The Weekly Dispatch

THE DISPATCH IS A WEEKLY POST BY ERIC DANIELSON, A PRIMER ON THE STATE OF THE WORLD AT THE BEGINNING OF EACH WEEK.

May 21 - June 3

Hello, and welcome to the dispatch for May 21st through June 3rd!

I apologize for my absence again last week. I spent the weekend hauling furniture from San Francisco out to Berkeley, and by Sunday evening I frankly didn’t have the strength left to lift the lid on my laptop. We’re mostly settled in to our new place here amid the fresh air and greenery, so I should be able to get back on a consistent schedule now.

Egypt

Elections: Egypt held its first round of presidential polls on May 25. The top two candidates, who will face each other in runoff elections later this month, were Mohamed Morsi, of the Muslim Brotherhood, and Ahmed Shafik, the prime minister under Hosni Mubarak. The success of Shafik, seen to represent the old regime, has sparked particular anger: demonstrators gathered in the streets outside his offices after the results were announced, and the offices were set on fire sometime that evening.

NightWatch declared the elections a fraud immediately, an analysis with some merit. There are at least three alternative narratives: First, many Egyptians are tired of the uncertainty and chaos that have plagued Egypt since the revolution, and may be concerned to cede too much to the Islamists. Second, while those who support the Muslim Brotherhood and those who support the Army had one candidate each, the liberal/secular/moderate vote was split between three candidates — the sum of the votes for the three runners up exceeds that of either Morsi or Shafik. Third, the Muslim Brotherhood and the Army are the two best-organized actors in the country right now, so it’s not surprising their candidates managed to get the most voters out.

Whatever the cause, the results aren’t great. Neither the Army nor the Muslim Brotherhood are particularly popular in Egypt right now, and a victory by either group would concentrate a lot of power in the country into one set of hands. A victory by Shafik in particular would almost certainly put people out into the streets again - and with good cause, too: a win by Shafik is almost unthinkable absent manipulation by the Army.

Mubarak Verdict: Former Egyptian President Hosni Mubarak was sentenced to 50 years in prison for his role in the deaths of more than 800 protestors last year. His interior minister was also convicted, though six police commanders and his sons were acquitted. The broad acquittals were met with anger by Egyptians, who took to the streets in protest.

The case has been extremely poorly handled by the prosecutors - neither the charges brought against Mubarak nor the evidence was as strong as it could have been - but Mubarak’s conviction was a foregone conclusion from the start. Both the many, many crimes the man committed in office and the consequences of an acquittal for Egyptian stability meant a life sentence at the least. Still, much of Egypt would have preferred to see him hang, and the acquittal of most of the police commanders has caused protests in the streets again.

Egypt is in a very fragile place right now: between the poor outcome of the presidential elections and the half-hearted prosecution of Mubarak, an awful lot of Egyptians are starting to protest again. The outcome of the runoff elections on the 16th & 17th of this month - and their perceived fairness - could have serious consequences for stability in the country.

Syria

Lebanon: The Syrian conflict is increasingly bleeding across the border to Lebanon, with skirmishes breaking out between Sunni and Alawite militias in Tripoli.

So far the Lebanese army and various political leaders have been able to keep a lid on the conflicts, but Lebanon is a country with a long history of civil wars, strife, and armed militias. With strong Shia groups (including Hezbollah) and Sunni groups present, a protracted Syrian civil war could easily spill over into Lebanon.

Houla: On May 25th, a combination of Army artillery and armed militiamen killed more than 108 villagers in Houla. The Syrian government has denied responsibility for the massacre](http://www.nytimes.com/2012/06/04/world/middleeast/assad-condemns-houla-massacre-blaming-outside-terrorists.html?pagewanted=all), while residents have pointed the finger at the Shabiha, pro-government militias who have played a strong role in the government’s crackdown on protestors.

Unfortunately, the situation in Syria hasn’t improved in any way that makes any sort of intervention more palatable — which is why the West, for all its talk, is still sitting on its hands. The Free Syrian Army is still not strong enough or cohesive enough to stand up to the government’s troops, the opposition still isn’t coherent enough to form a legitimate government, there’s a huge threat of sectarian violence if the government does fall, and there’s increasing evidence of links to al-Qaeda and other extremist groups among the Syrian opposition (whether the opposition wants them there or not). There’s nothing that looks like a viable military solution that doesn’t end in a decade of occupation.

The only thing that looks like a potential viable solution is getting Assad to stand down and trying to form a unity government, and right now Assad still has too much support for that. Both the Russians and the Iranians are supporting the regime, and China is staying uninvolved, which is making pressuring the regime next to impossible.

Additional Reads: Two further reads on Syria for the week.

The first is a piece from the New York Times on opposition to Syrian intervention by the Russian Orthodox Church, a strong political force in Russia. Syrian christians have strong ties to the Russian Orthodoxy, and the church fears that an avowed Islamist government in Syria would lead to persecution of the country’s christians - Assad, for all his flaws, has generally let the christian minority be.

The second was published by the Guardian, and talks about the origins of the Shabiha. The author is a Syrian journalist, and he does state that some of the claims about the Shabiha cannot be verified. Nevertheless, it’s a good read, and an interesting look at the “Ghosts of Syria.”

Iran

The second round of talks over Iran’s nuclear program ended with no deal, but an agreement to meet again in Moscow on June 18th. Both sides described the talks as productive, and both expressed optimism that a deal could be reached.

The sticking point appears to be whether or not Iran can continue to enrich its own nuclear fuel. Iran insists it has a right to do so, while the six nations involved in the talks are unwilling to accede that point. Nevertheless, the talks seem to be proceeding, which is a good sign.

The next round of talks are the last before the Eurozone embargo kicks in on July 1st - Iran will be keen to reach a deal by then, but they’re not going to accept any deal that doesn’t include some immediate easing of the sanctions, and they’re not going to accept a deal that forces them to give up their civilian nuclear programs. There’s definitely room for negotiation, but it’s got to be legitimate negotiations - the international community isn’t going to get all of its demands, and it isn’t going to get anything without giving Tehran something in return.

SpaceX

SpaceX’s Dragon cargo capsule launched, docked with the ISS, and was successfully recovered in the Pacific this week, completing the first successful commercial cargo flight.

I’m thrilled to see private space flight start to take off. I’m a huge fan of space exploration, but it’s extremely unlikely NASA’s budget will be restored anytime soon. It’s great to see space flight moving beyond the sole province of governments and to see the private sector start to get interested in space.

Final Thoughts

This is shaping up to be a busy month. Aside from elections in Egypt and another round of negotiations with Iran that are starting to want for deliverables, the situation in the Eurozone is starting to intensify too: Spain intends to try to sell a round of bonds this month, the success or failure of which could have serious consequences for the EU; and the Greeks go back to the polls on the 17th. Stay tuned - it’s going to be interesting.

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

Eric

May 14 - May 20

Hello, and welcome to the Dispatch for May 14 - 20!

My apologies for the absence last week - I’m in the middle of both moving and changing jobs, and last week I just didn’t have the time to keep up with the news throughout the week. This coming week may be a bit sparse as well, but once June starts I should be able to get back on a better schedule.

That said, let’s get started!

Malawi

Joyce Banda, the new president of Malawi, announced she would try to lift the country’s ban on homosexuality, a move that breaks with some less encouraging news from elsewhere in Africa this year.

