What can the new Taylor Swift music video teach us about the Iraq crisis?

Absolutely nothing, but you clicked on this, so it worked. Keep reading.

It’s amazing what can happen in 2 weeks when you’re on vacation. Ongoing conflict in the Levant (a fancy word for Syria, Lebanon Israel and Jordan), what looks like the beginning of a Third Iraq War, failing states in the Middle East, war between Russia and Ukraine, the usual tensions in East Asia, and an Ebola epidemic that just puts this all over the top.  I’m probably missing some things, but you get the idea. Not exactly a good year for geopolitical stability. I suppose it could have been worse.

But then the week I get back, and American photojournalist James Foley gets beheaded by ISIS barbarians and the video is posted on YouTube for the world to see.  I never knew him, but like me, I know that James was a History major from Marquette, a Jesuit University in the Midwest. He was a teacher who wanted to tell the world’s most difficult stories and make a difference, much like the Jesuits that educated him and myself.  His grizzly murder, however, cannot be separated from the seriousness of the threat that radical Islam (the Salafi jihad movement in particular) poses to the world, and the Iraq crisis we are reading about on the cover of every major newspaper.

Which brings us to the Islamic State (also known as the ISIS/ISIL).  Dealing with the Iraq crisis and the ISIS threat is a rough subject.  There are a ton of folks that got the ISIS wrong, possibly even President Obama.  The President’s take on this jihadist enemy has never inspired confidence in the counterterrorism community, and many have argued that his reaction over time to the rise of the ISIS does not reflect the seriousness of the threat we now face. In many ways, I understand it. President Obama sees other foreign policy objectives as more important in the long-run, and the Middle East crises are just one big distraction. The big one, of course, is the “pivot/re-balance to the Asia-Pacific.” In the wake of James Foley’s beheading by the ISIS, General Dempsey started his part of last week’s DOD press conference, not by speaking about the ISIS, but by discussing his recent trip to Vietnam, the first by a Joint Chiefs chairman in decades. The administration has faced setbacks to their Asia policy, but this, when paired with things you probably haven’t read about like this, this and this, is a sign that this “pivot” which pundits have criticized as “hollow” is more than just words. It’s for real and it’s strategic priority #1 for the Administration. We’re doing it the Chinese way: slowly, patiently and subtlety. And Obama wants people to understand that.

You can find a lot online about the Executive Branch’s remarks about the ISIS. For one, the President has called them a “cancer” that must be rooted out; Secretary Kerry tweeted that “ISIL must be destroyed/will be crushed,” and Secretary Hagel remarked that ISIS is a threat unlike anything we’ve seen before. So what must be done?

In the long run, President Obama’s remarks about the ISIS hold some truth; this group, and the wave of Salafi jihadism will burn itself out, that “People like this fail…because the future is always won by those who build, not destroy.”  But we would be naive to expect it to recede anytime soon. It is possible that the ISIS can be crushed in what time remains of President Obama’s second term, while defeating Salafi jihadism itself is far more ambitious. But refusing to use the time between now and January 2017 to fight the ISIS will not only give them time to grow, it would also be irresponsible.

Paul Pillar’s piece this week rightly points out that the keys to the ISIS’s destruction lie within its own unique methods and objectives.  For example, one thing that distinguishes the ISIS from other organizations is this “caliphate” they established, their conquered territory, which spans from Syria to Northwestern Iraq. It is essential to keep in mind that this “caliphate” exists in a desert region which offers few places to hide and where clear skies permit constant, pitiless bombing. What will be challenging is when they wise up and take refuge among regional towns and cities.

Airpower is only useful when forces move through open terrain. Bombing more populated areas is fine and everything, but it just so happens to be frowned up by 21st Century standards. Kurdish militias like the Peshmerga and a few battle-hardened Shia militia and Iraqi Military brigades have been able to fight back with some help from U.S. airstrikes, but their ability to seek out and defeat the group is still a big unknown.

Success against the Islamic State is going to require renewed help from the people of Iraq and Syria a la 2003 to provide human, local, on the ground, intelligence; this is known as HUMINT, or “human intelligence.” HUMINT can’t be gathered from a drone (that’s IMINT and in some cases SIGINT), nor can it be gathered from the business end of a cruise missile (that’s BOOMINT. Just kidding I made that one up).  You get the point; the lynchpin for any measurable success against a group like the ISIS requires firing up our old intelligence networks in Iraq or building new ones. It is going to require these guys, and there are rumors circulating that the band is getting back together again. If that’s true, the ISIS had better watch out.

So in short, Western airpower and Special Forces which empowers and aids locals, can set the stage for the strategic defeat of the ISIS. But a permanent solution to the problem would require local actors to step up. And not just the government in Baghdad and regional leaders in Iraq; putting pressure on regional partners and allies to help is equally crucial. Many radicalized westerners have been attending SCIS (Summer Camp In Syria) via Turkey to join the ISIS.

If I didn't know any better, I'd say Syria's border with Turkey seems like a safe place for these guys to operate, arm and organize.

If I didn’t know any better, I’d say Syria’s border with Turkey seems like a safe place for these guys to operate, arm and organize.

We must find ways to compel the Turkish government to make good on their NATO membership and secure their border. The Gulf States are also a key set of regional partners that must understand that their lackluster attitude towards money-laundering schemes and terrorist funding is unacceptable, and the ISIS, and groups like them, are awash in cash because of it; they must crack down on their citizens funneling money through Kuwait that support Salafi jihad.

Bomb ISIS, Help Assad

Another key factor to decisively defeating the ISIS is defeating them in Syria. General Dempsey, Chairman of the JCS admits this, and earlier this week, President Obama reportedly ordered surveillance flights over eastern Syria this week to give the U.S. some better sense of what’s happening on the ground. These could lay the groundwork for airstrikes in Syria similar to what American planes have dropped on Iraq. The timing of all this couldn’t be more ironic: Exactly a year ago this week we were waiting to see if the U.S. would bomb Syria (Assad), but this week in August 2014 we’re waiting to see if the U.S. will bomb Syria (ISIS).

The West may have to live with, and possibly even work with, a  Syrian and an Iranian regime they have for years sought to remove. In international relations, it's sometimes like family: you don't get to pick them.

The West may have to at least entertain the thought of living with, and possibly even working with, a Syrian and an Iranian regime they have for years sought to remove. In international relations, it’s sometimes like family: you don’t get to pick them.

If we bomb Syria, who are our allies on the ground that would fill the void and retake the territory?  The moderate groups in Free Syrian Army?  I’m still waiting for someone to tell me what that actually means.  Al Nusra Front, the al-Qaeda affiliate?  Or is it Assad?  If we attack the ISIS in Syria it looks like that means we’d be helping Assad.  And if we’re helping Assad, what kind of message does that send, when our administration repeatedly calls for regime change? That if you’re a homicidal autocrat and you yell “terrorist!” loud enough, the U.S. won’t just work with you, it’ll work for you. Are we prepared to step back from our policy of “Assad must go“?

We have to try and also think not just about who we’d be fighting against, in this case the ISIS, but also about who we’d be fighting for as a consequence, in this case Assad. We have to tread carefully.  Any notion that we’d be working with Assad, a Shia dictator, would be a propaganda goldmine for Sunnis worldwide.  We would also indirectly be empowering Hezbollah, a Shia terrorist group and Iranian proxy.  Moreover, there are reports circulating that Assad’s strategy from the get-go was detente with the ISIS; he leaves them alone while they kill off the other rebel groups fighting against him. In short, it looks like Assad has allowed these radicals to thrive in order to demonstrate his own value to the U.S.  Not bad for an ophthalmologist who never wanted to be president of Syria in the first place.

