Category Archives: oil economics

Financial Chinoiserie


A most peculiar crisis is developing for the Chinese economy – and, indeed, for the regime — while the world’s attention is riveted on the chaos and terror in the Mideast and Russian aggression in Ukraine.
Not the smallest element is the clever manipulation by Beijing’s strategists of the world’s hopes for continued remarkable Chinese growth as a last call instrument to bail out a dawdling world economy.
That misapprehension of China’s economic capacities may well forestall, again, at least for a time, an inevitable coming to grips with basic problems of it vast society under the Communist Party monopoly. But there is growing evidence that China’s financial problems have reached a crescendo that Beijing can no longer manage.
In that marvelous game of speculation on one of the world’s oldest cultures, I have always joked that the Chinese have two “extra” genes to others’ DNA: one is an inordinate capacity for hospitality, and the other for unlimited risk at gambling. Both are in full flower at the moment.
In effect this has led to foreign Old China Hands increasingly coming around to a pessimistic view of the outcome of events that some of us have held for years. The spectacular growth of China with the release of the unique energy of its people with the collapse of Maoism was nevertheless jerry built. Some of us have argued that it inevitably would crack – although as so many times in similar historical situations, what would be the final straw and when it will happen was unpredictable. As a result, I have had to suffer my friends continued scorn with “Yeah-yeah-yeah! you have been saying that for years” — and I have. But there is no doubt now that that moment of decision is rapidly coming closer.
Still, a continuing element in the Chinese equation is the rush of its trading partners to either help camouflage the actual situation, or, indeed, scurry to its aid. That is the case now with their acceptance of a proposal by China for a multibillions-dollar multinational bank to be directed by Beijing, ostensibly lending for Asian infrastructure. It would rival the Bank for International Reconstruction [the World Bank] and its financial sister the International Monetary Fund.
The World Bank, after a more rapid than anticipated completion of the post-World War II European reconstruction for which it originally was created, almost accidentally turned under U.S. direction to financing longer-term infrastructure projects in the undeveloped world, And then, having met much of that challenge, under Robert S. McNamara it again turned to social welfare projects. There is a substantial argument that in a world of incredibly sophisticated international lending enhanced by the digital revolution, its mission is long since over.
Now Beijing comes along, proposing that it head a copycat international banking operation, which would fund infrastructure. But Beijing running a multinational financial operation for “good works” is hardly parallel to that task undertaken by the U.S. and its allies in the post-World War II world.
The Chinese are notorious for corruption in their international lending as in all their economic transactions – and ignoring such ephemeral but important concepts such as environmental concerns and credit safeguards. But at the moment Beijing faces a series of collapsing overextended binational international lending problems. Tens of billions in loans, many of them swap credits against a now deteriorating energy market, include Angola, Venezuela, Nigeria and Brazil. They will now have to be refinanced, although how is far from clear.
In the face of Beijing’s growing overseas debt, foreign banks have begun demanding collateral even for loans to its highly favored huge state corporations, apparently preparing for a rise in defaults in the world’s second-largest economy. This is all overhung with an economy growing at its slowest pace since its dramatic opening to foreign capital and technology, and with an unknown downward trend which Beijing is desperately trying to disguise.
If the Chinese were successful with their new venture calling for a new international infrastructure bank under their direction, it would be an operation in reality to refund Beijing’s failing overseas lending and another attempt to boost its highly subsidized exports, already wrenching the world economy out of shape but faced with rapidly rising costs and intense competition from other low wage producers. That there are willing partners in this situation for such an obvious strategy among its trading partners goes back to the continued wishful thinking about the Chinese economy.
The Obama Administration, increasingly notorious for its foreign policy gaffs, opposed the new Chinese bank. But its campaign of opposition to the participation of its allies has, for the moment at least, collapsed. The lure of the Chinese growth mirage has been just too powerful even for London, with its famous City expertise notwithstanding, not to succumb. And it remains to be seen whether such already hard-pressed economies such as Australia’s – ironically suffering from that precise downturn in commodities prices, its principal exports, brought on by the drop in speculation on Chinese continued high growth rates.
Underlying all these decisions is the incredible Chinese lack of transparency and outright counterfeiting of its statistics. There is no end to what we don’t really know about the Chinese economy, whether shadow-bank lending, local-government financing, intra-local-government borrowing, unfunded pension and health-care liabilities. household finances, etc. There is considerable doubt that even the most studious and independent economic observers in and out of the Chinese government know themselves.
What we do know is that in all these issue, debt has been rising at a phenomenal rate. That means, as Michael Pettis, a finance professor at Peking University, has warned: “The problem in China is not the stock of foreign debt but the commitment to a growth model that requires an unsustainable rise in debt simply to keep the engine running.”
sws-03-29-15

Iran: Why?


Why is one of the world’s poorest countries [40% living in poverty, halfway down on list of countries in per capita GDP]] building capital-intensive nuclear power facilities?
Iran has the third largest oil and the second largest gas reserves in the world [without recourse to new shale gas potential]. 2006 oil production level was enough for 88 years if no new oil were found. But only in the last weeks a whole new huge reserve was located offshore in the Caspian Sea. Iran’s fossil fuel export potential is so great that were current sanctions ended suddenly, the world price of oil might well drop $10. That’s despite Tehran’s official rationale that nuclear plants for desalinization are necessary to halt diversion of oil and gas exports.
Why do the Tehran mullahs insist on construction of high cost nuclear power facilities when Iran produced 254 billion kWh gross in 2012 from fossil fuels and hydro, with consumption only 200 TWh?
Demand – before the sanctions — was growing at about 4% per year, according to the World Nuclear Association, London. But although Iran trades electricity with Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Syria, Turkmenistan and Turkey, it had small net surplus. Tehran plans to boost generating capacity by 2022 would have produced additional substantial exports.
Why did Tehran keep details of its nuclear program secret after signing a safeguards agreement with the UN International Atomic Energy Agency [1958] and other additional weapons of mass destruction limiting treaties since?
Iran’s experimental nuclear program was initiated by Mohammad Reza Pahlavi [1967] under the U.S Atoms for Peace Program. But in November 2003 the United Nations International Atomic Energy Agency [IAEA] announced Tehran systematically had violated its internastional agreements over 22 years, concealing nuclear weapons capability. Iran confirmed the IAEA’s accusations but denied their importance.
Why has Iran violated its agreement with Russia for a fuel supply including the return of used fuel?
Adherence to the agreement would have removed any necessity for uranium enrichment which Tehran now admits after dissident Iranian expatriates revealed the details of a secret enrichment plant in 2002. Furthermore, some 20 countries have nuclear power facilities which do not depend on locally sourced enriched nuclear fuel.
Why is Iran enriching nuclear fuel at at least three plants with the IAEA in March 2015 questioning whether another undisclosed facility may also exist?
In about 2000 Iran started building a sophisticated enrichment plant, which it declared to IAEA only after it was identified in 2002 by exiled dissidents. A second and and third plans for uranium conversion are under international safeguards, though IAEA says its monitoring is limited.
Why has the subject of Iran’s role as the world’s No. 1 state sponsor of terrorism been excluded from present negotiations?
Diplomacy to end Iran’s nuclear arms program by the 5+1 [United States, Russia, China, France, United Kingdom and Germany] with Tehran began in the spring of 2003 with continual extensions deadlines. During that period, Tehran has successful extended it aid to the Syrian regime of Basher al-Assad that has killed some 200,000 of its own people, been suspect in the murder of an investigator in the two 992 bombings of Israeli diplomatic and Jewish 1community centers in Buenos Aires, set up a new Latin American infiltration and subversion center in Bolivia, armed and now rearms the Hamas terrorist in Gaza, attempted [but was thwarted by the Israelis killing a prominent Irnian general] to extend its puppet Lebanese Hezbollah to a new anti-Israeli installation on the Golan Heights, expanded a drug smuggling and intelligence network with sympathetic Venezuelan [and Cuban] officials throughout Latin America and in the U.S., among other worldwide subversion activities targeted against the U.S. and its allies.
In November 2014, the Institute for Science and International Security (ISIS) said, “In order to avoid a bad deal, the P5+1 must hold strong on achieving an agreement that limits Iran’s nuclear program to a reasonable civilian capability, significantly increases the timelines for breakout to nuclear weapons, and introduces enhanced verification that goes beyond the IAEA’s Additional Protocol. A sound deal will also require Iran to verifiably address the IAEA’s concerns about its past and possibly on-going work on nuclear weapons, which means Iran must address those concerns in a concrete manner before a deal is finalized or any relief of economic or financial sanctions occurs.”
The Obama Administration and its supporters have presented a dire dilemma: either accept an increasingly watered-down agreement now being negotiated which would ostensibly limit Tehran’s nuclear weapons program with [what can only be described as a highly suspect] monitoring, or go to military action to end or degrade Iran’s program with the possibility of an ensuing regional conflict in the chaotic Mideast.
This formulation ignores several counterarguments:
1] With the current dramatic drop in world fuel prices – likely to continue even in the notoriously unpredictable oil and regional gas markets because or rising production in Iraq and Libya [and by Iran’s own black-markets operations]. That forecast is despite local violence because of new entries of shale gas in the U.S. and abroad, Saudi Arabia’s current low price regime to retain share in a dwindling market, and increasing fuel economies in a depressed world economy.
2] Continued sanctions or elevated sanctions could well bring about a capitulation of the mullahs or regime change in Tehran. [The Obama Administration not only refused to publicly endorse Iran’s Green Revolution after stolen elections in 2009 but ignored demonstrators’ signs in English calling on Obama’s intervention. Instead the Obama Administration moved for negotiations which strengthened an endangered regime.] .
3] As Washington [in 2006] proved in its successful efforts against North Korea counterfeiting of dollars, threatened or actual sanctions against third parties by the U.S. can be enormously effective. [Chinese banks temporarily withdrew their support from North Korea in the face of American pressure until it ended its most flagrant counterfeiting and distribution of $100 bills.]
. 4] If military action were to be taken even against parts of the Iranian program, it does not have the capacity quickly to restore the weapons program since it does not have the domestic industrial backup which has produced the current level of activity. It has relied on imported machinery and technology. It would produce an extended period of a halt to nuclear [and perhaps missile] development, and would critically impact a regime with growing serious economic difficulties.
So, the ultimate question:
Why has the Obama Administration continually given ground in its negotiations with Tehran, now permitting not only continued enrichment, but in effect, reducing the “breakout” time for conversion of enriched fuel to weapons?
sws-03-21-15

Obama Losing his war on the American Economy


Whether the fourth quarter 5% growth of the U.S.gross development product [GDP] is a fluke, another wave of the troubled sea of the longest recovery in recent American history, it is evidence of the miraculous strength of the U.S. economy.
Some are predicting it means a return to 3% annual growth rates next year, still not what is required to reduce both cyclical and the new digital revolution induced structural unemployment, but back to “normal” trends..
The war the Obama Administration has been waging against business, private initiative, and historical American innovation hasn’t been able to stifle the basic American entrepreneurial spirit. Nowhere is that more apparent, of course, than in energy.
For the energy revolution which has come about as a result of the private sector pursuing new technologies to develop shale gas and oil, of course, are at the center of the miniboom. And, the chutzpah of the Obama Administration’s claiming credit for something it fought as vigorously as its amateur planners could – promoting higher energy costs to encourage their vaunted shift to new fuels — is even by the standards of this Administration, outrageous. It remains to be seen whether a new administration in 2017 might open government including offshore lands and reinforce the U.S.’ position already as the number one oil producer in the world and a potential major gas exporter.
Whether it is recreational drivers enjoying the new, lower gasoline prices, or the petrochemical industry moving back from overseas to use as throughput cost a price for gas a quarter of deliveries in East Asia, the domestic economy is getting a shot in the arm. Not even the threat of an unconstitutional Obama’s Environmental Protection Agency all-out attack on all American electrical production and manufacturing can stymie the trend.
The international impact of this remarkable and relatively sudden development is still playing out.
The world energy price, however much markets are segregated by political concerns, is still in the throes of being threshed out. But lower energy prices, even in the fickle oil market, are obviously with us for several years. That’s the result of the American shale revolution, but also – despite all the feuds and guerrilla in the Mideast – the coming on market of more and more production. Boycotts and sanctions have only increased the black-markets nipping and tucking through all the back alleys of the world economy to market more oil.
It’s hard to know where to begin with what we already see as the immediate results of the world energy goldmine:
Saudi Arabia, hoping to impede the American and foreign shale revolution with its higher costs, is pumping more oil than ever from its low-cost resources. It hopes not only to have an effect on a possible competitor as the U.S. moves to becoming, again, a gas [liquefied natural gas, LNG] and oil exporter, but to deal a blow to its Mideast rivals.
Venezuela’s two-bit caudillos are in trouble with their heavy oil. [They will have new competition as the Keystone XL Pipeline finally overcomes Obama’s opposition to deliver similar Canadian tar sands oil to the Houston where one of the few refineries which can handle Caracas’ goo exists]. Nor can the collapsing Venezuelan regime continue to feed subsidized energy to its leftwing anti-America playmates. It remains to be seen if Obama’s life preserver thrown to a Castro regime, the first victim of such a shutoff, can save that crumbling dictatorship which has brought infinite misery to its people.
Lower world oil prices may be able to restrain an aggressive Tehran. They may do what American sanctions and a less than dedicated Obama negotiation to block the mullahs’ drive for nuclear weapons has not done. Lower oil prices for its relatively high cost production is tearing the guts out of an economy already in trouble on a variety of scores.
The Chinese are also on a downward spiral as their two big economic props – massive infrastructure development and exports – are being undermined, the first by a crippling debt crisis and the second by a dawdling world economy and growing competition from other low wage producers. But new cheaper worldwide energy will help as they are unable to turn to their own shale resources [mismanagement and lack of technology] as they become larger importers.
Japan and South Korea’s stagnating economies, too, will profit from their lower energy import costs, especially Abemomics in Japan which has had to suffer cutbacks in its heavy reliability on nuclear power as a result of the 2011 earthquake and tsunami catastrophe.
There are going to be groans and yelps from the great international oil conglomerates, too, who have Veneuzle=been riding high in the stock markets on high prices and profits. That may discombobulate some of the financial crowd and some of their kept media, but cheaper worldwide energy is bound to move the world economy forward – and in the process cripple some of the worst corrupt regimes. Not a bad way to enter the New Year, all things considered.
sws-12-28-14

The growing Russian menace


It is not a return of the Cold War – but, in a sense, it may be even more dangerous.