Banda became president after the former president, Bingu wa Mutharika died of a heart attack. Mutharika had been displaying increasingly concerning autocratic tendencies, and his death was followed by a couple tense days as the former president’s cabinet tried to prevent Banda’s succession. Malawi looks to have dodged a bullet.

China

The Chinese government relaxed bank reserve requirements to help offset signs of weakened growth, lowering the percentage of deposits large Chinese banks must hold in reserve (and not lend out) from 20.5% to 20%.

There’s been talk of slowing growth in China this year, but growth has slowed because of steps the government has taken to fight inflation. This announcement shows just how much firepower the Chinese central bank has in reserve - comparably large US banks need only hold 10% of deposits. (Higher reserve ratios slow lending, reducing both the availability of credit and the amount of money in circulation.)

EU

It’s been a big couple weeks in the Eurozone:

Greece

After a fractious election, the Greek parliament failed to form a government. Syriza, a leftist coalition which picked up 17% of the votes in the recent election, acted as the spoiler, refusing to form a coalition with any party hoping to uphold Greece’s much-hated IMF loan agreement. New elections are slated for June 17, and early polls suggest the far left will pick up even more votes. Fears of a Greek euro exit have returned in force in the wake of the failed attempt to form a government, and Fitch lowered Greece’s credit rating to near Junk status.

Italy

The head of an Italian nuclear energy company was shot in the kneecap, an attack with strong echoes of a spree of attacks by a terrorist group in the 1970s. The attack, along with a string of other recent attacks on tax collectors and government officials, prompted the Italian government to redeploy more than 24,000 police and military officials to increase security in the nation.

France

New French president Francois Hollande took office this week, and met with German chancellor Angela Merkel almost immediately after. Hollande also announced his cabinet, which kept mostly to the center and did not include Martine Aubry, the head of the socialist party. Hollande has promised to follow more pro-growth policies and push for the same from Germany.

Germany

German chancellor Angela Merkel’s party lost a major election in Germany’s largest state, taking only 26% of the vote, an 8% decline from the previous elections. Their rivals, the Social Democrats, won nearly 40% of the vote in an election seen largely as a referendum on Merkel’s austerity policies. Merkel announced later in the week that she would support some stimulus programs for Greece and a more growth- oriented policy for Europe at large.

German austerity hasn’t been popular anywhere, apparently even in Germany - and no wonder. Germany is one of the only countries in the Eurozone with a growing economy - even France posted stagnant growth numbers for the first quarter. Greece has shed around 25% of its GDP over the last 3 years, Spain has unemployment above 25% (and around 50% for youths), and Italy is worried about anarchists shooting people in the knee. The good news is, after the recent series of elections, it looks like the political tide is turning in Europe. Even Merkel, who has been steadfast in her support of austerity, is starting to back down.

The big question right now is Greece. The UK government recently estimated the cost of a messy Greek departure from the Eurozone at $1Tn, and that might be undershooting the mark if it sparks further crises in Spain or Italy. The Greeks at this point are ambivalent about staying in the Eurozone: arguments about the dangers of economic collapse are ringing rather hollow in a country where austerity measures have already driven unemployment over 21%. The real danger is to the rest of the Eurozone now. The Germans may not like the idea of bailing out Greece, but their recent economic performance didn’t come from the blue: the country has done extremely well under the Euro, and it has possibly the most to lose from a messy Euro exit. At this point, though, it’s hard to see Greece staying on the Euro. Currency depreciation is the only thing that might save the country’s economy now, and the only way to do that is to return to the Drachma.

US

NDAA

A federal judge blocked a provision in the recently signed National Defense Authorization Act that allowed the federal government to indefinitely detain people suspected of supporting terrorist organizations without trial. District Judge Katherine Forrest ruled the provision was too ill-defined and that the government had failed to adequately explain what would constitute support, leading to serious concerns over the scope of activities covered under the provision.

Economy

While the Jobs report was mostly steady this week, two other numbers were more positive: Housing starts (Real Estate construction projects) increased by 2.6%, while overall industrial production rose 1.1%, the largest gain since 2010.

Both of these numbers are very, very good. The economy is growing slowly, but the two indicators are good signs of fundamental improvements in the economy, and a good sign for future growth. Jobs numbers tend to be trailing numbers (the last thing companies do is hire more people), but industrial activity and housing starts tend to be leading indicators.

Debt Ceiling

House Speaker John Boehner warned the White House and Congress this week that he intended to hold up another increase in the debt ceiling unless it was accompanied by further spending cuts.

Economically, this is just as bad an idea as it was last time; the single worst thing the US could possibly do for both the domestic and the world economy is to toy with defaulting on our debt. The US economy is showing some signs of life, even despite headwinds from the EU crisis, but now Boehner’s threatening to plunge the markets back into chaos. Even if the debt ceiling does get raised, it’s this sort of political gamesmanship that cost the US its Triple-A rating last year, and while the markets shrugged off the spectacle last time, eventually someone’s going to blink.

Politically, this is insane. The debt ceiling debacle last year carried a massive cost for the Republicans: that fracas was a turning point for perception of the GOP both among the general public and in the White House, and it’s hard to point to a genuine political victory since then. Revisiting the issue, especially after trying to vote this week to renege on the terms they agreed to last year, is just not a good move. It’s a baldly political move, and it seems to be one of the few the GOP has this election, but it’s an incredibly weak hand, and the potential to backfire is enormous.

Final Thoughts

I stated at the beginning of this year that the tension in the Eurozone would be between the people and the bondholders. That seems to be what’s playing out now: recent elections in Greece, France, and Germany have all turned on the Eurozone crisis, and in all cases, the winners have been the ones who have sided with the people against austerity. Recent trends in Greece and Italy are concerning - the success of the fascist party in Greece and the rising violence in Italy warn of the dangers of inaction and of economic collapse - but overall, I think Europe may have just turned a corner in its handling of the crisis.

In economics, and especially in macroeconomics, it’s extremely difficult to run experiments. Usually, the best we can do to test a hypothesis is try to gather past economic data and fit it to our model. The results are usually fairly unsatisfying, and it’s very hard to solidly falsify a theory. The Eurozone has, by this point, run as good an experiment as I can imagine on the link between austerity and economic growth. The results are not good. Angela Merkel said this week that deficit reduction and economic growth reinforce one another. She got it half right: Absent bad policy, economic growth will certainly reduce deficits. Deficit reduction, on the other hand, seems to have very little to do with positive economic growth.

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

Eric

April 30 - May 5

Hello, and welcome to the Dispatch for April 30 - May 5!

China

A series of high-level meetings between the US and China was derailed by the arrival of Chen Guangcheng, a Chinese dissident, at a US embassy following a dramatic escape from house arrest. After several days of frantic negotiation, the US and China came to an agreement that met Mr. Chen’s criteria, including his desire to stay in China: he and his family would move to a different part of China, and he would be allowed to study law at a university. Upon leaving the embassy and meeting with friends and family, Mr Chen changed his mind and plead with the US to take him back in and allow him to temporarily come to the US. After further negotiations, the US and China announced Mr. Chen would be allowed to come to the US to study law at NYU.

Originally, Chen wanted to stay in China to continue his work - the Chinese government has a history of letting dissidents travel abroad and then refusing them re-entry, effectively shutting them out of the country. That’s likely what will happen now: Chen’s new agreement allows for him to go to NYU, but it doesn’t say much about him coming back.

