Focal Points Blog

Which Knot Needs to Be Unraveled First — Israel-Palestine or Iran’s Nuclear Program?

This week’s award for most counterintuitive opinion piece goes to New York Times contributing writer Noah Feldman. The best-selling author, Harvard Law professor, and member of the group that wrote the post-Saddam Iraqi constitution, Feldman has never been one to shy away from controversy. Indeed, he has willingly waded into thickets of stormy debate on numerous occasions—usually on issues surrounding the role of religion in public life both at home and abroad.

Feldman’s latest piece in the Times magazine takes a look at what might reasonably be achieved by President Barack Obama during the remainder of his first term (and possibly a second), and finds little cause for hope on the domestic front given the conservative thumping handed out to Congressional Dems in the midterm elections earlier this month. It should come as no surprise then, that

Historically, presidents thwarted by the loss of a Congressional majority have turned their attention to foreign policy — no doubt the reason that Obama left for Asia within a few days of the election. The explanation for the shift in focus is constitutional as much as tactical. The founding fathers, convinced that diplomacy could not be conducted by committee, gave the executive substantial discretion in conducting foreign affairs. Although Congress can ask questions and conduct oversight hearings, a president who wants to have an impact internationally can act more or less on his own.

Even here, though, prospects for major achievements are on the foreign policy front are few and far between. (As a quick aside, it’s interesting to note that Iraq doesn’t show up on Feldman’s radar whatsoever as an issue to which the president should devote special attention.)

The Afghan war has its own internal timing; the United States’ relationship with China is too complex for major breakthroughs; and, as Obama discovered at the G-20 summit, divergent economic interests can make even allies reluctant to compromise. Thus far, the Obama administration’s chief foreign-policy achievement has simply been to remind the world that the United States can be cooperative.

So, scanning the entire menu of US international affairs, where does Feldman see the best possibilities for success? You got it: the Middle East peace process! “Can Obama succeed where so many others have not?” Feldman asks. You might think, given the discouraging signs thus far in renewed efforts at getting the Israelis and Palestinians to sit down and negotiate that the answer is a no brainer, with emphasis on the “no.” But Feldman sees a glimmer of hope.

To be sure, Feldman—a knowledgeable analyst of Middle Eastern affairs—isn’t sporting a new pair of rose-colored glasses. Significant roadblocks to a lasting peace surely remain:

Israel and the Palestinian Authority will not, of course, make things easy. No sooner had direct peace talks begun in September — itself a victory for the Obama team — than the Palestinian side discontinued them over Israel’s refusal to renew a 10-month partial ban on building in the West Bank. Earlier this month, Israel announced that more than a thousand new housing units would be built in the Har Homa suburb of Jerusalem — a community that is outside the West Bank according to Israel, but inside the West Bank to Palestinians and the international community.

But, as Feldman rightly points out, “neither side has given up on the talks, and the Obama administration has continued its behind-the-scenes efforts to restart them.”

So then, what does Feldman believe to be the most productive way forward? In order to make his case, he begins with the actors involved. On the Palestinian side, things are a mess:

The Palestinian Authority is congenitally weak. Hamas controls Gaza, which has a Palestinian population approaching that of the West Bank. Dealing with Israel can be seen as a last-ditch attempt by President Mahmoud Abbas to stave off a permanent split of Palestine into two different subcountries. Although they are not prepared to negotiate with Israel, senior Hamas leaders have implied that they would provisionally accept a Palestinian state reuniting Gaza and the West Bank with 1967 borders. Of course, their motivation is presumably that they believe that Hamas could then take power democratically — hardly a reassuring thought for Abbas or the Israelis.

On the Israeli side of the equation,

most of Prime Minister Benjamin Netanyahu’s right-wing coalition government is profoundly skeptical of any territorial compromise; Netanyahu would not pay a domestic price if the negotiations fail. Why, then, has he not scuttled them outright? Many Israelis consider Iran’s nuclear capacity an existential threat. Yet both the Bush and Obama administrations have discouraged Israel from attacking Iran and starting a regional war. Netanyahu appears to believe that if he cooperates to some degree with the Obama administration’s request that he negotiate, he can — eventually — demand in return U.S. cooperation (or at least acquiescence) in an Israeli move against Iran. In the meantime, Netanyahu’s goal is to satisfy his coalition partners by showing resistance to the United States on settlement building without wholly alienating Obama. No doubt he hopes that Republican control of the U.S. House of Representatives will protect him from any pressure brought to bear by Obama and keep up the drumbeat on the Iranian threat.

And then of course, there’s Hezbollah. Interestingly, Feldman notes that

At the moment, Hezbollah is especially nervous about its impending indictment by a United Nations tribunal investigating the assassination of the former Lebanese prime minister Rafik Hariri. Faced with a loss of credibility for killing Hariri, a Sunni who is widely seen as a martyr, Hezbollah hopes to discredit the tribunal. It has tried blaming Israel and hinting that its militia might take to the streets. Provoking an Israeli attack would be the riskiest strategy, but it cannot be ruled out. In both Israel and Lebanon, many people speak about such a war in terms of when, not if — and both Iran and Hezbollah might prefer it to occur according to their timing rather than Israel’s. Needless to say, such a war would be disastrous not only for Lebanese and Israelis, but also for Palestinians, whose hopes for a state of their own would be crushed if Israel were attacked by Iranian missiles lobbed on their behalf but without their consent.

Amidst this crazy quilt of power, interests, and worry, Feldman sees an interesting pattern emerge: all the involved parties are acting from a position of weakness. And “overlapping weakness,” Feldman asserts, “has been a good basis for peacemaking in the region ever since the Camp David accords.”