For more than four decades, the U.S. and its allies wrestled with a formidable enemy, one armed to the teeth, from nuclear weapons and delivery systems to the best propaganda-subversion network the world had ever seen. But Washington and the West tended to obscure the enormous vulnerabilities of the autarkical Soviet economy – even when periodically it came obsequiously soliciting a blood transfer from the capitalists. Perhaps that was why only a few Russians had anticipated its extreme vulnerability and why its sudden implosion came as such a surprise in the West.

But during those decades, there was never much doubt about what the issue was, what each side’s military capabilities were, nor what both planned in the event of a breakout. It was labeled with that cliché, the balance of terror.
Today’s scene is much more unclear.

True, Russia’s weaknesses are much more apparent while Vladimir Putin increasingly challenges the West and its norms for worldwide peace and stability. There is one good reason: unlike the earlier era, this Moscow has sought and to some extent found economic integration with the world economy. So much so, in fact, that it has caught ‘the Dutch disease” – an overwhelming dependence on its vast oil and gas reserves for its relative prosperity compared to Soviet times. But the huge cash reserves for its gas exports to Western Europe only disguise its weaknesses and may be on the verge of rapid dissipation.

For in reality the Russian state today suffers all the ills of a descending power. A catastrophic decline in the birth rate has driven Russia toward a smaller and smaller population, as much as a third by 2050. Perhaps the dip in population slackening just now but continuing over the long run with a particularly high death rate for males from accidents and alcoholism. [Recent small blips of population increase are Russian ethnics returning to the “homeland” from former Central Asian non-Slav Soviet “republics”] Urbanization and the creation of a pampered elite disguise the abandonment of village economies and agriculture. Even its massive fossil fuels exports are based on antiquated and inefficient exploitation, with crumbling pipelines and depleting oilfields, increasingly dependent on foreign technology as it hopes for new oil finds in the Arctic.
Vladimir Putin, like his predecessor Boris Yeltsin, has promised reforms on all fronts. These include pumping up the once proud heritage of the Soviet military. But while he has initiated an ambitious rearmament program, it has not solved its traditional defects [disciplinary abuses, for example] of the Russian military nor moved successfully as promised repeatedly to an all volunteer force. Whether in the brief war against Georgia or in its covert aid to the pro-Moscow rebels in Crime and the eastern Ukraine, these deficiencies have been manifest.

All this explains why relatively minor sanctions of the U.S. and the EU against Russian aggression in Ukraine have impacted so heavily on Moscow. The massive outflows of capital, always a problem because of the unstable political scene which saw favorite oligarchs suddenly become enemies of the state, have soared. The stock market has soured, now short of foreign capital and domestic investors scurrying abroad. And the rubble has tumbled against the dollar.
But none of this has slowed Putin’s bombastic claims to regain for Russia the superpower status of the failed Soviet Union. [After all he has said the collapse of the Soviet Union was the greatest tragedy of the 20th century.] He has ignored advice of former trusted economic advisers warning of the growing impact of Western economic warfare. In part, this has been because his “victories” in Georgia, Crimea, and continued abetting of the civil strife in Ukraine itself, have generally been supported by the new Russian elite, as chagrined as he at the second class power status Russia had fallen into after 1990. A jingoistic – and largely government controlled media – have also spurred him on.

But in a sense, Putin is being sucked into a vacuum created by the Obama Administration and the European Union’s only lackluster effort to halt the first new European aggression by a major power since World War II. Rather than send all possible military support to the besieged Kyiv regime whose forces, unexpectedly, performed reasonably well against the Ukrainian rebels and their Russian encadrement, Washington, Berlin and Brussels have negotiated toward a loose federal Ukrainian state Moscow could manipulate and pull back into its orbit.

That has embolden Putin – playing to his domestic claque – to make increasingly aggressive gestures, whether bomber patrols off North America or Russian warships in the North Sea. The old Soviet [Putin’s own political ancestry in the NKVD/KGB] espionage intrigues have surfaced on the Lithuanian border, one of the three Baltic States looking to many observers as his next target in his attempt to reconstitute the Soviet empire.

The issue at the moment is not just the question of what either side will do next. That is, will Putin push for further concessions from Poland, the Baltic States, and Finland? Or will he be content to huff and puff until the weight of the falling world energy price finally sinks the Russian economy. That could come quicker than many anticipate in the always unpredictable world oil markets.

The Saudis with their huge reserves publicly claim the current falling worldwide energy prices are only temporary. [That was after rudely and uncharacteriscally refusing all media coverage of the recent OPEC conference which failed to curb production in order to bolster prices.] Their interest may be in a world oil price that would undercut the higher sxpenses of American shale production.

Their prophecy, if sincere, seems unlikely. Not only has the shale revolution in the U.S. [and now spreading abroad] given the American economy a fillip and virtually halted net energy imports, it threatens to turn into a weapon to finally establish a uniform world gas market at cheaper prices. Despite all the problems of the Mideast, new or reinvigorated Iraqi, Libyan and Syrian oil is reaching world markets. Even Iran, living with its own faltering sanctioned regime now somewhat diluted by the Obama Administration and Europe. is pushing sales. But their hottest new market, China, is slowing imports with what looks to be as a concomitant of their longterm slackening of spectacular growth of the past three decades. With much of the world in economic doldrums, consumption promises to remain relatively slowly increasing for some time at least. All this means lower real fossil fuel prices for the foreseeable future.

Russia’s high cost production will increasingly be the victim of this more liquid worldwide energy market. At that point, does Putin pull in his horns – or will he be tempted to believe his own propaganda and make other dramatic aggressive feints? And if so, what will the West – now led from behind by a recalcitrant Obama Administration – do?

And most of all, will both sides read the other’s actions correctly, avoiding an escalating clash?

sws-11-30-14

Transformation of U.S. foreign policy


Barack Hussein Obama, with a group of largely ideologically primitive amateur policymakers but skillful media manipulators, set out in 2008 with the stated purpose to “transform” the American Republic. Although their emphasis was more related to domestic issues, their goals also required a linked fundamental reorientation of American foreign policy.

With the prospect that in a few days, another defeat in Congressional midterm elections will severely limit his further initiatives in the remaining two years of the Obama Administration, it must be acknowledged that at least temporarily Obama & Co. have succeeded in their overall aims in the international arena.

That is a stark contrast to the domestic scene where most Obama policies have either failed spectacularly or are in a state of continued dispute in the face of, however eroded, traditional values, the weight of inertia, and that incredible American entrepreneurial utilization of technology. In energy, for example, perhaps the most important ingredient of economic policy, the technological breakthroughs in the exploitation of gas and oil – the shale gas revolution – have completely upended Obama’s energy strategy. Not only is the outlook for fossil fuel reserves, worldwide as well as domestically, been completely changed, but the always volatile energy costs now appear headed for a long period of falling real prices. Obama’s attempt to stampede the U.S. economy into highly government subsidized so-called alternative sources of energy are in shambles – at an untold cost to the taxpayer, or course.

The Obamaites have been far more successful in their pursuit of a dramatic reorientation of U.S. foreign policy. It remains to be seen, of course, whether those initiatives are a permanent feature of the international scene. But, for the moment at least, Obama has accomplished his goals: Gone largely is continuing recognition of Washington’s post-World War II leadership of the coalition of allies which not only won the greatest war in history against the Nazis and Japanese militarists but also outran the threat of another totalitarian enemy, Soviet Communism.

The Obama view was that in the half-century-plus of Washington world leadership, if not in its longer history including slavery, America had made too many mistakes, that its worldwide dominance was on balance deleterious, that a better role would be one of, at most, primus inter pare. Furthermore, reaching out rhetorically to former perceived victims of American actions would be a pathway toward peace and stability. In short, what he and his colleagues saw as a more compassionate and understanding American executive could go far in curing the world’s problems rather than using its power to help stabilize the world scene. [Never mind their dismissal if remarked at all of the enormous extension of aid to the world over previous decades.]

To a considerable extent, Obama – with the aid, however reluctant she now says, of his former secretary of state Hillary Clinton – has been able to achieve these policies.
But the daily headlines also tell us that the goals of this strategy has not been achieved in any quarter of the globe. But to the contrary, the world has hardly ever been in such disarray with or without an activist U.S. leadership.

Two points need to be made quickly:

The Obama Administration and its policies are not responsible for most of the world’s political problems, misgovernment and violence. It did inherit what despite one of the longest periods of peace in Europe’s history with its overwhelming influence on world affairs, was a volatile world scene. In short, the world is the jungle it always was. And recent events have shown us political movements demonstrating the ugliest aspects of human nature, too, are still with us. In short, it is clear that no farseeing American strategy could have done more than ameliorate the world scene, as some of us would argue it did for some six decades.

Secondly, the history of ideas suggests that Obama’s international perspective did not spring like Athena fully formed and armed from Zeus’ forehead. Obama’s theories of international relations rely heavily on that strong undercurrent of American thinking which always sought to minimize our exposure to the rest of the world’s problems.

That was the case, rather successfully throughout most of the 19th century with the help of His Majesty’s British Navy, and the God-given geographic isolation that two oceans afforded the U.S. [One has to recall, for example, that only a little over a year before the Pearl Harbor attack, legislation for extension of universal military service passed the House of Representatives by only one vote] Not only was that complicated concept, generally dubbed “isolationism”, part and parcel of American political thinking from the beginning of the Republic, but its supporters in more recent past have included a wide swath of supporters across the political spectrum from “Prairie radicals” to the complex sympathies of the warring parties in the U.S. electorate. [Pacifist and Socialist Norman Thomas sat on the same “America First” – the most active of prewar isolationist organizaions — platform with members of the pro-Nazi German American Bund in Yorkville in 1940.]

Still, the list of successful “accomplishments” of the Obama strategy to diminish America’s role in international affairs is long.

• By abandoning the deployment of anti-missile bases in Poland and the Czech Republic, arduously negotiated, Washington not only dealt American missile defense a body blow but awakened the old threat of decoupling European security from America’s worldwide strategies.

• The refusal to lead the alliance which overthrew Qadaffi in Libya resulted not only in the tragic and ignominious death of an American ambassador and three other Americans but is leading to an anarchic situation there – with its threat to Egypt and the rest of North Africa and oil markets – with possible jihadist ascendancy.

• An amorphous position toward the U.S.-Israeli alliance, despite pro forma statements to the contrary, emboldened jihadist Hamas and further diminished the possibility of a Palestinian negotiating partner for an accommodation between the Jewish state and the Arabs.

• The refusal to lead a Western alliance in support of Ukraine against the Hitler-tactics of infiltration and puppetry of Russia’s Vladimir Putin has not only diminished the fragile Kyiv government but put into question the guarantees of the NATO alliance to its Central and Eastern European members.