Aside from the above-mentioned concerns, I think an analogy can be made here. Consider FDR’s allying with the Soviet Union. Joseph Stalin, a homicidal maniac, was used to defeat what was perceived as a mutual, shared threat. There was an implicit understanding that we wouldn’t be buddy buddies after the war, but eliminating Nazi Germany was in both of our national interests.  We did business with Joseph Stalin, but we never trusted Joseph Stalin. Which brings me to my next analogy. Observe below. Skip to 01:55 and stop it at 02:23

Michael Corleone: C’mon Frankie… my father did business with Hyman Roth, he respected Hyman Roth.

Frank Pentangeli: Your father did business with Hyman Roth, he respected Hyman Roth… but he never *trusted* Hyman Roth!

Point is, we’ve played this game before. A lot.  If an understanding is made with Assad, it doesn’t have to be advertised.  In fact, the White House repeatedly denies that it will work with Assad in rooting out the ISIS in Syria.  We don’t have to trust them, but we may have to work with them.  Or work alongside them, however the Obama Administration wants to phrase it.

The other elephant in the room is Iran.  We cannot talk about dealing with the ISIS without Iran in the equation. In fact, there is a slow, gradual process of detente between the U.S. and Iran that some analysts see as inevitableThey can help, but what will it cost?  Here’s what I think they want in return: no more sanctions and a wink and nod to stop hampering their nuclear programme. It may sound ridiculous, but even if we end up not budging on those things, the thought exercise lends itself to an important lesson: no situation being dealt with can be handled in a vacuum. Things you perceive as unrelated could be the deal breaker for the other guy. We have to be careful when we compartmentalize issues. This not only applies internationally but domestically too.

To an outside observer like myself, the bright idea factory looks like it’s putting out a lot of smoke, but no one is offering policy and strategy options.  Let’s ease back on the rhetoric and think this one through, even if it means not talking about the ISIS for a while. These guys couldn’t imagine, nor afford, the western media PR campaign that is currently covering them.  They aren’t the world’s first militant organization, and they certainly won’t be the last.

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Don’t Fughettabout Foreign Policy: Risks and Trends for 2014

David Kessler and Peter Kouretsos – Happy New Year, everybody! Big things happened in 2013: Dave and I graduated in May and we’re all still here, which means that the world didn’t blow itself up. And to us here at the Brooklyn Diplomat, that’s a reassuring sign that we’re doing ok and that it could always be worse. Not great, but ok. It helps us put things into perspective.  But we digress. We’ve been reading lots of articles lately about what to expect in 2014, and while we’ve found some of the trends, forecasts and “predictions” out there to be agreeable and insightful, the overall impression we got can only be described by one of our favorite movies (because Brooklyn, that’s why)

Ok, maybe not exactly BS, but lots of this stuff seemed pretty obvious. It’s not very Brooklyn at all. And as the official trendsetter of the modern world, the gentlemen and scholars of Brooklyn ought to have a say in what to expect in a post 2013 world.  Main takeaway from all of what you’re about to read right now: Foreign policy. Start caring about it. While last year’s headlines were dominated by economics, just one look at any of the headlines this past month shows that 2014 will be a “Foreign Policy” year.  This is what Dave and I are thinking about now as we begin 2014.  At the end, we’ll also share with you our New Year’s resolutions.

First Up: PETER KOURETSOS

#5) MENA unrest expands:

2014 is going to be a record year for violence in Iraq (a great primer can be found here). Runner ups in terms of unrest and instability are going to be obvious, Egypt and Libya, where the money is running out and the governments being propped up at the moment simply are not working. There are also serious concerns of a security vacuum in Afghanistan with talks of a U.S. 2014 pullout if a Bilateral Security Agreement doesn’t get hammered out; failure here would mean Afghanistan spirals back to the way it was before the 2001 invasion and we’re back to square one.

Adding fuel to the fire in Egypt, the interim government backed by Sisi (who may very well run for President soon) and the SCAF recently declared the Muslim Brotherhood a terrorist organization. Both the Brotherhood and the government have reached a point of no return. By labeling the Brotherhood a terrorist organization and denying them any political voice, they’ve committed themselves to stamping them out for good; or risk them returning to power and destroying them. The Brotherhood, now backed into a corner, doesn’t have much to lose. And when one group has everything to lose while another has nothing to lose, it rarely ends well. It’s a very desperate situation. It’s a very…Syria(ous) situation…

Al-Qaeda is certainly not what it used to be after bin Laden’s death, but that does not necessarily make it weaker or stronger; it just makes it different. And if we don’t adapt to that, “different” will become “dangerous.”

2014 will be a “good” year for al Qaeda.  We will see a proliferation of small, local al Qaeda “units” that will take the jihad locally. This is not to say that some groups won’t target the U.S. directly anymore, but the emphasis will be local, where they can take advantage of economic hardship, weak, ineffective and unresponsive governance, and social unrest.  They have, for example, used Western Syria as a haven to launch operations into Iraq’s Anbar province, most notably in Fallujah.

Violence will grow and al Qaeda and its affiliates will grow.  The willingness of the U.S. and the Allies to devote significant resources to deal with these threats is not what it used to be (as opposed to right after 9/11).  To make matters more troublesome, the capacity for local governments and “partners” to pick up the slack simply isn’t there.  Turkey, Lebanon, and Jordan are bursting at the seams and risk becoming more unstable as they take in more refugees from the Syrian war, which is not ending any time soon.  If you want to know whether this new decentralized and fragmented al Qaeda is weaker or stronger than it was before Osama bin Laden’s death, you’re asking the wrong question.  It is certainly not what it used to be, but that does not necessarily make it weaker or stronger; it just makes it different.  In the environment described above, the so-called “al Qaeda 2.0” after 2011 becomes “al Qaeda 3.0” in 2014.

 #4) Consequences of an Iran deal:

As per the accord hammered out last November, Iran has halted its 20% enrichment and just began blending down its stockpile of 20% enriched uranium this January. The West has made good on their end of the bargain by lifting some sanctions.

Hassan Rouhani was elected for this very reason. Sanctions were biting and he has been tasked to stop the bleeding. He does not have the go-ahead from the Ayatollahs to completely eliminate enrichment, but the momentum is there in 2014 for a deal with limited enrichment in exchange for a seat as a member of the international community.

We will find very soon whether a nuclear deal with Iran is going to happen, maybe even by the end of the first quarter.  If it does, oil prices could take a hit when Iranian crude enters the market and the Saudis, Venezuelans and Russians will find themselves in a very difficult position. Petroleum exports account for a disproportionate amount of their national revenues because they have chosen not to diversify, mainly because they just never saw the need to.  Will they decrease production (and lower exports) to keep prices where they’re at now, or do they continue at current production levels and watch prices fall?

Either way, if a deal with Iran happens this year, the funds used to grease the wheels of these petro-states could begin to dry up. But if a deal does not occur, oil prices could spike, the potential for an Israeli strike will go up, the risk of other MENA states going nuclear goes up and the Iranians move much more quickly to a nuclear “breakout” capability.

3) Elections happening just about everywhere:

I know people are talking about U.S. Midterm Elections and are also on the lookout for anyone announcing a 2016 Presidential run, but I’ll let Dave take that one.  Pretty much any emerging market most investors have been talking about that can have elections this year is having elections. China is the exception here since they don’t have elections. I am also not counting Russia in this either.

A little under half of the world’s population will vote some time in 2014. The Economist breaks it down for you.

When I’m talking emerging markets I’m talking Brazil, Nigeria, Indonesia, India, South Africa, Columbia, Turkey (a full list here).  Many of these large economies have one thing in common: most of the parties in power now have been in power for more than a decade.  And for at least the past 10 years, the effectiveness of their governance has been questionable.  These countries are at a crossroads; a case in point is Turkey.  PM Erdogan must step down due to term limits but he can still win and hold the ceremonial office of President this year; we could see a Prime Minister-President seat-holding scenario similar to Putin’s Russia with Dmitry Medvedev.  But Erdogan’s AKP will still need to win local elections, and though they are still generally popular, recent discontent with the AKP’s strongarm tactics and a political crisis sparked by the Gezi Park protests could lose them some seats.