Both sides wanted this matter off the table. The US and China have a solid working relationship, one whose importance is only growing as China rises. Neither country wanted the high level talks derailed by one person’s case, as evidenced by the speed and flexibility with which the groups negotiated - and the concessions made by the Chinese along the way. Human rights are a point of conflict between the US and China, but they’re one part of a wide and complex relationship.

Aghanistan

President Obama signed the strategic partnership agreement with Afghanistan, laying out the terms for US/Afghan relations for the next decade. Arriving in secret, Obama stayed in Afghanistan for six hours before leaving. Hours after he departed, the Taliban attacked a compound in the capital, killing 7.

Obama spoke of the coming dawn in Afghanistan, but a look at the conditions under which he arrived and departed from the country say more than his speech about Afghanistan in 2012.

Bloomberg has an excellent read on the trip to and from Afghanistan. The level of secrecy and precaution required to fly the president into the capital of the country doesn’t speak of a country on the mend.

Mali

Forces loyal to the former president attempted a counter- coup this week, but after several days of fighting, their efforts seemed to fail. The countercoup was led by the former president’s Presidential Guard; the military junta says the guard took up arms after the junta attempted to negotiate peace with the group, while other reports said the junta had attempted to arrest the head of the guard.

ECOWAS has attempted to negotiate a 12-month timeline for Mali to transition back to civilian government, but the military junta has not agreed to this yet. Early in the week, Captain Sanogo, head of the junta, spoke about the future of Mali, hinting at the junta’s continued role in Malian politics. Despite promises to the contrary and a string of failures in the north, the coup leaders seem intent on retaining power. In light of this, ECOWAS’s 12-month timetable for a transition seems both overly generous and overly optimistic: in two months, this group of mid-level soldiers have gone from promising a swift transition to civilian rule after giving up half the country to rebels in the north to hinting of their central role in Mali’s future.

Burma

Aung San Suu Kyi’s National League for Democracy took the oath of office unaltered and joined the Burmese Parliament, dropping their earlier objection to some of the wording of the oath.

This was the right move. Burma has made incredible strides in the last year, but it’s still not a completely free country. The NLD has waited 20 years for a chance to actually join Parliament; passing it up over a matter of semantics had almost zero upside.

The good news from Burma continues.

EU

France

François Hollande defeated Nicolas Sarkozy in this week’s presidential elections, largely seen as a referendum on the EU’s austerity measures. Hollande said he will continue to balance France’s budget, but will focus on raising taxes to do so, and will press for more growth-promoting measures in the EuroZone.

Greece

Greece’s Parliamentary elections raised more questions than it answered, with the two main parties dropping from controlling a combined 78% of the parliamentary seats down to 34%, far shy of the needed majority to form a government. A coalition of far left parties won 16% of the vote, while a far-right neo-nazi party took nearly 7% of the vote, enough to secure 21 seats in parliament. If a coalition government cannot be formed within three days, new elections will be called.

The Greeks have been at the vanguard of the Euro crisis from the beginning. These elections are as pure an expression of electoral anger as you’re likely to see. The Greeks are furious about the bailout package and the austerity measures, and increasingly about the entire Eurozone - no wonder, at 20% unemployment and an economy that’s contracted 20% over 3 years - and that fury was evident in a complete breakdown of Greek politics. France’s vote was no less a protest vote. The French economy hasn’t fallen as much as Greece’s, but the French are feeling the effects of the Eurozone’s austerity measures as well.

The recent successes of Far-Right parties in the Eurozone elections is concerning. My sense is that the fundamental factor driving their current growth is high unemployment, but the danger is that any group that gets power brings its entire agenda with it, not just the parts that may have appealed to desperate or angry voters.

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

Eric

April 23 - April 29

Hello, and welcome to the Dispatch for April 23 - 29!

This has been an extremely busy week for me, and because of that, this is going to be an extremely short dispatch.

Egypt

The Salafis, a broad group of ultra-conservative Islamists, endorsed a liberal Islamist for president in a surprise move this week.

The Islamists move is a sign of dissatisfaction with the Military Council and the Muslim Brotherhood, the two current political powers in Egypt. The Brotherhood already has control of Parliament, and after initially promised not to field a candidate, the group reneged when they couldn’t find anyone to endorse. The Salafis’ endorsement makes Abdel Moneim Aboul Fotouh, a former Muslim Brotherhood member and very liberal Islamist, close to the front-runner in the race.

My sense is the Brotherhood is concerned first and foremost with making sure the military abdicates power. It’s entirely possible they will wind up backing Fotouh, even over their own candidate, if it looks like he could win the election.

Pakistan

Prime Minister Gilani was found guilty of Contempt of Court for failing to re-open a corruption case against Pakistani President Zardari. His punishment was imprisonment until court adjourned a few minutes later.

While the sentence seems ridiculous, Contempt of Court is a felony charge sufficient to bar someone from holding office in Pakistan. Effectively, the Contempt charge ends Gilani’s political career. He’s appealing, but the message from the Court’s short sentence was pretty clear, and it’s unlikely his conviction will be overturned. As NightWatch noted, it looks like Gilani took one for the team: Any appeal trial will take time, and then elections will have to be held, a new prime minister picked, and the entire court charade will need to start again. Gilani’s sacrifice just bought his party a good year’s grace from a hostile court.

Liberia

Charles Taylor, warlord and former Liberian president, was found guilty of war crimes by the Special Court for Sierra Leone.

Charles Taylor’s war in Sierra Leone became the archetype of African conflicts. The child soldiers, the mutilations, the blood diamonds: this the vocabulary by which we know African civil wars. The effects of his rule are still being felt in both Liberia and Sierra Leone. It’s hard to imagine what true justice would look like in this case; some events cut so deeply the only thing left to do is move on.

China

A blind dissident escaped house arrest and apparently made his way to the US Embassy. While the story remains officially unconfirmed by either the US or China, a senior US diplomat has apparently been dispatched to handle the situation before high-profile meetings between the two countries this week.

A couple months ago, the vice mayor of a Chinese city showed up at an American embassy and attempted to defect. He was eventually rebuffed and left the embassy, sparking the downfall of a prominent Chinese politician, ripples of which are still being felt. It’s going to be much harder for the US to turn away a blind advocate for democracy who has spent the better part of a year and a half under unofficial house arrest and who has been praised by Hillary Clinton. So far the Obama administration has done a good job of skirting the line between constituents in the US and partners in China, but returning Mr. Chen to China would be a severe black eye for an administration which has vocally promoted democracy and democratic movements around the world.

Russia

Vladimir Putin handed control of United Russia, his political party, over to outgoing president (and incoming prime minister) Dmitri Medvedev.

United Russia’s image has been tarred by electoral scandals, including the Parliamentary vote which sparked protests across Russia this year. Putin is trying to distance himself from the party and its scandals, but United Russia has been crafted in his image: it’s Putin’s party, and nobody’s likely to forget it – especially not with Dmitri Medvedev, widely regarded as Putin’s lapdog, at the helm.

Thanks for reading, and sorry for the brevity - next week I’ll be back to full length.

My best for the week ahead,

Eric

April 16 - April 22

Hello, and welcome to the Dispatch for April 16 - 22!

