The Realpolitiker: Global Paradigms

Florida voters bring Gingrich back to earth

2012-02-01T12:33:00.001-08:00

Business Times - 02 Feb 2012

Florida voters bring Gingrich back to earth

Former House speaker's grandiose planetary vision fails to find much of an audience there

By LEON HADAR
WASHINGTON CORRESPONDENT

WELL, it seems that Republicans in Florida have not warmed up to Newt Gingrich's plan to establish an American colony on the moon during the next eight years and turn it into America's 51st state.

The former speaker of the House of Representatives had hoped to exploit the political momentum generated by his earlier victory in the Republican presidential primary in South Carolina, and was trying to woo Floridians who work in the space industry in the state by pledging that 13,000 Americans would be living on the moon by the end of his second term as president. And, as president, he would grant them statehood.

But notwithstanding his grandiose planetary vision, Mr Gingrich was back on earth on Tuesday, after voters denied him victory in the Republican presidential primary in the Sunshine State. Former Massachusetts governor Mitt Romney - who won close to 50 per cent of the vote - displayed renewed confidence that he would be elected as the party's presidential nominee at the convention that will take place in Florida in June.

Mr Gingrich compares himself to Ronald Reagan (he is Reagan's 'political heir', he insists), Margaret Thatcher and Winston Churchill (among others). Mr Gingrich also describes himself as an 'Ideas Man' and relishes in his grandiosity.

'You're right,' Mr Gingrich explained during a recent televised debate with the other Republican presidential candidates. 'I think grandiose thoughts,' he insisted, adding: 'This is a grandiose country of big people doing big things, and we need leadership prepared to take on big projects.'

In addition to his plan for establishing an American moon colony and a space station on Mars, Mr Gingrich, the former chairman of the 'Congressional Space Caucus', has also promoted the idea of placing a large number of mirrors in space that could provide extra light and allow 'farmers in high altitudes to plant their wheat earlier' and could be arranged to 'light metropolitan areas only during particular periods, so there would be darkness late at night for sleeping'.

When it comes to our own planet and the North American continent, Mr Gingrich has proposed a return to the gold standard and the employment of children as school janitors.

He thinks that 'people like me are what stands between us and Auschwitz (the Nazi-era death camp in Poland)'.

Mr Gingrich has bashed his political rivals as ideological fanatics and evil-doers. Hence, he described Mr Romney as a 'Massachusetts moderate'. Now he calls Mr Romney a 'Massachusetts liberal' and a 'vulture capitalist', and an 'anti-immigrants'.

Mr Gingrich says that President Barack Obama exhibits 'Kenyan, anti-colonial behaviour' and was 'outside our comprehension'.

Mr Gingrich argues that an intolerant 'elite' made up of 'secular judges and religious bigots' was trying to promote 'radical Islam over Christianity and Judaism', and he describes homosexuals as 'pagans'.

By 'going nuclear', as some pundits described Mr Gingrich's campaign rhetoric, the former House speaker has been capturing the imagination of some Tea-Party activists and religious fundamentalists in Florida who continue to regard Mr Romney as too moderate and too centrist for their ultra-conservative tastes.

At the same time, Mr Gingrich's pandering to backers of Israel helped him win the financial support of Sheldon Adelson, a billionaire who owns casinos and hotels in Las Vegas and around the world and who is a radical Zionist.

But even if Mr Gingrich comes first in the primaries in some of the southern states where he is popular, it is inconceivable that he would succeed in winning the Republican nomination. If anything, Mr Romney has responded quite effectively to Mr Gingrich by using his organisational power and financial base. Mr Romney launched a series of television commercials aimed at exposing Mr Gingrich as a Washington insider and lobbyist.

Mr Romney's backers include the so-called 'Super-PACs' who can spend without any limits since they are funded by individuals and groups that are not listed as part of the candidate's campaign.

Moreover, the introverted and somewhat low-key Mr Romney has become more aggressive during the recent televised debates. He launched a feisty counter-attack against Mr Gingrich, recalling that the latter was forced to resign by his colleagues following revelations about his unethical conduct, and mocking the plan for a moon colony, during the second televised debate in Florida.

'If I had a business executive come to me and say I want to spend a few hundred billion dollars to put a colony on the moon, I'd say: You're fired,' said Mr Romney, a former business executive.