Brazil is another notable country with major elections to watch, and the World Cup (plus with the Olympics two years away) will add more to its complexity.  President Dilma Rousseff’s party will likely stay in 2014, but only because Latin American politics as a whole is uniquely more populist and often lacks strong opposition parties. Economic growth has also plummeted while public funds have been used to prepare the country for the World Cup and the Olympics. Extravagant stadiums next to run-down favelas will present the world with a Latin American version of Charles Dickens’ “A Tale of Two Cities.”

And as for the most populous Muslim country in the world in the ever-growing and important Southeast Asian region, Indonesia undergoes both Presidential and Parliamentary elections; it would do the United States some good if they re-engaged and reaffirmed their commitment to an Asia-Pacific “pivot.”  And although the popular topic right now is Ukraine, all eyes will be on Thailand as it navigates a political crisis between rival factions; it’s unlikely that an election will solve anything without an agreement between the clashing parties, and the risk of a military coup is always there.

#2 )Reforming China:

The Peoples Republic of China’s (PRC) Third Plenum launched significant and unprecedented political reforms that will fundamentally alter how China is governed.  In 2014 we will see the beginning of those, and consequently, the beginning of a new China. I’m still optimistic about China in 2014; the PRC’s resilience amid the decades of challenges it’s faced has been far too consistent to bet against.

By a show of hands, who’s betting against China in 2014? Nobody? Ok, cool, just making sure.

In Xi Jinping’s first year of governance, he’s engaged in more reform than in the PRC’s past 20 years.  This means real economic reform, a free-trade zone in Shanghai, anti-corruption moves, things that will get China on track for a serious restructuring.  But reform in China will make lots of people who have an interest in the status quo very unhappy. The Plenum was meant for Xi to consolidate as much power for himself to strong-arm these things through. The core issues and problems have never been external for China.  They have always been about, well…China. China’s core interests have always been domestic security and national unity. In fact, the new National Security body that was established after the Plenum, unlike ours, is focused on cracking down on internal matters like corruption, protests and unrest in the countryside.

China has greatly benefited from globalization, but they also have a long history of getting hurt when they expose themselves too much to the whims of other nations and foreign-based corporations that want to do business there.  The Opium Wars and the Unequal Treaty system during the 19th and early 20th centuries are the most popular examples of this.  This is why China has and will always be wary of any “comprehensive” and “binding” trade agreements and other multilateral treaties. China would much rather negotiate bilaterally, with one nation at a time, and on its own terms. So although the Bali talks and Doha give me hope for comprehensive international trade agreements, I’m not expecting China to commit to anything like it in 2014.

And if things get uneasy internally for China, with discontent and nationalism coming to a head, count on Xi and the Party to release some steam from the tea kettle and deflect those energies towards Japan and its neighbors who are suspicious of a more aggressive China. And in this kind of pressure-cooker environment, with all of their history and provoking the risk for a showdown with the Japanese as the Chinese reform process beings is real.

#1) The U.S. walks alone

The U.S. walks alone at the start of 2014, but it’s never time for it to throw in the towel. 2014 is a pivotal foreign policy year, and if they play their cards right, the United States can mitigate 2014’s risks and repair the damages of 2013.

Ok, Geopolitics 101 stipulates that there are exceptions to this: the British, the Canadians, the Mexicans and the Israelis. These relationships are maintained because of strategic choice and necessity, although there have been discussions about Israel’s discomfort with their U.S. relationship as of late.

Those exceptions aside, I am seeing signs that we’re beginning to live in a world where U.S. Foreign Policy has become less clear and less certain and decisive.  Our cuts in Defense and foreign aid make the rest of the world uneasy, and question our commitments. We’re also beginning to taper, and the money that used to float around and find its way to other nations’ markets isn’t going to be there anymore.  All other countries tied to the U.S. are concerned and are questioning the traditional terms of their relationship: South Korea, Indonesia, the Philippines, Brazil, Turkey, Saudi Arabia, UAE, Germany and France come to mind.  This includes trying to move away from U.S. standards in the global economy and changing the way they think about security, especially in light of the NSA revelations.  There is a level of uncertainty in the world that we have not seen in decades from the world’s only superpower, and I will be closely watching to see how this plays out in 2014.

Am I saying that the U.S. is in decline? No. I won’t go that far and jump on the bandwagon that started picking up steam during the 2008 financial crisis. The dollar is still strong.  The Chinese still want their kids to come to American universities. Any internationals who want to move their money out of the country brings it here.  We are still a safe bet. The legal system works and we are politically stable. In terms of U.S. innovation in energy, agriculture, biotechnology, nanotechnology, etc; the U.S. still dominates. The “dysfunctional Congress” even passed a $1.1 trillion bill that funds the government through 2014.  So no, America is not in decline. Its foreign policy is in decline. It is losing its ability to get what it wants abroad.

The same applies with Obama and Congress.  2014 will be the President’s last best chance to push an agenda for the rest of his term; after 2014 everyone gets so caught up in the election season that it’ll be difficult for his Administration to get any attention or support after this year.

As President Obama goes live in his State of the Union Address on Tuesday, his focus will likely be on the economy, the issues of growing inequality, a partisan Congress and a stagnant middle class, all important concerns.  But after all that’s happened in the last 6 months on the international front, pay close attention to which issues the President will emphasize besides the domestic ones.   I can’t say what he will choose as foreign policy priorities, but a comprehensive agreement with Iran on curbing their nuclear program, wrapping up Afghanistan and repairing the strained friendships with our allies would be a good start.  President Obama still has 3 more years in office, and second-term Presidents in their last couple of years in office often try and leave their mark on foreign policy.  And with the Obamacare rollout leaving a black mark on the President’s legacy, foreign policy can help save what’s left of it.  And I think he knows this.  And with all the talk about “national interests” in foreign policy discussions on the news, most Americans see the only “national interest” as nation building here at home. The polls speak for themselves: A majority of Americans are more disillusioned with the U.S.’s role abroad than ever before.  They just don’t see the point anymore.  And after Iraq and Afghanistan, “fughettaboutit” isn’t just a Brooklyn word anymore.  Let’s just hope that Obama doesn’t fughettabout foreign policy in 2014.

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Last but not least: DAVID KESSLER

#5) Pope Francis and the Catholic Church:

If I had to point to any one trend that I was most excited about or which I thought would be the most profound in 2014, it would be the current direction of the Catholic Church.  After emerging from the College of Cardinals as Pontifex Maximus only a year ago, Pope Francis (Formerly Bishop of Argentina Jorge Bergoglio) has already rocked the boat with his humble demeanor, his progressive tone when making remarks on various “hot topics,” and his focus on social justice for the World’s poor.  Furthermore, Francis was the first Pope to be elected from the Americas and is the first Jesuit Pope. As of late, Pope Francis has even been named Person of the Year by Time for 2013.  And as two young, Jesuit-educated, Christian gentlemen (Pete’s Orthodox and he’s excited for more Ecumenical dialogue between East and West now), we’re pleased with Pope Frank.

I see this pivot in the Church marking a major shift in how it will conduct itself in the 21st century.  While recent Popes have made significant strides toward modernizing the Church, namely Pope John XXIII and Pope John-Paul II, Pope Francis seems to be someone who can strike a balance of fully mobilizing the global youth who have been unable to identify with the Church as of late, while still maintaining the more “traditional” Catholic following.  From what I gather from Pope Francis’ various remarks, the Church will certainly be much more aggressive in the fight to combat poverty in the so-called, “developing,” world.  Furthermore, to conclude endless discourses on questions such as homosexuality, abortion, and other social flashpoints for the Church, the Pope will likely brush those questions aside in favor of addressing what he feels are the most pressing issues: poverty, faith, and community.  These are issues that he can unite the most people around and bring them closer to the Church, regardless of their views on the contentious topics.

#4) Syria:

Assad has taken some hard hits, but he has also been able to exploit and leverage the diverse conglomerate of rebel groups to survive. I don’t think he’s going anywhere in 2014.

