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Obama's World

By Greg C. Reeson

 

President-elect Barack Obama has been receiving classified, presidential-level intelligence briefings for more than a week now. These briefings, which involve highly detailed, sensitive information not shared with Senators or presidential candidates, are no doubt giving the incoming president a new appreciation for the complexities of the world into which he is about to step as leader of the most powerful nation on earth. In short, the rhetoric of a fairy tale campaign is about to meet the reality of global geopolitics.

 

President-elect Obama will very quickly be forced to deal with several major foreign policy challenges, including Iraq, Afghanistan, Iran, Russia, and the broader concept of a global war on terrorism. 

 

In Iraq, Obama will be faced with a situation that is much different from the one that existed just eighteen months ago. Progress has been slow, to be sure, but there are signs that indicate Iraq is on its way to becoming a stable and secure state. Virtually every security metric used by coalition forces in Iraq has improved dramatically since mid-2007, and political accommodation, while still struggling at the national level, is taking root at the local and regional levels. U.S. combat forces have been reduced from a surge-high of 20 brigade combat teams to just 14 today.

 

Will President-elect Obama fulfill his campaign pledge to withdraw all U.S. combat troops from Iraq in sixteen months, risking a return to 2006 levels of violence, the possibility of a wider regional war, a potential humanitarian crisis, and Iranian domination of Iraq? Or will he opt for a more cautious approach that heeds the advice of military commanders and eases the concerns of regional allies like Jordan, Egypt, and Kuwait?

 

Afghanistan will present Obama with what will perhaps be the defining event of his presidency. For years the situation in the former-Taliban and al Qaeda stronghold has been deteriorating, along with the political will of our NATO allies. Calls for more international assistance, a hallmark of the Obama campaign, will likely yield some token show of support from a few European nations eager to offer a gesture of goodwill. But in the long run it is doubtful that anything of substance will be offered by NATO countries lacking both the will and the capacity to do more to support the Karzai government.

 

Germany and France have both offered small increases in troop levels to President Bush, and will likely refrain from offering additional forces to President-elect Obama. Canada has already stated its intention to withdraw from Afghanistan in 2011, and the British have said only that they would consider small increases in troop levels. With Obama promising to send more American military forces to Afghanistan, the re-Americanization of the Afghan war is nearly complete. How long will it be before President-elect Obama’s supporters demand a U.S. withdrawal or the negotiation of a deal with the very people Obama promised to fight?

 

Iran will pose another problem for Obama, although probably not one that will involve the use of U.S. military force. Tehran continues to defy UN demands that Iran cease its enrichment of uranium, and further economic sanctions, favored by the President-elect, lack support from permanent UN Security Council members China and Russia. Obama’s offer of dialogue with Iran, warmly accepted by the Islamic Republic during the campaign season, has suddenly been rebuffed.

 

The Washington Post reported November 13 that Iranian officials are now sounding uneasy about negotiating with President-elect Obama, quoting deputy commander of the Iranian Revolutionary Guard Corps Hossein Taeb as saying, “People who put on a mask of friendship, but with the objective of betrayal, and who enter from the angle of negotiations without preconditions, are more dangerous.”

 

The Post also quoted Iranian President Mahmoud Ahmadinejad as saying, “It doesn’t make any difference for us who comes and who goes. It’s their actions which are studied by the Iranian and world nations.” In other words, the Iranians are waiting to see what Obama will do. Will he abandon the United States’ European allies and their preconditions for negotiation with Iran? Or will he stand firm with the United Nations and the European Union and back off from his campaign pledge to engage in direct talks with Tehran?

 

Russia was the first country to put the President-elect to the test with Moscow’s announcement that it would deploy short-range ballistic missiles to Kaliningrad in retaliation for the emplacement of U.S. ballistic missile defense systems in Poland. Russia is taking advantage of U.S. commitments in Afghanistan and Iraq to reassert itself in the Caucasus, Eastern Europe, and Latin America. Obama’s relationship with U.S. allies like Georgia and Ukraine will be critical in dealing with Moscow, and it is unlikely that Washington will get much help from Europe. NATO has no stomach for a row with Russia and Europe’s dependence on energy from Moscow lends itself more to concession than confrontation.

 

Finally, President-elect Obama will have to decide how his administration will prosecute the global war on terrorism launched by his predecessor, President George W. Bush. Will Obama continue military cooperation with Georgian forces concerned about Islamic radicalism spilling over from Chechnya? Will he continue to assist the Philippine government in its fight against Muslim radicals seeking to carve out an independent enclave on Mindanao? What about the resurgence of Islamist fighters in Somalia and ongoing African counter-terror operations in Djibouti? Is he prepared to expand the war on terror to new locations where U.S. efforts might be needed?

 

The global war on terrorism is just what its name says it is: a worldwide effort to combat terrorism and those who practice it. Afghanistan and Iraq may be the two most prominent battlefields in the war, but they are far from the only ones.

 

Vice-President-elect Joe Biden was correct when he said Barack Obama would be tested early in his administration. But that test is unlikely to be a singular event. President-elect Obama can expect to be challenged on multiple fronts simultaneously and soon after taking office. Whatever actions he takes in response to those challenges will set the tone for America’s relations with the rest of the world for the remainder of his term.

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Obama's Iraq Challenge

By Greg C. Reeson
 

In the December 1 edition of The Nation, Robert Dreyfuss argues that President-elect Barack Obama must resist pressure to stay in Iraq, and must make good on his campaign pledge to end the war he opposed as a state senator in Illinois.

 

Dreyfuss says that the recent financial crisis moved Iraq out of the forefront of voters’ minds, making it more difficult “…for Obama to claim that he has a mandate to end the war.” And despite the fact that only ten percent of exit poll respondents cited Iraq as their number one issue, Obama must claim a mandate to end the war, “…because,” Dreyfuss says, “as president-elect and then as president, he is going to face enormous pressure to abandon his pledge to withdraw.”

 

Who will the pressure come from? According to Dreyfuss, it will come from Obama advisers, hawkish Democrats, conservatives, neoconservatives, editorial pages of major newspapers, prominent think tanks, and the military. “Indeed,” Dreyfuss writes, “a showdown with the military command could be the most dramatic event of Obama’s first weeks in office.”

 

For years the military establishment has been pushing for a conditions-based withdrawal, arguing that a firm timeline ignores the security situation on the ground and does not allow for flexibility to respond to changing circumstances. A conditions-based withdrawal is at odds with Obama’s pledge to pull all combat troops out of Iraq within 16 months of taking office.

 

Describing the potential confrontation, Dreyfuss says: “Early in his administration, Obama may sit down with Petraeus – a politically savvy general who, it is rumored, is thinking about running for office himself, and who is the darling of the neoconservative movement – and tell him he intends to pull one to two combat brigades out of Iraq every month, starting immediately.”

 

Personally, I don’t see this conversation happening at all. I can’t imagine that a President Obama, now responsible for what happens in Iraq, will pull the plug without regard for the potential consequences. Tremendous progress has been made in Iraq since President Bush ordered additional troops to Baghdad and Anbar Province in 2007. President Obama will not want the progress achieved to date to fall apart on his watch. He will not be willing to bear the political price of a failed Iraqi state dominated by Iran, a massive humanitarian crisis, and a potentially wider Middle East war if the violence spills over into Saudi Arabia, Kuwait, Syria or Jordan. No, I expect there will indeed be a conversation with Petraeus, but that it will center on how to withdraw without jeopardizing the stability of the Iraqi government.

 

Still, let’s imagine for a minute that Obama does order to Petraeus and the Joint Chiefs to begin an unconditional withdrawal from Iraq based on a strict timeline and without regard for changing security conditions. Dreyfuss says, “The Constitution gives Obama the power to order them to carry out the new policy, whether they like it or not. If they don’t, well, he can tell them not be let the door rattle their medals on the way out.”