France

The first round of voting in the French presidential elections took place on Sunday. Nicolas Sarkozy, the current president, has been running a tough race against Francois Hollande, the Socialist Party candidate. Hollande beat Sarkozy in the first round, with 28.5 percent of the vote to Sarkozy’s 27.1. Most surprising, though, was far-right candidate Marine Le Pen’s strong showing, garnering 18% of the vote.

Le Pen’s surprising outcome may not be the boon for Sarkozy commentators are suggesting. Sarkozy’s deep unpopularity is largely due to the economy and the Eurozone crisis: like those in many other countries, the French are none to happy over continued austerity measures, slow growth, and what many see as overreaching by the IMF and Germany. Le Pen’s National Front party is an ultra-nationalist populist party which endorses leaving the eurozone and starkly limiting immigration. Their recent popularity reflects the growing anti-Euro sentiment in France more than any particular conservative turns. Sarkozy is the face of the Eurozone in France, and it’s questionable how many of Le Pen’s voters would turn out for him. In that, Le Pen’s turnout may be more promising for Hollande than Sarkozy: it’s a sign of just how deep the resentment towards Sarkozy’s embrace of the Eurozone runs in France today.

Burma

The recent Burmese elections are paying dividends: The EU announced a 1-year suspension of the sanctions against the country, Japan announced it would forgive more than $3.7Bn in debt, and the US Treasury Department said it would allow financial transactions in support of aid and development projects in the country. The celebration may be premature, though: The NLD is protesting the oath of office, which currently obliges members to “safeguard” the Burmese constitution, saying unless the phrase is changed, they cannot take the pledge.

On the surface, the conflict looks needlessly semantic, and my immediate instinct is that this may be a test to see just how far the military’s newfound appreciation for democracy goes. There’s plenty of reason for the NLD to be cautious, though. It’s not at all clear there’s unanimity among the military, who make up most of parliament, in favor of the recent liberalization moves - should the NLD take an oath to safeguard the constitution and then attempt to rewrite it, they may wind up imprisoned, or worse.

That said, Aung San Suu Kyi, the leader of the NLD, has spent almost 15 years under house arrest as a democratic activist, so it’s certainly believable the NLD is making a stand on principle.

Mali

Though it has been nearly 10 days since Traoré, the head of the National Assembly, was sworn in as interim president, the leaders of the coup have not given up power yet, as evidenced early this week by the arrests of at least 5 leading political figures. The military made no statement about the arrests.

The coup leaders have pledged to restore democracy, but midnight arrests of senior political figures is not a reassuring sign. Traoré may be the Interim President, but the men with the guns are still making the rules. The longer they stay in power, the bigger the temptation to try to sway the outcome of the eventual transition back to civilian leadership.

Sudan

After a campaign of bombings from Sudan, the South Sudanese army pulled back from Heglig, an oil-rich region along the disputed border. The conflict continued over the week, with the Sudanese military striking several areas in South Sudan amid increasingly bellicose rhetoric from the Sudanese president Omar al-Bashir.

The Sudanese cease-fire in 2005 and the referendum for independence in 2011 were monumentally important to resolving relations between two fundamentally different nations, but they left several issues undecided. The border was loosely defined at best, and substantial areas (including Heglig) are legitimately claimed by both sides. The oil revenue sharing remains a contentious point, with the majority of production in South Sudan but the only pipelines running through Sudan. The citizenship of Southerners in Sudan was never resolved, and South Sudan has been slow to issue passports to its citizens. Until these issues are resolved, either by internal negotiations or with the help of outside mediation, the two countries will continue to come to conflict. Even then, historic prejudices may spark conflicts from time to time, but at least then neither side will be able to claim legitimacy while invading their neighbor.

Syria

Amid scattered violence, UN observers began arriving in Syria on Monday, and by Saturday, the Security Council had agreed to increase the number of observers to 300 (the original limit of 30 was widely criticized as inadequate to patrol a country slightly larger than North Dakota). To the shock of the Syrian opposition, though, Col. Himmiche, the leader of the UN’s advance team, announced the observers wouldn’t patrol on Fridays, the traditional day of protest in Syria.

The shared sentiment in Syria is, “If you’re not going to patrol on Fridays, why the Hell are you even here?” Fridays are the days of protest, both in Syria and across the region - skipping Friday patrols is like skipping DUI checks on St. Patrick’s day.

Also, note that the continuing violence in Syria is coming from both sides: the government hasn’t stopped cracking down on protestors, but a spate of bombings and other attacks have hit government troops as well. Neither side is sticking to the cease-fire agreement.

US Election

While Mitt Romney has begun merging his campaign staff in with the RNC, there are still deep divisions within the GOP. Senator Dick Luger, a six-term senator from Indiana, became the latest prominent Republican to face a Tea Party primary challenge. He was joined later in the week by Orin Hatch, who narrowly missed a supermajority in Utah’s primary and will now face a primary challenge in that state.

The action in this year’s election is in the Senate races: enough seats are up for grabs to shift the balance of power in Congress towards the GOP, a change which would hamstring Obama’s second term even more than his first has been. It will be interesting to see the interplay between the Senate races, where many of the candidates have strong Tea Party ties and are likely to run on a more conservative platform, and the presidential race, which will be fought on much more centrist lines.

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

Eric

April 9 - April 15

Welcome to the Dispatch for April 9 - 15!

Sudan & South Sudan

The simmering conflict between Sudan and South Sudan took another step towards outright war this week when South Sudan took over the town of Heglig, a disputed city home to Sudan’s largest oilfield. The African Union decried the move as “illegal,” and Sudan responded with airstrikes. Skirmishes continued throughout the week, dimming prospects of a peaceful resolution.

South Sudan gained its independence after a long civil war, a brokered peace treaty, and a referendum in January 2011. While relations between the two countries were only ever cordial at best, the largest conflict was over oil: South Sudan holds more than 75% of the combined countries’ oil, while Sudan holds the pipeline and port required to get it to market. After Sudan threatened to take what it wanted from the pipes, South Sudan shut down oil production and threatened to build a pipeline through Kenya, a process that would take at least a year. There’s little hope for a peaceful agreement and both countries are suffering for lack of revenue. Sudan may have a harder road ahead than South Sudan: like many regimes, the government of Omar al-Bashir has stayed afloat through bribes furnished through oil money. Without oil money for bribes, the government’s days are numbered, and the only other group in the country with any power are the Islamists who invited Bin Laden to set up camp in the mid-1990s.

North Korea

After weeks of buildup, North Korean’s much anticipated satellite launch ended in failure, with the rocket breaking up over the Pacific. Two days later, Kim Jong-Un, in his first address to the nation, declared military technology continued to be the top priority, extolling the progress made by his father and grandfather.

The rocket’s failure is humiliating for North Korea: staged to celebrate the 100th birthday of Kim Il-Sung, the founder of the nation, it was meant to show how far the country had come. The launch was a thinly veiled demonstration of the country’s missile technology — an NBC correspondent who saw the actual satellite expressed doubts about whether it was real or just a mock — and the launch came at the cost of scuttling a deal for more than $200m in American food aid. Kim Jong-Un’s speech to the nation, though, was an interesting development: his father, Kim Jong-Il, rarely ever spoke in public. Kim Jong- Un’s willingness to speak publicly and apparently likeness to his grandfather, practically a deity in North Korea, may prove his most useful assets, especially during what’s rumored to be a messy succession.

South Korea warned earlier in the week it saw signs of preparations for a nuclear test; in light of the failed rocket launch it’s definitely possible the North will attempt to repair some of the damage to its image with a new nuclear test.