What Feldman doesn’t address—and what would have made for a more interesting, and ultimately more important contribution—is what role, if any, the president himself should play in these negotiations. Does Obama have enough political capital to personally direct traffic through these proceedings, or does his weakness at home allow Netanyahu a free pass to continue walking all over the White House? And what about Hillary Clinton? If the time is as ripe as Feldman believes, should Clinton be considering some shuttle diplomacy to rescue what have been disappointingly flaccid results from the previously unassailable uber-diplomat George Mitchell? On these basic tactical issues, Feldman is silent.

Instead, he concludes by charting the possibilities for numerous domino effects that might result from an Israeli-Palestinian deal, everything from the emergence of a more moderate Hamas, to an Israeli-led alliance of largely Arab states against Iran. His closing remarks suggest that Feldman, unsure how to tidily wrap-up his analysis, decided to run a Hail Mary pass of best case scenarios that appeal more to wishful thinking than sober reason.

This is especially the case with the respect to potential war with Tehran. Thus far, the push to bomb Iran is winning its race against the push for peace between Israel and the Palestinians. As a result, it may be worth asking if Feldman has his priorities, and timetable of possible futures, reversed. If Washington is suckered into attacking the Persian heartland, or if Israel itself marched to war against Iran, peace with the Palestinians will be the least of Middle East concerns.

On the other hand, if Iranian-US/Israeli tensions are quelled, Washington might be able to focus more of its attention on devising a solution to the Palestinian question. It wouldn’t be easy, let alone guaranteed. But if Feldman is correct to suggest that fears of a nuclear Iran contribute to the continuing mischief frustrating a lasting settlement, perhaps Obama should get serious about tackling Washington’s Iran problem before playing peace-monger with the Palestinians and Israelis.

Michael Busch, a Foreign Policy In Focus contributor, teaches international relations at the City College of New York and serves as research associate at the Ralph Bunche Institute for International Studies. He is currently working on a doctorate in political science at the Graduate Center, City University of New York.

It’s a Shame Chalmers Johnson Did Not Live to See the U.S. Air Base on Okinawa Closed

Futenma, Okinawa(To left, U.S. air station Futenma in Okinawa.)

I contacted Chalmers Johnson last spring when we were putting together a coalition to oppose the relocation of the Futenma air base in Okinawa. Johnson, who died over the weekend, was best known for his book-length critiques of U.S. foreign policy (Blowback, The Sorrows of Empire, Nemesis, and this year’s Dismantling the Empire). But he began his career of scholarship with books on China and Japan, and in 1999 published an edited collection called Okinawa: Cold War Island.

Johnson graciously arranged to send a signed copy of the book on Okinawa to a congressman heading to Japan. And he agreed to pen an op-ed to coincide with the massive protest against the base relocation that took place in Okinawa on April 25. In the piece that my colleague Emily Schwartz Greco ultimately placed with The Los Angeles Times, he wrote:

The U.S. has become obsessed with maintaining our empire of military bases, which we cannot afford and which an increasing number of so-called host countries no longer want. I would strongly suggest that the United States climb off its high horse, move the Futenma Marines back to a base in the United States (such as Camp Pendleton, near where I live) and thank the Okinawans for their 65 years of forbearance.

Johnson was a realist. “Unfortunately, I’m not very optimistic that either the Obama administration or the Japanese will do anything about closing Futenma,” he wrote to me at the time. As it turned out, he was right. The Obama administration put maximum pressure on the Japanese government to abide by an earlier agreement to build a replacement facility on Okinawa. As a result, Japanese Prime Minister Yukio Hatoyama reversed his initial skeptical position on building a new base and then promptly resigned.

Two trends, however, may force both the United States and Japan to change their policy. In the United States, a veritable fever to cut the deficit has descended on Washington. The preliminary Deficit Commission report, released earlier this month, recommended a one-third cut in U.S. military bases overseas. Even conservatives such as Tom Coburn (R-OK) are willing to put the Pentagon budget on the chopping block.

Meanwhile, in Okinawa, two prominent figures are battling for the governorship of the island. Both incumbent Governor Hirokazu Nakaima and former Ginowan Mayor Yoichi Iha want Futenma closed and the replacement facility built somewhere other than the Okinawan prefecture. Iha, supported by the Social Democrats and Communists, has gone one step further: he doesn’t want the base in Japan at all. The election takes place next weekend. Given the sentiments of Okinawans – more than 80 percent oppose the current Tokyo-Washington relocation plan – the new governor of the island, whether Nakaima or Iha, will be a thorn in the side of the alliance.

Chalmers Johnson would no doubt have continued to be skeptical of change in the short term. No other Japanese prefecture is interested in another U.S. base. The Pentagon is pushing back against any substantial cuts and is not eager to reduce its overseas footprint. But, as I wrote back in spring for TomDispatch,

NIMBY movements may someday finally push the U.S. military out of Japan and off Okinawa. It’s not likely to be a smooth process, nor is it likely to happen any time soon. But the kanji is on the wall. Even if the Yankees don’t know what the Japanese characters mean, they can at least tell in which direction the exit arrow is pointing.

Chalmers Johnson explained the how and why of U.S. empire, and for that we all owe him an enormous debt of gratitude. It is a shame that he did not live long enough to see that empire dismantled. But in the work we do toward that goal, we honor his name and his work.

U.S. Out of Afghanistan by 2014? Don’t Hold Your Breath

Rasmussen, Karzai(To left, Afghanistan President Hamid Karzai and NATO Secretary General Anders Fogh Rasmussen.)