 

There’s no question that the commander-in-chief has the authority to order a withdrawal from Iraq, and there is no question that Petraeus and the Joint Chiefs would obey that order. But they would do so only after fulfilling their obligation to inform the commander-in-chief of the consequences of any potential actions he might be considering. And it is those consequences that will give the new president pause.

 

Despite his advocacy of an immediate and unconditional withdrawal, referred to in some circles as a retreat, Dreyfuss is worried that Obama will cave to the pressure to finish the job in Iraq. He points to facts that I have written about before, such as Obama’s refusal to define the size of a potential residual force, his willingness to listen to commanders on the ground, and his vague characterizations of potential missions for our soldiers in Iraq. As I have said before, Obama carefully crafted his words to allow himself the flexibility to back off his campaign pledge to withdraw from Iraq immediately and completely.

 

I believe Obama never had any intention of pulling out of Iraq on a sixteen month timetable, unless that timetable agreed with security conditions on the ground. He’s no fool and he certainly will not feel bound to honor a pledge that could cost him a second term. Dreyfuss says that “Bush has handed him a country still perched on the brink of civil war, and it could flare up again at any moment.” What Dreyfuss ignores is that Iraq is considerably more stable and secure than it was when Obama advocated a complete withdrawal in 2006, and that the potential for a flare up is exactly why it makes no sense to pull out precipitously. The situation in Iraq has changed, and Obama’s rhetoric has followed suit.

 

Dreyfuss concludes by saying, “If violence grows, Obama may pay a political price, but get out he must. Doing so will require boldness, decisive action and skillful regional and international diplomacy.”

 

It will also require an incredible amount of stupidity.

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UN for Obama?

By Greg C. Reeson
The Washington Post ran an article October 26 saying that an informal survey of staff members and foreign delegates at the United Nations revealed an "...overwhelming majority would prefer that Sen. Barack Obama win the presidency, saying they think that the Democrat would usher in a new agenda of multilateralism after an era marked by Republican disdain for the world body."  

A couple of points here. First, why would nations that wield less power on the international stage want the United States to engage in more multilateralism? Is it because they have the best interests of the United States or the world as a whole at heart? Or could it be because they have their own self interests at heart and would prefer to see a diminished role for the United States, the de facto global leader, in every region of the globe?

Second, why wouldn't Republicans, or anyone in the United States, have a disdain for the UN? Founded with a noble purpose, the United Nations has floundered at virtually every opportunity afforded to it. The Security Council has become a joke, where nationalist self-interest prevails over what may be good for the international community. The United Nations may provide some valuable humanitarian and social services, but when it comes to global security, the world body is ineffective and dysfunctional.

The Post says "Obama supporters hail from Russia, Canada, France, Britain, Germany, the Netherlands, Sierra Leone, South Africa, Indonesia and elsewhere." Think about this for a moment. Russia is trying to reestablish its position in the world, and it is probable that Vladimir Putin, who still calls the shots, Medvedev's election as president notwithstanding, sees a possible advantage in a more pliable Obama than a rigid, anti-Russia McCain. Does anyone really believe Russia is interested in multilateralism? France and Germany have long sought to unify Europe as a counterweight to U.S. power, and Britain is not the same ally it was under Tony Blair. Each of these countries, as is the case with all countries, is looking out for what is in their best interest, not what's in the best interest of the "global community."

"Many U.N. rank and file...see in Obama's multicultural background - a Kenyan father, an Indonesian stepfather and a mother and grandparents from Kansas - a reflection of themselves. ‘We do not consider him an African American,' said Congo's U.N. ambassador, Atoki Ileka. ‘We consider him an African.'" That statement should provide a clue into the thinking at Turtle Bay: Less American, more international.

This is not just a personal attack on George W. Bush. According to the Post, "...critics of the Bush administration...acknowledge that the U.S. attitude toward the United Nations has improved dramatically in recent years...." These critics, the Post says, "...say President Bush deserves much credit for supporting U.N.-backed initiatives, including the provision of billions of dollars in funding to fight AIDS and malaria in Africa as well as support for the largest expansion of U.N. peacekeeping in history."

The implication here is that the problem is not Bush. The problem is American dominance. As Americans, do we really want a diminishment of our power and influence in the world? Do we want a lesser role in global affairs? Do we want a president who is seen as more multicultural than American?

The answer seems obvious to me.

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Jihadist Ideology and Targeting Aid Workers

An interesting analysis by Fred Burton and Scott Stewart at Strategic Forecasting, Inc. Reprinted with permission. Bolded text indicates emphasis added by me.

 

By Fred Burton and Scott Stewart

 

On the morning of Oct. 20, as humanitarian aid worker Gayle Williams walked to work in Kabul, Afghanistan, two men on a motorcycle approached and shot her multiple times before speeding off. The Taliban have claimed responsibility for the assassination of the 34-year-old British citizen from South Africa. Taliban spokesman Zaibullah Mujahid told The Associated Press that his group killed Williams because she “came to Afghanistan to teach Christianity to the people of Afghanistan.” Williams’ organization, Serving Emergency Relief and Vocational Enterprises (SERVE), denied the charge.

 

In a message on SERVE’s Web site, the organization noted that Williams had worked for nearly two years in Kandahar and Kabul directing projects designed to integrate disabled Afghans into the mainstream educational system. SERVE has a long history of working with the needy and with refugees in Afghanistan. The organization was founded in 1972 to help famine victims in Ghor province, and began to work with Afghan refugees in Pakistan in 1980. Since 1992, the group has focused on work inside Afghanistan, providing assistance to refugees returning to Afghanistan and vocational training for the disabled.

 

In September 2007, we discussed the burgeoning kidnapping industry in Afghanistan and how the Taliban were beginning to focus on humanitarian workers — not only as a moneymaking enterprise, but also as a political lever. Indeed, reports from organizations such as the Afghanistan NGO Safety Office (ANSO) and the Agency Coordinating Body for Afghan Relief indicate that attacks on aid workers have increased dramatically in 2008. According to ANSO, the 19 humanitarian aid workers killed in the first half of 2008 surpassed the 15 killed in all of 2007, and the death toll has continued to mount.

 

The brazen attack against Williams follows other deadly attacks against aid workers in August and September. On Aug. 13, a marked International Rescue Committee vehicle was attacked in a small-arms ambush in Logar province. The attack resulted in the deaths of one U.S. citizen, two Canadian citizens and an Afghan driver. On Sept. 14, a suicide bomber attacked a marked U.N. Assistance Mission for Afghanistan vehicle in the Spin Buldak district of southern Kandahar province. Two Afghan doctors — working to inoculate Afghan children against polio — and their driver died in the attack.

 

The increase in attacks against humanitarian workers shows that the Taliban have made a strategic decision to target them. Additionally, from the targeting of non-Christian workers, it is obvious that the issue goes much farther than just a desire to combat proselytism. The Taliban clearly see Afghanistan’s many foreign missionary and secular humanitarian aid organizations as supporting the Afghan government, and they believe that driving these organizations out of Afghanistan will be a blow to the government’s efforts to promote stability in the country. Because of this, we anticipate the Taliban will continue to target aid workers in the country, and not just those connected to Christian organizations.

 

The targeting of humanitarian aid workers goes far beyond Afghanistan, however. And the practice is becoming a point of contention between jihadist ideologues and militant groups.

 

The Somalian Example

 

A similar campaign by jihadist militants designed to force humanitarian workers out of a country has been under way for the past few years in Somalia. Chaos has reigned in Somalia since the late 1970s, becoming a full-blown humanitarian crisis and civil war in the early 1990s. Somalia has never really recovered from that war. Incessant violence still rages, and because of the violence, there are currently millions of internally displaced people — aka refugees — dependent on foreign humanitarian aid for survival. According to U.N. estimates, 3.2 million Somalians (or 43 percent of the country’s population) are dependent on such aid.