The prolonged civil war in Syria seems to encapsulate many different global struggles, both direct and proxy.  There seems to be no immediate end to the fighting, and one can only hope that 2014 is the year that the bloodshed is concluded.  More broadly the Assad regime in Syria, assisted by both Hezbollah and Iran, is struggling to remain in power as an Alawite-led regime in the predominately Sunni state of Syria.  Meanwhile, the Sunni Arab States and al-Qaeda continue to push back against the regime and support the revolution.

Though I foresee a prolonged conflict in the Levant for a while longer, any victor in Syria (if there ever is one) would probably be Assad.  Although the international community has called for him to step down and/or negotiate a settlement, Assad and his regime have shown resilience and an incredible tolerance for pain; thus far this is evidence that he still commands substantial legitimacy among his supporters, and the state is robust enough to survive in 2014 and beyond.  In particular, the military seems to be generally supportive of his leadership, in contrast to what we saw in Egyptian in 2011, where the Egyptian SCAF refused to continue backing then-President Hosni Mubarak.  There have been some defections, but as long as the military remains with Assad, I do not believe he will be defeated unless a greater outside force (al-Qaeda or a foreign power) is able to bolster the rebels to overpower the Syrian military or dissuade them from supporting Assad.

#3) A Strained US – Russia Relationship:

Presidential Candidate Mitt Romney memorably stated in 2012 that Russia is, “without question our [the United States’] number-one geopolitical foe.” For the record, the jury is still out on whether this remark is true.  But as of late there have been many events to suggest that this Cold War mentality may be relevant.  Perhaps the most talked about man involving a deteriorating U.S. –Russian relationship, Edward Snowden, will continue to test US-Russia relations into the coming year.  The slight against the U.S. when Russia agreed to give him asylum against cries for “justice” in the U.S. is ever present. Furthermore, we still don’t know the true extent of the damage he’s done or what it is he took with him. Granting him amnesty is probably off the table at this point, since he’s been to two countries that are two of the U.S.’s greatest cyber-security threats (China and Russia). Continuing points from the previous stated trend, the Syrian Civil War is also an indirect struggle between Russia and the United States.  The United States has traditionally backed the most powerful Sunni nation in the region, Saudi Arabia, while Russia has traditionally backed the most powerful Shia nation, Iran, and consequently, Syria.  Thus, the war in Syria looks ever more like the Cold War-era proxy conflicts. As a positive, the recent deal for Syria to voluntarily give up its chemical weapons for destruction was jointly agreed upon between Secretary of State John Kerry and Russia’s Foreign Minister Sergey Lavrov has shown that we can find some common ground on some issues.

C’mon guys. It’s only awkward if you make it awkward.

During the upcoming 2014 Winter Olympic Games in Sochi, Russia may also display the status of relations between the two nations.  To prepare for Russia’s gig on the global stage, President Putin has granted amnesty to thousands of prisoners, including his biggest rival, oil-tycoon Mikhail Khodorkovsky.  This is an attempt to show that Russia has not receded to its harsh Soviet ways.  It should be noted, however, that these acts of “good will” may only temporarily improve Russia’s image rather than act as precedent for real reform within Putin’s Russia.  The US-Russian relationship will certainly make headlines over the upcoming year, but if the past is a judge for things to come, it looks like only headlines we’ll be reading will be about a stagnant or deteriorating relationship. Let’s hope at least for the former.

#2) A key year for the U.S. in 2014:

On the U.S. domestic front, another exciting year of political gridlock and debacle is on the horizon.  As President Obama enters the New Year with his lowest approval ratings since his inauguration, he will be quarterbacking the salvation effort for his signature legislation, the Affordable Healthcare Act (ACA, aka “Obamacare.”)   The website setbacks we’ve been reading about will be corrected in the coming weeks and Obamacare will receive its real test: whether the nation is willing to choose to enter healthcare exchanges or pay the penalty of not acquiring healthcare.  From my point of view, the ACA is here to stay and Americans will likely warm up to it if, and only if, enough people choose to enroll in Health Insurance rather than pay the penalty.  Whether the new system will work as efficiently or as cost effectively as legislators suggested is to be seen in the coming years.  However, the Democrats have been running on the ACA (or at least the idea of it) for nearly 50 years. They cannot afford for this to fall through. And it’s unlikely that Republicans will repeal it; it’s much easier to give out a social good than to take it away.  Thus, I would say that Obamacare is here to stay at least for the next 8-10 years.

Democrats, Republicans, and pretty much everybody else may be pointing fingers at each other, but one thing’s for sure: U.S. leaders have their work cut out for them in 2014.

On the flip side of American politics, the Republican Party will look to maximize the Obamacare confusion and win support to its cause while overcoming internal discord.  Within the party, two very distinct groups have emerged that are going to butt heads: the traditional “establishment” Republicans and the Tea Party Republicans.  Outspoken members of the Tea Party faction include Senators Ted Cruz, Rand Paul and Congresswoman Michele Bachmann.  Notable establishment GOP members include Senator John McCain and Governor Chris Christie.  While the traditional Republicans hold the majority of high ranking Republican positions, the Tea Partiers have secured some significant grassroots support.  The Tea Party’s most notable contribution (or lack thereof) to politics was their integral part in triggering the Federal Government Shutdown of 2013.  During this episode, the Tea Party legislators did exactly what they said they would do when running for their seats in government: attack the ACA by any means.  Unfortunately for both the nation and the Republican Party, this “noble stand” was a decisive defeat that cost the country weeks of Federal Government impotence.

From where I stand, the division and subsequent struggle for the Republican Party, ought to happen as soon as possible.  Political infighting followed by consolidation is nothing new, even internationally: Remember how Tony Blair led an internal movement within his Labour Party, moving it from the far-left/left to the center-left. And in 1997 the Labour Party achieved its first election victory since 1979.  Likewise, a strong leader from the center-right in the U.S. can assume a similar Tony Blair-like role over the party before the Presidential election of 2016 and move it in a more moderate direction.  The sooner and more decisive the struggle, the better.  A good barometer of this internal struggle will certainly be the upcoming 2014 congressional elections.

#1) Have No Fear, the Global Economy is Here!:

Finally, in regards to the global economy, I predict a very fruitful year.  [The majority of] Europe will return to greater prosperity and competitiveness than before the European debt crisis began.  The U.S will continue to grow its economy but it too must find solutions to reducing its public deficit so as to achieve sustainable economic growth.   The Chinese will continue to power forward with after a year of robust growth in 2013, although we’re beginning to see signs that they’re beginning to pump the brakes .  Japan will continue to be mired in its incredible public debt (which it will attempt to solve by printing more money) and oncoming demographic collapse (which can be mended by immigration reform, but probably little will be done to address that).  Russia and Brazil will get their time in the sun during the 2014 Winter Olympics in Russia and the 2014 World Cup in Brazil.  Both events will be great opportunities to show off the economic advantages for foreign investment in their respective countries.  Russia ought to seek continued growth, which has been strong since President Putin came to power. Brazil, on the other hand, has seen rather sluggish economic growth as of late and will certainly try to reverse that trend. As for the smaller economies of the world, they ought to perform positively if history is any judge of future trends.  Overall, the coming year will continue to see a dramatic reduction in Global Poverty and the world economy will grow substantially.

Nobody can account for all the bumps in the roads, and I’m sure 2014 will see its fair share of black swans. But the world will keep spinning.

IMAG1123

Two New Year’s Resolutions from two new graduates:
Pete: “Apply to Grad School in the Fall so I can defer my student loans next year!”
Dave: “See more friends and keep thinking scholarly and happy thoughts! We’ll get through 2014 everybody, let’s also try to enjoy it a little too!”

Deal or No Deal?: A Primer on the Iran Deal, Your Questions Answered

So after playing some catch up on the Iranian nuclear negotiations, it’s pretty clear that the U.S. has made a lot of people in policymaking positions quite angry. But not everyone has been following it, and if you want some quick answers to those questions that you’re too embarrassed to ask, I’m here to help.