On Saturday, at the NATO summit in Lisbon, officials announced 2014 as the target date for withdrawing combat forces from Afghanistan. Afghanistan is already America’s longest war. As of next Saturday, at nine years and 50 days, it will also have exceeded the length of the Soviet’s war in Afghanistan. In 2014, this will have been a 13-year war.

Eleven years sounds like a long time, but the U.S. presence in Afghanistan will almost certainly be even longer. While NATO secretary general, Anders Rasmussen framed 2014 as the end of NATO’s combat mission in Afghanistan, Obama made sure to refer to 2014 as a target date rather than a deadline. The withdrawal of U.S. forces would, he noted, depend on the readiness of Afghan forces to take responsibility for their country’s security.

Writing for Politico, Josh Gerstein described the NATO announcement as little more than spin. It “seemed intended to generate headlines or at least a public perception of a plan for withdrawal.”

In all likelihood, that media strategy will continue well into the future, and will become especially apparent when we arrive at previously announced target dates. In July 2011, we can expect the cameras to be rolling when the official drawdown of soldiers begins. As in Iraq in 2010, in Afghanistan in 2014, we can expect the president to announce the formal end of America’s combat mission and applaud the soldiers for a job well done. As in Iraq, the official end of the combat mission in Afghanistan will not mean the removal of all troops, but rather the continued presence of thousands of soldiers serving as advisors and trainers. And as in Iraq, the line between advisor and combat soldier will continue to be murky.

In the end, press conferences about Afghanistan tell us much more about the official media strategy than they do about the administration’s actual plans. Currently, as Nick Turse of TomDispatch has reported, the U.S. has over 400 military bases in Afghanistan and plans for a mega-embassy, the largest in the world. The administration would not embark on a building boom of this scope unless it had plans to be there for a long, long time.

Some on Right Think Nicaragua’s Incursions Into Costa Rica Call for U.S. Attack

Ortega Google MapsKnown more for its Page Six gossip columns than anything approximating serious political reporting and analysis, the New York Post apparently feels no need to exercise responsibility in publishing op-eds calling for even more US military intervention overseas to protect democracy. No, the paper is not suggesting that we expand our presence in Pakistan, nor does it argue for increased attacks against targets in Yemen in the name of fighting terror. It isn’t even suggesting, following the lead of today’s Washington Post, that we threaten to bomb Iran.

The Post’s Benny Avni called for possible military action against Nicaragua on Thursday, following its recent incursions onto neighboring Costa Rica’s soil earlier in the week, thanks to an error by Google Maps of all things. Instead of questioning what business a sovereign nation-state has in relying on Google for keeping track of its own territory, Avni takes Nicaragua’s actions as another sign of Barack Obama’s failed presidency. “Will the Obama administration ever start standing up to the Latin axis of caudillos?” an outraged Avni asked. “Nicaragua invaded Costa Rica last month”!

One might question how an “axis of caudillos” could be anything but Latin, or wish that the paper’s editors had spared readers such an aesthetically unpleasing contrivance. But never mind: these are petty grievances when compared with the larger problems of Avni’s approach.

The editorial adopts the conceit that Barack Obama is failing to defend democracy in what Avni perceives to be Washington’s back yard.

Never mind that Nicaragua’s constitution limits a president to two consecutive terms in office. Ortega can use the government’s hold over institutions and the press to erase that — just as Chavez did in becoming Venezuelan president for life. Last year, Manuel Zelaya tried to pull the same trick in Honduras — and Argentina’s Cristina Kirchner is mulling a similar campaign now. (Her husband’s recent death removed the option of further tag-team end-running of the term limit.)

Washington has failed to take a strong stand against such violations of democratic principles…The Obama crowd needs to stop flinching every time the caudillos exploit the old Yanqui go home rallying cry.

To be sure, Avni’s got a point about Ortega. The Nicaraguan president represents the very worst his country’s politics have to offer. Far from the leftist revolutionary he once purported to be, Ortega has reduced himself to little more than an opportunistic kleptocrat who demonstrates greater commitment to his personal wealth accumulation than to freeing his country from the yoke of economic depravation.

I suspect that Avni’s also right about Ortega’s motivation in being so stubborn on the issue when he argues that

Ortega hopes to use his tough stance to drum up domestic support for a third presidential term. In fact, his victory in next year’s election is predetermined if the OAS can’t send election observers, as it now plans.

As the Economist has observed

Mr. Ortega has enjoyed a wave of nationalist support at home. On November 3rd he won the first unanimous vote in the National Assembly of his four years in office. All this coincides with the start of the election campaign.

Still, using Ortega’s craven political ambition and disregard for term limits as support for possibly sending American troops to roll back the assault on democracy in Latin America is as silly as it is dangerous. By Avni’s logic, Michael Bloomberg — himself no fan of term limits when they constrain his political ambition — should be included as a member of Chavez’s Army of Darkness. Does Avni fear that we suffer from a democracy deficit at home, then? I would hazard that he does not.

To the more serious issue of Nicaragua’s incursion into Costa Rican territory, Avni’s argument again holds no more water than a soggy paper towel.

Chavez, Ortega and the rest threaten their neighbors and America’s global interests. Most recently, Chavez bought from Russia the S-300 anti-aircraft missiles that Moscow had promised not to deliver to Iran — and it’s a safe bet he’ll soon deliver the materiel to the mullahs.

His assumption, then, that Nicaragua’s transgressions somehow green-light possible military action by the United States apparently ignores considerations of little things like international law, dispute settlement precedent in Latin America, and the fact that Costa Rica itself doesn’t want it. But Avni isn’t concerned with trivialities. “Unlike Costa Rica, we can back up our diplomatic prowess with force, if need be.”