 

The Islamist militants in Somalia are fighting the government of President Abdullahi Yusuf and the Ethiopian troops keeping Yusuf in power. The militants understand the importance of international aid to internal stability, and have sought to use attacks against aid as a weapon against the government. Groups such as the al Qaeda-linked al Shabab have launched many attacks against humanitarian aid workers since 2006 and have been able to use kidnapping and assassination to drive most of the foreign aid workers out of the country.

 

Even with the foreign aid workers gone, the militants have continued their attacks against World Food Program (WFP) shipments and Somalian employees of aid organizations. In the past week alone, two U.N. employees were assassinated in Somalia. On Sept. 17, Abdenasser Adan Muse, a senior program assistant for the WFP, was shot three times as he left a mosque in the town of Merca. On Sept. 19, Mukhtar Mohammed Hassan, a water engineer working with the U.N. Children’s Fund, was shot dead in Huddur as he walked with friends after attending a local mosque.

 

Tensions

 

Of course, the decision to target humanitarian aid workers significantly impacts the people deprived of the aid such organizations offer, including programs to provide food, water and medical care.

 

One of the things that helped turn the tide of public opinion against the jihadist militants in Iraq — including groups like al Qaeda in Iraq headed by Abu Musab al-Zarqawi — was the violence the groups perpetrated against civilians, and among those innocent civilians were employees of nongovernmental organizations. In addition to the murders of aid workers such as Margaret Hassan of CARE International, militants conducted an attack using a large vehicle-borne improvised explosive device (VBIED) against the Baghdad headquarters of the United Nations in August 2003. The bombing resulted in the death of Sergio Vieira de Mello, the U.N. High Commissioner for Human Rights in Iraq. The U.N. headquarters came under attack again in September 2003, and following the second attack, all U.N. personnel were withdrawn from the country, along with many other international humanitarian aid workers.

 

Just over a month after the second U.N. bombing in Baghdad, the International Committee of the Red Cross (ICRC) headquarters in Baghdad was attacked by militants using a powerful VBIED. But al-Zarqawi’s forces are not the only ones who have attacked the ICRC. In addition to the Baghdad attack, ICRC workers have been abducted or attacked by jihadists in several other places, including Ethiopia, Somalia and Afghanistan.

 

Not only have the attacks against ICRC personnel gained the attention of the people denied humanitarian assistance as a result, they have also lead to a significant buildup of tensions among jihadist ideologues over the subject of attacks against humanitarian workers.

 

This tension can be seen in the writings of Isam Mohammed Taher al-Barqawi, more popularly known by the nom de guerre Abu Muhammad Asem al-Maqdisi, considered by many to be the world’s leading jihadist theoretician. Since his release from Jordanian custody in March, al-Maqdisi has released a number of new writings on jihad. Unlike other jailed jihadist theoreticians — such as Egyptian ideologue Sayyed Imam al-Sharif, aka Dr. Fadl — al-Maqdisi has not recanted his jihadist beliefs.

 

In the recently released Chapter 19 of his book “Thoughts on the Fruit of Jihad,” al-Maqdisi has taken a clear stand against targeting “genuine” humanitarian organizations. Al-Maqdisi specifically referred to the ICRC, noting how it is a legitimate humanitarian organization with no hidden agenda whose valuable services to the poor and dispossessed should be appreciated.

 

Al-Maqdisi wrote about his own personal experiences with the ICRC since 1994. Much of his time since then has been spent in prison in Jordan, and according to his writings, he had much positive interaction with the ICRC during that time. During such a prison stint in the mid-1990s, al-Maqdisi became acquainted with al-Zarqawi, who was greatly influenced by al-Maqdisi’s teaching. Al-Maqdisi would later repudiate al-Zarqawi over the latter’s targeting of Shiite noncombatants and their religious facilities in Iraq, which had caused thousands of deaths. Al-Zarqawi responded that his former mentor had strayed from the jihadist cause.

 

Al-Maqdisi wrote Chapter 19 in response to incidents such as the 2003 bombing of the ICRC office in Baghdad. In it, he urges jihadist militants to refrain from attacking genuine humanitarian organizations.

 

Where the Rubber Meets the Road

 

Al-Maqdisi is widely respected in the Arabic-speaking jihadist world, but we know from historical precedent that al-Zarqawi and company did not follow his philosophy about targeting the Shia and other noncombatants in Iraq when they believed that tactical considerations outweighed such overreaching principles. It is also noteworthy how disregarding al-Maqdisi’s guidance to militants in Iraq — and the subsequent blowback — was a significant factor in their downfall.

 

There is precedent for this type of ideological tension and pressure causing jihadist groups to abandon widely used tactics. One such example was the jihadist beheading videos, which proliferated after the highly publicized February 2002 video of the beheading of journalist Daniel Pearl by Khalid Sheikh Mohammed (KSM) in Pakistan. Jihadists in places like Iraq and Saudi Arabia quickly copied the tactic, and it was used in many videos released by these groups in 2003 and 2004.

 

As this tactic spread, it was condemned by the al Qaeda core leadership. Even though the practice had been begun by KSM, a senior al Qaeda operative, the leadership gauged the response to the videos and deemed the practice to be counterproductive to their overall goals. This condemnation was clearly evident in the letter from Ayman al-Zawahiri to al-Zarqawi intercepted by the U.S. government and released in October 2005. Significantly, the practice of jihadist groups beheading hostages on video has declined markedly since the core al Qaeda leadership expressed their opposition to it.

 

Al-Maqdisi’s stance on the issue of killing humanitarian aid workers, and specifically ICRC members, is clear, and his stature will cause militant groups to pay attention to his opinion. It should be noted, however, that wiggle room for militants will remain if they claim, as the Taliban did in the Williams case, that the target of their attack was involved in proselytism. The Taliban were undoubtedly already under pressure in that case to justify their assassination of a woman, something considered very unmanly in Afghan culture.

 

Given this evolving intra-jihadist debate, signs should be looked for of a tactical shift in places like Somalia, where attacks against humanitarian organizations have been widespread, or in Afghanistan, where such attacks have been rapidly growing in number. So far, tactical considerations have outweighed ideological arguments against such attacks, and we see no end in sight to such attacks. But with al-Maqdisi’s pronouncement, the pressure against such attacks will surely grow and the topic should spawn a lot of discussion and division in militant circles. This discussion may ultimately lead to a change in tactics.

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Presidential Polls: Within the Margin of Error?

By Greg C. Reeson
The Wall Street Journal’s Politics and Campaign section had an analysis posted October 17 that casts doubt on the large lead Senator Obama enjoys over Senator McCain in some national polls. In “Some Surveys Indicate Tighter Presidential Race,” the Journal says that while some newspaper and television network polls show Obama with a commanding lead, “…other surveys tell a somewhat different story, suggesting the presidential race is still close, and the Republican has even gained ground in recent days.”

 

For example, the Real Clear Politics average posted the morning of October 17 showed Senator Obama leading Senator McCain by nearly 7 percentage points. But within that average, individual polls varied wildly. Of the 13 polls rolled up into the RCP average, 6 showed an Obama lead of 5 points or less. Of those 6, one poll was at 2 points, one poll was at 3 points, and three polls were at 4 points. Only two of the individual polls showed Obama with a double digit lead, like the recently published CBS News / New York Times poll that gave Obama a 14 point lead.

 

Why the differences? According to the Journal, “Pollsters are facing new challenges this year, trying to gauge whether the electorate is changing, and how much.”

 

In addressing methodology, the Journal’s analysis says those polls assigning a wide lead to Obama “…tend to assume that a growing proportion of voters are Democrats, and a shrinking percentage Republicans. They also point to a big increase in turnout, particularly among voters under the age of 30. Surveys showing a closer race assume less change in party affiliation in particular.”