Egypt

In a sweeping decision on Saturday, Egypt’s High Election Commission disqualified 10 candidates for president, including the three front runners: Omar Suleiman, Mubarak’s intelligence chief, seen as the military’s candidate, was disqualified because the 30,000 signatures he needed to run could not be verified; Hazem Salah Abu Ismail, a Salafist representing ultra-conservative Islamists known for his vitrolic anti-West speeches, was disqualified because his mother was an American citizen; and Khairat el-Shater, the Muslim Brotherhood’s candidate, was disqualified due to a prior conviction under the Mubarak regime.

Omar Suleiman’s departure from the race is a bit of good news for Egypt; it’s hard to see him as anything but a representative of the military and the old regime. Likewise, Abu Ismail’s disqualification should sooth some nerves in the West, though the well-timed discovery of papers verifying his mother’s American citizenship do imply some outside help in the process. The concern now is how the Salafis will respond to seeing their candidate removed, especially with apparent help from their avowed enemies in the West. The Muslim Brotherhood suspected el-Shater’s candidacy might not pass muster, so they have another candidate ready to take his place if need be.

This is a strange bit of news altogether, though. Suleiman was seen as the military’s man - to have him disqualified by a commission appointed by Mubarak is rather surprising. It’s absolutely possible - hell, it’s likely - that the court action is completely above board and as-reported, but given everything else Egypt has been through, I’m not sure I’ll believe this one until the military actually abdicates control of the country.

Iran

Iran, the US, UK, France, Germany, Russia, and China met for the first round of talks aimed at resolving the nuclear impasse. No concrete steps were made, but the six countries were satisfied that the Iranians were serious about negotiating this time (the 2011 talks ended almost immediately), and follow-up talks were scheduled for May 23.

Iran is obviously playing for time: the longer they can keep negotiations going, the longer they can forestall any military action, and the better any negotiated agreement is likely to be. That said, I suspect the six nations are playing for time too: Nobody wants a war with Iran, and as long as the negotiations are ongoing and appear fruitful, the international community can pressure Israel to refrain from attacking. The consensus is that Iran’s goal isn’t to have a nuclear weapon right now, but they do want to have the option of making one if they need to. The only country with a serious objection to a non-nuclear but “screwdriver-ready” Iran is Israel: the rest of the international community is more concerned about avoiding another long and costly conflict in the Middle East.

Foreign Policy published a piece by Hossein Mousavian which does an excellent job detailing the many reasons Iran has to be mistrustful of the West. Negotiations are a two-way street, and there aren’t too many compelling reasons for the Iranians to expect the West to hold up their end of the bargain.

Summit of the Americas

The Summit of the Americas was held this week in Colombia. Unsurprisingly, drug policy was the headline topic, with the Colombian president proposing a global taskforce to overhaul drug policy around the world, though President Obama flatly rejected any talk of legalization. The talks ended without any consensus statements, though, largely due to concerns over the continued exclusion of Cuba from the meetings.

The drug issue is the 900lb gorilla of intra-American relations. The United States is the largest consumer by far of illicit drugs, but most of the costs of dealing with the issue have been borne by Central- and South-American countries, and there’s ample reason to criticize the current policy. This week, the AP reported that there were signs the Zetas, a paramilitary narco-cartel formed by former Mexican special forces trained by the US, and Mara Salvatrucha, a Guatemalan group made of gang members deported from the US, were beginning to work together in Guatemala. Both groups sprang from US efforts to crack down on the drug problem, and both have grown into a huge threat to Central American security. It’s no wonder patience is wearing thin south of the US border.

The second point of contention between the US and the rest of the Americas is Cuba: but for some small changes in immigration, US policy towards Cuba hasn’t changed since the Cold War, and the rest of Latin America has run out of patience with the US position. Cuba may be nation non grata to the US, but its ties with the rest of the Americas - especially Bolivia, Nicaragua, and Venezuela - are rather strong. The United States’ continued insistence on barring Cuba from the Summit is starting to cost us diplomatically.

Ultimately, between Brazil’s ascendency as a global power, the Americas’ growing fatigue with heavy-handed and tone-deaf policy from the US, and the spread of Mercosur (the South American equivalent of the European Union), the American nations are finding themselves less reliant on the US and less willing to accede to US demands in the region.

South China Sea

The Philippines and China found themselves in a standoff this week when the Philippine navy tried to arrest the crews of 8 Chinese fishing boats for illegal poaching. Two Chinese surveillance vessels arrived and positioned themselves in the way of the Philippine ship, sparking a three-day standoff over a small shoal 140mi off the Philippine coast. The standoff was resolved on Saturday, with all 8 Chinese ships returning to China.

China has been increasingly assertive in its claims to territory in the South China Sea. China claims most of the sea as its territory, a claim disputed in various places by the Philippines, Viet Nam, Japan, and Indonesia. Most of the disputees are US allies or signatories, which is why the disputes are so tense: the Chinese see any US infringement in the region as a direct challenge. As China grows more assertive, I expect this region to get more volatile.

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

Eric

April 2 - April 8

Hello, and welcome to the Dispatch for April 2 - 8!

A quick note: Starting with this dispatch, I’ll be citing stories older than one week where necessary. A number of stories have come up which tend to look like routine politics until a week or two later, and I’d rather be able to give a comprehensive read on an event than miss something based on a 7-day window. The world’s done an awful poor job conforming to my schedule so far, and I’ve little reason to expect it to do so in the future.

That said, let’s get started!

Mali

The Tuareg rebels declared the northern territories an independent nation, calling it Azawad. The declaration was immediately rejected by the African Union and several other international parties, though the AU and France also turned down the Malian coup leaders plea for military assistance. The coup leaders announced that, in exchange for immunity from prosecution, they would hand over power to the National Assembly within days, and deposed President Toure officially stepped down to facilitate the transfer of power.

The Tuareg’s historic homeland covers parts of Algeria, Libya, and Niger as well as Mali, which may explain the chilly reception from both the African Union and ECOWAS. The group also has ties to groups claiming affiliation with al Qaeda, which hasn’t won them friends in the west either.

Syria

As April 10th, the deadline for a cease-fire agreed upon under terms brokered by the UN, approaches, violence continued in Syria. At the end of the week, the Syrian government said it would not enact the cease fire without written guarantees from the rebels that they too would stop fighting. Hopes for a cease-fire were also undermined by Saudi Arabia and Qatar, who pledged significant financial and material support to the rebels.

The “Friends of Syria” are not providing weapons directly, but with more than $100M earmarked to pay for the Free Syrian Army’s salary, they might as well. It’s little wonder the Assad regime is lukewarm on the prospect of a cease- fire.

Egypt

Following rising tensions between the Muslim Brotherhood and the military leadership and a dearth of other candidates to endorse, the Brotherhood backed away from an earlier pledge to abstain from the election and announced a candidate for president. On Sunday, another candidate was announced: Omar Suleiman, Mubarak’s former intelligence chief.

When Mubarak was deposed, many observers noted it looked an awful lot more like a coup than a revolution: the crisis in Egypt ended with Mubarak in the hands of the military, not the people. Suleiman’s candidacy fits this narrative: when things started looking sour for Mubarak, he offered Suleiman as his replacement. For several months now, the military and the Muslim Brotherhood have been sparring over who will ultimately control Egypt, and Suleiman looks to be the military’s next play. The Brotherhood may have decided it couldn’t risk not running a candidate, even if the move scares away some potential supporters.