Pete, what’s this whole Iran thing about?
Ok, short story: The question revolves around the status of their nuclear program. Iran has always maintained that its nuclear program is purely for peaceful purposes (nuclear power/energy). Even though Iran has denied working toward nuclear weapons, it has said it will not submit to any plan that would totally eliminate its nuclear program. By this they mean the right to enrich their own uranium for energy.

Ok, so they said it’s for peaceful purposes, nuclear power is fine, what’s the problem?

A lot of people are uncomfortable with the fact that they possess the infrastructure and technology to manage the entire nuclear fuel cycle from start to finish – from digging uranium out of the ground to generating power with it. An offshoot of mastering the fuel cycle is that you can take it to the next level by making a nuclear bomb. The problem here is that you can use the same centrifuges that enrich uranium to low quantities (~3.5% for nuclear energy) for enriching uranium to higher quantities (90% for nuclear weapons). Iran has enriched some 200kg of its uranium stockpile up to 20%. Why 20%? I don’t know, it seems like a random number but I’ve read that once you break 20%, enriching to 90% is not so difficult anymore. And that’s enough to get some people worried.

Another issue is that they’ve built facilities without reporting them to the International Atomic Agency (IAEA) beforehand, some in urban areas, others under mountains (Those make them tough targets for a military strike). One such reactor that you may have heard about recently, the “Arak” reactor, that once completed, would be able to make plutonium fairly efficiently, another possible source for nuclear weapons. The Iranians have also deliberately deceived inspectors about secret sites and the status of their program. They’ve also been developing ballistic missile technology and reports surfaced a few years ago that they’ve been trying to develop a nuclear warhead. And it’s not just us who want them to stop; in 2006 the Chinese and the Russians got on board with the U.S. and the rest of the UN Security Council and began pressuring Iran to halt their nuclear program. I’ll say it again: in 2006 the Chinese and the Russians got on board and began pressuring Iran to halt their nuclear program. Considering all the things we can’t get Moscow and Beijing to agree with us on, I’d say that if they’re concerned about this, it’s becoming a problem.

Hmm, sounds like it may be a problem. What have we been doing about it?

So since Iran has not complied, it’s been punished with economic sanctions, a great deal of which has hit its oil and gas industry. If you want to learn more about them, here’s a good backgrounder on them, courtesy of BBC. The Iranians have also been experienced technical setbacks, the most widely cited example courtesy of a computer virus known as Stuxnet, allegedly developed by the Israelis and the United States (which has been denied by both). Also every now and then a nuclear scientist doesn’t show up to work at the lab because he’s too busy getting blown up [possibly by Israeli intelligence]. And while not explicitly using the phrase “military strike,” President Obama and other senior administration officials have repeatedly claimed that “all options are on the table” when handling this issue.

Yikes, so why aren’t the Iranians backing down?

The 1968 NPT (Nuclear Non-Proliferation Treaty), which almost every country in the world abides by, says that parties of the treaty have the “inalienable right…to develop research, production and use of nuclear energy for peaceful purposes.” So the quick answer is that international law says they can.

The more complicated answer is that the Iranian Revolution of ’79 still lives. What do I mean by that? The same people who are in power are vanguards of the anti-Western revolution that established the Islamic Republic of Iran when they overthrew the Western-backed Shah in 1979. They’re still pretty upset about the decades of interference on the part of the U.S. and Western Europe in the Iranian political economy during the 19th and 20thcenturies. And as the heirs of the great Persian Empire, they are a proud people. They want to be recognized as a regional power again, and a nuclear program is a way into the country club.

Another reason, if Iran really does want a nuclear weapons capability, is defense. Iranian leaders believe that the U.S. and her allies (namely Saudi Arabia and Israel) will stop at nothing to overthrow their regime. The last President of the United States called the regimes in Iraq, Iran and North Korea the “axis of evil” and so far we’re 1 for 3 in the regime-change business. Another leader by the name of Muammar Gaddafi willingly relinquished his nuclear stockpile years back but just a few years ago saw his country bombarded by NATO before he was dragged through the streets of Tripoli and executed. And let’s not forget that in the 80s Saddam was on our side, and we gave him plenty of help in his war with Iran that lasted 8 years and killed hundreds of thousands on both sides. With this kind of baggage weighing on the leadership’s mind, a nuclear deterrent may be an attractive option.

But even if they didn’t want a nuclear weapon, the Iranians have managed to give many countries good reason to suspect that their “peaceful” nuclear program is actually a cover for a covert push to develop a weapons program.

What about Israel? Their Prime Minister was trolling the negotiations and just called this deal we brokered with Iran “a historic mistake.”

In many ways, Israel has good reason to be worried about a more powerful Iran. The Iranian leadership has repeatedly called the Jewish state a “cancer that must be removed” and actively supports Hezbollah and Hamas, the Lebanese and Palestinian militant groups with a long history of attacking Israel. But it’s pretty doubtful that the Iranians are going to fire a nuke over Tel Aviv or Riyadh (the Saudis are also a party with security concerns about a nuclear Iran). If they do that, Tehran just signed their death warrant and it’s game over for the regime. I’m sure they know that. But a nuclear Iran may be emboldened enough by their new deterrent to support and finance Hezbollah and Hamas. It may also start a nuclear arms race in the Middle East, with governments in Turkey, Egypt, Saudi Arabia, etc. all pursuing a nuclear weapons capability to counter Iran. So it’s a mixed bag, but if you stick your hand in it, you’ll probably get stung pretty bad. That being said, Iran is a problem for Israel, but not in the same way that it’s a problem for the emirs in the Gulf. I’m going to go out on a limb here and say that Israel may not like it, but it can probably live with a belligerent Iran.

That actually kind of really sucks. What’s our plan?

The options are really contingent on what you want to achieve. All around though, they’re not all that great.

The first not-all-that-great plan is to bomb Iran’s nuclear sites (the ones we know about). Best case scenario, this would probably set them back a year or two, maybe even just a few months. Bottom line though, it will make Tehran more likely to develop a nuclear weapon if they weren’t going to already. We’d also probably lose support from key international players to stop Iran’s nuclear program. In fact, we’ll probably lose international support for a lot of other things going forward.

The second not-all-that-great plan is a follow up of the first bad plan: an invasion by our Armed Forces and a coalition of the willing (whichever countries want to help out) to overthrow the regime. Why not go all the way? You bomb them and give them a chance to recover? You’re not sure if you got all the nuclear sites? All that fissile material lying around waiting to get stolen now? C’mon bro, finish the job…Unfortunately whichever President authorizes that is doomed. After Iraq, this option is not happening.

The third not-all-that-great plan is to try and overthrow the regime in other ways. This is problematic, since the regime has shown and incredible amount of resilience since ‘79. Even during the “Green Revolution,” the 2009 protests after the disputed Iranian presidential elections, citizens were calling for government reforms, not the overthrow of the ayatollahs. Furthermore, any internal movements that we give even moral support to would lose all their legitimacy anyway.

The fourth not-all-that-great plan is to just keep doing what we’re doing: Force Iran to unconditionally surrender and give up its nuclear program in its entirety. Like I said before, those sanctions have definitely been biting, and covert action like cyber-warfare and assassinations have been successful in setting their program back some. But despite what we’ve been doing, the Iranian nuclear program has continued to grow. We can try to delay it, but that’s all we’d be doing: delaying.

The fifth not-all-that-great plan: negotiating a deal directly with Tehran. If my Spidey senses are spot on this time, this seems to be the thrust of what the P5 +1 (U.S., Russia, China, Britain, France, + Germany) actually hopes to accomplish in the near future: Iran gets its nuclear program, but with enough restrictions and inspections that everyone can accept it as peaceful. The downside is that this would be difficult to enact and no deal will please the Israelis, the Saudis or our Congress. Another thing to think about is that this all hinges on actually trusting Iran with a nuclear program, after it has cheated on past deals.