• Neither Obama’s ostensibly seminal addresses in Cairo and Istanbul with apologies for pretended insults to Islam by the U.S. and a more than sympathetic reading of the history of Islam have improved relationships with the Muslim world nor diminished the growing Islam;s traditional jihadist elements.

• Courtship of the controversial Muslim Brotherhood, apparently a critical part of Mr. Obama’s CIA Director John Brennan’s nonconventional view of Islam, has widened the gap with the Egyptian military now ruling what has been the most important Arab country and a leader of the Muslim world and other Arab allies in the Gulf.

• A studied neutral position toward Chinese claims on Japanese occupied territory returned under bilateral postwar agreements to Tokyo and no immediate followup to Clinton’s statement of reorientation of U.S. strategy toward Asia has unnerved traditional Asian allies.

• Continued flirtation with the tottering Communist regime in Havana has encouraged Moscow to try to resurrect its alliance with Castro Cuba, encouraged elaborate Cuban espionage in the U.S., and undermined the continuing dissident democratic movement in Cuba supported by Cuban Americans in the U.S.

It is far from clear that in the kind of volatile world in which we live, the “success” of Obama’s transformation of American policy would not be the object of a concerted reversal by a new administration in 2016. Or, indeed, as despite cryptic language and new names for old crimes [workplace violence for jihadist terrorism], the Obama Administration is now by force majeure is being made to reverse course. The great danger is, of course, as in the present attempt to cope with the ISIL phenomenon in Iraq and Syria, Obama’s half-measures will lead to further disaster.

sws-10-05-14

Strategy, any one?


 

“Okay, smart-a___, what is your strategy?”

In a [rather large] nutshell; here are the tactics which when pulled together make up a grand strategy:

Domestic

Make an “America is back!” speech from the Oval Office in the White House modeled on Harry Truman’s “Doctrine” speech of 1947. http://www.americanrhetoric.com/speeches/harrystrumantrumandoctrine.html   Its principal theme would be recognition that the U.S. and its allies are launched in an extended war — and still far from being won — against the Islamic jihadists.

Immediately ask Congress for emergency lifting of all Sequestration applying to the Department of Defense, the CIA and other security agencies for five years. Halt and reverse with continuing extension and recruitment the personnel cutbacks now decimating the American armed forces.

Reverse energy policies to provide the U.S. economy and our allies with a noninflationay stimulus of cheaper fuel, simultaneously directly providing hundreds of thousands of new jobs, by:

 

  • Administratively, opening up all federal lands [including offshore Virginia, etc.] to fracking,
  • Administratively, waiving all EPA regs on fracking for five years.
  • Administratively, fast-tracking applications for the dozen or so outstanding applications for liquefied natural gas export facilities, putting on hold any Environmental Protection Agency regulations concerning them for a five-year period.
  • Asking  Congress to lift all oil and gas export restrictions, including a waiver on EPA fossil fuel export regs for five years. [These exports would begin to supply allies in Europe and Asia and simultaneously help mend the balance of payments hemorrhage against the dollar.]
  • Immediately okaying the XL Keystone Pipeline and other Canadian applications for pipelines into the U.S. directed at Houston refineries and their export facilities.
  • Pushing Detroit and foreign-owned auto companies to organize and subsidize a national network of filling stations for an expanded production and use of LNG-fueled vehicles.

To reinforce federalism, begin the rescission of the 17th amendment, restoring the original intent of the Founders by returning the power on how to elect senators to the states, freeing the states to determine their own method including indirect election by the various legislatures. [Most of the turn of the 20th century arguments for direct election are now better ones for indirect election, e.g., “it’s a millionaire’s club”.]

Resurrect the independent U.S. Information Service with a cabinet post and assistant secretaries from State, Defense and CIA. The new department would incorporate the Board of International Broadcasting, expanding Radio Liberty [with renewed local language broadcasts to Central Asia] in order to tell “the American story” to the world.

Mideast

            Bomb the ISIL in Syria and Iraq “back to the stone age” with a massive WWII type aerial bombardment. In riposte, sanction all banks and financial institutions – including third parties, and, of course, including all Russian and the Chinese institutions – doing business with the al Assad regime.

“Pressure” Turkey to accept a NATO mission on its southeast flank to work directly with the secular and “moderate” Islamic anti-Assad forces from a Turkish sanctuary. Organize with our NATO partners a joint “request” that Ankara release immediately all imprisoned Turkish journalists as the first step in reinaugurating the movement toward a civil society. Let Pres. Recep Tayyip Erdogan know if he does not acquiesce to these quiet pressures and move back from his drift into Islamism, Washington will demand Turkey’s expulsion from NATO.

Reinvoke strict sanctions on Tehran until the mullahs accept a NATO – not the UN IAEI which has been so notoriously inept — inspection of their nuclear activities. Slam the possibility of military intervention “back on the table” and be prepared for surgical strikes to slow if not deter the Mullahs’ acquisition of WMD.

Administratively, add the Moslem Brotherhood to the State Department’s terrorist list, and direct the FBI to insure that all domestic Islamic organizations [including mosques] with formal and informal ties to the Brotherhood be put on a terrorist alert list.

Lift all restrictions on arms to Egypt now being temporarily enforced and invite al Sisi to visit the U.S. before mid-summer 2015.

Persuade al Sisi to abandon his dicey Second Suez Canal Project. Instead round up  Gulf States, Israel’s Dead Sea Works, the World Bank [IBRD] and private European, American and Japanese capital to fund the Qattara Depression Project to provde Egypt with cheap hydropower and a new chemical industry. http://en.wikipedia.org/wiki/Qattara_Depression_Project

Immediately and with considerable public fanfare accept Sheik Tamim bin Hamad Al Thani’s request for stationing additional American forces [he has called for 10,000] on the world largest air base at Al Udeid [Abu Nakhlah Airport], the U.S. Army base at Sayliyah and the U.S. base at Doha. Then, “encourage” the Gulf States [UAE, Dubai, Saudi Arabia] in concert with the United Arab Republic [Egypt] to ultimatum the Sheik to end all payments and subsidies to the Moslem Brotherhood, Hamas, al Nusr and ISIL and to both Arabic and English al Jazeera networks — “or else”. Compensate by helping the EU, and especially Germany, to negotiate greater LNG purchases from Qatar, if necessary using additional European storage facilities, to negate the Russian fossil fuels blackmail.

Immediately supply Ukraine with necessary heavy weapons and technical assistance to meet Pres. Vladimir Putin’s aggression.

Reoccupy with significant ground forces and maximum publicity the old Wheelus U.S. Air Force base at Mitiga International Airport in eastern Libya. “Encourage” Gen. Khalifa Belqasim Haftar to negotiate merger of Libya with the United Arab Republic [Egypt] with the help of ENI [Ente Nazionale Idrocarburi ] whereby the huge oil revenues could be stolen and wasted more beneficially.

“Persuade” the UN to amalgamate the UNWRA [special Palestinian UN organization with its enormous budget] with the UN Refugee Organization with the appointment of an American administrator by withholding the major part of both their fundings from the American taxpayer [as was done earlier to reform UNESCO and ILO]. Insist on a purging UNWRA staff, ejecting all those who have worked for or been active in Hamas, a terrorist organization so designated by the US and its allies.

Europe

Put the ruffles and flourishes back into the Anglo-American alliance with its attendant links to Canada, Australia and New Zealand as the cornerstone of NATO and America’s world alliance strategies.

Deliver SAPiest heavy weapons and technical assistance to Ukraine in its fight against the invasion by Russian Pres. Vladimir Putin’s forces and block Moscow intervention in rewriting the structure of the Kyiv regime.

Establish a NATO base in Estonia.

Move into lock-step with the French in tamping down West and Central African violence [see below].

See that the NATO Rapid Deployment Force becomes a reality SAPiest with the training on a level with the U.S.’ and Britain’s Special Forces.

Prepare for the eventual collapse of the Euro.

East & South Asia

Quietly assign a senior U.S. diplomat to a special U.S.-Japan-Korea commission to sit sine die to help sort out issues between Tokyo and Seoul with special personal representatives of Prime Minister Shinzo Abe and Pres. Park Geun-hye. [Their grandfather and father, respectively, established postwar relations between the two countries.] This would aim to smooth over the most important obstacle in an American-led defensive alliance in Asia against North Korea and Communist China threats.

Reinvoke the strict sanctions earlier used to induce the North Koreans to come to heel, including third party sanctions against any financial institutions who deal with them, openly or clandestinely. They would be lifted when an international inspection team consisting of Americans, Japanese and the NATO allies certify its weapons of mass destruction programs have been ended.

Nudge ASEAN to resurrect the intent of Sec. of State John Foster Dulles’ 1950s Southeast Asia Treaty Organization with the headquarters again in Thailand, and hold out admission possibility to Vietnam [if it makes major “reforms”, that is de-Communize] in its feud with Communist China.

Push Taiwan rearmament and “invite” the Republican Party to cuddle up to the Democratic Progressive Party to pressure the Kuomintang back into a stronger line against amalgamation with the Mainland to maintain the oinly democratic society in Chines history.

Latin America

Initiate “tough love” with Mexico, e.g., introduce legislation to subsidize American investment in Mexican oil and gas in exchange for joint paramilitary border operations to halt illegal flow of immigrants to the U.S. with reinforced joint patrols on both sides of the border and a joint U.S.-Mexican undercover immigration control force on the Mexican-Guatemala border. Reach agreement on new “modalities” for protecting American citizens traveling, visiting and doing business in Mexico, matching those affording Mexican citizens in the U.S.

Swap new legal provisions for bond concessions to the Argentines for their cooperation in U.S. Latin American projects, especially cleaning up “ice” trafficking through Rosario and Iranian penetration of neighboring Paraguay, and a quit-claim to the Falkland Islands.

Introduce legislation to reinstitute the macro aspects of the Cuban embargo at the same time removing all restrictions on movement to and from Cuba by American and Cuban citizens.

Africa

Move U.S. Africom to a new joint U.S.-French-Portuguese-NATO base to be built rapidly with port and air facilities on São Tome e Principe in the Gulf of Guinea while pursuing a campaign of destruction with African and Eruopean allies against Boka Harum.

If this seems a formidable list, it is indeed. It it seems an impossible list, remember that a population less than half the present one in the American war mobilization between 1939 and 1944 doubled real wages in the U.S., produced 229,600 aircraft, added 5,000 ships to the existing merchant fleet, even though two-thirds of the economy was devoted directly to military equipment — and simultaneously won a war against two formidable enemies. It took leadership and political resolve. But just as the attack on Pearl Harbor alerted a recalcitrant nation, however far current leadership has drifted away the country should be reminded that 9/11 was proof that “the splendid isolation” of the U.S. from the rest of the world’s troubles during the 19th century is long past history.

But no amount of posturing over strategy and tactics will suffice if the leadership is irresolute and tries to wish away the dangers of that world jungle that has now physically encroached.

sws-09-07-14

Mañana is here


Much has changed, obviously, since I published Mexico: chaos on our doorstep [Hardback, Paperback: 232 pages, Madison Books (July 24, 1989), ISBN-10: 0819172960, ISBN-13: 978-0819172969, Amazon, $13.17].

As so often has happened, my timing was bad. The book’s research identified a problem prematurely and the title raised hackles among some Latin American specialists, most of whom had a more optimistic view.

But what led me to write the book may still be as relevant. It was my “discovery” of the startling fact that the 1500-mile U.S. Mexican border was the only land frontier between what in those days was called The Third World, pre-industrial, poverty-stricken, and unstable societies, and the First World of a few “developed” European and North American countries, Australiasia and Japan. Ultimately, I argued, that was bound to lead to a security crisis for Washington.

The prediction has been a long time in coming and we may still not be there yet – but recent events on the border suggest we are very near at least.

I couldn’t but be struck these past few days with the familiarity of “the children crisis” on the Texas border. In my reporting for the book in Mexico and in the U.S., particularly among Mexican Americans, the head of Los Angeles’ medical services told me his budget was coming apart because pregnant illegal Mexican women increasingly were using his facilities. They accomplished two purposes: they got free medical services not then available in Mexico except to the rich. But more important, they established the American birthright of their offspring who might in later years claim citizenship for their families. But his complaint was that in order to meet this additional drain on his facilities he was having to reduce his postnatal care extension service.

Substitute the nationalities of the current children and accompanying parents and pregnant women now producing “a humanitarian crisis” and you see trends haven’t changed.