No matter how wrong-headed Avni’s argument may be, at least it isn’t as lunatic as some others we’ve seen. Last week, Haaretz floated a completely different explanation for Nicaragua’s Google misadventures:

The recent border dispute between Costa Rica and Nicaragua is a sign of an ambitious plan by Venezuela, Iran and Nicaragua to create a “Nicaragua Canal” linking the Atlantic and Pacific oceans that would rival the existing Panama Canal…Sources in Latin America have told Haaretz that the border incident and the military pressure on Costa Rica, a country without an army, are the first step in a plan formulated by Venezuelan President Hugo Chavez and Nicaraguan President Daniel Ortega, with funding and assistance from Iran, to create a substitute for the strategically and economically important Panama Canal.

Back on earth, however, Avni’s impatient rejection of multilateral efforts at peaceful resolution of potentially explosive conflicts completely misses the two most important developments in the case.

First, the Nica-Costa Rica fracas has ignited a major shift in the operations of the OAS. After Nicaragua protested OAS deliberations with its absence, the Latin American Herald Tribune reports that the Venezuelan representative motioned to block

debate about whether or not to call the meeting, arguing that it was not the OAS’s responsibility to decide a border dispute and that a quick response was the worst solution, and he even insinuated that the Council was leaning toward supporting Costa Rica in the matter. His motion was rejected and the Council proceeded to debate several amendments that had been presented.

This is in the face not only of the protests coming from Caracas and Managua, but following a vote that prompted six abstentions. As Boz points out,

In the course of the past two weeks, we’ve gone from an OAS that would not vote unless the results would be unanimous to an OAS that is divided on procedural votes and holding sessions over the objections of other members… this shift away from the consensus model in the OAS could be a huge story with lasting implications for the organization.

Second, Costa Rica’s non-alarmist resort to the OAS and other organs of international security seems to be working. Not relying solely on the slow-churning wheel of OAS diplomacy, government lawyers filed suit against Managua in the International Court of Justice, calling on the UN’s top judicial body to order Nicaragua back to its own territory. Managua responded by signaling that it was ready to negotiate a solution.

There’s little question that the Central American dispute will resolve itself peacefully, albeit not quickly. It’s also true that Ortega’s disregard for his neighbor’s sovereignty is unacceptable, and that Nicaragua’s advances, and ugly politics in general, need to be rebuffed. But if Washington is to reassert hemispheric leadership, as Avni demands, it’s going to need to bring more to the table than lazy, knee-jerk calls for the use of force. To be sure, there are plenty of items to criticize in Obama’s foreign policy to date. But support for peaceful diplomacy through international organizations is not one of them.

Michael Busch, a Foreign Policy In Focus contributor, teaches international relations at the City College of New York and serves as research associate at the Ralph Bunche Institute for International Studies. He is currently working on a doctorate in political science at the Graduate Center, City University of New York.

Senator Kyl’s Stalling on New START Is Fraying Washington’s Nerves

Sen. Kyl“Senator Kyl’s recent statements begin to seriously call into question where the cat and mouse game between the administration and Kyl’s office will end,” writes Chris Jones of the Center for Strategic and International Studies in an indispensable post. Minority Whip Kyl (AZ), to whom Senate Minority Leader Mitch McConnell (KY), has granted final say on whether Senate Republicans will vote to ratify New START, has been stringing along the Obama administration.

Either he’s trying to extort the very last penny from it that he can for the nuclear weapons industry and its vaunted “modernization” program before giving the go-ahead to Republicans to vote yes. Or, failing that, he seeks to squeeze what funding he can from the administration before ordering the bill shot down.

Kyl’s coyness has become tiresome — even to the Senate’s next most respected voice on nuclear weapons issues, Richard Lugar (IN). Jones links to Josh Rogin at Foreign Policy:

In a stunning rebuke to members of his own caucus [Lugar] said on Wednesday that the GOP is intentionally trying to put off a vote on the New START treaty with Russia, and avoiding a serious discussion about the treaty within the caucus. . . . Kyl told [Rogin] that negotiations were going forward “in good faith,” but Lugar suggested that’s all a smoke screen and that the Republican leadership is committed to avoiding completion of the treaty for the foreseeable future.

In other words, not during the lame duck session. Jones also links to Elizabeth Weingarten at the Atlantic, who writes:

Matthew Rojansky, the deputy director of the Russia and Eurasia program at the Carnegie Endowment for International Peace, says . . . Kyl may be waiting until the next Congress to make sure the. . . . promised funds to appear in a spring appropriations bill.

Or, Kyl and the Senate Republicans are stalling “just to make the president look ineffective and weak,” writes Center for American Progress president John Podesta at Politico (another link courtesy of Jones). But, in their rush to make the president look weak, they may, many believe, be weakening national defense. Rogin quotes Lugar: “Every senator has an obligation in the national security interest to take a stand, to do his or her duty.”

What Lugar means is that, in the year since the original START expired, the United States has been sorely lacking one of its provisos — the right to inspect and monitor Russia’s nuclear program. Podesta also writes:

Majority Leader Harry Reid (D-Nev.) must recognize that most Republicans have little interest in killing the treaty. He should schedule a vote in this lame-duck session. . . . Though a handful of GOP senators outright reject New START and are ideologically opposed to arms control, the majority are likely to support the treaty if it comes to a vote.

Apparently, most Republican senators get the national security angle, which also includes ensuring Russia’s help pressuring Iran to abandon its nuclear program. Hard to believe, but there actually appears to be a Democratic bill that Republicans, however much they’re opposed to helping Obama “reset” U.S.-Russian relations, don’t want to vote no on.