 

Going further to demonstrate poll variance, the Journal cites an LA Times poll where Obama has a 9 point lead and a Pew Poll where Obama has a 7 point lead, but then cites an IBD-TIPP poll where the Obama lead is less than 4 points, and recent Rasmussen and Zogby polls that show an Obama lead of 4 and 5 points, respectively.

 

The Journal quotes editor in chief of the Gallup Daily Frank Newport as saying, “Clearly, the race has tightened.”

 

Another problem with the polls, the Journal says, lies in their determination of likely voters. As an example, the Journal points to the Gallup daily tracking poll: “Gallup actually conducts two separate daily polls, one that includes all surveyed adults who say they will vote, and a second that is more restricted, using a decades-old methodology that determines ‘likely voters’ in part by examining historical models on the types of voters who have showed up at the polls.”

 

The variation? The first poll shows Obama leading McCain by 6 points. The second? The gap narrows to 2 points.

 

Another problem shows up in determination of party affiliation. For example, the Journal says, Rasmussen weights polls so that Democrats outnumber Republicans 39 percent to 33 percent. Zogby uses a ratio of 38 percent Democrats and 36 percent Republicans.

 

John Zogby says, “What troubles me is when I see some of my colleagues have 27% of the respondents that are Republicans. That’s just not America, period.” Zogby goes on to say that party affiliation remains constant “day-to-day, and it never fluctuates by eight points in a short time period.”

 

Is the race within the margin of error? I would say that’s highly unlikely. But I would also say that I think it’s going to be a lot closer than many believe.

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Obama and Foreign Policy Flip-Flopping

By Greg C. Reeson

 

Danielle Pletka of the American Enterprise Institute penned an opinion piece for the Wall Street Journal October 16 that took aim at Democratic presidential nominee Barack Obama’s foreign policy statements, and how those statements would be interpreted by the rest of the world. I recall discussing this issue quite some time ago with some colleagues, and in postings in the blogosphere.

 

Some of Obama’s comments could be chalked up to foreign policy inexperience, to be sure, but Pletka’s point about flip-flopping on positions is a valid one given America’s leading role in the world, and how that role is seen by friends and foes alike. Here are some excerpts from her op-ed.

 

As the election creeps nearer and the polls increasingly favor Barack Obama, it is worth considering the implications of another ‘say anything’ president. Such a president moves swiftly from state to state and country to country, adapting his talking points for the audience at hand. Consistency is not his goal; he aims to satisfy his listeners. Bill Clinton was such a president, and Mr. Obama promises more of the same.”

 

The problem with adapting talking points to fit the audience at hand creates problems of perception about America’s “intentions and resolve,” Ms. Pletka says. Giving some examples, she offers the following.

 

“On June 4, he told a pro-Israel crowd that ‘Jerusalem will remain the capital of Israel, and it must remain undivided.’ A day later he decided that it would be ‘up to the parties to negotiate a range of these issues. And Jerusalem will be part of those negotiations.’ Six weeks later, he wrote off his commitment to a united Jerusalem as ‘an example where we had some poor phrasing in the speech.’”

 

“In July 2007, Mr. Obama was asked whether he would ‘be willing to meet separately, without precondition, during the first year of your administration, in Washington or anywhere else, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea.’ He said: ‘I would.’ A year later, to a much different audience in Israel, he said: ‘I think that what I said in response was that I would, at my time and choosing, be willing to meet with any leader if I thought it would promote the national security interests of the United States of America.’”

 

The list goes on.

 

“In May 2008, in Oregon, he explained to an antiwar audience that Iran doesn't ‘pose a serious threat to us the way the Soviet Union posed a threat to us.’ Two months later in a speech in Israel, suddenly Iran ‘would pose a grave threat.’ A month later he said that ‘the danger from Iran is grave, it is real, and my goal will be to eliminate this threat.’”

 

“In January 2007, he explained, ‘I don't know any expert on the region or any military officer that I've spoken to privately that believes that [deployment of more troops to Iraq] is going to make a substantial difference on the situation on the ground.’ A year later he had reversed not only his position, but his memory of his position: ‘Now, I had no doubt -- and I said at the time, when I opposed the surge, that given how wonderfully our troops perform, if we place 30,000 more troops in there, then we would see an improvement in the security situation.’”

 

I, for one, distinctly remember Senator Obama saying that an increase in troop levels in Iraq would not only not work, but would likely make the violence worse.

 

Ms. Pletka continues. “A few years ago, he excoriated the ‘utterly failed’ Cuba embargo, but recently told a Cuban-American audience in Florida he would continue the embargo.”

 

The real problem with the constant changing of positions on foreign policy matters is that it sends conflicting messages to both our allies and our enemies. How are they supposed to know what our intentions are, and what our level of commitment is, if we can’t adhere to a consistent line of rhetoric?

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The Afghanistan Surge

By Greg C. Reeson

 

The London Sunday Times reported October 12 that President George W. Bush is planning on announcing an Iraq-style surge of U.S. military forces to Afghanistan after the presidential election next month.

 

According to the Times’ report, the plus-up in American troops could number as many as 10,000. The plan for a surge, of course, mirrors the effort undertaken by President Bush and General David Petraeus in Iraq beginning in early 2007. The security situation in Afghanistan has been steadily deteriorating for more than a year, and Bush is planning to address that problem with a multi-faceted approach that will utilize all the elements of national power.

 

The Times quotes Chairman of the Joint Chiefs of Staff Admiral Michael Mullen as saying, “The trends across the board are not going in the right direction. It has been very, very tough fighting this year and it will be tougher next year unless we [develop] a way to get at all aspects of the challenge.”

 

The Times says Bush “…is eager to pass on the lesson learnt from the troop surge in Iraq.” Perhaps the most important lesson is that military force alone cannot hope to succeed. Additional troops can help decrease levels of violence, reduce Taliban influence, and secure more territory, but simultaneous efforts across the diplomatic, information, and economic fronts are needed as well.

 

It is also crucial to understand that Afghanistan is different from Iraq. Simply taking the Petraeus plan from Iraq and transferring it to Afghanistan will not work. An independent assessment must be conducted before moving forward with any strategy. That said, Petraeus is probably the right man for the job. He can draw on lessons learned from his time in Iraq, but ultimately he will be forced to use his knowledge of and experience in counterinsurgency to develop a unique plan to bring stability to Afghanistan.

 

Petraeus has already begun work on a new Afghanistan strategy. Mullen told the Times, “It’s the full spectrum – the political piece, the diplomatic piece, the economic piece in addition to the security piece – that has got to improve dramatically.”

 

No doubt a central piece of any Petraeus strategy will be his plan for dealing with the lawless region along the Afghanistan – Pakistan border. Cross-border raids have increased, and have become more overt, and Pakistan has been either unwilling or unable to exercise control over the Federally Administered Tribal Areas and the Northwest Frontier Province. Without some measure of stability in this region, any Afghanistan strategy is likely to fail.

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Presidential Polls: Closer Than You Might Think

By Greg C. Reeson

 

Everywhere you turn, media organizations, political analysts, and casual observers in the blogosphere are citing polls and trying to predict who’s winning in the race for the presidency. But for those who are anxious to believe what they are seeing in the poll results, and for those who deny what the poll results are telling them, here are a few words of caution.

 

Virtually every poll available right now has Democratic presidential nominee Barack Obama leading Republican nominee John McCain by a comfortable margin. The latest Real Clear Politics average, which looks at multiple polls instead of just one or two, has Obama leading McCain by nearly 8 points.

 

But it is not wise to look at results such as the RCP average and try to discern what will happen on November 4. Here’s why.

