nuclear attack submarines, it is able to displace 4,100 tons submerged, allowing it to achieve 20 knots under water and 13 knots on the surface. The Soryu-class is equipped with a full compliment of 20 type 89 high-speed homing torpedoes, as well as American-made anti-ship Harpoon missiles. The Soryu-class is also capable of utilizing advanced cruise missiles, which, should the need arise; will provide Japan a preemptive strike capability.

The Atago-class destroyer, as well as its predecessor the Kongo-class, offers the Japanese a versatile surface combat platform, capable of engaging multiple threat environments. The Atago-class destroyer is outfitted with the MK-45 lightweight artillery gun, two MK-141 missile launchers, that provide up to eight ship-to-ship missiles, and a MK-15 Phalanx Close-In-Weapon-System – capable of defending against anti-ship missiles, aircraft, and littoral warfare threats.

Japan’s naval capabilities have the potential to help stifle an increasingly aggressive Chinese military posture, as well as ensure the protection of its territorial sovereignty. The deployment of these naval weapon systems can profoundly complicate Chinese, or North Korean military calculations in the region, causing them to stop and consider the ramifications of pushing for the establishment of a hegemony in South East Asia, or even, in the case of North Korea, pursuing provocative military action against Japan.

Not to be out done, Japan’s Air Self-Defense Force is at the cutting edge of aviation technology. The “tip of the spear” in Japan’s air combat arsenal is the Mitsubishi F-15J – a homemade redesigned version of the American F-15 Eagle, this veteran fighter jet comes equipped with numerous air-to-air missiles, and has been in a perpetual state of evolution during its 30+ years of deployment – enjoying numerous retrofits and upgrades to its radar and electronic guidance systems.

While the F-15J is an excellent fighter aircraft, combat aviation technology has advanced beyond F-15Js current capabilities – Japan is already beginning to plan for its replacement. The Japanese, at one point, expressed interest in purchasing the Lockheed Martin F-22 Raptor, however, the U.S., for a variety of reasons, were not keen on selling it.

Japan is set to join the American Autonomic Logistics Global Sustainment Program (ALGS), which is an eight nation logistical partnership created to sustain the manufacturing and operation of the Lockheed Martin F-35 Lightning II, commonly referred to as the Joint Strike Fighter. In joining the ALGS, Japan has said that it is interested in manufacturing components for the F-35, which would mean relaxing its long established ban on the export of military hardware.

The potential inclusion of Japan in the ALGS is a major shift in Japan’s military posture, and represents a watershed moment in the transfer of military technology from the U.S. to Japan. If this agreement goes through, any doubts about the direction of Japan’s military normalization will be laid to rest. Japan possesses the third largest economy in the world, coupled with advanced manufacturing capabilities, and a massive population – Japan has the potential to reemerge as a major player on the global stage. Japanese recognize the threat environment in which it exists, and as Prime Minister Abe moves Japan toward military normalization, he has sent a clear signal to Japan’s neighbors that it will not acquiesce to a Chinese predetermined status quo and it will not tolerate military posturing from North Korea.

Over the years, China has been working toward developing the military capability that would allow it to establish an anti-access/area denial (A2-AD) zone in the western pacific (A2-AD is a strategy that focuses on preventing an enemy from conducting military operations in, near, or within a specific region). In the event that a military confrontation was to occur, the Chinese, utilizing A2-AD stratagem, want to neutralize U.S. power projection in the western pacific. This would limit the ability for the U.S. to respond to, for example, a military annexation of Taiwan, or one of the many territorial disputes currently playing out in the South China Sea. From a U.S. perspective, the emergence of a robust and formidable Japanese military will be indispensible in acting as a countermeasure to the Chinese implementing an effective A2-AD strategy.

There are many factors to consider when discussing Japan’s military normalization, however, none are more important than ensuring Sino-Japanese relations remain on an even keel. Sino-Japanese relations have a long and checkered past, mostly due to the fact that China, as well as the Korean Peninsula suffered tremendous hardship and cruelty under the yoke of Japanese imperialism. Japan’s push toward military normalization has the potential to awaken the deep seeded mistrust that has always plagued Sino-Japanese relations.