Criminally High Interest Rates Foul the Wellsprings of Microcredit in India

Just as a new round of existential self-flagellation seemed primed to capture the time and attention of the foreign aid Twitterverse, news broke that reoriented the discussion from retrospective hand-wringing to forward looking action. Margaret Wente’s weekend essay—”Is Humanitarian Aid Bad for Africa?”—provoked a flurry of debate (though none of it so far as I could tell took issue with the Palin-esque categorization of “Africa”as a homogenous giganta-country) and attracted the attention of aid luminaries Dambisa Moyo and William Easterly. Then everything changed.

On Tuesday, the Bill and Melinda Gates Foundation announced a major strategic sea-change in its approach to combating poverty around the world. Melinda Gates, speaking at a media roundtable event in Seattle, made known her foundation’s commitment to

spend $500 million over the next five years to spur savings among the world’s poorest workers who live on less than $2 a day. As part of the pledge…Gates announced $40 million in new grants to six recipients that will start or expand savings programs, test new approaches such as mobile banking and research how such programs improve the lives of the poor.

The move marks an important move away from support for microcredit ventures. The Puget Sound Business Journal inquired whether

microlenders—which have an established network of locations to serve borrowers, unlike microsavings institutions—would play an important role in the foundation’s new strategy. The answer is no.

And good thing, too! The New York Times reports that microcredit is in huge trouble in the very place where it has been hailed the greatest success: India. The Times notes also that:

The crisis has been building for weeks, but has now reached a critical stage. Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry, banking officials say.

Why the sudden problems? The roots may be found in some of the early criticisms of leveled against the microfinance industry. Chief among them, skeptics of microlending argue that the exorbitant interest rates that often attend loans reduce the practice to little more than formalized loan sharking. As the Times itself reported this past spring,

the phenomenon has grown so popular that some of its biggest proponents are now wringing their hands over the direction it has taken. Drawn by the prospect of hefty profits from even the smallest of loans, a raft of banks and financial institutions now dominate the field, with some charging interest rates of 100 percent or more.

The phenomenon is especially acute in countries like India, Mexico, and Nigeria, where the demand for small-market loans has completely outstripped local supply, opening the door for institutions to begin charging usurious interest rates to vulnerable borrowers.

In the case of India, officials

fear that microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy.

Responding to public anger over abuses in the microcredit industry — and growing reports of suicides among people unable to pay mounting debts — legislators in the state of Andhra Pradesh last month passed a stringent new law restricting how the companies can lend and collect money.

Even as the new legislation was being passed, local leaders urged people to renege on their loans, and repayments on nearly $2 billion in loans in the state have virtually ceased. Lenders say that less than 10 percent of borrowers have made payments in the past couple of weeks.

The lion’s share of public resentment surrounding microcredit institutions in India seems directed at the country’s largest provider of microloans to the poor, SKS Microfinance. The firm recently took its venture public, with its CEO Vikram Akula personally pocketing a crisp $13 million from the sale of his shares.

For his part, Akula defended his group, pinning blame on “rogue”actors who undermined the integrity of the microcredit structure though “errant practices.” The Wall Street Journal notes that

Mr. Akula said SKS’s lending rates had dropped consistently, to 24 percent, from 31 percent as the lender was able to take advantage of economies of scale. Within that, the company’s cost of funds was 9 percent and the cost of delivering a loan was 9 percent, he said. In addition, there was a 3 percent corporate tax, and another 1.5 percent was set aside for loan-loss provisions. “From a microfinance perspective, we have some of the lowest cost structures in the world,”he said.

This may be, but Alula’s suggested remedy for the crisis—”enlightened regulation”by the Indian state—would do nothing for micro borrowers such as K. Shivamma, a 38-year-old farmer profiled by the Times, who

took her first loan hoping to reverse several years of crop failure brought on by drought. “When you take the loan they say, ‘Don’t worry, it is easy to pay back,’ “Ms. Shivamma said. The man from Share, the company that made her first loan, did not ask about her income, Ms. Shivamma said. She soon ran into trouble paying back the $400 loan, and took out another loan, and then another. Now she owes nearly $2,000 and has no idea how she will repay it. The television, the mobile phone and the two buffaloes she bought with one loan were sold long ago. “I know it is a vicious circle,” she said. “But there is no choice but to go on.”

All of which seems to suggest that the microcredit crisis threatening the Indian economy offers initial support to William Easterly’s quick takeaway from Wente’s article, namely that “the viable arguments are that (1) aid’s record is sufficiently disappointing that it is unlikely to ever be the main driver of successful development, [and] (2) if aid were more accountable it would do less ill and more good.”But if the fears of some observers are realized in this particular case, “more good”will be completely off the table moving forward, and “ill”a mild understatement of the consequences.

Michael Busch, a Foreign Policy In Focus contributor, teaches international relations at the City College of New York and serves as research associate at the Ralph Bunche Institute for International Studies. He is currently working on a doctorate in political science at the Graduate Center, City University of New York.

Could Gandhi Have Halted Night Raids?

Afghanistan night raid victimU.S. Special Operations forces night raids may be scaring the wits out of Afghans, but they’re not the only ones freaked out. General David Petraeus professed to experience “astonishment and disappointment” when Afghan President Hamid Karzai recently called for an end to them because, aside from imperiling their lives, the raids drive Afghans into the arms of the Taliban.