Ok, so we are negotiating with them, that looks like the least worst option. What’s this “deal” or “agreement” everyone’s talking about now?

The most straightforward explanation I found was this one by the New York Times; it has lots of pictures and short sentences. The agreement does not guarantee that Iran will make a bomb, but it certainly complicates it. The agreement lasts 6 months, when a more permanent agreement is supposed to get hammered out: No more enrichment above 5%; nuclear-related activity (no production of fuel, no nuclear research) on the Arak reactor stops; no new centrifuges; daily inspections to all nuclear facilities; all in exchange for unfreezing some overseas assets and some limited relief of sanctions that only amount to a few billion.

Good deal or bad deal?

It’s actually really not the deal that we should be thinking about now. This is an interim agreement that is easily revocable in six months if a comprehensive deal falls apart. It’s a test to see whether the Iranians are for real about this.  But if I had to judge, it’s a relatively safe deal that puts the burden of proof on Iran while at the same time showing some goodwill on our part to negotiate a settlement down the road.  Diplomacy is a two-way street, and easing some basic sanctions while maintaining the overreaching architecture let’s the Iranians walk away with something while not giving away too much on our part. And it’s pretty likely that the negotiators needed approval from the Supreme Leader Ali Khamenei in order to agree to the abovementioned agreement and bring home the bacon [ok, bad analogy, especially for a Muslim country] so that’s a pretty good sign. Only he can give the “ok” to build a bomb, and to our knowledge he has not given the order. This agreement blocks the most likely avenues for the Iranians to go forward with that. But as with all things, the devil is always in the details, and if any comprehensive agreement falls through, it will be because of those. I do still think that criticisms of this agreement are premature; the real deal hasn’t even started yet. And if the Iranians do end up cheating, we’ll be in a better position to ratchet up the sanctions again and dust off the war-plans.

Long-term though, it’s not so much the nuclear thing that I’m thinking about so much as Iran’s future in the Middle East. Strategically, we have nothing to gain by artificially weakening a country with a young, educated, large population that can be used to balance the Sunni-dominated Middle East. I’ll be looking for signs that we’re ready to start talking about reintegrating them into the international community. Bottom line: We have nothing to lose by gaming this thing out. And speaking out gaming it out, enjoy the football games and have a Happy Thanksgivukkah!

As the World Increases its Dependence on Fossil Fuels, Producers Decrease Theirs: The GCC

Burj Khalifa is currently the tallest manmade structure in the world.

Burj Khalifa is currently the tallest manmade structure in the world.

David Kessler—Have you ever seen the film, Mission: Impossible – Ghost Protocol?  If yes, then you may remember the scene when Ethan Hunt (Tom Cruise) scales an enormous tower hotel in Dubai to thwart Moreau from delivering the nuclear launch codes to Wistrom.  Whether you have seen film or not, the hotel in the film is named Burj Khalifa and it is currently the tallest structure in the world.  Since the opening ceremony in 2010, Burj Khalifa is symbolic of a trend that was started decades ago to diversify many Gulf Cooperation Council (GCC) countries away from their main export: fossil fuel.

Ethan Hunt (Tom Cruise) may have reached new heights in his latest mission, but so have the Gulf States. Keep reading, people!

Ethan Hunt (Tom Cruise) may have reached new heights in his latest mission, but so have the Gulf States. Keep reading, people!

When one thinks about the GCC nations (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) one cannot easily disassociate them from fossil fuels, the world’s most valuable resources.  However upon closer observation, one can witness a changing environment.  From the futuristic skyline of Dubai, to Bahrain’s strategic position in the world of finance, to the massive investments made by the Qatar Investment Authority, many of these states are global players in markets besides fossil fuels.  These trends reflect different causes for diversification among which include: insulation from “oil shocks,” depleting oil reserves, threatening alternative energies, and the desire for more foreign investment.  Ultimately, the basic need to reduce reliance upon fossil fuels is what drives these countries to diversify.  Now lets take a brief look at this change in three dynamic countries: Bahrain, the UAE, and Qatar.

Bahrain

The Kingdom of Bahrain is perhaps the most threatened nation by reserve oil depletion.  If production increases at the current rate, it is estimated that their reserves could be fully tapped out in as little as 10 years.  Nevertheless, oil does account for 60% of all exports in the country.  Thus, diversification is clearly necessary if Bahrain wishes to continue economic growth.

The capital city of Al-Manama (Manama) is the finance capital of the Gulf and competes with Malaysia for the title of “global capital” of Islamic Banking.  Like Dubai, Manama’s skyline is as impressive as any advanced nation’s and reflects the construction investments made in Bahrain in recent years.  Structures such as the iconic Bahrain World Trade Center and the massive development, “Bahrain Financial Harbour”, make Bahrain a hub for international business.  Furthermore, these feats of architecture also make Bahrain an ascetically pleasing place for investment and tourism.  Another reason for Bahrain’s privileged position as a center of finance can be attributed to having one of the most valuable currencies in the world.  One Bahraini Dinar is worth $2.65.

Bahrain's Grand Prix attracts Formula One enthusiasts from all over the globe to the small island.

Bahrain’s Grand Prix attracts Formula One enthusiasts from all over the globe to the small island.

Tourism is another big investment that Bahrain has made in recent years.  The Ministry of Culture of Bahrain has proclaimed Manama as the “Tourist Capital of the Arab World,” dividing the tourist seasons into four categories: Culture tourism, Sports tourism, Leisure tourism, and ECO tourism.  The annual Bahrain Grand Prix, is one of the premier tourist events in Bahrain and attracts (wealthy) Formula One enthusiasts from all over the world.  Another enticement for tourists to visit Bahrain is its liberal views towards alcohol, where the substance is legal.  As a result, multitudes of people from Saudi Arabia, where alcohol is not legal, flood into Bahrain on weekends to enjoy themselves.

Qatar

Many know the State of Qatar as the richest nation, per capita, in the world.  Unlike the other two countries, its main export is another familiar fossil fuel: liquefied natural gas.   Qatar is making strategic investments into expanding non-fossil fuel sectors such as finance, tourism, construction, services, and manufacturing.  Of the three countries, Qatar is the most reliant upon its fossil fuels which account for roughly 85% of its export earnings.  Nevertheless, Qatar has capitalized on key investments such as ownership stakes in foreign firms, the global media outlet: “Al-Jazeera,” and being awarded the opportunity to host the 2022 FIFA World Cup.

The Qatar Investment Authority, which is responsible for economic diversification, is reported to have made, “investments in a number of high-profile real estate, hospitality, manufacturing, sporting and retail brands overseas, such as Harrods and the Shard building in London, the Raffles Hotel Group, locations in New York and Paris, Volkswagen, Credit Suisse, and Xstrata.”  These strategic investments open up new methods of cash flow into the country that can be allocated to further diversifying the nation’s economic portfolio.  Furthermore influencing global corporations can bring more foreign investment into Qatar.

Serena Williams Recieves PSG Jersey

The QIA has made lucrative investments in recent years such as the acquisition of football club PSG. This particular placed Qatar center-stage in the world of sports. The photo above shows Nasser Al-Khelaifi, the President of PSG and former tennis professional, presenting Serena Williams with her own PSG jersey after she won the Qatar Total Open tennis tournament in 2013.

One of the most recent (and more well known) acquisitions of the Qatar Investment Authority was the French Football Club, Paris Saint-Germain (PSG), purchased in 2011.  The buyout costed the Qataris about $135 million.  Since then, PSG has spent over $250 million, an outstanding spending binge, to recruit some of the best talent in the sport  Zlatan Ibrahimović, Thiago Silva, Ezequiel Lavezzi, and David Beckham.  The club’s latest acquisition, former Napoli world-class striker, Ednison Cavani was purchased for an astounding $84 million.  QIA’s investment has yielded a championship in the French “Ligue 1” for the 2012-2013 season.  So far, PSG has proven to be a profitable venture for Qatar and, more importantly, and interesting an unconventional way to promote the Emirate.