Yemen

In the aftermath of the unrest which removed former President Saleh, Yemen’s south continues to be a center of unrest. The government has not managed to fully re-establish control, despite its best efforts, and al Qaeda’s Yemeni branch is becoming well rooted in the area, as evidenced by a spate of recent attacks. Adding to the government’s woes, troops loyal to the former president’s half- brother Saleh al-Ahmar shut down Yemen’s largest airport for a day to protest al- Ahmar’s sacking by President Hadi, one of nearly 20 firings intended to clear the military ranks of loyalists to the old regime.

Saleh’s resignation earlier this year left a number of open questions, including the disposition of his friends and family members in key government positions. The firings and subsequent airport takeover aren’t going to settle any nerves in Yemen. Until the new government can deal with the remnants of Saleh’s regime and get full control over the military, it won’t be able to tackle the problem in the south, which means the al Qaeda affiliate will continue to have a free hand. President Hadi may possibly have the worst job in the world.

China

Chinese Prime Minister Wen Jiabao called for the breakup of China’s four biggest banks, saying their monopoly on finance is beginning to slow China’s economic growth. Wen’s statement follows on another talk he gave at the end of March admonishing the Chinese government to do more to tackle corruption.

All four banks are state-owned and massively well connected, which is why Wen’s statement is particularly worth note.

Final Notes

I’m always reluctant to spend too much time talking about al Qaeda or its affiliated groups - the group is just too much of a hot issue, and American news in particular tends to be extremely sloppy in dealing with al Qaeda. They’ve been largely removed from Afghanistan and Pakistan, but the news from North Africa and Yemen this week are signs of the vitality of their affiliates. In general, though, Al Qaeda tends to operate in conjunction with other local groups: the group itself is relatively light on manpower, and tends to act more as training, logistics, and support for local movements. This makes them an extremely amorphous group, but it also is a weakness, since the local groups usually have goals that don’t match al Qaeda’s brand of International Jihad. This was effectively the lesson of the “Sunni Awakening” during the Iraq war - separating al Qaeda from their local supporters can be an extremely effective means of shutting down the group’s activities in a given area. The situations in Mali, Yemen, and Somalia are going to get more scrutiny in the coming weeks, and I guarantee the al Qaeda connection will become part of the news. Keep in mind the distinction between al Qaeda proper and other local Islamist groups: most groups operating in the region don’t have aims on the sort of international actions al Qaeda aspires to, and the presence of “al Qaeda-affiliated groups” does not actually tell one an awful lot in that region - several of the rebel groups in Libya during Gaddafi’s overthrow had links to al Qaeda as well.

Thanks for joining, and my best for the week ahead!

Eric

March 26 - April 1

Hello, and welcome to the Dispatch for March 26 - April 1!

My thanks this week to Luis and Harlan, who helped me better understand the situation in Argentina and direct my research. There’s no substitute for knowledgable and interested people, and I’m fortunate to have such good friends.

Let’s get started!

Mali

ECOWAS, the Economic Community of West African States, issued a warning on Wednesday to the leaders of the Malian coup, pressing them to restore the democratic government and placing peacekeeping troops on standby. The Tuareg rebels in the north took advantage of the chaos surrounding the coup and seized a swath of territory, culminating in the capture of Timbuktu on Sunday. Facing pressure from abroad and a severely deteriorated security situation, the coup leaders announced they would restoring the constitution and transfer power back to a transitionary government as soon as possible.

To say the coup has failed spectacularly is an understatement. Within one week, the leaders of the coup allowed the Tuaregs to capture more Malian territory than they have in almost a century of uprisings; indeed, with Timbuktu, they’ve now realized their full territorial ambitions. When civilian government is restored, it will be in a severely disadvantaged position as it attempts to negotiate the future of the northern region of the country. Last week, world leaders said the age of the coup was past, this week shows they may be right.

Myanmar

Nobel prize winner Daw Aung San Suu Kyi won a seat in Sunday’s much- anticipated parliamentary elections, according to her party, the National League for Democracy. The NLD itself is said to have won at least 40 of the 44 available seats.

Myanmar’s parliament consists of 664 seats, only 44 of which were contested this election. Still, the move is enormously symbolic: A year ago, it would have been unimaginable to see the NLD, and especially Aung San Suu Kyi, whose 15-year house arrest came to symbolize the country’s repression, in parliament. The speed of the country’s liberalization has been breathtaking, and as yet observers are left scratching their heads over the cause. The most credible theory is that the leaders of the military junta, now rather wealthy old men, would rather retire peacefully as heroes than wait for the Arab Spring to arrive at their door. In any case, the government is making all the right moves, and, as Hillary Clinton put it, that’s quite a nice sight to see in a season thus far dominated by Syrian tanks.

Argentina

The Obama administration announced it was suspending trade benefits to Argentina over the country’s failure to pay $300M in awards to two American companies. The administration said it did not believe Argentina had acted in good faith concerning the awards, granted in the aftermath of the country’s 2001 default.

The $300M is owed to two companies: one is CMS Energy, an energy firm who won bids on large energy concessions in Argentina in the mid 90s, and the other to Azurix, a subsidiary of Enron, which won a bid to supply water around the same time. Both bids were awarded during a raft of privatizations taken as concessions for IMF loans during the 1990s, and the two companies were among the holdouts in Argentina’s debt restructuring during their 2001 default.

The history between Argentina and the US since WWII has been checkered at best - starting with the Marshall Plan, under which European nations were blocked from purchasing goods and services from Argentina in a bid to discredit Perón, the Argentine president at the time. The story since has been one of coups, debts, corruption, and concessions to external creditors, the end result of which is Argentina, once the 7th largest economy in the world, finds itself still struggling to access foreign credit markets. Argentine governance has frequently been fraught with corruption and ill-advised policy, but it’s awful hard to see any balance in this move: Argentina now joins Sudan, Syria, and Belarus as the only countries in the world ineligible for trade benefits, due mostly to two companies’ demands for more concessions from a bankrupt nation.

Oil Markets

The French Energy Minister confirmed talks with the UK, US, and Japan about releasing oil from the countries’ strategic reserves to bring down crude prices. The Saudi oil minister said his country would bring as much oil to market as needed to keep prices down, stating that high oil prices were beginning to have an effect on European growth. On Sunday, President Obama announced there was enough oil supply on the market to go forward with another round of sanctions targeting Iran’s oil exports without affecting global energy prices.

In a bit of election-year irony, the slow economic growth is helping the Obama administration take a hard line on Iran: oil demand is low, in part due to sluggish growth in Europe and slower than expected demand from China. The talk of releasing oil from the strategic reserves, though, belies the optimistic talk of Saudi supply. Iran is the second-largest producer of oil in the world, with output around 30% of Saudi Arabia’s. It’s extremely hard to imagine a scenario where shutting Iran out of the oil markets doesn’t impact prices.

As an aside: the Strategic Petroleum Reserve exists to handle genuine emergencies and short-term supply disruptions. Seeing it used it for what are fundamentally political purposes is an extremely poor development. If the administration thinks the benefits of pressuring Iran to abandon its nuclear program outweigh the potential cost of an increased price of oil, let them make that case, but to dip into the emergency fund by choice instead of necessity is both disingenuous and potentially dangerous.