In a Huffington Post article, Robert Naiman of Just Foreign Policy writes that the tactic of night raids “has been the subject of almost no public debate in the United States. Newspaper columnists aren’t inveighing against the night raids. Members of Congress aren’t demanding that the night raids stop.” What if, he asks, “Afghans adopted a strategy of nonviolent resistance against the night raids? Could they be stopped?” Naiman explains.

Let’s suppose . . . that there were a well-organized popular movement in Afghanistan against the night raids. Let’s suppose that this movement went around to respected Islamic scholars and got legal judgments that the night raids are an offense against Islam. Let’s suppose that this movement prepared to defend villages where U.S. night raids are being carried out, and organized committees of unarmed women to implement this defense. And let’s suppose that when a U.S. night raid began, a call would go out from the mosque, and a group of unarmed women would surround the house and say to the US soldiers: you’re not coming in, and if you try, we will not move. And let’s suppose that some Western NGO issued these women video cameras, as the Israeli human rights group B’tselem has issued Palestinians video cameras. And let’s suppose that a group of people in the United States and Western Europe agreed that they would try to support this movement, by vigorously raising their voices in protest whenever US special forces tried to break the line of protesters.

Nonviolent resistance is employed by thousands of Palestinians, along with sympathetic Israelis. Naiman cites the citizens of Budrus, who in 2004, used nonviolent resistance to force Israel to re-route the West Bank Barrier around its village. Do Focal Points readers think that this tactic has failed to achieve wide success in Palestine because it’s an impotent act — or because it hasn’t been fully implemented? Can Gandhi’s satyagraha work in Afghanistan as outlined by Naiman? Let us know in the comments section.

Note to Washington: China’s Monetary Moves Are Not a Conspiracy Against U.S.

China moneyOutgoing Director of the White House National Economic Council Larry Summers sure knows how to make the obvious seem newsworthy to the Wall Street Journal. Speaking with an elite group of American investors keen to capitalize on rapidly emerging market opportunities in Southeast Asia, Summers revealed to his audience what is by now conventional wisdom to anyone who bothers reading the newspaper once every year or so. According to the Journal, Summers told his audience that “The history of the early 21st century ‘will be about how the world adjusted to the movement of the theater of history toward China.'”

No kidding.

Still, the Journal contextualizes the current situation with some sobering, if widely known stats:

Underscoring the tension between the countries, Min Zhu, special advisor for the International Monetary Fund in Washington and former deputy governor of the People’s Bank of China, told the same forum that the weight of global GDP is shifting toward China and other fast-growing emerging economies while richer nations still face high debt and weak growth.

Given current trends, emerging markets and developing countries will account for 60% of global gross domestic product in six years, he said. “It is a different world,”Mr. Zhu said.

Robert Diamond, head of Barclays PLC, said U.S. businesses could pick up the mantle but lack the confidence to start hiring because of concerns the country isn’t on the right path with spending, deficits and taxes.

Meanwhile, China is moving up the value chain into high-tech capital goods and is poised to account for about a third of global manufacturing of advanced machinery and equipment within a decade, from about 8% today, Mr. Zhu said. “China will probably lead a global manufacturing restructuring. That will be a big impact for advanced economies, particularly for economies that want to export tech goods.”

But this is only part of the story. What the Journal fails to point out is that the gradual transition of hegemony between the United States and China is currently being threatened by Washington’s insistence that Beijing dispense with its clever practice of currency manipulation, tinkering that has artificially driven down the price of Chinese money, and therefore also the price of Chinese commodities. The effect has been dramatic, as US manufacturing sectors have struggled to compete with attractive Chinese exports being sold well below cost.

Trouble is, as President Barack Obama rudely discovered this past week in his failed trip to the Far East, China refuses to be hectored on the issue of currency manipulation by an administration guilty of precisely the same thing (but for an entirely different purpose).

But even if the Fed were to abandon its newly minted policy of Quantitative Easing (if this makes no sense to you, and it shouldn’t, click here for an entertaining primer), it’s far from clear that China would be persuaded to follow suit. Thomas P.M. Barnett, in an unusually smart essay in yesterday’s World Politics Review worth quoting at length, explains why:

China’s demographic clock is ticking like no other nation’s in human history. Already losing its cheap-labor advantage right now, China is set to stockpile elders from here on out at a pace never before witnessed. By 2050, it will have more non-working old people (400 million plus) than America’s total projected population (400 million). At that point, the U.S. median age will still be just below 40, while China’s will be closer to 50. It took Europe a century for its elder population to gradually rise from 10 percent of total population to the 20-percent level. America’s still-unfolding journey along the same path will run about six decades. But China will have 20 years, if it’s lucky.

That should explain what’s driving China’s seemingly selfish economic strategy.

The world is now rolling the dice on one massive demographic bet: that the seemingly inexhaustible engine of Asia’s savings will be able to sustain both an aged West and a rapidly aging East until a new regional source of accumulated savings emerges to drive the global economy. That begs the question of whether or not China will have enough time to nurture its replacement in the role of global financier in either the Islamic belt, sub-Saharan Africa, Latin America or some combination thereof.

Understand, too, that young growing countries tend to deficit-spend, just like older ones. It’s the middle-aged ones — like both China and America today — that are supposed to rack up the savings. But the U.S. continues to blow its wad as the Boomers start marching into retirement, while China’s middle-aged window will slam shut more rapidly than that of any civilization in human history.

It’s about time someone other than Fareed Zakaria attempts to short-circuit the fear-mongering, lunatic predictions emanating from the far right concerning the rise of China. As Barnett rightly points out,

Our sense of scale is completely out of whack. The U.S. freaks out politically because a million or so Latinos show up inside America each year. But to approximate China’s domestic challenges, we’d need to invite roughly twice the population of Latin America (a billion-plus souls) into the country to achieve the same demographic density, with three-quarters of them impoverished to achieve the same poverty density. Clearly, our political and economic system might operate more rigidly under such circumstances.