Indeed, Mr Romney's carpet bombing of Mr Gingrich has demolished him in Florida where the former speaker lost among all the major demographic groups, with the exception of very conservative voters. Mr Gingrich did especially badly among women - 51 per cent of them voted for Mr Romney. Female voters apparently empathised with Mr Gingrich's first two wives.

But Mr Gingrich is a very angry man who feels that he has been unfairly clobbered by Mr Romney and the Republican Party establishment.

Vengeful and relentless in his populist attacks on Mr Romney and the 'elites' in Wall Street and Washington, Mr Gingrich is promising to continue the challenge against the 'Massachusetts moderate' in all the coming primaries and caucuses and until the nominating convention in June.

The continuing civil war among the Republicans - and in particular, Mr Gingrich's vulture-capitalism criticism of Mr Romney - can only play into the hands of Mr Obama and the Democrats who want the American voters to perceive Mr Romney, the former financial executive, as a close ally of the elites in Wall Street and Washington. The Democrats want voters to identify the Republicans as political demagogues with grandiose but silly ideas. At the moment, the Republicans seem very obliging.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

2012-01-30T12:25:00.001-08:00

Business Times - 31 Jan 2012

Economic nationalism is back

This time round, it's bipartisan, with both the Democrats and Republicans standing up to China

By LEON HADAR
WASHINGTON CORRESPONDENT

WE TAKE it for granted that the current political discourse in the US is dominated by the struggle for power between the Democrats and the Republicans, and the ideological clash between the 'liberals' and the 'conservatives' - and their many respective sub-groups and orientations.

But a more traditional way of studying the major battles in American politics is to apply an ideological dichotomy that goes back to the founding of the republic and the great political divide between 'Jeffersonians' and 'Hamiltonians' - which seems to be more relevant than ever these days as the American political and economic systems are going through another historic transformation once again.

The conflict between the Federalists who were led by Alexander Hamilton (who would become the first US secretary of the treasury) and Thomas Jefferson (who would be elected as the third US president) and his anti-Federalists, reflected contrasting philosophical visions and policy agenda about the role of the federal government.

Hamilton, a New Yorker, favoured a strong central government that would help provide order and support for the growth of business and industry. His vision was that of an America as a strong industrial power - with productive enterprises rather than speculation. And he believed that - not unlike Great Britain and other European nations - the US should have a national bank to fund the national debt and should promote an activist industrial policy through selective tariffs, subsidies to targeted industries, and investment in infrastructure.

The Virginian Jefferson, on the other hand, was opposed to a concept of a strong central government and wanted to devolve power to the states ('states' rights') and local and private entities, and promoted a vision of America as a peaceful nation of farmers and small businesses that refrained from pursuing the mercantilist and realpolitik foreign policy of the major European governments. Jefferson's America was one that was ruled by the people as opposed to the educated and the wealthy who would be in charge in Hamilton's America.

So imagine these two Founding Fathers listening to President Barack Obama's State of the Union Address last week, in which he was promoting a message of economic nationalism, promising to rebuild American manufacturing and to fix the country's infrastructure while asserting the right of the US to challenge other nations' unfair trade practices.

And now try to guess which of these two political and intellectual giants - Hamilton or Jefferson - would be applauding a speech in which the president decried that America has become a nation of 'outsourcing, bad debt and phony financial profits' and promised to rebuild 'an economy that's built to last'.

'Our workers are the most productive on Earth,' President Obama said, stressing that 'if the playing field is level, I promise you, America will always win.'

Mr Obama celebrated his decision to use the power of the federal government to bail out Chrysler and General Motors in 2008, noting that the two Detroit car companies are now booming, and pledged to pursue similar government intervention in the economy in other areas.

'It can happen in Cleveland and Pittsburgh and Raleigh,' Mr Obama said, referring to places in the country that once upon a time used to be the symbols of American economic strength, where thousands of workers were employed in flourishing factories that exported their products worldwide. Today, many of these jobs have disappeared as a result of technological changes and globalisation, and are being outsourced to Asia.

'We can't bring every job back that's left our shore,' Mr Obama admitted, but stressed that the US has 'a huge opportunity, at this moment, to bring manufacturing back'. 'But we have to seize it,' he added, laying out concrete plans for ending tax breaks for US corporations that move offshore and for imposing a tax on their overseas profits, and at the same time, cutting taxes on domestic US manufacturers.

There is no doubt that the economic nationalist Hamilton who had laid the foundations for the modern American industrial policy would have been smiling during President Obama's speech. Mr Obama seemed to compare America to a military unit that can marshal its resources to win the war.