The question not too often asked is how these children, many if not most unaccompanied by adults and some without contacts in the U.S., made their way twothousand miles up through Mexico from Central America. A bitterly humorous but excellent semidocumentary Anglo-American film, “El Norte”, in 1984 described the perils of such a journey. Only acquaintance with Mexico gives one an appreciation, for example, of the instructions to the Central American protagonists of the film as how they are to pass as Mexicans in their trip to The North [the U.S.]. It is obvious not only that it takes “guides” but collaboration of Mexican authorities, at least at the local and regional levels, for the rapidly growing flow of children. Chiapas, for example, the Mexican state on the Guatemalan border is one of the most troubled in the country. Their inspiration to come north depends, as well, on the widespread belief in Central America and beyond that amnesty for illegal entrants is coming in the Obama Administration’s proposed immigration “reform”.

A look back at some of the problems outlined in my book suggests it is less dated than one would otherwise assume; one could argue only the numbers have changed. The border was already under siege I learned then when I talked off the record to members of the Border Patrol and U.S. immigration agents working the border turnstiles. Once when I quoted some Washington numbers, one American policing a frontier gateway asked me, incredulous, if I believed the official statistics. In my investigations then I was already shown ultraviolet photographs of crowds of illegals crossing the border under cover of night even in the highly populated areas surrounding San Diego. And I heard details of the expanding gangs of ”coyotes”, the criminal body traffickers, who arranged for less sophisticated or adventurous migrants to cross into the U.S.

Furthermore, any examination of U.S. border cities, where I visited, whether Nuevo Laredo, El Paso, Nogales, or San Diego, exposed the growing call on their resources by the growing satellite cities on the Mexico side and the difficulties of policing any American border precautions. [The El Paso fire department, for example, was routinely called on to aid with fires in Ciudad Juarez, just across the border. Juarez has more recently been the site of such violence in “the drug wars” tens of thousands of its estimated two million people have fled to safety.] It was obvious that the growth of the so-called maquiladoras – twin plants which meshed manufacturing on both sides of the border to employ cheaper Mexican labor and tariff incentives –would be a draw not only for rural Mexican and Central American labor but would tempt even more illegals to cross into the U.S.

My book “bombed” for, as The New York Times iconic reporter and editor, Scottie Reston, once said, “Americans will do anything for Latin America – except read about it”. When we made a documentary, “The Invisible Invasion”, based on the book – I wrote and narrated it with cameos on border sites – we managed to interest only one public TV station in telecasting it, once. Unfortunately, even my copy of the video has disappeared – at least temporarily.

The overall issue I posed then – and perhaps it is still as significant – was whether Mexico’s European elite [as distinguished from “the Golden race”, the Mestizo bulk of the population and the growing number of Indians] would assume the responsibilities of their then authoritarian control. It was clear that Mexico was not only built on what was then labeled the 14 families, but that “civic spirit” was a concept alien to the culture. It’s perhaps still valid to ask that question today.

Of course, Mexico 2014 is vastly different than the country I examined a quarter of a century ago. Its economy, after the great foreign exchange crisis of 1994, has expanded exponentially until it is now the 14th largest in the world, the 10th largest in purchasing power. The then 70-year monopoly of power of the Party of the Institutionalized Revolution [the PRI] has been broken by the once Catholic-centered National Action Party [PAN]. Not only have peaceful transfers of power between the two parties taken place, but slowly if painfully the old government monopolies with their cozy relationships with crony capitalists [including the multibillionaire Carlos Slim, perhaps the world’s richest man, and a major New York Times stockholder] are dissolving in a slow progression toward a market structure.

That export-led economy – its more than $200 billion in exports larger than the combined exports of several major Latin American countries — has more free trade agreements [40 countries] than any other country.  Its most notable trading partner, of course, is the U.S. [through the North American Free Trade Pact including Canada]. Some 80% of exports of machinery and agriculture flows north, with the Norteamericanos supplying half its $370 billion in imports. Finally, the curse of the 1938 leftwing ideological nationalization of its vast oil resources is slowly being amended so that at least its vast reserves have access to new international technologies through production sharing and other arrangements..

Mexico’s population explosion – it has the largest Spanish-speaking population in the world of 120 million and after Brazil the second largest cohort in Latin America – has slowed to just under 1% annually. But the tenfold increase since 1900 means that even today more than half the population is under 25. That is a great contributing factor to income inequality – more than a third of its population, particularly in rural areas,.lives in abysmal poverty – may even have accelerated in recent years. The $22 billion remitted by immigrants to the U.S. constitutes a critical part of life for millions of Mexicans left behind – and explains why the border migrant problem is central to the political as well as the economic issues between the two countries.

What dominates contemporary Mexico life, however, is the violence and economic effects surrounding the enormous drug trade, largely catering, of course, to the $60-billion market for illicit drugs in the U.S.  According to the Global Peace Index 2014, it cost the Mexican government almost $172.7 billion to fight the powerful drug cartels in 2013 [more than twice Mexico’s foreign debt].

Former Pres. Felipe Calderon launched an aggressive campaign to subdue the traffickers who threatened to the take over the whole apparatus of government through massive corruption of the police and other government officialdom. But since Calderon launched military operations in 2006, violence has escalated not only between the government and the drug rings but between competing criminal gangs. Two years into his six-year presidential term as Calderon’s successor, Pres. Enrique Peña Nieto – the return of the PRI to power — has put the emphasis on reducing violence rather than his predecessor’s frontal attack on the traffickers.

So far there is little evidence that strategy has worked and the violence continues apace. Murder rates have risen substantially, according to the UN Office on Drugs and Crime, nearly triple the level in 2007. Calderon’s resort to using the military arose from the inefficiency and corruption among the police. But recent violence between the competing cartels has reached levels, particularly in the states bordering the U.S. that has forced whole villages to flee.The lifeblood of the drug traffic, of course, is a high level of corruption. In the 2013 Corruption Perceptions Index, Mexico ranks 106th [out of 177] and is the worst performer among the large Latin American countries, excluding Venezuela.

Peña Nieto’s response to criticism – especially American — of his policies has been that no Mexican strategy would be successful if the United States does not stop the flow of weapons to Mexico, block money laundering through North American banks, and, above all, reduce its own drug consumption. In 2008, the U.S. and Mexico – acknowledging the necessity for a mutual approach to the drug epidemic and the growing power of the trafficking cartels — adopted the Mérida Initiative. It sought to combat transnational crime with $1.4 billion in a three-year U.S. grant to the Mexican government for military and law enforcement training and equipment. U.S. Senate investigators since have seen the program as largely ineffective, if not a failure.

The arrival of The Children’s Crusade following the Pied Piper of illegal job opportunities in the U.S. marks a new era in the growing dysfunction of the U.S. southern border.

And what looked like a probable security crisis in the future to me 25 years ago now appears to be, indeed, on our very doorstep.

sws-06-22-14.

Putin, Bluffer-in-chief


by Sol Sanders
The current extremely successful campaign of aggression by Russia’s dictator-candidate Vladimir Putin illustrates two of the fundamentals of geolitical history:
A demagogue’s capability of achieving remarkable results through bluff.
How history often turns on relatively small margins only later to be disremembered.
Putin, with a home front in near crisis, has nevertheless won an important strategic victory by his covert invasion of the Crimea and wresting it, at least temporarily, from Ukraine. The disarray in Kiev after an unbelievably corrupt regime was dismembered by a popular street revolt has facilitated his pretense of superior power. That a rapidly declining Russian population, beset with all sorts of economic and social ills has embraced his new nationalist fervor, is no surprise. The old bandwagon effect of propaganda is notorious; pace Germany in the Nazi takeover after 1933 when the celebrated “good Germans” were increasingly few and far between – as long as Hitler was winning..
Putin’s victorious march from one propaganda feat to another is occasioned more by the utter collapse of a naïve U.S. policy in regard to Russia. Not least has been Washington’s inability to present a common front with the European Union. It is one of the many contradictions of the current scene that German Chancellor Angela Merkel, presumably the most exposed of the EU’s members to blackmail because of its heavy [one-third] dependence on Russian energy imports, has taken the firmest line, at least publicly. Pres. Obama’s statements, on the other hand, ring hollow as more of past “red lines” which turned out meaningless.
Putin’s success is all the more “illogical” given the fact that he appears to have no ideology – other than a vague wish to return Russia to Soviet and/or Tsarist glory. Yet he dare not maximize that nostalgia given the still unresolved issue of Stalin and his domestic terror within the living memory of at least a few Russians. Nor, one suspects, is he moving systematically from one strategic move to another, but rather improvising tactically as he goes along.
What is clear is that his aim is to reassert Moscow authority over the former “lost” areas of Soviet dominance. Ukraine with its 45 million people, great agricultural resources and ancillary industry to the old Soviet decentralized industrial networks [not the least munitions] is a special prize and first in his agenda That would suggest that rather than proceed with dismembering it – that is, repeating the process of detaching Crimea and linking it to Russia which he might be able to do in Eastern and Southern Ukraine — he may well want a weak and subservient Ukrainian central regime.
Thus Secretary of State John Kerr’s repeated efforts to smooth the Russian feathers with his almost constant exchanges with Foreign Minister Sergey Lavror are worrisome. That’s especially true since announcements of successful agreement between the two are followed almost immediately by aggressive statements from the Kremlin. If an attack on a sovereign nation is the international issue that precipitated the present crisis and must be dealt with, as it is, then surely Putins dictating the formation of a restructured Kiev regime – perhaps with a few imputes from Washington – is not the way to go.
Therefore, there may be wishful thinking to British Foreign Secretary William Hague’s guessing that Putin has lost control of his assets in Ukraine. That is a little hard to believe. Western observers on the ground are generally agreed that those little men in “green uniforms” wearing masks and wielding sophisticated arms were infiltrated KGB and Russian Special Forces. They led the charge of local Russian ethnic dissidents against the fragile Kiev government. Yes, Putin did publicly call for halting this past weekend’s referendum in Eastern Ukraine. [No one dares use that old Hitler appellation “plebiscite” with its evil 1930 connotations] It calls for separation and possible affiliation to the Russian Federation. But that certainly does not mean that Putin’s agents aren’t, in fact, pushing his backhand program. Is Hague really that naïve?
This kind of subterfuge has been the chief characteristic of Putin’s program since he began the effort through the ousted bought-and-paid-for former Ukrainian Pres. Viktor Fedorovych Yanukovych. That miscreant was so unsavory that Moscow has treated him with rubber gloves after he ran to Russia for his life. The incredible revelations of hedonistic lifestyle have, even by the standards of the many present worldwide kleptocracies, staggering. It suggests just how far the improvised Kiev administration at the same time must create a new regime resisting very real disruptive tendencies within a new state but at the same resist Putin.
In the last few days, Putin has played an old Stalinist card: the appeal to loyalty to the Motherland, a massive display of military pomp and ceremony on Red Square not seen since Soviet days. The call to loyalties of World War II when Russians paid a terrible price for Stalin’s dallying with Hitler for a temporary truce in the Fascist-Communist struggle and the purging of his veteran generals to exert maximum control. It also, subliminally, recalls the Russian complaint that they rather than the West with their enormous casualties [8.7 million soldiers, 6 to 12 million civilians].downed Hitler. That, again, feeds into the kind of anti-Americanism which is the flip side of a genuine admiration for Americans that has always characterized the Russians.
Yet Putin’s military in 2014 – despite its threatening hoard of nuclear weapons and some lingering success in continued Soviet missile propulsion – is nothing like the Soviet inventory. Of the Soviet fleet of 110 deep water ships, for example, Putin as only 12. [The submarine fleet is less than a third.] Putin’s military modernization – ironically in part based on acquiring actual weapons in addition to technology from the West [drones from Israel, SUVs from Italy, training equipment from Germany, etc.] – has introduced new flexibility into the old Soviet gigantism.. Progress made since the Russian army stumbled into Georgia in 2008 includes remolding the Spetsnaz [special forces] so abysmally ineffective in the two [recent] Chechnya wars. But his army still hangs suspended somewhere between a conniving and evading draft and volunteers. Nor has the nightmare of brutality of relationships between NCOs and soldiers been assuaged.
But while Russian forces are not match for NATO, Russian strategy cannot be dismissed by Washington. For example, by setting up an expanded anti-aircraft defense for Belarus – increasingly under Russian influence and control, and perhaps the No. 2 target after Ukraine — Moscow has partially checked any Western air effort to defend the Baltic States in the event of a surprise attack by Russia. NATO’s commander U.S. Air Force General Philip Breedlove acknowledges that Russian forces which remain deployed along Ukraine’s border [despite Russian denials] could overwhelm Ukraine in as little as five days.
Still, Putin is also paying an enormous price for the increased instability his international ploy has introduced into the Russian economy. Never mind that the Obama Administration’s sanctions so far – “move another inch and I will let you have it!” – are virtually meaningless. The capital outflow of Putin’s own oligarchic playmates, always enormous, is suddenly a hemorahge hat can’t be staunched. The estimated $70 billion in the first quarter of 2014 is more than all last year’s losses. Despite nominally attracting Western oil companies to still unexplored Arctic resaves, Putin’s fossil fuel exports remain high cost. And they are under threat from the U.S. shale natural gas and oil exports dynamiting world fossil fuel prices. The effort by Russian government companies to grab European gas distribution networks has only been partially successful, with new pipelines from Azerbaijan, Turkmenistan, Israel, and with new LNG/LPG facilities independent of Russia and Ukraine already falling into place.
Putin’s potential for troublemaking, of course, is virtually unlimited. Every one of the former Soviet-Occupied countries – the so-called “near abroad” – have significant Russian ethnic populations. He can, as he did in Crimea and now in Eastern Ukraine, manufacture incidents of discrimination and persecution of Russian-speakers. [There is considerable evidence of naiveté of some Western observers about the complicated loyalties of these minorities. Their real sentiments were for special rights under a Kiev government but a longing to go west with it to the EU rather than east to a failing Moscow economy.] It is a pattern the Nazis used in the run-up to World War II, and a Polish official who suggests Putin’s speeches might have borrowed from Hitler’s on may not be that much of an exaggeration.
When, how and where Obama and the EU must call Putin’s bluff is now the question hanging in the air. The ball is in their court. There is an ever present danger that events or hubris will drag Putin along and create the kind of armed conflict neither side wants but will not be able to avoid.
sws-05-11-14