 

First, all of the polls reported in the mainstream media are based on a two-person race. Respondents are asked to choose between Barack Obama and John McCain. But on election day, there will be more than two candidates on the ballot. And while the number of votes that will be cast for Libertarian Bob Barr and Independent Ralph Nader is negligible, those votes will still have an impact on the race. According to the Real Clear Politics site, when Barr and Nader are factored in, Obama’s lead shrinks to just over 4 points. That’s because Nader siphons off more votes from Obama than Barr does from McCain.

 

Second, most poll reporting is based strictly on national level responses. I personally have never put much stock in national levels polls during a presidential election because the race for the White House is ultimately a state-by-state contest. Simply put, no one wins the presidency just because they get the most total votes on election day. What matters most are the individual states.

 

Some states are solidly behind Obama, and some states are solidly behind McCain. That means that a handful of “battleground” states will end up determining the next president of the United States. Those “battleground” states are Ohio, Florida, Nevada, North Carolina, Missouri, Indiana, Colorado, West Virginia, and Virginia. A look at the Real Clear Politics averages for those states show that the presidential contest is anybody’s game.

 

In Ohio, RCP shows Senator Obama ahead by less than three points, within the margin of error and clearly a toss-up. In Florida, Obama leads by nearly 4 points, outside the margin of error, but dangerously close in a vitally important state. In Nevada, Obama leads by 3.2 percent, and in North Carolina Obama leads by only 1.2 percent. Senator McCain is holding a razor thin lead in Missouri, currently less than 1 percent, and a more healthy 3.8 percent lead in Indiana. Obama leads in Colorado by 4 percentage points, and McCain leads in West Virginia by 2.2 percent. In Virginia, Senator Obama has widened his lead to 6.3 percentage points. RCP now has Virginia as “leaning Obama” instead of toss-up, but I include it here for a simple reason: Virginia has not gone for a Democratic presidential candidate since Lyndon Johnson, and the GOP is making a strong push in the Commonwealth in the final weeks.

 

So, we have 9 “battleground” states in play. Given a polling margin of error of three percentage points, Ohio, North Carolina, Missouri, and West Virginia are completely up in the air. Florida is barely outside the margin of error, as is Nevada. Indiana is leaning to McCain, but is by no means decided, and the same can be said of Colorado for Obama. In Virginia, Obama has surged of late, but Virginia political history suggests that this state, too, will come down to the wire.

 

Now, there’s no question all the trend lines are moving in Obama’s direction. He clearly has the momentum, and this has always been his race to lose. Given an unpopular president, the Iraq war, the current economic crisis, Afghanistan deteriorating, and the illusory promise of “change,” Obama should be running away with this thing. But he’s not. Obama’s inability to close the door on the McCain candidacy, state-by-state polling that is much tighter than national polling, and the Bradley effect, the phenomenon where white voters tell pollsters they’ll vote for the African-American candidate then change their minds in the privacy of the voting booth, will likely make this election a lot closer than the national polls are predicting.

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NATO is Dying in Afghanistan

By Greg C. Reeson

 

The United States is asking its allies in the North Atlantic Treaty Organization to cough up more military forces for the war in Afghanistan. U.S. Defense Secretary Robert Gates is making the rounds at a two day conference of NATO defense ministers in Budapest, Hungary, in an effort to win more resources for what is once again considered the central front in the global war on terrorism.

 

Gates’ plea is not new, of course. The U.S. government has been asking NATO to bolster its commitment to Afghanistan for years. What’s different this time is that Afghanistan is at a critical point. The situation on the ground is becoming increasingly untenable, and the need for additional forces is becoming more critical than it has been in the past. What is not different is that America’s calls for a greater international effort in the former-al Qaeda safe-haven will probably go unheeded.

 

Since the end of the Cold War and the collapse of the Soviet Union, the United States’ allies in NATO have increasingly cut defense spending to the point where the ability of the alliance to conduct any type of meaningful operation is in serious doubt. Afghanistan has proven to be a significant challenge for NATO, one that could signal the demise of the defense alliance. In addition to funding challenges, NATO has problems with national caveats on member states’ troops and an operational capability gap that leaves the United States bearing most of the burden for any NATO operation.

 

What is ostensibly a NATO effort in Afghanistan is in reality a U.S. effort, with a minor supporting cast. NATO troop contributions represent only a fraction of the total foreign presence, despite NATO’s invocation of the collective defense clause of its charter in the aftermath of the terrorist attacks on 9/11. And what troops are there are largely limited in their ability to conduct operations by national caveats that keep troops out of harm’s way.

 

There are, of course, some notable exceptions. The Brits, as one would expect, the Dutch, and the Canadians are fighting and dying alongside their American counterparts. They have proven their mettle time and time again, and they have proven themselves to be reliable partners in the fight. But German troops are restricted to non-combat roles, as are the troops from most of the other nations with forces currently in Afghanistan. A recent German agreement to increase its force size from 1,000 to 4,500 means little if those forces cannot be employed in combat operations against a resurgent and increasingly bold Taliban in the most dangerous parts of the country.

 

French troops are likewise limited in the role they play. Still, Afghanistan is a theater of war, and in wars, people die. The French citizenry was horrified not too long ago when ten French paratroopers were killed in an ambush in Afghanistan, and there have been increasing calls in France for the withdrawal of the French contingent. French President Nicolas Sarkozy has remained a valuable ally in the face of increasing domestic opposition, but it is unclear how long he will be able to buck public opinion in France. Many European countries have no stomach for casualties at any level, a fact that is, to a degree, understandable given that Europe has suffered through two of the most horrific conflicts ever waged by man. This aversion to casualties makes it difficult for European governments to actively employ their forces in combat roles, even when those governments deem it to be necessary and right. So, even if other NATO countries were to pony up additional forces, restrictions on their location and ability to conduct operations would effectively limit any real impact they might have on the fight.

 

The operational capability gap is another problem. Reduced defense spending by America’s NATO allies has resulted in significant shortfalls in equipment capability and compatibility. Virtually all airlift operations are conducted by the United States, and many nations rely exclusively on the U.S. for logistical support in general. The inability of many NATO allies to support their own forces places enormous strain on the already thinly stretched U.S. military. Europe is years behind the United States when it comes to military capability, a fact that becomes glaringly obvious in the conduct of coalition operations.

 

NATO is in danger. If it can’t or won’t muster the forces and the will to win in Afghanistan, how will it be able to counter a rising Russian threat? How will it protect new member states struggling to move closer to western powers? How will it remain relevant in an increasingly complex and dangerous world?

 

What is becoming increasingly apparent is that NATO is unlikely to pass the Afghanistan test. As calls for more troops continue to be ignored, the United States is planning even more increases in U.S. force levels to stem the advances made by the Taliban over the past two years. The Americanization of the Afghanistan war is nearly complete. We are clearly not winning the fight in Afghanistan. If we lose this war, the credibility and viability of NATO as a collective defense alliance will be lost with it.

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Rasmussen: Iraq will be a Success

According to a new Rasmussen report issued September 30, a plurality of poll respondents said the war in Iraq would in the long-term be considered a success. This was the first time for such a result since Rasmussen began tracking the topic.

 

The Rasmussen poll took the form of a nationwide telephone survey conducted September 29. The results of the survey revealed that 41 percent of respondents “…said history will rate the war in Iraq a success….” A slightly lower number, 39 percent, responded that the Iraq war would be judged by history to be a failure. One-fifth of respondents were undecided.

 

The results of this latest survey differed sharply from polling last August. At that time, nearly 60 percent of respondents said the Iraq war would be judged a failure while less than 30 percent thought it would be considered a success. Rasmussen also reported that 48 percent of respondents “…also believe the situation in Iraq will get better in the next six months…,” compared to less than a quarter of respondents who think the situation in Iraq will deteriorate. Nearly a quarter of respondents said they expected the current situation in Iraq to remain roughly unchanged over the next six months.