Prime Minister Abe and his Liberal Democratic Party are firmly in control of Japanese Parliament, and are unlikely to face any meaningful political challenge for several years. Recognizing this opportunity, Prime Minister Abe has taken the necessary steps to fundamentally alter the geopolitical outlook of Japan – the U.S. will play a critical role in ensuring that this shift in Japan’s military posture does not occur at a pace that would unwittingly escalate Sino-Japanese tensions. There is a delicate balancing act playing out, on the one hand the U.S. wants to bolster Japanese military capabilities, in the hopes of deterring Chinese military ambitions, but at the same time, the U.S. must maintain positive relations with Beijing – needless to say, the coming decades will require some deft diplomatic maneuvering to maintain regional stability.

If the U.S. is able to keep Japan on its course toward military normalization, without exacerbating tensions with Beijing, then the U.S., in Japan, will discover a robust and formidable partnership that can help maintain U.S. influence in the Western Pacific and South East Asia for the foreseeable future.

Mazrak camp in the tough mountainous scrublands of Yemen’s north-west border with Saudi Arabia is now home to more than 10,000 people displaced by the escalating war between the government and rebels from the Huthi clan.
Photo: Annasofie Flamand / IRIN / 201003230854400244

By Ali G. Scotten

As Gulf Cooperation Council (GCC) officials meet with President Obama at Camp David, their lobbying efforts are revolving around one question: In the event of a nuclear deal with Iran, what will the U.S. do to counter the Islamic Republic’s influence in the Middle East? The more important question, however — and one that Obama should ask them — is how they plan to stop the spread of sectarian warfare in the region.

The intensification of fighting along the Sunni-Shia divide should be of far greater concern than the challenge posed by Iran’s emergence from isolation. Sectarian hatred is drawing religious extremists from around the world to fight in Syria, Iraq and Yemen. The longer that violence continues along religious communal lines, the harder it will be to arrive at political solutions to each conflict, and the more battle training foreign insurgents will receive — experience that can be used to wreak havoc when they return home.

The transnational nature of the current sectarian conflict is largely a result of the way a number of GCC countries, led by Saudi Arabia, have attempted to counter Iran’s increasing influence in the region. For over a decade, Arab leaders have been warning Western governments of the Islamic Republic’s nefarious plan to establish a Shia empire across the Middle East — an argument based on the assumption that all Shias are sleeper agents, mindlessly awaiting orders from Iran’s Supreme Leader. The irony is that, in employing sectarian rhetoric to thwart Shia community efforts to address local grievances, these leaders have galvanized Sunni extremists, whose violence often serves to push Shias into Iran’s arms as a last resort.

Iraq and Yemen provide just two examples.

Following the U.S. overthrow of Saddam Hussein in 2003, Saudi Arabia and its allies feared that a new representative government in Baghdad would emerge as a Shia theocracy operating under Tehran’s thumb. This was despite the fact that the majority of Iraqi Shias align with the Najaf school of Shiism, which looks down on ayatollahs engaging in worldly politics, and that most Shias polled at the time didn’t see Iranian involvement in their political affairs as a positive development. However, anti-Shia rhetoric and funding from wealthy individuals in GCC countries — coupled with the U.S. de-Ba’athification program, which exacerbated Sunni fears of marginalization — drew Sunni militants to Iraq harboring the intent to spark a sectarian civil war. When the civil war erupted in 2006, Shia Iraqis had little recourse but to turn to Iranian-allied extremist groups for protection.

In Yemen, the Saudis have been bombarding Houthi rebels, whom they view to be Iranian proxies because of their Zaydi Shia faith. But Zaydis share more in common religiously with their northern Yemeni Sunni neighbors than they do with distant Iranian Shias; in fact, many Zaydis even consider themselves to be a distinct sect. As a result, until the past couple of decades, Yemen experienced relatively little in the way of sectarianism. The more assertive form of Zaydism that the Houthis follow, however, emerged in the early 1990s in response to the encroachment of Saudi Wahabbism—the brand of Sunni Islam that has inspired the Taliban, Al Qaeda, and the Islamic State—into northern Yemen, accompanied by attacks on Zaydi shrines and mosques.

This new tension, combined with the economic deprivations experienced by northern Yemenis, created the Houthi movement. During the past decade, the Houthis became more radicalized following Yemeni dictator Ali Abdullah Saleh’s six military incursions into northern Yemen, which left thousands dead. The Saudis, who supported the attacks as a means of countering Iran’s supposed influence in the Arabian Peninsula, joined the fight against the Houthis in 2009, prompting emboldened rhetoric from Tehran in support of the rebels.