Ideology, technology, and – coming up a poor third – common sense


Nowhere is the struggle fiercer between half-aspiring ideology and good old common sense than in the Obama Administration’s energy strategy – or lack thereof.
Having been ambushed by intrepid technology in the exploitation of natural gas — – “the shale revolution” — the country’s energy markets are in partial abeyance. The shale gas has blocked the initial Obama drive to raise fuel and energy prices to force consumers to higher [if heavily subsidized even when facing bankruptcy] “alternative energy sources”. At the moment, the U.S. energy economy is poised between the fact that the new technology has brought abundance, even a temporary surplus, of natural gas, and the risk a falling price might inhibit further exploitation of increasingly greater estimated reserves.
The door is still closed for maximum exploitation of gas, the least polluting by far of all the fossil fuels, government fiat [refusal to lease public lands, pipeline certification, etc.]. But there is growing pressure on the Obama Administration’s despite its leftwing base and the problem of “face” for an obvious strategy to bolster a stagnant economy and the worst employment situation since the Great Depression.
Meanwhile, not only is the shale revolution building toward the vaunted calls from every recent president for “energy independence”, but it is creating additional revenues for those states who have defied the Obama Administration and its handmaiden the Environmental Protection Agency’s harassment. Pennsylvania’s more than six thousand unconventional wells, either producing gas or under development, lifted $224.5 million in fees off the state’s taxpayers backs last year. More than $2 billion in state tax revenue has been generated since 2008.
Despite the logic of giving shale gas free rein, the enviromentalistas continue to rant about the possible impacts of fracking – the method of reaching the gas — although there has been no significant pollution episode. That’s not only because of caution and superior technology of the drillers but the fact that the shale deposits generally lay hundreds of feet below water aquifers. Fracking skirts them and then drills horizontally to get at the gas [and sometimes oil]. On the contrary, there have been several disastrous train wrecks in the U.S. and Canada, with the rapidly increasing movement of new found American oil by rail rather than through more efficient pipelines.
Nor do the enviromentalistas concede that the movement from coal to gas turbines for producing electricity has reduced the overall levels of pollution. Nor is there recognition that the cost of failure to authorize pipelines – the most dramatic example, the proposed Keystone XL pipeline which would carry Canadian crude, picking up Dakota oil enroute, to the Houston refineries and a portion, perhaps as much as 15%, into export. A part of that tragedy is that millions of cubic feet of gas are being “flared” – allowed to burn off in the air – in the Dakota oilfields because there are no pipelines or liquefying facilities to carry it to market. Not only do 1500 wells flare an estimated $100 million worth of gas each month, but the resulting pollution represents an unnecessary additional pollution hazard.
In one of the most curious misplaced arguments making the rounds of the talking heads spewing out nonsense on energy is the advocacy of government subsidized electric cars. Until there is a revolutionary breakthrough in battery science, there is no efficient way to store electricity. Recharging the car batteries at their current level of efficiency in electric engines is after all based on the nation’s creaking electricity grid, about half of which is now produced by the devil incarnate of the enviromentalistas, coal. Imagine what would happen in the unlikely event there were millions of electric cars that needed overnight recharging.
Chris Faulkner, Breitling Energy, one of the leading lights in the fracking industry and as much of a mavim on world energy as you will find, argues that $5-6 billion would set up LNG pumps in the nation’s filling stations. Relatively modest changes in 1960s car engines –  at a cost of less than $1,000 a car, $30,000 for contemporary models – would permit them to use liquefied natural gas [LNG]. In fact, LNG is being used by some city bus lines already [e.g., Washington, D.C.]. And imported Indonesian LNG has been in common use in Japan, Hong Kong and Taiwan for almost 50 years. [A French company has just signed a contract to export U.S. LNG to Taiwan.] Faulkner points out that if the large transcontinental trucking companies went to LNG at current costs, the saving would be about the tab of current purchases of foreign oil.
Perhaps someone will whisper the dirty little secret that LNG at the pumps would reduce the average motorist’s fuel tab by up to two-thirds. Is that going to happen before the elections this fall – or will we have to wait for 2016?
sws-04-06-14

 

The Cool War Cometh II


There is presently about as much confusion as when the U.S. entered The Cold War against the Soviet Union in the late 1940s. But there are fundamental defining differences to what is likely to be an equally long and complex new struggle between the U.S., its allies and Moscow.

The two engagements do share one commonality: American leadership now as then has been slow to face up to the task before it. It’s far too easy now to forget just how many times Josef Stalin signaled his forthcoming unrelenting war on The West before democratic statesmen understood what they faced and mobilized to meet it. [And here, mea culpa. I admit shamefacedly as a young, idealistic, naïve student I wrote a U of Mo Jay School classroom harangue [alas! printed in the Columbia Missourian] denouncing Winston Churchill’s March 1946 “Sinews of Peace” speech, at nearby Westminster College. Back from our victorious however bloody war in Europe and Asia, I was sure like most that a new era of relations among nations had begun, that the old balance of power collisions were now a thing of the past. It was then, of course, the British statesmen who whatever his numerous strategic mistakes this time with great clarity defined the issues and coined the term “iron curtain”.]

Churchill knew that the word had gone out to Communist apparatchiks worldwide that the Soviets were grasping for world domination. Even now almost every month brings more evidence of the enormous influence of their coterie in the highest echelons of Western government and among intellectuals helping to disguise and confuse the issues. Yet it was at a time when Moscow was constantly revealing its hand. Whether it was the last minute snatching of Manchuria and northern Korea and Japan’s northern islands, the usurpation of the Polish government-in-exile, Moscow’s attempt to set up a new Azeri satellite in northwest Iran, an attempted Communist coup against still “unrecognized” Indonesian nationalists, Communist exploitation of an insurrection in India’s Hyderabad [Deccan] state, the revelations of penetration of the Australian Labor Party, the attempto install Communism in Greece — Stalin was pushing the Comintern’s envelope everywhere.

Only with the dramatic resolve – and what was ultimately to be the Soviet downfall, superior American technology – following the Berlin Airlift in 1948 was there a full awakening. Washington backed off Soviet efforts to force the U.S. and its Western partners out of bifurcated Berlin. Suddenly it became crystal clear to all and sundry that the struggle was joined and would have to be resolved only by the ultimate victory of one party or the other.

Even then, Henry Kissinger’s 1969-1980 “détente” [from the French “a relaxation”] again obscured the issues for a decade. It was not until the advent of Ronald Reagan and his clear-eyed identification of “the evil empire” with his matching tactics that Communism was met again head-on and defeated – as much from its own “internal contradictions”, as the Communists would have said, as outside pressure.

Lack of that Communist ideology or for that matter any ideology characterizes the current contest. Putin’s turn to an age-old amorphous appeal to romantic Slavic “exceptionalism” opposed to Western European humanism is a weak reed. Despite Putin’s labeling the implosion of the Soviet Union as the greatest tragedy of the 20th century, Communism today has no appeal beyond Pyongyang’s traditional Oriental Despotism [into which Lenin warned Soviet rule might degenerate], an increasingly nominal adherence by an ideologically rudderless China, and the kleptocracy of Vietnam.

Putin is not only bereft of ideology, the Russian leader bluffs his way from move to move. But that is not to say he is not for the moment successful. Nor is to be forgotten how often Hitler in the 1930s was bluffing, but how often the feint was successful. From his 1936 “unilateral” remilitarization of the Rhineland in defiance of the Versailles and Locarno Treaties, when he told his anxious commanders they would withdraw if France opposed them militarily, Hitler bluffed. Nor was it clear to most at the time that his domination of Czechoslovakia by gnawing at it through Sudetenland. – “protecting’ German-speaking ethnics much as Putin claims he has done in Crimea and threatens in Ukraine proper – meant he was securing the best Skoda arms for another division to strike at Poland in September 1939, initiating World War II.

Putin, of course, is not Hitler. His jerrybuilt post-Communist economy is not the war machine 19th century delivered to the Kaiser in World War I, the model which so infatuated Lenin it was his template for designing the catastrophic Soviet economic experiment. And if for no other reason, although Putin has a gigantic nuclear arsenal, Russian conventional military forces do not remotely resemble Hitler’s wehrmacht. But Hillary Clinton was correct when her speechwriters said Putin’s grab of Crimea resembled the Nazi dictator’s  repeated claims on his neighbors’ territory through provocations. This time Putin, too, masked pure and simple aggression as ethnic conflict replete with hired thugs and Russian soldiers short of their insignia. As Polish columnist Konstanty Gebert. commented, apparently only half-seriously, “… the analogies are staggering to the point that I’m asking myself whether Mr. Putin’s speechwriter didn’t intentionally model elements of the speech [formally announcing Crimea’s annexation] on the more famous predecessor.”.

Furthermore, The Economist’s Andrew Lucas is absolutely right in condemning on moral terms the Western apologists for Putin, proferring whether we would have treated a former Gestapo figure with such “understanding” had postwar Germany retreated from democracy. An interviewer on government-subsidized National Public Radio [where else?] suggests a fundamental difference Communism and the Nazis: the Kremlin did not pursue a policy of annihilating one people, the Jews. [The Crimean Tatars, 200,000 killed with forced evacuation during World War II, and more murdered when they tried to return after the Soviet implosion, might take exception to even that supposed distinction.] But that is an all too familiar rationalization of the Western left for Moscow’s actions, a Russia where there has been only the slightest fundamental grappling with the horrors of Stalinism and the tens of millions killed by the Leninist regime. It is  a very fine distinction, indeed.

Again, unlike the Soviet Union which attempted autarky except in crises when it needed a capitalist transfusion [see Sanders’ Living Off the West: Gorbachev’s Secret Agenda and Why It Will Fail, Madison Books, 1990], Boris Yeltsin and then Putin’s Russia sought integration into world markets. That is Putin’s strength and his weakness. As by far the world’s greatest exporter of natural gas and the second largest oil producer [only recently has U.S. production risen to make it No. 1], the $160 billion Moscow earned from fossil fuel exports in 2012 is the critical element in its weak economy. The shale revolution initiated by American technology, again, offers abatement in the long run of European reliance on Russian gas. If only Pres. Barack Obama would drop his war on fossil fuels and speed up U.S. pipelines, LNG installations for fleets and exports! Note the call of several Central European countries publicly since the Ukraine crisis began for just such action. Instead, as so often happens with democracies, instead of dramatic, decisive action, Obama has chosen to scale up his economic weapons, thereby giving Putin that more time to accommodate.

True, there will be a price to pay for economic warfare to rock Putin’s boat, especially by our European allies. But there is no reason – given all that he has said publicly and his blatant action in Crimea – to believe that the old secret police thug is aiming at less than an attempted restitution of a Russian empire. Already there have been hints at exploiting other Russian ethnic minorities which exist in all the former Soviet “republics” that freed themselves from Moscow’s rule in the 90s, as he has done on the Black Sea.

Those who obscure the issue by either justifying Putin’s actions with such bogus arguments as Washington’s purported failure to accord Moscow a sufficient world role after the Soviet implosion, or wishful thinking that Putin may not continue to bluff his way to new victories to bolster his rickety regime, are doing world stability and peace a great disservice. Of course, there are complexities and cross-currents. But the fact is the world again is faced with an aggressor dedicated to territorial aggrandizement. And only standing up to the bullying effectively is the answer to maintain longterm peace as NATO, the most successful alliance in history has proved.