 

Expanding the questioning further, Rasmussen found that more than half of respondents, 55 percent, “…now believe the United States and its allies are winning the war on terror.” Less than one quarter, 21 percent, responded that the terrorists were winning. Another 18 percent said “…it’s a draw.”

 

The results of the survey reflect security improvements in Iraq that have largely been credited to President Bush’s surge of American troops to Baghdad and Anbar Province, the Sunni Awakening, and the decision by Iraqi cleric Moqtada al-Sadr to stand down his Mahdi Army militia. The latest quarterly report on Iraq released September 30 by the Department of Defense says violence is down dramatically and that incidences of attack are at their lowest level since early in 2004.

 

Nearly half of the respondents to the survey, 46 percent, said the United States was safer today than it was on September 11, 2001. Just over one-third, 34 percent, said the U.S. was less safe.

 

When accounting for party affiliation, Rasmussen reports that nearly 75 percent of Republicans say the Iraq war will be judged a success, but a mere 16 percent of Democrats agree with that assessment. Similarly, 76 percent of Republicans said Iraq would continue to improve, while only 23 percent of Democrats would say the same.

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Financial Crisis and Bailout: An Analysis

Reprinted with permission below is an interesting analysis of the current financial crisis and bailout plan by Dr. George Friedman, founder of Strategic Forecasting, Inc.

 

I clearly belong to the third group he talks about, and believe this “crisis” is being overblown, and that the problem now is more political than economic. This is a lengthy piece with a historical example of past government action, but worth the read, I think.

 

I have bolded what I consider to be key parts of the analysis for those not wishing to read the entire piece.

 

By George Friedman

 

Classical economists like Adam Smith and David Ricardo referred to their discipline as “political economy.” Smith’s great work, “The Wealth of Nations,” was written by the man who held the chair in moral philosophy at the University of Glasgow. This did not seem odd at the time and is not odd now. Economics is not a freestanding discipline, regardless of how it is regarded today. It is a discipline that can only be understood when linked to politics, since the wealth of a nation rests on both these foundations, and it can best be understood by someone who approaches it from a moral standpoint, since economics makes significant assumptions about both human nature and proper behavior.

 

The modern penchant to regard economics as a discrete science parallels the belief that economics is a distinct sphere of existence — at its best when it is divorced from political and even moral considerations. Our view has always been that the economy can only be understood and forecast in the context of politics, and that the desire to separate the two derives from a moral teaching that Smith would not embrace. Smith understood that the word “economy” without the adjective “political” did not describe reality. We need to bear Smith in mind when we try to understand the current crisis.

 

Societies have two sorts of financial crises. The first sort is so large it overwhelms a society’s ability to overcome it, and the society sinks deeper into dysfunction and poverty. In the second sort, the society has the resources to manage the situation — albeit at a collective price. Societies that can manage the crisis have two broad strategies. The first strategy is to allow the market to solve the problem over time. The second strategy is to have the state organize the resources of society to speed up the resolution. The market solution is more efficient over time, producing better outcomes and disciplining financial decision-making in the long run. But the market solution can create massive collateral damage, such as high unemployment, on the way to the superior resolution. The state-organized resolution creates inequities by not sufficiently punishing poor economic decisions, and creates long-term inefficiencies that are costly. But it has the virtue of being quicker and mitigating collateral damage.

 

Three Views of the Financial Crisis

 

There is a first group that argues the current financial crisis already has outstripped available social resources, so that there is no market or state solution. This group asserts that the imbalances created in the financial markets are so vast that the market solution must consist of an extended period of depression. Any attempt by the state to appropriate social resources to solve the financial imbalance not only will be ineffective, it will prolong the crisis even further, although perhaps buying some minor alleviation up front. The thinking goes that the financial crisis has been building for years and the economy can no longer be protected from it, and that therefore an extended period of discipline and austerity — beginning with severe economic dislocations — is inevitable. This is not a majority view, but it is widespread; it opposes government action on the grounds that the government will make a terrible situation worse.

 

A second group argues that the financial crisis has not outstripped the ability of society — organized by the state — to manage, but that it has outstripped the market’s ability to manage it. The financial markets have been the problem, according to this view, and have created a massive liquidity crisis. The economy — as distinct from the financial markets — is relatively sound, but if the liquidity crisis is left unsolved, it will begin to affect the economy as a whole. Since the financial markets are unable to solve the problem in a time frame that will not dramatically affect the economy, the state must mobilize resources to impose a solution on the financial markets, introducing liquidity as the preface to any further solutions. This group believes, like the first group, that the financial crisis could have profound economic ramifications. But the second group also believes it is possible to contain the consequences. This is the view of the Bush administration, the congressional leadership, the Federal Reserve Board and most economic leaders.

 

There is a third group that argues that the state mobilization of resources to save the financial system is in fact an attempt to save financial institutions, including many of those whose imprudence and avarice caused the current crisis. This group divides in two. The first subgroup agrees the current financial crisis could have profound economic consequences, but believes a solution exists that would bring liquidity to the financial markets without rescuing the culpable. The second subgroup argues that the threat to the economic system is overblown, and that the financial crisis will correct itself without major state intervention but with some limited implementation of new regulations.

 

The first group thus views the situation as beyond salvation, and certainly rejects any political solution as incapable of addressing the issues from the standpoint of magnitude or competence. This group is out of the political game by its own rules, since for it the situation is beyond the ability of politics to make a difference — except perhaps to make the situation worse.

 

The second group represents the establishment consensus, which is that the markets cannot solve the problem but the federal government can — provided it acts quickly and decisively enough.

 

The third group spoke Sept. 29, when a coalition of Democrats and Republicans defeated the establishment proposal. For a myriad of reasons, some contradictory, this group opposed the bailout. The reasons ranged from moral outrage at protecting the interests of the perpetrators of this crisis to distrust of a plan implemented by this presidential administration, from distrust of the amount of power ceded the Treasury Department of any administration to a feeling the problem could be managed. It was a diverse group that focused on one premise — namely, that delay would not lead to economic catastrophe.

 

From Economic to Political Problem

 

The problem ceased to be an economic problem months ago. More precisely, the economic problem has transformed into a political problem. Ever since the collapse of Bear Stearns, the primary actor in the drama has been the federal government and the Federal Reserve, with its powers increasing as the nature of potential market outcomes became more and more unsettling. At a certain point, the size of the problem outstripped the legislated resources of the Treasury and the Fed, so they went to Congress for more power and money. This time, they were blocked.

 

It is useful to reflect on the nature of the crisis. It is a tale that can be as complicated as you wish to make it, but it is in essence simple and elegant. As interest rates declined in recent years, investors — particularly conservative ones — sought to increase their return without giving up safety and liquidity. They wanted something for nothing, and the market obliged. They were given instruments ultimately based on mortgages on private homes. They therefore had a very real asset base — a house — and therefore had collateral. The value of homes historically had risen, and therefore the value of the assets appeared secured. Financial instruments of increasing complexity eventually were devised, which were bought by conservative investors. In due course, these instruments were bought by less conservative investors, who used them as collateral for borrowing money. They used this money to buy other instruments in a pyramiding scheme that rested on one premise: the existence of houses whose value remained stable or grew.

 

Unfortunately, housing prices declined. A period of uncertainty about the value of the paper based on home mortgages followed. People claimed to be confused as to what the real value of the paper was. In fact, they were not so much confused as deceptive. They didn’t want to reveal that the value of the paper had declined dramatically. At a certain point, the facts could no longer be hidden, and vast amounts of value evaporated — taking with them not only the vast pyramids of those who first created the instruments and then borrowed heavily against them, but also the more conservative investors trying to put their money in a secure space while squeezing out a few extra points of interest. The decline in housing prices triggered massive losses of money in the financial markets, as well as reluctance to lend based on uncertainty of values. The result was a liquidity crisis, which simply meant that a lot of people had gone broke and that those who still had money weren’t lending it — certainly not to financial institutions.