Mr Obama did not reject the ideals of individualism and free markets that were seen by Jefferson as embodying the American spirit. But he argued that at a time when the structure of the post-1945 American economy is crumbling and the global status of the US is being challenged, there is a need to revive the Hamiltonian approach - under which Americans are brought together as one people where a more activist federal government provides incentives and support through initiatives to promote manufacturing, clean energy, infrastructure, education and research.

And as part of creating the basis for a functioning national community, the federal government would need to narrow the widening social-economic gaps and bring more fairness into the system under which every American would have a 'fair shot' at achieving his or her dreams. The tax code would demand more of the wealthiest Americans, not only as part of an effort to achieve fairness but also in order to provide for more revenues to finance government 'investments' in the common good. Hamilton would have approved.

In fact, Hamilton may have been winking not only at Mr Obama's speech but also during the debates between the Republican presidential candidates. Former Pennsylvania senator Rick Santorum called for eliminating taxes on domestic American manufacturers and taking steps to encourage American businesses to relocate their factories back to the US, while former Massachusetts governor Mitt Romney portrayed the emerging Chinese economy as a major threat to long-term US economic security and urged the imposition of retaliatory tariffs on Chinese imports if the Chinese continued to hold down the value of its currency.

In a way, even the Republican presidential candidates who continue to preach the gospel of free markets and denounce government intervention in the economy have come to the conclusion that in the aftermath of the financial meltdown and the ensuing Great Recession, it is becoming more difficult to win the votes of blue-collar workers and economically distressed members of the middle class by continuing to promote laissez faire economics at home and free trade policies.

These are the kind of policies that are seen by more and more Americans as contributing to the mess in Wall Street, the economic 'squeeze' of the middle class, the shrinking of the manufacturing industry, and the outsourcing of American jobs to China and elsewhere.

Both President Obama and his Republican challengers recognise that the US is facing similar challenges to the ones that it confronted at the end of the 19th century and early 20th century when the rise of manufacturing, the expansion of the large urban centres, growing social-economic inequality and the changing dynamics of the global economy forced major changes in national economic policies and led eventually to the Progressive Era, to the New Deal and the evolution of the welfare state.

Get out of the way

President Obama believes that the federal government needs to maintain and revitalise the welfare state while trying to help create a new industrial base. The Republicans, on the other hand, seem to be playing defence in response to the president's Hamiltonian strategy by insisting that private businesses should and could play the leading role in the process, and the best that the government can do is to get out of their way.

Both sides have yet to come up with a coherent strategy to achieve what seems to be the most perplexing issue: How to encourage Apple and other advanced high-tech industries to continue thriving while creating more American jobs at home, as opposed to creating more jobs in China.

But there is one area on which the Democrats and the Republicans seem to agree, and that is the need to take a more aggressive approach towards China and other emerging economies that are seen as not playing by the rules of global free trade. In particular, the White House - which has been promoting the idea of creating new 'green' industries - regards China's state subsidies to solar and wind power companies as a major threat to its plans.

Hence, President Obama's proposal to establish a trade enforcement unit to investigate foreign violation of trade rules and to propose legal actions against the violators read: China.

So expect both President Obama and his Republican challenger to be campaigning on an aggressive economic nationalist platform this year.

Democrats and Republicans have yet to provide a lot of details on how they plan to create new jobs in America. But they seem to think that by standing up to China, they would convince American voters that they do have a plan.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Obama vs. the Hawks on Iran

2012-01-30T09:11:00.000-08:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Jan 30, 2012): http://nationalinterest.org/commentary/obama-vs-the-hawks-iran-6419
Obama vs. the Hawks on Iran

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January 30, 2012
Leon Hadar [2]
The mainstream media is again reporting the conventional wisdom: A nuclear Iran would pose a direct threat to U.S. security interests and an “existential threat” to Israel, and anyone who opposes bombing Iran is an “appeaser” and “anti-Israeli.”

This dominant narrative is also reinforcecd by the cast of a popular reality-television show, The Republican Presidential Debate. Not an episode goes by without Mitt Romney, Newt Gingrich and Rick Santorum bashing President Obama as an enabler of a new Holocaust with Ahmadinejad as Hitler.

But Obama has allowed his own policy opaqueness to enable the let’s-bomb-Iran crowd, who echo the lines written by the Likud government, to fill the void and dominate the discourse.