German Chancellor Angela Merkel, with more contact and knowledge of Putin than other Western leaders, has said he lives in “fantasy”. That U.S. Secretary of State John Kerry and British Foreign Minister William Hague continually assure Putin — and us – that we are in a new era, absent 19th and 20th century national conflicts, suggests others too may have stumbled into a tangentially related “fantasy”.

sws-03-23-14

The [Chinese] emperor has no clothes


The shudder that relatively minor bad news from China sent through world markets last week was a warning that the halcyon days of Beijing’s economy are over. Indeed, reluctantly because of self-interest and wishful thinking, a universal consensus finally is emerging that the Chinese economy is in deep trouble, a crisis that could perhaps overturn the regime itself.

The cardinal indicator is that the Chinese economy is slowing down. How much, how fast, which sectors, is all open to speculation given the notorious unreliability of Beijing statistics. But certainly we long ago dipped below that 8% minimal annual gross national product growth rate which once was accepted inside and outside the Middle Kingdom as the requirement for political stability.

In a sense, it was inevitable: perhaps the world has no history of a regional economy as large as China’s growing at its phenomenally high rate over the past two decades. But, then, too, it has been obvious to all but the most optimistic that huge aberrations were being built into a wanting modernization process that would eventually haunt the leadership. That’s where we are now.

There is unusual agreement, again, among Chinese and foreign critics of what is wrong and even accord on remedies for amelioration. Communist Party Chairman, chief executive, and chief of state Xi Jinping and to a lesser degree Prime Minister Li Kegiang, some 18 months in office, are saying all the right things. Xi, unlike his predecessors, even manages to project charm to sell what will be under the best circumstances extremely difficult structural reforms. The new leadership has come down hard on corruption which is not only endemic, but has taken on growing economic aspects with everything from undermining manufacturing quality to facilitating a huge capital flight. It acknowledges that pollution, paralyzing major cities for days and increasingly jeopardizing children’s health, is an economic hazard.

But however clear a new formula would have to be found, the task is daunting. Such a strategy would have to replace the two-pronged drive put into place once the Chinese Communists abandoned Marxist-Leninist-Maoism in all but name. Mao-style autarky was trashed for an enthusiastic welcoming of foreign investment and transfer of technology to build export markets based primarily on abundant cheap labor. But at the same time, Beijing continued the Soviet tradition of enormous expansion of the infrastructure, well beyond contemporary or projected demand.

This Weltanschauung now has eroded dramatically.

The worldwide economic downturn ended an unlimited expansion of markets for Chinese exports. These manufactures had become part of a vast, new production chain in which international companies used Chinese assembly to produce products for sale to the U.S. and the rest of the industrial world at bargain prices. While these operations introduced limited manufacturing, through manipulation of currency and subsidies Beijing was in fact subsidizing foreign buyers. One look at the retail prices of products at an American retailer indicates that some dissident Chinese economists may well be right arguing that a capital-short country was exporting capital to wealthier nations.

Furthermore, Chinese razor thin margins have been jeopardized by rising costs, including growing fuel imports and a flattening out of the labor supply due to the regime’s attempts to stem population growth. For these reasons China already has lost many of the lowest end manufactures to other low-wage competitors; infants garments, for example, to Bangla Desh. There is even some movement because of technological improvements of off-shored manufacturing back to the industrial countries. For example, with America’s shale revolution reducing the price of domestic natural gas to a third of delivered prices of LNG in East Asia, petrochemicals and their plastic products are returning.

At the same time, China’s vast infrastructure expansion is falling victim to a growing credit crunch. Having sailed through the financial crisis with an unprecedented “stimulus” package of $586 billion in November 2008, Beijing created overcapacity and overinvestment. At the same time, local government’s expansion was based on sales of diminishing farmland for industrial and infrastructure development and credit from regional bankers.

The net result of all this is debt that even the government has found difficult to estimate and a fragile financial structure at every level of government. Perhaps more important, it has resulted in an increasingly onerous situation for private developers who carry a disproportionate weight in the overall growth. With stop and go credit policies, intrepid bureaucrats have created new shadow credit organizations beyond the scope of government monetary and fiscal policy.

The generally accepted recipe for solving these problems is to move the economy away from its concentration on investment and exports toward greater consumption and financial liberalization. But, in fact, recent trends have been in the opposite direction, as the government faced dismantling a system which had profited small urban elite enormously with a superficial appearance of modernization. The strongest resistance has come from huge government corporate entities and the welter of smaller SOEs [state owned enterprises] in the hands of regional and local Party apparatchiks. Their influence inside the ruling Communist Party gives them call on capital, even when as often happens, to entities either deficit or bankrupt.

What gave the markets the shivers last week was a statement from Li that a series of defaults were inevitable as the government tries to rationalize. A default by Haixin Steel, a relatively small operation but with ties to coal and iron ore companies was what gave rise to international concern. It also reflects what industry sources believe is a growing collapse with half of the country’s steel mills losing money. A week earlier China experienced its first bond default when Chaori Solar, a small privately owned solar panel maker, was unable to meet interest on Rmb1bn ($163 million) of bonds sold only two years ago.

In the past, the government has always picked up defaulting companies. If that policy is now to be abandoned, it is unclear just how big the debacle will be and whether it could lead to panic. Already world copper and iron prices fell sharply under the pressure of Chinese speculators retreating from their bets on a continued high level of metals production.

To remedy these problems, Xi’s highly publicized reforms, however much pushed by the leadership, are running into the often hidden outcome of past excesses. For example, not only does the attempt to moderate the “one child” policy appear as a lame effort to resolve an already warped sex ratio in the society – female fetus abortions having produced a vast excess of males – but a huge, corrupt bureaucracy created to enforce the strategy is blocking real changes. Furthermore, such side issues as hundreds of thousands of “illegal” births have produced a sizeable population which cannot claim identity from the still deeply held conviction of Party leaders they must control any dissidence through strict monitoring. A similar problem exists for the hundreds of thousands of part-time workers in all the major metropolitan centers, brought in as “cheap labor”, but refused urban citizenship and a right to limited social welfare benefits. The security proponents are allied with local governments in this instance against any “reform” because of the additional costs it would heap on already overburdened local government and the dismantling of authoritarian control of every individual.

While the system does have the support of the Party apparatchiks, a highly touted new urban middle class does not exist. Best estimates are an upper 1% of households — 2.1 million out of about 530 million households — owns 40-50% of the country’s $10.5 trillion worth of real estate and financial assets. That these ultra-rich – many at the Party’s highest echelons – are moving money into foreign real estate and other investments is widely reported. Should they consider moving 30% of their assets abroad, which is a figure rumored in Chinese circles, the much celebrated Chinese monetary reserves of $3 trillion in dollars would be inconsequential in stemming the tide.

This prelude to a cataclysmic readjustment of the Chinese economy is arriving at a time when Western economists and businessmen have had to abandon a long-cherished hope that continued rapid Chinese [and Indian] development would prop up the world economy. But their disillusionment on this aspect is likely to pale into insignificance as the effects of the Chinese slowdown impacts further on commodity producers in Africa, Latin America and Australia.

Beijing leadership’s quandary is that the struggle to refashion the Chinese economy with further liberal economics comes up against the determined effort of the CCP to maintain its power monopoly which forbids just that. For example, the effort to turn the yuan into an international currency requires it become convertible. That would not only jeopardize current export subsidies but would further encourage the flight of capital, largely a function of the corruption in the Party, often at its highest levels. .

That produces an explosive environment where almost scenario is arguable.

sws-03-16-14

 

 

 

 

 

A world ablaze – but different fuels


 

A bane of modern military studies [let’s eschew “science”] is the concept of counter-insurgency – the idea that indigenous revolts around the world can be analyzed with “the scientific method” and a set of general principles if implemented could cure the problem. Common sense tells us that the essence of any dissidence/armed insurrection is its particularity, its basis in specific local conditions. They differ not only in geography but in the characteristics of individual societies. So, yes, the army should not steal the peasants’ chickens is a good maxim – but such bromides do not go far to tell you how to prevent civil war.

At the moment, we have one bitter internecine war in Syria, and three incipient revolts between two or more elements in Ukraine, Venezuela and Thailand. Other conflicts, even messier to define, are growing in the Central African Republic and Nigeria.

The question, of course, is whether there anything that connects all these conflicts? And, if so, what if anything can be done to lessen tension and conflict?

Ukraine

The ambivalence between Ukraine and Russia is as old as the two peoples. In fact, it was from centers in what is now Ukraine that Christianity spread to the Great Russians and where they even got their name.  More recently, Ukrainians have suffered disproportionately in the Soviet Union – a bitter irony, often at the hands of ethnic Ukrainian members of the Communist hierarchy. Stalin’s man-made famine of the 1930s followed on to the horrors of those of World War I when the engineer Herbert Hoover first emerged on the world scene. But a flame of Ukrainian identity survived, expressing itself at the height of Soviet repression in such small protests as citizens of Ukraine’s western metropolis, the old Hapsburg city of Lviv [Lvov, Lemberg] unofficially using “our time” [Central European] rather than Moscow’s time zone to express their identification with the West..

So it is no wonder that [Ras] Putin, the new Russian dictator seeking to restore Soviet glory has intrigued in a state once called in the two World Wars “a figment of the imagination of the German general staff”. Whatever the outcome of fast-moving events, Putin has the most to gain or lose – aside from the Ukrainians themselves. Ras – who has said publicly that the demise of the Soviet Union was the greatest catastrophe of the bloody 20th century — is gambling. By his direct intervention, he either hopes to bring Ukraine again under Moscow hegemony, or failing that, to destroy its unity as a cautionary tale for other former Soviet “republics” holding on to their fragile independence.

But for the moment, the anti-Soviet forces have gained the upper hand in Kiev and he faces a choice of backing the ultra-corrupt Russophile Viktor Yanukovych as he attempts to cling to power, apparently setting up shop in Russian-speaking and industrial eastern Ukraine. Or Ras could wait to see if Pres. Barack Obama and the European Union will do the necessary to back their friends in Kiev. Or, unlikely, Putin retreats, taking his licks and admitting a disastrous defeat. That result could escalate Moscow’s growing economic difficulties with its almost total dependence on fossil fuel exports, undercut by the growing impact of America’s shale revolution on world prices.

Syria

As ghastly as is Basher al Assad and his Iranian backers’ war on Syrian civilians – matching the ugly trial run Nazi and Fascist aircraft waged on Spanish Republicans in that prelude to World War II – geopolitically its importance lies elsewhere. Every day that al Assad’s regime survives, U.S. interests and those of its allies suffer: there is an intensification of the influence and control of radical jihadists in the opposition to Assad, and the growing influence of the Tehran mullahs not only in Damascus but in neighboring Lebanon and even among formerly rabidly Sunni Hamas jihadists in Gaza.

Continued Syrian fighting risks the stability of both Israel and Jordan, the major two outright allies along with Saudi Arabia. The growing perception of Iranian strength is posing an increasing dilemma for the Gulf Arab sheikdoms and even the military in Egypt: whether they knuckle under to Iranian Mideast hegemony or go nuclear themselves. For long ago it became apparent that despite public pronouncements, the Obama Administration is prepared to settle for a supposedly nuanced arrangement whereby Tehran has the capability of weapons of mass destruction but does not “weaponize”. That for a country which for 17 years was able to disguise its uranium enrichment from UN regulators of the non-proliferation treaty it had signed.

Venezuela

With its long history of repressive regimes since independence from Spain almost 200 years ago, Caracas again is saddled with new oppression. But this time its incompetence matches any effort to tyrannize a divided opposition. With one of the world’s largest petroleum reserves, Pres. Nicolás Maduro has taken the country further toward bankruptcy, in no small part because of the largesse he has continued from his predecessor, Hugo Chavez. Chavez’ populist policies built a constituency among the nation’s poor until his death in 2013 and among leftist regimes around the continent.

Now Maduro, with his constant malapropisms, almost a caricature of Chavez, relies increasingly on Raul Castro’s Cuba and its secret police tactics, including Cuban “advisors”, against rising opposition. The cost in oil for the Castro dictatorship some observers reckon as much as $13 billion a year. Other discounts go to the leftist, and above all anti-American regimes, notably the Sandinista retreads in Nicaragua.