Health Care

The Supreme Court heard arguments over the Patient Protection and Affordable Care Act, or Obamacare, this week. The case focused on the “Mandate,” the requirement in the law that individuals buy health insurance or pay a penalty. The Obama administration was confident at the start of hearings the law would stand, but by mid-week, the Justices’ questioning led many to believe they would strike the law down.

While it was expected the court would break along ideological lines, leaving Justice Kennedy the pivotal vote, Kennedy’s questioning of the Administration’s lawyer was extremely sharp, surprising most observers. The Justices have indicated their decision will be all or nothing: either the Mandate, and thus the law, stands, or the Mandate falls and the entire 2700-page law will be revoked.

The government’s arguments in favor of the mandate have centered on the Commerce Clause and the assertion that, at some point, everyone interacts with the health care market - because the government can regulate the health insurance and care markets, and because everyone will use the market eventually, the government has the ability to regulate the terms on which people enter that market. The argument of Attorneys General representing the states suing the government point out that this reasoning can be stretched to cover nearly every industry, including food: can the government thus compel us to buy broccoli as well? Either side can quote a large body of case law - going back to 1792, in some cases - and, no matter the ruling, the decision promises to be highly contentious.

Final Thoughts

I’ve talked before about my distrust of complexity - in fact, the Obama administration’s attempts to mold the oil markets to prevent spillover from Iran was the background for my previous comments on complexity, and that situation isn’t looking a lot better to me than it did then.

The individual health care mandate, the subject of the Supreme Court’s scrutiny, is another example of complexity serving ideology: the mandate exists to solve the inability of people with pre-existing medical conditions to get health insurance, and the subsequent bankruptcy of people whose only mistake was to get cancer. By all measures, the regulation against pre- existing coverage bans is wildly popular: 85% of people support it in recent polls. The only way to make that regulation economically viable, though, is to dramatically increase the number of healthy, dues-paying people on insurance company rolls. The mandate is designed to keep private insurance companies in business while achieving the rather laudable social goal of preventing the sick from being left to die on the streets. The problem is, it might be unconstitutional. The other problem is, it’s a terrible patch to a broken model.

We’re at a crossroads: we can either have profitable, market-driven insurance companies, or we can have a society in which an illness is not a death sentence, economic or otherwise. The mandate kicks the can down the road, but it’s not clear what other problem it solves: whatever its other virtues, it’s impossible to call a system in which individuals are compelled to buy health insurance a “free market solution.” If we really want coverage for those with dire illnesses, it’s well time to drop the pretense and move to the system we’re trying to jury-rig our way into: single-payer universal health care.

I’m not arguing whether single-payer is the best system - my argument is: if we’ve decided we want people who are sick to receive affordable medical care, the only way to accomplish that goal in a market-based system is apparently through actions which remove any real basis by which we can call the system market-based. At that point, the only thing we add to the system by pretending to include private enterprise is an incredible amount of complexity and bureaucracy, both in regulatory bodies and in the insurance companies themselves. It would be far, far better, cheaper, and more direct to cut out the middleman and enact what we’re really striving for than to keep patching together a broken system in hopes of creating a serviceable health care system.

Whatever the system we decide on, it’s well time we have a serious discussion: if we want a market-based solution, we need to accept the consequences, which will be measured in lives. If we’re not willing to accept the cost of a market system, we need to stop pretending half-measures will do the job and commit to paying the price of our moral preferences.

Thanks for joining me, and my best for the week ahead! Eric

March 19 - 25

Hello, and welcome to the Dispatch for March 19-25!

You may have noticed the Dispatches have been short recently – this is largely due to time constraints. I’m still looking for a good way to handle smaller stories that tend to get cut on Sunday night. One step I am taking, though, is in being more aggressive about retiring stories whose fundamental details haven’t changed. The GOP nomination was the first such story, and Syria has become the second - I’m hoping clearing stories in which there’s nothing new to report will give some breathing room for the rest of the world.

For now, though, let’s get to the Dispatch!

Mali

A group of junior army officers ousted the Malian president on Thursday, citing the government’s poor handling of the struggle against a Tuareg rebellion in the north of the country. Coming just days before a scheduled election, the coup was widely denounced by the UN and across Europe, though at the end of the week it was still uncertain whether the soldiers were fully in control of the country.

The coup is an echo of the Libyan revolution: many of the Tuareg rebels fought for Gaddafi and returned home with better arms and training. The Malian army, at 7,000 strong, has been at a severe disadvantage in the fight; it’s unsure what the coup leaders hope to accomplish to solve this imbalance. On a broader level, this is the first big ripple in Africa from Gaddafi’s fall: the former Libyan dictator spent a lot of money on a lot of weaponry, quite a bit of which was never accounted for. Dispersing large amounts of new cash and weaponry into an already politically unstable region isn’t a recipe for smooth seas: I suspect we’ll be seeing the ghost of Gaddafi again in Africa.

China

A week after the Communist Party purged Bo Xilai, a prominent party member, rumors of gunfire in Beijing, military vehicles on the street, and potential coup attempts swept Chinese blogs.

Ordinarily I wouldn’t cover this story, as none of the claims are verifiable, but NightWatch had some excellent commentary on Thursday and Friday. NightWatch’s argument is that, while the rumors themselves are not particularly credible, the fact that a large part of the web-using Chinese populace finds reports of gunfights between political factions plausible casts a sharp light on the image of stability and solidarity China has projected in recent years.

Syria

Clashes in an upscale neighborhood of Damascus early in the week and military action in regions the government thought cleared of rebels showed the insurgency’s resilience in the face of continue government action. The UN Security Council passed a resolution exhorting the Syrian government to call a cease-fire and promoted Kofi Annan’s peace plan, the first time China and Russia have backed such a resolution.

The Syrian narrative now is well-established: The insurgency, well rooted but poorly organized, too widespread to be easily quashed; The Syrian government, able to take territory and inflict damage, yet unable to truly impose its will on the country; the International community, horrified at the civilian massacres, but stymied by divisions among nations and among the rebellion. There’s little prospect for any dramatic changes for now, and less still for any resolution to the Syrian situation anytime soon. For the time being, the Syrian situation is in stalemate.

Iraq

In anticipation of the Arab League meeting in Baghdad next week, followers of Moqtada al-Sadr staged a rally in Basra, with nearly a million people marching in the streets. Al Qaeda in Iraq staged their own demonstration, setting off dozens of car bombs across the country on Tuesday, killing nearly 54 people and underlining continuing insecurity in the nation.

The common thread between Sadr’s display and Al Qaeda’s attacks is Iraqi President Nuri al-Maliki’s recent moves to consolidate his power. Following the US departure, Maliki, a Shi’ite, had the Sunni Vice President arrested, and has worked to both marginalize the Sunnis in government and shore up his own base. Al Qaeda, primarily a Sunni group, has been resurgent in the region due to Sunni anger at the Maliki government. Sadr, on the other hand, sees Maliki’s intransigence as an opportunity. Formerly the head of the Mahdi army, Sadr commands widespread support in Iraq - witness this week’s demonstration, which put more people on the streets than the demonstrations in Tahrir Square - and looks to be positioning himself to take advantage of Maliki’s declining popularity to boost his own power.

