Hello, and welcome to the Dispatch for August 13 - 26!

My new schedule is working out much better for me - I think this is much closer to a sustainable pace given the rest of my workload, and it also helps smooth out the news cycle a bit, though I do worry about landing slightly behind the curve on some stories. More tweaks to come, I think, but for now, let’s get started!

Iran

Iran kicked off the two day summit of the Non-Aligned Movement on Sunday. The summit is attended by delegates from more than 118 nations, including U.N. Secretary General Ban Ki- Moon, Indian Prime Minister Manmohan Singh, and Egyptian President Mohammed Morsi. Earlier in the week, the New York Times reported that Iranian currency traders are now heading to Afghanistan and to Iraq to skirt sanctions and to obtain US currency.

The Iranians are using the NAM summit to show they are not nearly as isolated internationally as the US has claimed. With more than 120 nations, including the leaders of two US allies and the UN Secretary General in attendance, the point is well made. India in particular has been resistant to the US’s efforts, and has improved its trade ties with Iran in the past couple years (though they’re likely getting good prices - the sanctions on Iran haven’t been completely toothless). The reports about currency trading in Afghanistan and Iraq are especially stinging for the US: both countries have been the recipients of enormous amounts of US spending, the very currency being traded to the Iranians in violation of US sanctions.

The picture painted is of both the limits of US influence and the growing capability of non-Western nations. Iran is being protected in the UN by Russia and China; it is being supported economically by China and India; and Egypt, Afghanistan, and Iraq have all worked to improve their ties with the country this year. Despite the US’s best efforts, Iran remains both a regional power and an integral member of the international community. The sanctions have taken their toll, but the threat of attack by the US seems distant now - by all evidence, the US (rightly) sees a nuclear Iran as manageable, and certainly there’s no plan to do anything important before November 6th. This leaves an Israeli strike as the remaining wildcard. Given the very public dissent over the wisdom or timing of such a move among the Israeli elite and clear lack of US support for an attack, that seems unlikely for the time being.

Syria

On Monday, President Obama warned Syria that the US Military could intervene in Syria were there signs of chemical weapons either being used or being transferred or lost to outside groups. The conflict in Syria is spilling over the Lebanese border, culminating this week in a spate of kidnappings between rival Sunni and Shiite families.

The US continues to resist getting involved militarily in Syria, but Obama’s statement is the second very public warning over its chemical weapons, which are the one factor that would force US action, at least on a limited scale. Unfortunately, there are very few scenarios now which wouldn’t prompt US intervention. The Saudis and the other Gulf States won’t let the Free Syrian Army fail, which means that unless the Alawite regime throws Assad overboard in a bid for peace, the conflict becomes a fight for survival for Assad. The longer the fight drags on and the more desperate things get for the current regime, the more likely it is the chemical weapons get deployed. Even if Assad gets deposed without using the weapons, the chaos following the government’s collapse would provide too ripe an opportunity for enterprising groups to make off with them.

Global Economy

The economy of the Eurozone as a whole contracted last quarter, as modest growth in France and Germany was offset by sharp contractions in Spain, Italy, Portugal, and Finland. The UK also dropped back into recession, contracting by 0.5% in the second quarter. Meanwhile, the US Fed indicated that it might start a third round of monetary stimulus to help boost the flagging US economy.

After two and a half years of austerity-only policy, both the EU and the UK are back in recession. Policymakers have now tried austerity-only policies in the UK, Germany, France, Italy, Spain, Greece, and Portugal, and the results are absolutely awful across the board. There’s not a single country where austerity policies have resulted in anything looking like growth, and yet policymakers keep doubling down across Europe. So far the US has dodged the Austerity bullet and stayed out of another recession because the Federal Reserve is politically independent. Calls for austerity in the middle of the recession were insane three years ago and are just batshit now - no one sound of mind can look at the numbers coming out of Europe and have any illusions that austerity is a viable growth-producing policy.

Briefs

Russia

Three members of Pussy Riot were sentenced to two years in prison on charges of “hooliganism motivated by religious hatred” after what was largely seen as a politically motivated show trial. The ruling prompted outrage in the west - though as the Guardian’s Simon Jenkins pointed out in an editorial, Russia is hardly alone in jailing its citizens to “send a message,” and the US’s outrage rings particularly hollow following the crackdown on the Occupy movement this last year.

Somalia

Somalia swore in a new Parliament this week in a process that, while flawed, has prompted hope for the future of the nation. With the help of the international community, Somalia has managed to both curb piracy and largely remove Al Shabab, raising hopes for the future of the chronically chaotic country.

Final Thoughts

One more story popped up that I didn’t get to cover above:

From the NYT: Capitol Dome Is Imperiled by 1,300 Cracks and Partisan Rift

The Capitol dome is in dire need of repairs - it’s cracked, leaking, and starting to rust. The bill for the repairs, though, is $61M, and the House won’t approve the money because of budget concerns this year.

There’s fiscal prudence, and then there’s watching the crown jewels of the nation collapse in upon themselves. It would be difficult to conceive of more potent symbolism than seeing the Capitol dome collapse due to Congress’s bizarre fixation on austerity at a time when interest on federal debt is practically zero and the unemployment rate is still above 8%.

Thanks for joining me, and my best for the weeks ahead!

Eric