Thailand

The old contest between Bangkok’s Sino-Thai elite and the more ethnic Thai rurals, especially those in the poorer northeast, has come unhinged in the rapid economic and international integration of the once isolated nation that never became a European colony.. Ironically, the rural areas – which once got some taste of social and economic upward mobility through the frequent encroachment of the military on the political process – have now been seduced with long-awaited social services. Former Prime Minister Thaksin Shinawatra, a populist handing out new entitlements while he used his connections for building an enormous personal fortune, is a fugitive from corruption charges. Nevertheless, from Dubai or wherever he has been running the country through his political machine with his sister as prime minister to the consternation of the old elite. [It is another irony that Shinawatra is, himself, only first generation Sino-Thai which he has never tried to hide.]

The elite, increasingly supported by students and Bangkok’s middle class, are now turning to the possibility of some sort of indirect rule rather than Shinawatra’s popular mandate. The crisis is deepening, beginning to affect Thailand’s tourism — $26.7 billion in 1013, up 20% over the year before. Street rioting has already canceled out an estimated 900,000 visitors in the next six months and their $1.6 billion. Violence would eventually cut into the steady low of foreign investment – Thailand’s auto industry dominates Southeast Asia, ninth largest in the world.

Solutions for half a century to periodic blowups have come from the intervention of the military, now more reluctant than ever before to jeopardize its $5.3 billion budget by bloodying its hands. Thailand’s sainted 86-year-old King Bhumibol Adulyade, despite his close associations with the elite, has spent much of the last year in hospital. The final arbiter in past political crises, he is coming to the end of a 68-year reign with the succession somewhat clouded by a scandal-prone crown prince.

Needless to say, the U.S. did not create any of these crises. But whatever the failings of the Obama Administration and Secretary of State Hillary Clinton’s endless peregrinations and John Kerry’s pledges of endurance, there is a growing worldwide perception that American power is retreating in the face of a poorly functioning domestic economy, a curtailment of military expenditures, and an Obama policy that attempts to “lead from behind”.Syria” has become the arch symbol of Obama’s indecisiveness. That carries over to a growing belief in a general withdrawal from the U.S.’ preeminent post-World War II leadership of free societies. With Obama’s threats and “red lines” increasingly ignored, an ominous vacuum in virtually all regions of the world invites chaos if not worse.

sws-02-12-14

 

Why is everything going wrong?


It isn’t.

There is an old axiom in the news business – or what is left of it as traditional newspapers die to be replaced, for the moment at least, by amateurism on the internet and its social networks – that good news is not news. So we get a steady diet from the media of the worst/most dramatic happenings, now delivered in seconds across the world, and in apocalyptic terms. For nothing is as common as the young [or willfully ignorant] journalist who writes about this or that particular happening as “the first time ever”, “the biggest ever”, or “it is in [whatever other way] unique”. More times than not, the event is a repetition, however singular in its own way in time and space, of something that has happened before. As clichés go, “there is nothing new under the sun” is not a bad one.

But in direct contradiction, I was astonished at a recent Fortune magazine item: entrepreneurs in California have launched a $220-million assembly line – and photographs do make the completely automated selection, weight and packing facility the size “of four football fields” look something like Henry Ford’s old original. It will send to market 800 bags of fruit or 18 million “mandarins” harvested daily. That’s a new undertaking in what is all but a stagnant economy, with massive unemployment, and a Washington economic policy at war with business. Mind you, I doubt the little fruit which it and another rival company are developing almost overnight in California – already reaching half the households in the U.S. according to Fortune — will taste as good as the little old fashion Florida tangerine or that most delicious of all fruits, the Japanese mikan. But it will give large numbers of the American people more access to a cheap [in real terms] citrus than they have ever had. And that, my man, is progress in the face of the welter of bad news all around us.

Okay, now that I have dispensed with the Pollyanna, what is going wrong and why?

For it is not to say that we are in the midst of a cataclysm of troubles, at home and abroad, or again, to deny we have seen far deeper crises. Think of Abraham Lincoln’s outlook at the eve of the civil war. Or, as I recently was telling a friend, it was my duty as a 15-year-old high schooler in January 1942 to go from classroom to classroom reciting a narrative on world events erupting out of Pearl Harbor. It was a grim list of defeats and retreats by the U.S. and its allies. Britain had survived the Blitz, eight months of bombing of civilian targets, but just. Hitler had launched [and we did not know it was to be a disaster] the largest military adventure of all time against the Soviet Union. Two of Britain’s vaunted battleships had been sunk off Malaya’s east coast anticipating the fall of Singapore, what Winston Churchill called the worst defeat in British military history. Most of our Pacific fleet had been sunk at Pearl Harbor with only the aircraft carriers luckily absent at sea. It was the worst of times.

That’s, of course, what we used to call “the old Buddhist argument, things could always be worse. We could be in a 1914 situation – although I think the current widespread comparison highly deficient – and facing such calamities. But for the moment, our concerns of the worst and longest recession in the post-World War II American economy – with its repercussions for rest of the world – and a spate of regional conflicts, however bloody and ugly, around the world, is not the terrible conflict of World War II.

Truth is the carefully manicured narratives of past history usually present a straight-line story of what we now see as the major issues. But during the time those events were transpiring, the contemporaries probably felt the same way we do today, harassed by a whole series of displacements and conflicts, some of them bearing directly on our own lives.

Still, having listed all these caveats, it is appropriate, I believe, to look around and see what is happening and make our guesses as to why:

1] The world since 1945 had learned to live with one major, dominating power, the United States. Not only had it not seen at home the depredations which had scourged Europe and Asia, but it had grown new muscle in Franklin Delano Roosevelt’s economic mobilization for war despite the tragic loss of 416,000 lives in combat. The overwhelming majority of industrial and agricultural production lay with the U.S. and whether it chose to use it or not, gave it the power to try to decide world events.

In the midst of the worst zig in the business cycle since the Great Depression of the 1930s. we have an administration in Washington – in part representing a war-weary electorate and an increasingly redistribution of world power – with the most nexperience president and adminmistrative team in modern U.S. history. To add to the difficulties, Pres. Barack Obama believes he has received two mandates to “transform” the American economy and political scene. A part of his program is to increase the “redistricutive” mechanism of the U.S. government through heavier taxation and regulation.

Internationally, the President attempts to step back from the role Washington has taken during the whole post-World War II period. He proposes to “lead from behind”, imitating the old adage that the dagger being at its most powerful when it is still in the scabbard. The President and advisers believe they are sophisticated enough to arrange new patterns of world relationships which would require no U.S. military application of force while we tend to our own somewhat dilapidated infrastructure and meet the demands of a new post-digital revolutionary age.

But the question that goes begging is whether Washington may well have done is to remove itself from regional conflicts [except as feckless mediators] throughout the world leaving a large vacuum permitting the play of the always present destabilizing and destructive forces.

2] The Cold War is over and with it, largely, the alternative a vast bureaucracy forcing a top-down social engineering on a goodly section of the European population under the name of Communism. That was supposed to result in “a peace dividend” for the U.S. economy and the American people. That has not come to pass, in part because the largest part of maintaining world order and stability continues to fall on the shoulders of the Americans. Also an old threat to Western dominance and civilization, the Arab/Muslim fanatic, has again risen to become an international menace.

Using much of the same technology which has enriched Western life and the newly developing economies, the jihadists have learned to project terror into the very heart of non-Muslim societies as well as exacerbate age-old bloody feuds among the Prophet’s followers. Having failed to make the transformation into modern societies, the Arab countries and other Muslim societies are again ravaged by old tribal and ethnic conflicts. But these threaten to spill over into other parts of the world as repeatedly Islamic terrorist acts, successful, or unsuccessful have dramatized. The failure of U.S. military adventures in Iraq and Afghanistan to dramatically curtail these terrorist activities seems likely to continue to be a preoccupation of the U.S. and its allies into a distant future.

3] The digital revolution has unfurled technology beyond the wildest dreams of even its most astute advocates. [I am reminded of an old piece of advice from a friend when interviewing an academic on Latin America: “Remember he knows far more than he understands”.] In fact, it has created a second industrial revolution in which technology – sometimes even at minimum expense – has disrupted the whole schedule of work. Jobs and even careers thought essential to industrial societies for generations are being eliminated overnight. The complications are infinite as the Obama Administration’s ham-handed effort to reform U.S. medical services has demonstrated. Yes, medical expenses have grown disproportionately to the rest of society’s costs – although they may be slowing temporarily because of the economic recession. But is it not obvious that increasing applications of expensive new science to our aches and pains would do just that?

The unanticipated events and unintended consequences of this technology is upending the entire world, including setting up new relationships within the American domestic society as well as among nations. Nothing could be more indicative of the new situation than the internet which arose almost by accident and now dictates an increasing part of our economic and social life. That means that government policy, so often written to placate particular sections of the electorate, is often upended by the new technologies. No clearer example exists than the attempt of the Obama Administration to dictate energy goals has been totally vanquished by the introduction of new technologies with the shale gas revolution..

Life has never been simple – not since the first caveman hit the second caveman over the head with a club as they wrestled for the same piece of meat or the affections of a blonde playmate. Common sense tells us that despite the huge and unknowable advances in technology that will continue to be the order of the day.

So, make the best of it. There is a jungle out there and we all must gird our loins to cope. But that has been the nature of life on this planet from its inception. It behooves us to make the most of it and get on with the job of living even in these troubled, as they always are, times.

sws-02-09-14

America, bursting with energy!


The U.S. energy juggernaut, powered by new technology and common sense, keeps rolling on.

Gains in energy production and productivity probably account for much of the projected 3.5% increase in the gross national product in the last quarter of 2013. Of course, even if it doesn’t get he expected adjustment downward later, the gains represents only a small part of the race to recoup the losses of the past seven years since the 2007-08 financial crisis hit. Nor unfortunately is energy production in itself much of a labor intensive activity, making little contribution toward the most horrendous unemployment problem since the end of World War II or maybe the Greart Depression. And it is very much still with us despite some masterful Administration playing with statistics [that notorious form of lying!]..

But what would be laughable if not such a tragic reflection of the Obama Administration’s war on the economy, are the claims in the President’s state of the union address for effecting the energy progress. In fact, this Administration has done just about everything it could to inhibit the expansion of fossil fuel development. Nevertheless Administration efforts to hike prices in order to force the markets into still high cost so-called green energy sources and away from fossil fuels has come a cropper. The enormous strides of deep drilling recovery from shale have worked a revolution in energy, the heart and soul, of course, of the American economy. As one spokesman for the industry said at a Congressional hearing a few days ago, until now our gas recovery in America had been largely the oozing from these shale deposits. Now the industry is going after the heart of the reserves deep in the earth.

But gas hasn’t been the only energy source that has had to overcome Washington’s efforts to stifle cheap fuel. The President’s stacked Environmental Projection Agency has waged a war against our vast coal reserves – possibly unconstitutionally — instead of speeding the search for new ways of burning and utilizing our almost limitless energy resource. It has stifled leasing of government lands for oil and gas development. [Luckily the successful movement into shale gas and oil production has had private lands for a playpen to demonstrate an entirely new source of energy.]  It has thrown up barriers to oil and gas exports which would permit the energy companies to use the cheaper American domestic sources in surplus, not only to enhance energy profits but by lucky coincidence to defanging a half century’s use of oil to abet jihadist politics by Middle East producers.

The President’s exaggerated claims for “alternative energy” advances are largely fiction. Hundreds of millions from the Administrative stimulus package have gone into bankrupt entities which even the President has admitted had few “shovel ready” projects as he had earlier claimed, Furthermore, fossil plants are still needed to meet increased energy demands in even this relatively stagnant economy. For when the wind doesn’t blow and the sun doesn’t shine electricity demands still have to be met. Never mind the horrendous cost and endless litigation for new high voltage networks that nobody wants in their backyard to carry these “alternatives’ production from their origin where they cannot be stored to the urban markets where they are needed.

No more did the ballyhoo of the liberal media die down over an empty rhetorical State of the Union drama – shamelessly ending with an appeal to every patriot’s tears with an endorsement of the struggle of a heroic wounded soldier – than there was a new ringer. The State Department, somehow charged with the audit because of the involvement of our neighbor and near-twin, the Canadians, announced there are no environmental constraints against building the Keystone XL Pipeline. It is the fifth time a government inquiry has said the $5.4 billion project, to be funded entirely by the private sector, has been given an environmental stamp of approval. Some fifteen thousand pages of scientific and technical evidence published in four environmental analysis reports since 2010 had already concluded the project would have minimal impact on the environment. The trajectory from Canadian tar sands through the Dakotas – where it would pick up increasing oil production from one of the largest finds ever in the U.S. – toward refineries in Texas looks like a thunderbolt, zigzagging to avoid supposed local environmental hazards. Even organized labor, what had been Obama’s most loyal constituencies. has been pressing the Administration to go ahead for the tens of thousands of construction jobs it would produce. The proposed 1,179-mile pipeline extension would run from Hardisty, Alberta, to Steele City, Neb., and then join up with a southern link already completed in January this year to the Texas refining and petrochemical complex and ports. The 485-mile southern section of the pipeline operated by Calgary-based TransCanada did not require presidential approval because it does not cross a U.S. border.