Ultimately, in attacking the Houthis as Iranian proxies rather than seeking to alleviate the social and economic problems afflicting northern Yemen, Sana’a and Riyadh pushed the rebels to seek Iran’s help. Moreover, Saudi intervention in the name of countering Tehran created an incentive for the Iranians to operate in a region that held minor strategic importance to them, largely in order to prevent the Saudis from claiming that they had dealt the Islamic Republic a blow. Today, multiple flights travel each week between Tehran and the Houthi-held Yemeni capital, with many likely carrying arms (although most analysts see Saleh’s about-face in support of the Houthis, rather than Iranian weaponry, as the key to the rebels’ recent success).

None of this is to say that Iran is blameless in the sectarianism game. The Saudis and Bahrainis, for instance, likely wouldn’t see their sizeable Shia populations as security threats if it weren’t for Islamic Republic founder Ayatollah Khomeini’s call in the 1980s to spread the Islamic Revolution — a call that led to the establishment of pro-Iranian revolutionary groups throughout the Persian Gulf. One such group, Hijazi Hezbollah, is widely believed to have been behind the 1996 bombing of the U.S. military barracks in Al-Khobar, Saudi Arabia. And Iran’s failure to rein in previous Prime Minister Nouri Al-Maliki’s persecution of Iraqi Sunnis contributed to the widespread alienation that allowed the Islamic State to take over much of the country’s Sunni areas with such ease. The massacres being perpetrated against Sunni civilians by Iranian-backed Shia militias in areas liberated from the Islamic State do nothing to address this problem.

At today’s meeting with Obama, GCC leaders will ask for more military assistance. While Washington is likely to grant them their wish — perhaps providing them with a missile shield — it’s unclear what more weaponry will ultimately accomplish given that most of the fighting is being waged by non-state actors who can’t be defeated through conventional military means. Already possessing the world’s fourth-largest defense budget, the Saudis have been unable to achieve definitive success against the Houthis. Instead, the fighting is spreading into Saudi Arabia, and the Islamic State appears to have used the unrest to gain a foothold in Yemen.

It’s time for the GCC to accept that the years of containing Iran are over; the Bush administration’s decision to overthrow Tehran’s mortal enemy in Baghdad made that all but inevitable. Even in the face of the most crippling sanctions it has ever seen, the Islamic Republic has been able to preserve the Assad regime in Syria and increase its influence in Iraq. Is it possible that, following the lifting of sanctions, Iran could use the billions of dollars in unfrozen assets and increased oil revenue to intensify the fighting? Yes. But it should be painfully clear by now that none of the region’s most serious conflicts can be resolved without having Iran at the table. Ultimately, lasting security will have to involve the establishment of a new regional framework that binds the Islamic Republic and the other Persian Gulf countries into a relationship that elevates economic collaboration over geopolitical confrontation.

This is unlikely to occur, however, without domestic reform in the region. All of the conflicts raging in the Middle East today — with the exception of the U.S.-inspired chaos in Iraq — were sparked by protests against repression. In this regard, it’s important to note that Persian-led Iran has only made substantive inroads into the Arab world in times of instability. This was the case following the 1982 Israeli invasion of Lebanon, which provided the context for Hezbollah’s emergence, and it’s the case in Iraq and Yemen today. Meanwhile, GCC leaders’ policies that marginalize their Shia subjects, rather than integrate them into a pluralistic national project, have created the very susceptibility to Iranian influence that the Sunni monarchs fear.

For these reasons, when President Obama’s visitors ask him how they can best counter Iran, the most honest answer he can give is, “Get your own houses in order.”

Ali G. Scotten is a Fellow with the Truman National Security Project and founder of Scotten Consulting, LLC, a company specializing in sociocultural and geopolitical analysis of the Middle East. Views expressed are his own.

via Twitter (World Bank)

Maroš Šefčovič, the European Commission’s vice president in charge of energy, has been hitting the old Silk Road in search of new gas supply contracts that would break Gazprom’s hold on the European market. Emerging from a meeting held in the Turkmen capital with representatives from Turkmenistan, Turkey and Azerbaijan, Šefčovič confidently said that the union would start importing Caspian natural gas through its long-touted Southern Gas Corridor network of pipelines by 2019. The fact that the officials also discussed the prospect of building pipeline through Iran “since diplomatic relations with Iran are developing positively” is yet another startling reminder of just how badly Europe wants to break free from Russia’s natural gas supplies.