On the home front, Qatar plans to invest over $200 billion between construction projects and infrastructure.  This includes building a bridge, the Bahrain-Qatar Causeway, which would connect Bahrain to Qatar over the astounding 40Km of water that divides the two states.  The massive construction boom will no doubt be, at least in part, to prepare Qatar for the massive tourist influx as it hosts the 2022 FIFA World Cup.  Stadiums, roads, housing, and other attractions must be constructed to service the global entourage.  The event will bring tourists from around the world to visit the Arab state and will be an opportunity to display the richest nation in the world’s economic prosperity.  Nevertheless, other than the World Cup Stadiums, Qatar has planned the construction of at least 19 “megaprojects” which include: a new international airport, city infrastructure, highway networks, education facilities, and state-of-the-art public transportation systems.

The UAE

Like Qatar, The United Arab Emirates (UAE) is one of the richest countries in the Gulf and has, visibly, invested heavily in non-fossil fuel sectors.  The Burj Khalifa is only a recent addition to the UAE’s construction boom in the past two decades.  This growth, however, took a hit from a bursting credit bubble that seriously stalled development from 2008 – 2011.  Nevertheless, the hard-times seem over as the Emirate of Dubai resumes incredible expansion of construction projects and foreign investment floods into the country.

Oil is still the UAE’s main commodity export with a 45% share with the profits from oil exports being funneled, with apparent success, into broadening: finance, tourism, construction, and manufacturing sectors.  In particular, the economy of the UAE has expanded 4.4% last year however the tourist industry in Dubai grew at an astounding 18.7% the same year.  Many incredible construction feats are still in the works such as the “Falconcity,” which will exhibit replicas of many great wonders of the world in one place; the “Hydropolis,” an underwater hotel; and the “Dubai Sports City,” a sports complex the size of… you guessed it, a small city!

Investors have been quick to jump on the opportunities in the UAE which include a stable political atmosphere to conduct business, free-trade zones for manufacturing, and a sizeable pool of consumers.  Regarding manufacturing, many free trade zones have been established across the UAE.  Large investments in Abu Dhabi’s heavy manufacturing industries and Dubai’s lighter manufactured goods have witnessed a boom in this sector.  As a result, manufacturing in the UAE happens to be the second fastest expanding, non-oil, sector in the economy.

One of the more interesting accomplishments of the UAE is the expansion of the gold market in Dubai.  Dubai is positioned strategically both geographically and economically to conduct trade of the precious metal.   Dubai has acquired a substantial 29% of the global gold trade.  Dubai has assumed this position thanks to low taxes, cheap labor, and low prices.  Furthermore, the UAE’s location between Africa and Asia allows it to easily tap into rapidly growing markets.  Not surprisingly, some refer to Dubai as the “City of Gold.”

Why does this matter?

At a time when the global economy is focused on the rapidly developing economies of the BRICs nations as well as the smaller “emerging markets” in Asia, Africa, and South America, the MENA region is mainly recognized as a region in upheaval.  While this holds true for most nations in the region, the Gulf States (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) have managed to insulate themselves from the turmoil to varying degrees.  In particular, Bahrain, UAE, and Qatar have made recent strides in diversifying their economies away from fossil fuels in an effort to prepare for more sustainable, long-term growth. The strategic geographical position at the crossroads of Europe, Asia, and Africa make the markets in the Gulf quite accessible and attractive.  Moreover, these states have higher per capita incomes than many states in Europe, and all of the BRICs, securing a large consumer pool for foreign investment. This article simply scratches the surface taking a glance at three out of the six GCC nations that are all moving forward towards diversification.  It will be exciting to see how the GCC countries develop as their economies continue to expand away from fossil fuels and achieve a deeper level of integration in other major industries.

A map so you all can get a visual of where the (GCC) states lie on the map in relation to the rest of MENA. C'mon, you seriously thought you'd get away without another refresher in some geography?

A map so you all can get a visual of where the (GCC) states lie on the map in relation to the rest of MENA. You seriously thought you’d get away without another refresher in some geography? Fughettaboutit!


Deal With it: Hopes, Realities and Egypt

I wake up every day combing the headlines, looking in the news for a car bomb that went off and killed dozens in Cairo. But not yet. Not today. This isn’t to say that I’m hoping for one, but let’s not kid ourselves here, we know what is coming. Both sides in Egypt know what is coming. Too many souls have been taken to go back to pretending nothing happened. Everyone has blood on their hands.

The standoff between Egypt’s military and supporters of Mohammed Morsi has left hundreds of people dead and thousands injured. Here are some takeaways from what has happened in Egypt in recent weeks:

1. Even if we do cut off aid to Egypt, don’t buy the argument that if we do that the ISF will all of a sudden start a war with Israel. Even without our help the IDF (Israeli Defense Forces, c’mon guys, get with the acronyms!) would embarrass them. Both have an interest in maintaining a stable Sinai Peninsula and Suez and maintaining good relations with the United States. If anything, expect Israel to further their ties with the ISF and reaffirm their commitment to their security relationship in the absence of U.S. support.

2. In anticipation of our cutting Egypt off, the Saudis and the rest of the Gulf monarchies all pledged to commit billions in funds and armaments. And so did our friend, Vladimir Putin, with “no strings attached” by the way. That means more influence for geopolitical and regional rivals, less influence for us.

3. The removal of one man does not mean the removal of his regime. The ouster of Hosni Mubarak in Egypt just two years ago was not the ouster of the regime Mubarak oversaw: here, I’m talking the Armed Forces, the police, the Intelligence apparatus (and the secret police), the cartels composed of the privileged and the elite who have their hands in the economic hand-basket that we see going to hell, among others. These people, these networks, are what I am calling the “regime.” They have a vested interest in maintaining their positions in Egyptian society, and I do not see them simply disappearing because of some popular elections. They, particularly the military, remain the true powerbroker of the state system in Egypt. In truth, the “revolution” we saw two years ago was not a revolution. A revolution is a fundamental/complete change in the established order. The “revolution” people have been talking about hasn’t actually happened, at least not yet.

4. Building off the previous point, the military is the only institution capable of holding the Egyptian state together. And they are not leaving anytime soon. For reasons mentioned above, the Arab world (in this case Egypt, but the MENA region in general) did not have the roots of liberal democracy that could take over during the Arab Awakening. There have also not been many modernizing autocrats who built broad, educated middle classes that could organize themselves and eventually effectively take control. The only two parties that have that sort of discipline and structure is the ISF (military) and the Muslim Brotherhood. If you cannot entertain even the thought of that-which-was-just-mentioned, I really don’t know what to say.

That being said, militaries are often quite reluctant to get involved in the long-term, day-to-day governance of a country. It’s too complicated and messy. The determining factor is whether or not there are any groups or institutions to hand that role over to. After what the Muslim Brotherhood tried to pull over the last year, they have reason to be cautious and uncertain.

We think of democracy as the standard, the measure by which we assess a country’s progress. But progress is indeed possible without democracy preceding it. Take Latin America as an example: for all of the horrible things Pinochet and his cronies did in Chile, he played into our anticommunist containment strategy fairly well. At the same time it is safe to say the country as we know it today would be nothing if it weren’t for the reforms he strong-armed through. It is now considered one of South America’s most stable and prosperous nations, and a liberal democracy at that. But the former came first. The same can be said of Fujimori of Peru, who helped eradicate the Shining Path, the Maoist terrorist group, and put Peru on a path of economic growth that makes it as competitive (in conjunction with several other economies) as China. And although he has stood trial for crimes against humanity, the name Fujimori is revered; in fact his daughter is a member of the Peruvian legislature and almost won the Presidency in 2011 (she lost in a runoff by 3 percentage points). Look to Asia for more examples. China, Japan, Singapore, India; they have their share of decades of strongmen, dictators, and shady democrats with authoritarian tendencies, but the kicker was that most of them were modernizers. Think Nehru, Lee Kuan Yew, Deng Xiaoping; these were people who focused on building infrastructure, both physical and intellectual. This, coupled with entrepreneurship and an export-led economy is a chief reason why we’re seeing a rising middle class in these countries. A strong middle class and relative political stability are precursors to a peaceful transition to liberal democracy (that is, if that’s what the people want. Citizens of Singapore for example seem to be content with their situation).