As things now stand, we interpret China’s efforts to advance its economic “rise” as necessarily coming at our expense. By that logic, however, China cannot succeed without destroying the U.S. economy. Meanwhile, given our penchant for decrying China’s lack of democracy, the Chinese interpret our efforts at “rebalancing” the global economy to be nothing less than an attempt to destroy the ruling Communist Party’s primary source of political legitimacy — namely, China’s ongoing per capita income expansion. …

The truly ironic part is that we need Chinese savings to revitalize America’s economy — right now. But instead of welcoming that investment instinct, we spot bogeyman intentions behind every Chinese move to enter the U.S. market.

Coming into office last year, Barack Obama gave every indication of being above that sort of fear-mongering. But after his recent electoral “shellacking,” the president apparently senses that his political back is up against the wall. He’ll now be doing whatever’s necessary to avoid what he perceives to be the real ideological Armageddon on the horizon: a Tea Party president in the White House come 2013.

Which, I suppose, drives at the heart of all matters of political economy: namely, the degree to which smart economics is all too frequently sacrificed at the altar of political expediency, no matter how sympathetic its ends. The United States has successfully avoided crashing into the shoals of poor economic stewardship during the Cold War and immediate neoliberal period following the collapse of the Soviet Union. But as the 2008 financial and economic crisis seems to suggest, time may be running out on American faith in hypercapitalist free markets.

Given these gathering clouds, and caught between the twin threats of Tea Party potency and perceived threats of China’s rise to international prominence, one worries that President Obama may fall victim to the time-worn tendency to make the good the enemy of the best. Or, perhaps in the current situation, it’s a case of rendering the bad the enemy of the worst.

Michael Busch, a Foreign Policy In Focus contributor, teaches international relations at the City College of New York and serves as research associate at the Ralph Bunche Institute for International Studies. He is currently working on a doctorate in political science at the Graduate Center, City University of New York.

Republican Go-to Guy on Nukes Keeps Obama Administration Twisting in the Wind on New START

Kyl, McConnellAlong with Richard Lugar (R-IN), Jon Kyl, the Republican Senate whip from Arizona, is Senate Minority Leader Mitch McConnell’s (KY) go-to guy on nuclear issues. We wrote yesterday:

“After Republicans picked up six seats in the Senate earlier this month, prospects for the passage of the new START began to diminish (not that this author minds). Barron YoungSmith at the New Republic writes that last week ‘chief of staff to Senator Bob Corker — a key vote on the treaty — said that it should not be considered during the lame-duck Congress, and the Republican Policy Committee released a memo urging a similar delay.'”

Kyl is known as a staunch supporter of nuclear weapons who made his mark as a freshman senator in 1999 when he blew up passage of the Comprehensive (nuclear) Test Ban Treaty. But, writes YoungSmith in the article I cited yesterday, “bizarrely enough, he seems to want [new START] to go through.” I continued:

Turns out, not so bizarrely. Desmond Butler for the Associated Press writes:

In a bid to win approval of [new START] before newly energized Republicans increase their clout in the Senate, the Obama administration is offering to add billions of dollars in funding for the U.S. nuclear arsenal. [To wit] a boost of $4.1 billion . . . between 2012-2016 . . . that will go to maintaining and modernizing the arsenal and the laboratories that oversee that effort. The additional money comes on top of an additional $10 billion the administration had already agreed to over 10 years.

And that additional $10 billion, YoungSmith explains, is “on top of” . . .

. . . an initial massive $80 billion appropriation in Obama’s 2011 budget proposal [that Kyl demanded be] guaranteed over ten years. [In the end] Kyl’s proposal would pair New START with a huge cash bonanza for programs that would make it easier to maintain and upgrade our nuclear weapons in the future.

In other words, according to YoungSmith, Kyl “seems to think that securing long-term funding for nuclear modernization outweighs whatever qualms he might have about reducing our present arsenal.”

Writing for Time, Massimo Calabresi is wary of Kyl, though. Of his perceived openness to New START, Calabresi writes:

Maybe. But if Kyl’s primary characteristic as a Senator is subterfuge, his secondary characteristic is a tough devotion to his ideological positions. . . . And convincing Kyl to accept a large cut to the cap on U.S. strategic warheads runs counter to positions he has taken over 16 years in the Senate. That said, the administration has accurately identified something Kyl wants in exchange for accepting a “relatively benign treaty.”

Nuclear modernization and missile defense, that is. Those issues aside, writes Kelsey Hartigan at Democracy Arsenal, New START will be “the first test of whether the GOP can be trusted to lead. [Sen. Lugar] recently wrote that ‘the Republicans can’t just be the Party of No.’ [And as] Robert Kagan recently explained to his fellow conservatives, ratifying New START is a ‘good first step toward governing.'” Besides, writes Hartigan, “Screw up New START and you can kiss your nuclear pork goodbye.”

To what extent, should New START be shot down, remains to be seen. But we might find out. Yesterday at Politico, Laura Rozen reports that Kyl may be getting cold feet.

Seemingly shutting the door on one of the Obama administration’s key goals for this lame-duck session of Congress, Sen. Jon Kyl (R-Ariz.) said Tuesday that he does not think the Senate should vote to ratify the START treaty before the end of the year. . . .

“If the Republicans’ lead negotiator says we shouldn’t consider START during a lame duck, I think we have to take him at face value,” a leadership aide told POLITICO Tuesday. “Having said that, we are going to continue to try and get it ratified in the lame duck.”