 

The S&L Precedent

 

Such financial meltdowns based on shifts in real estate prices are not new. In the 1970s, regulations on savings and loans (S&Ls) had changed. Previously, S&Ls had been limited to lending in the consumer market, primarily in mortgages for homes. But the regulations shifted, and they became allowed to invest more broadly. The assets of these small banks, of which there were thousands, were attractive in that they were a pool of cash available for investment. The S&Ls subsequently went into commercial real estate, sometimes with their old management, sometimes with new management who had bought them, as their depositors no longer held them.

 

The infusion of money from the S&Ls drove up the price of commercial real estate, which the institutions regarded as stable and conservative investments, not unlike private homes. They did not take into account that their presence in the market was driving up the price of commercial real estate irrationally, however, or that commercial real estate prices fluctuate dramatically. As commercial real estate values started to fall, the assets of the S&Ls contracted until most failed. An entire sector of the financial system simply imploded, crushing shareholders and threatening a massive liquidity crisis. By the late 1980s, the entire sector had melted down, and in 1989 the federal government intervened.

 

The federal government intervened in that crisis as it had in several crises large and small since 1929. Using the resources at its disposal, the federal government took over failed S&Ls and their real estate investments, creating the Resolution Trust Corp. (RTC). The amount of assets acquired was about $394 billion dollars in 1989 — or 6.7 percent of gross domestic product (GDP) — making it larger than the $700 billion dollars — or 5 percent of GDP — being discussed now. Rather than flooding the markets with foreclosed commercial property, creating havoc in the market and further destroying assets, the RTC held the commercial properties off the market, maintaining their price artificially. They then sold off the foreclosed properties in a multiyear sequence that recovered much of what had been spent acquiring the properties. More important, it prevented the decline in commercial real estate from accelerating and creating liquidity crises throug hout the entire economy.

 

Many of those involved in S&Ls were ruined. Others managed to use the RTC system to recover real estate and to profit. Still others came in from the outside and used the RTC system to build fortunes. The RTC is not something to use as moral lesson for your children. But the RTC managed to prevent the transformation of a financial crisis into an economic meltdown. It disrupted market operations by introducing large amounts of federal money to bring liquidity to the system, then used the ability of the federal government — not shared by individuals — to hold on to properties. The disruption of the market’s normal operations was designed to avoid a market outcome. By holding on to the assets, the federal government was able to create an artificial market in real estate, one in which supply was constrained by the government to manage the value of commercial real estate. It did not work perfectly — far from it. But it managed to avoid the most feared outcome, which was a depression.

 

There have been many other federal interventions in the markets, such as the bailout of Chrysler in the 1970s or the intervention into failed Third World bonds in the 1980s. Political interventions in the American (or global) marketplace are hardly novel. They are used to control the consequences of bad decisions in the marketplace. Though they introduce inefficiencies and frequently reward foolish decisions, they achieve a single end: limiting the economic consequences of these decisions on the economy as a whole. Good idea or not, these interventions are institutionalized in American economic life and culture. The ability of Americans to be shocked at the thought of bailouts is interesting, since they are not all that rare, as judged historically.

 

The RTC showed the ability of federal resources — using taxpayer dollars — to control financial processes. In the end, the S&L story was simply one of bad decisions resulting in a shortage of dollars. On top of a vast economy, the U.S. government can mobilize large amounts of dollars as needed. It therefore can redefine the market for money. It did so in 1989 during the S&L crisis, and there was a general acceptance it would do so again Sept. 29.

 

The RTC Model and the Road Ahead

 

As discussed above, the first group argues the current crisis is so large that it is beyond the federal government’s ability to redefine. More precisely, it would argue that the attempt at intervention would unleash other consequences — such as weakening dollars and inflation — meaning the cure would be worse than the disease. That may be the case this time, but it is difficult to see why the consequences of this bailout would be profoundly different from the RTC bailout — namely, a normal recession that would probably happen anyway.

 

The debate between the political leadership and those opposing its plan is more interesting. The fundamental difference between the RTC and the current bailout was institutional. Congress created a semi-independent agency operating under guidelines to administer the S&L bailout. The proposal that was defeated Sept. 29 would have given the secretary of the Treasury extraordinary personal powers to dispense the money. Some also argued that the return on the federal investment was unclear, whereas in the RTC case it was fairly clear. In the end, all of this turned on the question of urgency. The establishment group argued that time was running out and the financial crisis was about to morph into an economic crisis. Those voting against the proposal argued there was enough time to have a more defined solution.

 

There was obviously a more direct political dimension to all this. Elections are just more than a month a way, and the seat of every U.S. representative is in contest. The public is deeply distrustful of the establishment, and particularly of the idea that the people who caused the crisis might benefit from the bailout. The congressional opponents of the plan needed to demonstrate sensitivity to public opinion. Having done so, if they force a redefinition of the bailout plan, an additional 13 votes can likely be found to pass the measure.

 

But the key issue is this: Are the resources of the United States sufficient to redefine financial markets in such a way as to manage the outcome of this crisis, or has the crisis become so large that even the resources of a $14 trillion economy mobilized by the state can’t do the job? If the latter is true, then all other discussions are irrelevant. Events will take their course, and nothing can be done. But if that is not true, that means that politics defines the crisis, as it has other crisis. In that case, the federal government can marshal the resources needed to redefine the markets and the key decision-makers are not on Wall Street, but in Washington. Thus, when the chips are down, the state trumps the markets.

All of this may not be desirable, efficient or wise, but as an empirical fact, it is the way American society works and has worked for a long time. We are seeing a case study in it — including the possibility the state will refuse to act, creating an interesting and profound situation. This would allow the market alone to define the outcome of the crisis.

 

This has not been allowed in extreme crises in 75 years, and we suspect this tradition of intervention will not be broken now. The federal government will act in due course, and an institutional resolution taking power from the Treasury and placing it in the equivalent of the RTC will emerge. The question is how much time remains before massive damage is done to the economy.

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Obama - McCain: Where the Race Stands

Writing for Real Clear Politics, Jay Cost examines the current state of the race for the Presidency between Senators Barack Obama and John McCain.

 

In his analysis, Cost looks at the effect of the recent financial crisis on each candidate’s poll numbers. The data presented show a clear decline for McCain coupled with a corresponding rise for Obama since the current mess began to come to light.

 

From the seizing of Fannie Mae and Freddie Mac by the federal government to the first White House meeting on a way forward, McCain has dropped more than 3 points in the Real Clear Politics average of polls while Obama has risen more than 2 points. Using Cost’s numbers, Obama polled at 47.9 percent while McCain came in at 43.3 percent.

 

Prior to the crisis, the race was essentially a dead heat, with McCain reducing his deficit in the polls following his selection of Alaska Governor Sarah Palin as his running mate and the close of the Republican National Convention. “Currently,” Cost says, “the race stands roughly where it did in June, though McCain is in a slightly better position.”

 

What should be most troubling for McCain supporters, though, is not the Real Clear Politics national average. In presidential elections, national polls mean little except as an indicator of the larger mood of the country. The swing toward Obama in the national polling average is not nearly as important as the swing toward Obama in key battleground states. Some states will always vote Republican, and some states will always vote Democrat. But it is the battleground states that will determine the election. And that is where McCain is showing signs of distress. While some battleground states are firming up their positions, others, like Virginia, Florida and Ohio, are very close and within the polling margin of error. There has been a trend toward Obama in the battleground states, but it is unclear at this point if that trend will continue.