What the Administration could have been doing instead of diddling with this obvious decision is devoting its subsidies to pipelines to carry our now huge surplus of gas in the form of liquefied natural gas [LNG] to a new network of filling stations around the country. Japanese and Hong Kong taxis have been using imported Indonesian LNG successfully and with great economic benefit for more than half a century. We have a few municipal bus and truck fleets around the country using it, ironically, largely because of environmentalist pressure for the reduction of carbon emissions which results from gas rather than other heavier fuels. In fact, again, it has been the growing substitution of gas for old style coal burning turbines – largely for purely economic reasons – that permitted the President to trumpet the fact that the U.S. has succeeded in the goal more than any other country in reducing carbon emissions. But that has not not, as he hinted, taken place because of anything the government has done. [Mandated higher mileage for Detroit’s automobiles which the Administration crows about is a minimal contributor, if at all. What it has done is drive manufacturers toward lighter weight vehicles, hopefully not ahead of the meticulous and difficult development of stronger metal alloys and crash-resistant design.] In fact, some auto engineers point out transforming a 1960s standard gasoline engined car to LNG would only be a matter of a thousand dollars or so The hitch is a network of filling stations to dispense the LNG from transcontinental pipelines..

Even the environmentalistas of NPR have had to acknowledge the explosion of energy in the northern plain states in a series emphasizing the seamier side of the enormously profitable developments there. That has been not onlya bonanza for the companies but for the lowest unemployment rates in the nation. “National People’s Radio” emphasis is less on the hundreds of thousands of jobs and taxes paid local governments and additional income for farmers, some eirtscrabble poor – and the benefits for energy consumers created by a traditional American oil boom..

But what the government-subsidized network series does underline is that in part because of war against expansion of pipelines, “$1 million a day just being thrown into the air” or “flared”, burned into nothingness as an unused byproduct of the search and development of the golden light crude oil of the region. NPR’s solution to the problem is, of course, more regulation rather than directing federal subsidies toward the rapid creation of new pipelines. That kind of program could carry this wasted gas wealth to newly emerging petrochemical and other manufacturing “in-shoring” from its earlier flight of American industry to more attractive business environments overseas.

Bottom line: even the anti-business, anti-free enterprise, anti-libertarian thrust of the Obama Administration and its often mindless Washington bureaucracy has not been able to squelch the vitality of the U.S. economy. The struggle will go on for at least another three years. But in the energy revolution now going forward despite the statism of the current Washington leadership, American initiative and enterprise is reasserting itself for what one hopes will be its inevitable economic victory in its best U.S. traditions.

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The Obama Administration dissolves further, now into mysteries


With its attempt to tame the Tehran mullahs, the Obama Administration now adds mystery to its already established credentials for obfuscation and incompetence.

  • Obfuscation. Pres. Barrack Ohama’s special friend and adviser, Iranian-born Valerie Jarrett, apparently, has been secretly creeping around the Persian Gulf for a year holding “unofficial” talks with the Persians, blindsiding its regional allies including Israel and Saudi Arabia. Meanwhile, not so secretly, the Obama Administration has reinforced its entreaties to the mullahs by partially defanging the sanctions. As a token of Foggy Bottom’s love and devotion to successful Geneva negotiations at any price [i.e., Laos, Vietnam, Iraq, Afghanistan, etc.], the Treasury has not been going after new sanctions violations or violators.
  • Incompetence But former housing [and slumlord] expert Jarrett, who apparently didn’t tell Secretary of State John Kerry how successful she thought she was, invited his nibs to parachute in to sign the give-away on the dotted line in Geneva in mid-November. But somehow those well known negotiating tactics Ms. Jarrett learned at the feet of the Mayors Daley fell apart. Kerry found himself holding a signing pen dipped in French béchamel instead of the usual invisible ink. Paris, bedeviled with a failing economy and calling up “gloire” as once “protectors” of the Syrians and Lebanese, said no. France’s role was as a full-fledged member of the UN Security Council plus Germany/EU’s negotiating team. But never mind, Kerry – who knows real humiliation when he sees it, having run to the Paris Vietnamese Communists in between Congressional hearings where he lobbied against American soldiers in Vietnam — returned for a second try.

Success in this “successful negotiations came this time with the Obama Administration’s fairly simple Iran line: Americans are tired of Mideast wars, costly in men and treasure. As even wartime leader Winston Churchill put it, “To jawjaw is always better than to war-war.” The Tehran mullahs have a “reform government” trying to mitigate US, EC and UN sanctions which, finally, after a decade are beginning to bite. The economy is near runaway inflation – not least because of throwing more than $150 billion on building a nuclear weapon, vast sums [to the North Koreans and Chinese] for missiles technology [including ICBMs that could eventually hit the U.S.], and supporting overseas terrorism. Tehran is now ready for a bargain after almost half a century of antagonism toward the world’s only superpower.

Of course, all these arguments have, to say the least, devastating counters: The so-called reform government has executed 190 political prisoners since it came in power in June. One of the most reactionary governments the world has ever known not only represses its own citizenry but spends billions on overseas subversion and terrorism – from Damascus to Buenos Aires. Tehran continues to be the main support – not only with funds and weapons but cadre of its Iranian Revolutionary Guard – for the Assad regime in Syria which has murdered some 200,000 of its own citizens. Iranian Pres. Hassan Roubani once bragged earlier negotiations which he headed permitted the mullahs to advance its nuclear program. Tehran supports not only its Shia Arab cousins with the Hezbollah in Lebanon, in the eastern Saudi Arabian oilfields, and troubled Bahrain with a Sunni sheikh but a Shia majority. The mullahs even cross the line to try to create another Hezbollah doing its dirty work around the world with the ultra-Sunni Hamas in Gaza, now at loggerheads with its former sponsor, Egypt. Cairo has its hands full with a full-fledged insurgency based on Iran’s gunrunners to Hamas in the Sinai Peninsular

That is why no amount of spinning by Obama or Kerry can possibly disguise this great gamble.

There are other geopolitical implications to a six months “deal”:

  • It will have the critical if indirect effect of confirming to all and sundry in the volatile region that America is withdrawing its support from its Mideast allies and, indeed, in effect enlarging the vacuum of power with which Obama has unleashed all the old regional conflicts.
  • The very negotiations themselves with the power structure of the West have come to the rescue of the failing prestige of a crippled Tehran regime, presenting itself as David against Goliath. It builds on the imperial designs – which preceded this regime as they did the former Shah’s – of an ancient civilization to dominate the region.
  • It has further alienated the U.S.’ traditional allies in the area – ironically uniting two of its most bitter enemies, the Israelis and the Saudis in their opposition, fear and anger over moves to accommodate Iran. They are joined by all the governments in the Gulf and Egypt’s military – always clutching at its traditional role as center of the Sunni world and now at odds with Washington.
  • The technical details of the agreement – which are likely to reveal new potholes once they are completely exposed – are onerous for an alliance once united in opposition to the mullahs acquiring a nuclear weapon. They inevitably will permanently weaken the sanctions regime abroad, so painfully arrived at. The agreement only slows enrichment of uranium. It does not provide foreign destruction of Iran’s stockpiled highly enriched uranium, the raw material for a bomb. It fuzzes the whole concept of whether Tehran has the right to enrich under pledged under the non-proliferation treaty not to develop a bomb.

Will the enforcers really know what is happening? For 17 years, the mullahs were able to disguise their nuclear program from the United Nations International Atomic Energy Agency — most recently under a compliant chairman, the now fugitive Mohamed El Baradei. [He is running from the Cairo military because of his collaboration with its former Brotherhood regime.]

In fact, news of the race for the bomb only reached the West through the Khalq, the leftwing of the coalition which overthrew of the Shah but who lost out to the mullahs. [The Obama Administration has reneged on Washington’s promise, despite their once being listed as terrorists for their implication in American deaths, to protect them from the new Shia-dominate Iraqian regime where they were once refugee allies of Saddam Hussein against the mullahs.]

Even were the mullahs to live up to the agreement, what would prevent them from simply refusing to negotiate – as is Washington’s strategy – into a new protocol to end their bomb efforts?

Worst of all, the relaxation of sanctions will save the regime’s neck from being rung by an increasingly hostile and deprived population. The sanctions began to bite only after their invocation against third parties. Unfortunately, not only the Russians and the Chinese, but our allies in Europe are salivating over the possibility in these straitened times for new sales to a near bankrupt regime. Tehran will get its hands on some $10 billion in additional oil sales.

Secret Indeed, it is no secret to any who knows the region and the Obama Administration that its strategies and policies from its inception has veered toward a traditional “Arabist” view. That group of scholars and their fellow travelers in the State Department and CIA insist, as do their British confreres, the source of all the Mideast problems is the Israel-Arab confrontation and a “solution” to it would go a long way to pacify the region.

Couple that with manifest hostility to Israel in Obama’s insistence that the 1948 armistice lines be the basis for Israel-Palestinian negotiations. [Prime Minister Netanyahu bumptiously on camera gave him a history lesson, pointing out that such lines which imperiled his country’s very existence. were not acceptable]

Early on Obama condemned to failure recommenced Israel-Palestine negotiations by insisting that Jewish “settlements” in the West Bank and [formerly in] Gaza was the first obstacle to peace. They had never had the highest priority in earlier failed negotiations. [When Prime Minister Ariel Sharon unilaterally withdrew from Gaza including forcing out Jewish settlers, his reward has been the continual missiles barrage on southern Israel.] There are, after all, 1.5 million, mostly Muslim, Arabs, in Israel within the so-called Green Line of the 1948 armistice, so the presence of Jews living in the original Biblical lands of the Hebrews in any new Palestinian state would only be reciprocal.

Despite the strong Israeli lobby in the Congress which has staid Obama’s hand, he has engaged in shin kicks against Jerusalem, e.g., leaking word the Israelis were the authors of the May 2013 strike inside Syria against arms enroute to Hezbollah. Because neither wants a prolonged confrontation, both the Israelis and Assad have publicly refused to acknowledge this – and at least two previous raids. Neither wants to face his public with publicity for an action which would require retaliation or at least explanation, hardly a secret to Foggy Bottom and the President’s team.

It is certainly no secret the President, before he reached the office, had close associations with Arab and Muslim activists including a close friendship with a former spokesman for Yasser Arafat’s Palestine Liberation Organization now a Columbia University professor. The toleration of the increasing authoritarism of Egypt’s former Morsi presidency which led to a popularly supported military overthrow was a symptom of wider sympathies. John O. Brennan, CIA director, has made repeated controversial public statements on Muslim issues; for example, explaining jihad as only a search for a Muslim soul rather than the Islamic battlecry for 1300 years, or that the Muslim Brotherhood, the fountainhead of modern Islamicist terrorism, was in transition to more moderate doctrines, etc., etc.

But this is a Tehran regime, after all, which almost daily advocates the destruction of Israel and blasts gutter level anti-Semitism. There is little wonder, therefore, that any Obama Administration movement toward an accomodation with Iran is seen as endorsing the end of Israel’s position as holding the monopoly on nuclear weapons in the region. Now, there is considerable danger a nuclear arms race will begin with the Arab states and Turkey.

So, again to the secret: why, then has the Administration bent such effort to turn its back on its Sunni friends and offer the Iranians a path toward dominance in the region? Is it any wonder that the Saudis are outraged and have uncustomary expressed their dissatisfaction publicly to Obama’s policies?

Even the most optimistic of Obama’s advisers could not have believed, even when negotiations began a year ago, that they would have had an impact on his sagging polls. Certainly, now they will be no more than a 48-hour distraction from the collapse of Obamacare with the U.S. public’s notorious obliviousness to foreign policy issues until they are in full crisis.

About the only answer seems to be that this is another aspect of “leading from behind”, which the ideologues and geopoliticians in the Administration think by enhancing Iran’s role in the region will present a balance they can manipulate.

If so, a little history is in order: for almost two generations after World War II Washington strategists through several administrations thought something like that was plausible, with its tacit alliance with the Shah, the Israelis and Turkey against Egypt’s Col. Gamel Nasser’s Arab nationalism. The region’s infernal tribal conflicts and the Shah’s vainglorious dreams coupled with Pres. Jimmy Carter’s acquiescence to subversion of his throne brought that strategy to an abrupt end.

The current attempt for a modus operandi with one of the history’s most reactionary regimes to facilitate its regional hegemony is not likely to fare better.

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