Also, Kyl is due to speak with either — reports vary — Vice President Biden or Secretary Gates tomorrow. Remember: however pro-nuclear those opposed to New START may appear to be, they’re voting against a measure that Secretary Gates and the Pentagon support. A no vote would also keep U.S. access to Russia’s nuclear program via inspections closed as it has been for a year. More to the point, as Ms. Rozen reports, “The move could be a blow to the Obama’s administration’s ‘reset’ of relations with Russia, and for U.S.-Russian cooperation on countering Iran’s nuclear program, among other areas.”

In regards to Kyl’s statement that the Senate should wait until after the lame-duck session to address New START, she writes:

“Issuing a press statement while sensitive private talks are ongoing strikes me as an act of bad faith,” the nonproliferation hand said. “It only reinforces those who believe that Kyl is playing the administration for a fool, stringing out a series of concessions before abruptly calling the whole thing off.”

The Obama administration: played by the Republicans again?

U.S. Wins the Merchant of Death Sweepstakes

Viktor Bout extraditedThe diplomatic tug of war between the United States and Russia over the fate of suspected international arms dealer Viktor Bout was won Tuesday by officials in Washington. For the past two years since his arrest in a US sting operation, Bout has languished in a Thai prison as Moscow and Washington sparred to control his fate. The United States has publicly pushed for his extradition to American soil where he will very likely be put on trial for conspiracy to kill Americans. Bout purportedly enjoys close ties to the upper echelons of power in Moscow which some believe has driven Russia to fight for his release in fear of what beans might be spilled about state secrets in an American courtroom.

Bout—known popularly as the “Lord of War”—was extradited Tuesday morning by Thai officials in a security operation worthy of the Secret Service. The New York Times gives a sense of the scope and scale of security measures taken to keep Bout alive for quick trip between the prison where the alleged “Merchant of Death” and the Bangkok’s international airport.

Two motorcades — one apparently a decoy — made the trip to the airport and shortly afterward an airport official confirmed that Mr. Bout had left on a chartered American aircraft. The Bangkok Post reported that about 50 police, including snipers, were at Don Muang airport to protect Mr. Bout. The 20-seat aircraft also carried two pilots and six officials from the United States Drug Enforcement Administration.

Bout will arrive in the United States, likely in New York, sometime Tuesday night.

Thailand’s last minute decision to ship Bout off to the States came as a huge relief to American officials. Thailand’s criminal court, which had opened the door for extradition in a ruling last month conditioned their decision by announcing that Bout had to be moved before November 20, or else set free. In the month since, Washington and Moscow have heavily lobbied the Thai government, with Russia being unusually visible in its proactive attempts to have Bout released. But authorities in Bangkok signed off on the suspected arms trafficker’s extradition early this morning, and state police wasted no time in putting Bout on a plane to the United States.

Russia was predictably upset. Russian Foreign Minister Sergei Lavrov denounced the move as “an example of extreme injustice. We as a country,” Lavrov said, “will support him by all means.” The foreign minister also cast doubt on the independence of the Thai legal system, noting that Bangkok’s decision resulted from “unprecedented political pressure from the USA on the government and judicial authorities of Thailand.” For its part, American officials had no immediate comment, but a press conference to discuss the issue has been scheduled for tomorrow morning in New York.

The big question in the immediate term is what effect, if any, Bout’s extradition will have on recent efforts by both Washington and Moscow to “reset” US-Russian relations. Despite the angry posturing by the Russian foreign ministry, the Bout case is unlikely to single-handedly disrupt attempts by President Barack Obama and Russian President Dmitry Medvedev to draw their countries closer on issues of common interest even as they push points of possible dispute to the sidelines. Renewed relations have successfully navigated some turbulence in recent months, not least of which, as the Telegraph points out, “a major spy scandal this summer that saw the FBI catch ten Russian agents did not spoil the party.” It’s hoped that the Bout situation will also not present a major speed bump to improved relations between the two powers.

For some, Bout’s extradition is not nearly so threatening to a US-Russia reset as the recently recalibrated US Congress. The Telegraph goes on to argue that “After Mr Obama’s Democrats fared badly in recent midterm elections, the fate of the new US-Russia nuclear pact or START, which needs to be ratified by the Senate, seems uncertain. If that falls, then the “reset” really will be in trouble.” Perhaps, but it isn’t just American lawmakers that could throw a wrench into the works.

Russia has recently exhibited an emerging block of reactionary legislators no less suspicious of the Obama White House than the US Congress is of their Cold War antagonists. Medvedev’s concessions to the Obama administration on anti-proliferation matters particularly have come under heavy fire from Russian lawmakers who argue that it represents of victory of American power over that of Russia. An irate Leonid Slutsky, deputy chairman of the international affairs committee in the Duma’s lower house, decried what he sees as clear US bullying. “The United States is now trying to dictate its position on the entire system of global politics and international relations. It is trying to somehow reintroduce a unipolar world.”

In this sense, the Bout case will likely bolster fears throughout various quarters in Moscow that Washington is intent on getting its way irrespective of Russian interests. It remains to be seen how well the Obama and Medvedev regimes handle this latest flashpoint in US-Russia relations. What is clear, however, is that in the face of a conservative resurgence in both countries, what otherwise could have been a minor nuisance in the management of foreign affairs suddenly may now take on greater dimensions, and further frustrate the maintenance of international security.

Michael Busch, a Foreign Policy In Focus contributor, teaches international relations at the City College of New York and serves as research associate at the Ralph Bunche Institute for International Studies. He is currently working on a doctorate in political science at the Graduate Center, City University of New York.

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