 

Some additional notes made by Cost: 1) the number of undecided voters has increased in the last three weeks from 6.3 percent to 8.8 percent; 2) the polls have been very volatile over the past month; and 3) there is a large portion of the electorate that says it makes up its mind right before the election. These three notes, Cost says, “…indicate that caution is required in projecting the state of the race forward. There seems to be a lot of uncertainty out there.”

 

Reinforcing his claim of uncertainty, Cost says, “The events of the last 20 days could be the break Obama and his supporters have been waiting for – something that induces the remaining undecideds to abandon the status quo and embrace ‘Change That Works For You.’ But it might also be the case that this is just another turn on a very windy road – something that, like the trip to Europe, loses much of its effect after it drops from the news.”

 

What is becoming apparent is that McCain needs something to happen to change public perception about the state of the economy. Right or wrong, the public is blaming Bush and Republicans in general, and McCain is the candidate of those being blamed. Barring a turnaround in perception, it could be a long 5 weeks for McCain.

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U.S., Russia Deal on Iran is a Waste of Time

The Associated Press, citing British Ambassador to the United Nations John Sawers, reported September 26 that the United States and Russia had reached an agreement on the pursuit of a new United Nations Security Council resolution on Iran for its failure to comply with UN demands to stop the enrichment of uranium.

 

But it appears that any new resolution will merely be a continuation of past Security Council ineffectiveness. According to the AP story, western diplomats stated that a new resolution would simply reaffirm the three sanctions resolutions already passed and would not contain any new measures designed to change Iran’s behavior.

 

Instead, the new resolution would seek to remind Iran that it has an obligation to comply with UN demands. Never mind that Iran has repeatedly denounced previous UN resolutions and has promised that it would never comply with Security Council directives. While the United States and a few European allies would like to see tougher sanctions imposed on Iran, the reality is that both Russia and China refuse to play ball.

 

No matter how much the west might like to see additional punitive measures taken, there is no hope of such action without the support of Moscow and Beijing. Both hold veto power in the Security Council, and both have refused to take meaningful action against Iran. Perhaps it’s because of business relationships with Tehran. Perhaps the reason is that Russia and China don’t see a real threat. Or perhaps Russia and China are simply taking advantage of an opportunity to snub the United States. Whatever the reason may be, it simply doesn’t matter. Without China and Russia, nothing meaningful is going to happen.

 

So while Russia and China are willing to agree to tough statements criticizing Tehran and demanding compliance with UN resolutions, neither is willing to back their talk with any sort of muscle. And without some enforcement mechanism that can be used to gain Iran’s compliance, all the talking and threatening rhetoric is meaningless. There is no fear factor present. And without a fear factor, there is no hope of compliance.

 

If the United Nations really wants Iran to stop enriching uranium, then the five major powers on the Security Council need to come together and resolve to enforce their demands on Tehran. Otherwise, the Security Council lends more weight to President Bush’s assertion that the UN risks becoming irrelevant. Of course, Russia and China will probably come around once Iran tests a nuclear device. But by then, it will be too late.

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Obama Replacing Biden: A Rumor Gone Wild

The Internet’s political blogs are filled with speculation that Democratic Presidential nominee Barack Obama is soon going to replace vice presidential running mate Joe Biden with Senator Hillary Clinton. Biden, the rumors go, will drop out of the race for health reasons, opening up the possibility of what many Democrats have labeled a dream ticket: Obama – Clinton.

 

The reason: Biden is becoming too much of a joke, and a liability, on the campaign trail. Since his selection, Biden has provided critics with lots of juicy material. His gaffes have become almost comical, and are happening with startling regularity.

 

Here’s a quick recap of some of Biden’s most notable screw ups. He called for a state senator at a campaign rally to stand up and be recognized, not realizing the man he was referring to was in a wheelchair. He demonstrated his ability to quickly recover, though, by saying, “God love ya, what am I talking about.” He then called on the rest of the audience to “stand up for Chuck.”

 

He said not too long ago that Hillary Clinton was eminently qualified to be president or vice president, and would probably have been a better pick than he was. He got a bit of history wrong when he talked about how President Roosevelt discussed the stock market crash on television in 1929 (it was then pointed out that Roosevelt was not president in 1929 and that there was no television as of that date).

 

He called an Obama – Biden campaign ad “terrible” during an interview. He opposed the bailout of AIG before Obama took a stance on the issue. That gaffe prompted Obama to say that Biden had spoken too soon. He has contradicted Obama on support for coal plants in the United States. And my personal favorite: Biden called his wife gorgeous (nothing wrong with that) but then said she had a doctorate degree, which was a problem. What exactly did he mean by that?

 

So, as Joe Biden’s mouth continues to get him in trouble, the rumor mill has started to work overtime. Dropping out for health reasons seems plausible enough. Biden has a history of brain aneurysms and that could be cited as a reason for his departure. But does this rumor have any merit? Is it really possible?

 

I don’t think so, and here’s why. First, a shakeup on the ticket now would open Obama up to charges that he didn’t properly vet Biden. In reality, Biden is a known entity. He’s been in Washington for 36 years and Obama knew just what he was getting. Second, replacing Biden could make Obama look indecisive, which is not exactly the image a presidential candidate wants to portray to the voting public. And third, absentee and mail-in ballots have already gone out in some states, and those ballots say Obama – Biden. Changing the ticket now could open up the possibility of legal challenges based on those ballots.

 

So, in the end, I think this rumor is just that: unfounded speculation based on a desire to see Hillary included on the ticket.  

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Newsweek: Why Democrats Lose

In an article called “Here They Go Again,” posted on the Newsweek web site and set for publication in the magazine’s September 29 issue, Jonathan Darman writes that Democrats should recognize that America is more conservative than they would like to believe.

 

“To Democrats,” he says, “it simply does not make sense. The past eight years, have, they say, been disastrous for America. The military is beleaguered…. The nation…has been disgraced…. The economy has collapsed. The financial system is broken. Eighty percent of voters believe the nation is on the wrong track. Yet…the Democratic nominee for the presidency only slightly leads the Republican standard bearer in most polls.”

 

It’s true. The latest RealClearPolitics averages have Senator Barack Obama leading Republican rival Senator John McCain by less than three points, 47.7 percent to 45.1 percent. With everything seemingly going against Republicans this year, the obvious question is why isn’t Barack Obama running away with this thing?

 

Darman says the prevailing mantra of Democrats, that Republican distractions and lies, packaged and sold with Karl Rove tactics, obscure the issues and problems that Democrats try to address in their campaigning, simply does not suffice.

 

Instead, Darman writes, the Republican Party “…has been the conservative party in an essentially conservative nation.” The fact that Democrats have won only when running centrist campaigns, while Republicans have won seven of the last ten presidential elections only serves to bolster Darman’s case.

 

And when Republicans do win, it is more often than not a blowout (Nixon in 1972, Reagan in 1980 and 1984, Bush the Elder in 1988, all cited by Darman). The only significant Democrat wins came in 1992 and 1996. Jimmy Carter, Darman notes, is the only presidential candidate fielded by Democrats in nearly 50 years to win 50 percent of the popular vote.

 

If Darman’s thesis is correct, then Barack Obama could be in trouble. He is rated by some analysts as the most liberal member of the Senate and his campaign is centered around the idea that government needs to be more involved in people’s lives. The idea that government is the answer has been largely discredited, Darman says, “…by the decline of the postwar boom, the failure of Lyndon Johnson’s Great Society and an American military defeat” in Vietnam.

 

Democrats Jimmy Carter and Bill Clinton, the only Democrats to win the White House since Lyndon Johnson, “…surveyed a center-right nation and concluded: ‘If you can’t beat ‘em, join ‘em,’” Darman says. Still, Darman says, Obama is well-positioned to win the presidency. “For the first time in 40 years,” he says, “the left has a real chance to sway the center’s notion of the proper role of the state.”

 

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