But can the EU’s gamble pay off?

On paper, Turkmenistan would be a great match for Europe’s energy woes. To begin with, the Central Asian country sits on the world’s fourth largest gas reserve and owns the world’s second largest gas field. Historically, thanks to some perverse pipeline politics that forced the country to export the bulk of its natural gas to Russia, Turkmenistan had been one of Gazprom’s largest suppliers of gas. That is, until 2009, when the Russians unilaterally announced that they will gradually phase out gas imports from Central Asian countries (in 2015, Gazprom will buy only 4 billion cubic meters, down from 45 bcm six years ago). As a result, Ashgabat turned to China and the EU to offset the lost revenues. After Turkmen officials revealed their desire to supply Europe with 10 to 30 bcm per year, Brussels listened and quickly dispatched Šefčovič to Ashgabat.

What’s more, sealing a deal with Turkmenistan to send part of its gas to Europe would be a boon not only for the Union’s energy security but also for Ukraine’s own trials and tribulations with Russia. In late March, Poroshenko signaled his interest in resuming inexpensive gas imports from Turkmenistan, as a way to sidestep Gazprom’s whimsical pricing policy.

Kyiv’s energy policy used to be prescribed by the gas prices demanded by Gazprom, a price curve that ebbed and flowed in lockstep with Ukraine’s falling in and out of Moscow’s grace. Up until 2009, thanks to a contract signed by RosUkrEnergo’s Dmitry Firtash, Kyiv enjoyed the lowest gas prices in its history by relying on a mix of cheaper Turkmen and Russian gas. The agreement, revolutionary at the time because it was the first time Turkmen gas would make its way directly to Europe, was shredded when Firtash’s political opponent and former gas trader, Yulia Tymoshenko cut out RosUkrEnergo from the equation and signed instead a 10-year agreement with Gazprom. Because of its variable pricing technique that saw prices rise four-fold in the span of a few years, the 2009 deal proved to be a complete mess for Kyiv. Prime Minister Arseniy Yatseniuk announced that his government is now seeking a hair-raising $16 billion in damages from Gazprom before an arbitration court in Stockholm.

Today, the prospect of importing Turkmen gas to Ukraine is trickier than it is for the EU, mostly because Kyiv needs Gazprom’s pipeline network for its transport. However, Ukraine’s rightfully combative stance with Russia makes the prospect of negotiating a deal with Gazprom a tough sell. Firtash, riding high after being cleared of graft charges by an Austrian court, in what the judge deemed to be a politically motivated trial mounted at Washington’s behest, could however end the deadlock given his long-standing business connection in both Moscow and Ashgabat.

With both Brussels and Kyiv courting Ashgabat, we are now witnessing the birth of a new energy architecture in Europe that will have long lasting impacts on Russia’s capacity to use its energy weapon for political games. Unlike its ho-hum predecessor, Jean Claude Juncker’s Commission has deftly navigated the testy waters laid at its doorstep by Moscow’s aggression in Ukraine. EU Competition Commissioner Margrethe Vestager leveled a €10 billion anti-trust case against Gazprom for unfair pricing in several Central and Eastern European countries. The move is part of the Union’s Third Energy Package that wants to bolster competition in EU energy markets through a process of unbundling, or separating pipeline ownership from gas producing companies. A win for the Commission’s litigators would deal a mortal blow to Gazprom’s bottom line and would force the company to rethink its business plan. Even if the company reached an agreement with Ankara on May 7 for the building of a pipeline across the Black Sea to Turkey, the feasibility of the project has been severely questioned.

Against this backdrop, Šefčovič’s and Poroshenko’s forays in Turkmenistan seem to indicate that the tide is turning against Gazprom’s old ways of doing business. The unprecedented fall in oil prices (Gazprom’s gas prices are pegged to the barrel) and the tumble of the ruble have shaved 86 percent off the company’s net profits in 2014, a trend that will continue unless the gas company adapts its European business model in order to respect European laws. In the medium term, the message is clear: Gazprom’s can no longer claim to be indispensable in Europe.