Iran

I had the opportunity this week to attend a panel on the Iran-Israel crisis. The speakers were Avner Cohen, a nonproliferation expert who wrote the history of the Israeli nuclear program; Karim Sadjadpour, an expert on Iran who’s written extensively about the Iranian government and Ayatollah Ali Khamenei; and Shibley Telhami, who for 10 years has been one of the principal investigators in the Arab Public Opinion Survey (full bios).

Avner Cohen spoke on the Israeli perspective. His assertion is that Israel’s principal concern is the loss of their “Benign Monopoly” on nuclear weapons in the Middle East: the Israelis currently enjoy the ability to escalate a military conflict as quickly as necessary. Cohen expressed concern over the volume and severity of Israel’s rhetoric, fearing it could bind Israel to take some extremely costly and inadvisable military action.

Karim Sadjadpour addressed the Iranian side of the conflict. He stated the three defining features of the current Iranian leadership (composed of “Principalists,” the more conservative school of Iranian leaders) are “the Hajib, Hatred of the US, and Hatred of Israel.” He believes the current regime will resist engagement with the West out of fear it could lead to reforming Iranian society; the Principalists feel this would be the death of the Iranian Revolution. However, the regime is not suicidal, either: it can be bargained with, cajoled, or otherwise influenced, and containment is a definite possibility.

Shibley Telhami spoke largely about the results of polling in the Middle East. He said that, when asked what the most dangerous country in the region was, the consistent answer across the Middle East was Israel. Telhami also mentioned that support across the region for international intervention in Iran was nearly non-existent, largely due to mistrust of the West and a feeling of double standards concerning the Iran. Among Israelis, 90% of those polled thought Iran would eventually get a nuke, and 2/3rds said they could live with that.

The three speakers generally agreed on several things: First, if Iran does get a bomb, the odds of it winding up in terrorist hands are essentially nil - it’s just not a narrative that works out. Likewise, the odds of either Iran or Israel ever using a nuclear weapon are vanishingly small. The primary concern for the US is Iran’s antipathy towards Israel: Telhami quoted David Frum, George W. Bush’s speechwriter, as saying “You can hate Israel or build nukes, but you can’t do both.”

Ultimately, the problem was succinctly summed up by Shibley Telhami: Any resolution must be agreeable to Israel, Iran, and the US. Israel won’t agree to just containing Iran’s nuclear program, Iran doesn’t want to reconcile with the West in any meaningful way, and the US doesn’t want to go to war. That leaves an awful small amount of ground for an attainable agreement.

Final Thoughts

The NATO intervention in Libya and its aftermath show how even military actions we would consider highly successful have ripples across the world. The Malian coup is a particularly dramatic outcome, but Libya figures in the Iranian nuclear crisis as well: Gaddafi gave up his nuclear program in 2003, and 10 years later, NATO forced a regime change in the country. To the Iranian leadership, this is a cautionary tale. The Syrians learned from Gaddafi that the international community’s apparent red-line is air power: the Syrian army has largely kept their planes grounded while attacking the rebellion. The NATO intervention in Libya, which started as a no-fly zone and turned into regime change, factored highly into Russia and China’s veto of UN Security Council action against Syria: both countries felt duped after their vote for the Libyan no-fly zone, and neither is particularly inclined to support NATO adventurism now. Even in Libya itself, the promised democracy has not yet materialized: stitching together a society from highly disparate elements is proving highly challenging. This is the danger in military action: we don’t know where all the threads lead. Even in something as laudable as the intervention in Libya, which almost certainly saved thousands of lives, if not the whole city, has had consequences across the globe. It’s a lesson to keep in mind when considering foreign intervention: chaos is the rule of the world.

Thanks for reading, and my best for the week ahead!

-Eric

March 12 - 18

Hello, and welcome to the Dispatch for March 12-18!

Israel/Gaza

The assassination of the head of a militant group in the Gaza Strip by the Israeli army sparked several days of rocket attacks and Israeli airstrikes. By mid-week, a cease-fire brokered by Hamas and Egypt had largely restored calm in the region, though sporadic attacks continued through the week.

A few notable facets to the story: First, Hamas was apparently instrumental in de-escalating the violence and bringing about a cease-fire - that’s quite a step for the organization. The negotiations were apparently conducted with the help of Egypt, which isn’t surprising, given the link between Hamas and the Muslim Brotherhood. I expect to see a bigger role for Egypt in the Israeli- Palestine peace process in the future. Second, Israel announced their “Iron Dome” rocket defense system successfully stopped the majority of the rockets which were heading towards civilian areas. The Iron Dome has the potential to take one of the few potent weapons militants in Gaza have from them. A successful deployment should reduce Israel’s safety concerns, but it tips the balance of power in the region even further towards Israel - it remains to be seen what impact that will have on the peace process.

Afghanistan

The killing of 16 Afghani civilians by a US Army Sergeant has focused popular anger against the US and NATO. The Taliban announced a suspension of the peace talks in Qatar, and Afghani President Karzai demanded the US confine its troops to base until their departure.

Iran

SWIFT, the Society for World Interbank Financial Telecommunication, announced they would cut Iranian banks out of their system this week to comply with EU sanctions against the country.

Being cut out of SWIFT functionally cuts Iranian banks off from the rest of the world. This is the first time a country has been banned from SWIFT, and will make it very difficult for Iran to transact with other countries or acquire currencies other than its own. The sanctions against Iran were already extremely harsh, this will tighten the vise even more.

Syria

The Syrian opposition suffered both tactical and organizational setbacks this week. The Syrian military routed the opposition from Homs and Idlib, prompting several high-profile members of the Syrian National Council to resign from the group. The resigning members accused the SNC of being opaque, rigid, autocratic, and overly influenced by the Muslim Brotherhood, as well as of not supporting the armed uprisings.

The biggest problem the opposition has had so far is their lack of organization. There have been protests around the country and armed oppositions in various places, but they’ve been fractured, and because of that, they’ve had a very hard time holding territory or creating a more sustained rebellion. The resigning members, which include highly influential opposition leaders, have indicated they will form a new group; hopefully they can accomplish what the SNC hasn’t.

Russia

Citigroup added up all of Putin’s re-election promises and discovered that, for the Russian government to fulfill them all, oil would have to rise to $150 per barrel and stay there.

Obviously if oil hit $150 per barrel (a 25% rise), it would be a drag on the world economy, but it’s not there and it’s not likely to get there anytime soon. Putin made most of the new promises to get people off the streets. If he fails to deliver, it’ll add even more fuel to the opposition next cycle.

North Korea

The North Korean government announced it would launch a satellite to commemorate the 100th birthday of Kim Il-Sung, the founder of North Korea. The announcement flies in the face of the recent agreement with the US, which explicitly forbade missile tests. The North Koreans have often used “satellite launches” to test new missile technology.

Greece

The new Greek bonds generated by last week’s deal began trading this week and are already selling at severely depressed levels. A European Commission report acquired by Reuters found the Greek government would likely have to implement even more austerity measures to meet the 2013 and 2014 goals set for the country by the EC.

All the good money’s on a Greek default: The deficit goals the Greeks need to meet to secure funding to avoid a default are set as a percentage of GDP, which has been falling like a stone, in no small part because of the austerity measures. The upshot now is that most Greek debt is held either by public institutions or the extremely adventurous: the net effect so far of the austerity and bailout deals has been to reduce the contagion from whatever Greece winds up doing as much as possible, so when the Greeks either default or leave the Eurozone, they shouldn’t drag half the world along with them.

Thanks for reading, and my best for the week ahead!

Eric