All speculation aside, as I remember my history, our own revolution was not an easy transition either; it led to a bloody civil war a half century later. We seem to expect that others will do it differently. I don’t know of any society that has changed without struggle. We didn’t. The Russians certainly didn’t. The French didn’t. Neither have any of the African states or most of the Asias ones. In the short history of mankind, we seem to spend a good deal of time either plotting to conquer or kill each other. If you think Egyptians won’t do the same, I challenge you to pick up a newspaper and tell me I’m wrong.

Out with the Old, in with the Coup: Reflections on Morsi’s Ouster

Ok, so if you’ve been living under a rock this week, you’d think that the people of Egypt are hijacking our 4th of July celebration! The truth is, even if you haven’t been living under a rock for the past week, you may come to the same conclusion.

Egyptian military (SCAF) chief Gen. Abdel Fattah al-Sisi (pictured above), announced on July 3 that the country’s president, Mohammed Morsi, had been removed from office in the wake of public, but largely popular, unrest in the streets. The number of Egyptians protesting, some 33,000,000, was the largest number of protesters in a political event in the history of mankind (that I know of).

[The now] Ex-President Mohamed Morsi was a political unknown a year ago; he was not a great statesman. But in Egypt’s first popular presidential election, Morsi was the torch bearer for the Muslim Brotherhood and won 51.7% of the popular vote. The organization, which was founded in Egypt more than 80 years ago, had been banned for decades, most notably suppressed under the rule of Hosni Mubarak, has dreamt of ruling Egypt and the rest of the Islamic world.

Hosni Mubarak (former decades-long ruler of Egypt, now behind bars and rocking some sweet shades)

In the eyes of many that day was a great day for Egyptians; the people voted, and a party that was persecuted for most of its existence was actually elected and trusted by a majority to govern the country and bring the people’s demands for bread, freedom and social justice to the forefront. And it’s not like the SCAF, who were skeptical of the democratic alternative to Mubarak, intervened and didn’t give the Brotherhood a chance to rule. The SCAF gave Morsi and the Brotherhood a chance to rule; in fact they gave the Brotherhood a whole year to rule and the party publicly failed on its own merits over the course of that year. Perhaps the military chose not to intervene when the Brotherhood did win so as to prove to everyone that they were not fit to rule Egypt (that’s speculation of course).

Mohammed Morsi, the man of the hour.

The Brotherhood was elected with a slim majority (51.7% means that 48.3% voted for somebody else) and in the technical sense of the phrase, they “totally blew it.” Morsi and the Brotherhood assumed power and adopted a hardliner, exclusive approach to governing. They ignored a crippling economy, failed to ensure basic security and protection of minority groups, and refused to include other parties (even other Islamist groups) in a coalition government that we in the United States and other Westernized democracies, perhaps take for granted.  In the end, the Muslim brotherhood led Egypt down the path of Islamic despotism and economic decline. But I guess since the Brotherhood took all the power, they can take all the blame.

That being said, I think the recent events of this week set a dreadful precedent for the region’s future. It encourages the people to get rid of their elected leaders by disrupting their rule as opposed to voting them out. It goes to show that the people were more concerned with Morsi’s failure to govern rather than with the democratic process. The thing people have been calling “democracy” in Egypt though isn’t the democracy we think of; this is mob rule, democracy in the rawest sense of the word, and probably one that Aristotle would think of (pull out your Freshman-year Political Science notes). But let’s not kid ourselves here and think that what’s happening now in Egypt is in the interest of ALL Egyptians. If you think that, then you probably think that the millions of supporters of the Muslim Brotherhood live on the moon. Well, they live in Egypt too, and they also have interests, interests that they tried to force on others with no checks or balances. And that’s politics for you: factions and societal and economic pressures all in one pot that must be reconciled and sorted out. It is a constant struggle, and even some of us in the United States grow impatient of our own political struggles. Maybe Egypt isn’t quite ready for this experiment we call “democracy” yet.  Now before you all get offended by this, I think democracy for an unprepared populace could be far worse than a Mubarak. Even Thomas Jefferson, a great American hero and a father of our Republic, agrees with me here.  In a letter to Lafayette after Napoleon seized power, quelling the chaos of the French Revolution, Mr. Jefferson wrote (as an intellectual exercise, pretend he’s writing to someone in Egypt now):

“A full measure of liberty is not now perhaps to be expected by your nation, nor am I confident they are prepared to preserve it. More than a generation will be requisite, under the administration of reasonable laws favoring the progress of knowledge in the general mass of the people, and their habituation to an independent security of person and property, before they will be capable of estimating the value of freedom, and the necessity of a sacred adherence to the principles on which it rests for preservation. Instead of that liberty which takes root and growth in the progress of reason, if recovered by mere force or accident; it becomes, with an unprepared people, a tyranny still, of the many, the few, or the one.”

A few more takeaways and things to look for/expect in the near future:

1) Don’t think just because the Muslim Brotherhood was booted out that all is ok now with them. Expect the Brotherhood to keep resisting and push back against this move by the military; they will not forget.

2) The people protesting in the streets were all united in that they wanted Morsi and the Brotherhood out, but that’s about all they really agree on. The future will be a struggle of their competing interests. Unfortunately for the politics of the Middle East, most countries have a “winner-take-all” policy.

3) For decades, since the Cold War to today, the military has essentially ruled, approving and backing an individual or a party.  This is primarily because no military wants to be involved in the day-to-day affairs of running a country. The military has and will remain the primary source of power in the country, as with many countries, and will throw its weight behind any party or coalition that will see to managing the political economy and as such, limiting unrest.

4) Washington cannot do much to shape Egyptian politics right now, even if it tried. And for many reasons, it shouldn’t. I’m not going to say anything more about that point

I call upon the Egyptian people to prove me wrong. I would wholeheartedly welcome that. I sincerely hope that this coup is more akin to the one we witnessed in Portugal in 1974 than the one in Algeria in the 1990s. But as with all things though, time will tell.

Syria and the Israeli Mind

Some speculate that the Israeli airstrikes in early May were tied with a message to the Iranians. A less conventional reason is tied to the operational/tactical reasons for the strike: to send a message to the U.S., the U.N., and anyone else that has called for restraint against significant intervention, citing sophisticated Syrian air-defenses as a chief reason. Israel just proved to the world that the Assad regime is but a shell of its former self and cannot protect its own airspace.  A no-fly zone and/or an airstrike, therefore, is back on the table.

Some have wrongly speculated that this is the beginning of an alliance between the rebels and Israel. But the “enemy of my enemy is my friend” argument does not hold water here. Israel has had a relatively stable informal security understanding with the Assads, granted, with some flare-ups every now and then and it would much rather deal with the “devil you know” than something far more unstable and unpredictable.

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The truth is that there are no good options in Syria. Do nothing and the war drags on indefinitely. Funnel money, arms and training to the rebels, the best fighters of which have ties to al-Qaeda, and blowback is inevitable. There are also reports of Russia considering equipping the Syrian regime with sophisticated anti-aircraft systems, helping rule out Western intervention. Israel has conveyed that it would consider destroying such shipments before they reach the regime’s forces.

Israel has a long history of preemptive attacks to set back weapons programs, facilities, convoys, etc to protect its very survival.  This strike is a continuation of its policy to prevent weapons systems from getting into the hands of its enemies that are capable of striking the country. Given the fact that Hezbollah has formally committed to the Assad regime’s survival, count on Israel continuing with the status quo: not involving itself in an all-out war, but conducting limited strikes if it feels its security is being threatened.