Obama has asserted that a nuclear Iran is “unacceptable” and insisted that “no option is off the table” in stopping Iran's quest for the bomb. But while Obama is continuing to publicly pursue a peaceful diplomatic resolution of the crisis, his approval of legislation imposing tough economic sanctions against Iran may be seen as the first step toward a military confrontation.

At the same time, the Obama administration has refrained from explaining how it would respond to an Israeli strike against Iran’s nuclear facilities. Defense Secretary Leon Panetta said last year that he would warn the Israelis of the global economic consequences of a military strike on Iran. But before he was vice president in 2006, Joe Biden said that Israel “can determine for itself—it's a sovereign nation—what's in their interest and what they decide to do relative to Iran and anyone else.”

As one tries to decipher these conflicting signals sent by the Obama administration, it is difficult to deconstruct its Iran policy. Will the administration give Israel a green light to attack Iran, or has it vetoed such a move? Is the White House hoping to create an environment conducive to U.S. military action, or is it applying diplomatic brinkmanship that could bring about a peaceful resolution?

This kind of policy opaqueness and injecting a lot of “noise” into the process can provide a strategic advantage over foreign adversaries. From that perspective, what is perceived as a sense of confusion in the Obama administration may be a sort of psychological warfare against Iran (“We cannot control Israel”) and diplomatic pressure on China and Russia (“Support sanctions or Israel will strike”).

In any case, it doesn’t make a lot of sense for Washington to advertise its intentions to the Iranians in advance. Obama remains silent on what exactly he will do if Tehran fails to terminate its nuclear program, inducing the Iranians to make a deal.

But Obama’s lack of transparency has a major downside. The White House believes that it is writing the script for this diplomatic production. But some of the main actors may not be willing to read the lines assigned to them and could try to write a different ending.

Neither the current Israeli government nor the Republican presidential candidate will support a deal with Iran that would be acceptable to the regime there. So much for the proposal by Turkey and Brazil that Iran send uranium abroad for enrichment or a step-by-step process advanced by Russia that calls for confidence-building and transparency measures by Tehran. Any sign that Obama was even considering these or similar ideas as a basis for negotiations with Iran would ignite a storm of protest by Benjamin Netanyahu and his Republican pals.

But Obama could take advantage of the debate in Israel over the cost-effectiveness of a military confrontation with Iran: leading security figures there argue a war with Iran could lead to many casualties, devastate the economy and only postpone the development of an Iranian bomb by a year or two, a view that is shared by many respected U.S. officials and analysts.

Obama needs to accentuate these arguments and stress his commitment to finding a peaceful resolution to the crisis, one that would secure both U.S. and Israeli interests. Such an approach would probably anger Netanyahu and Romney but would secure support from those Israelis and Americans who are opposed to a military strike against Iran.

At a time when many Americans, including Republican-primary voters, have begun to question the wisdom of never-ending and costly military intervention in the Middle East, it is doubtful that a Republican will win votes by committing to another war there. If he shares these voters’ concerns, Obama must demonstrate it—in both words and action.

Leon Hadar, senior analyst at Wikistrat, a geostrategic consulting group, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).

Image: Barack Obama [3]

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Source URL (retrieved on Jan 30, 2012): http://nationalinterest.org/commentary/obama-vs-the-hawks-iran-6419
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[2] http://nationalinterest.org/profile/leon-hadar
[3] http://www.flickr.com/photos/barackobamadotcom/

US is back as a global power, says Obama

2012-01-25T12:43:00.000-08:00

Business Times - 26 Jan 2012

US is back as a global power, says Obama

He also calls on wealthy Americans like Romney to pay more in taxes

By LEON HADAR
WASHINGTON CORRESPONDENT

ON THE same day that leading Republican presidential candidate Mitt Romney released his tax returns which showed that he paid less in taxes than top wage earners, US President Barack Obama launched his populist re-election campaign during his State of the Union Address.

Among other things, President Obama called on wealthy Americans like Mr Romney to pay more in taxes and pledged to come to the aid of many middle-class Americans who, unlike Mr Romney, live from pay cheque to pay cheque.

Mr Romney's tax returns showed he paid a lower effective tax rate than wage-earners on his US$42.5 million (in combined 2010 and 2011) income from investment profits, dividends, and interest.

President Obama's nationally televised address before Congress that marked the start of his campaign highlighted a vision of government that invests in strengthening the manufacturing base, reforming education, and creating new sources of energy and that places at the centre of its policy the plight of America's workers and middle-classes as it tries to give every American a 'fair shot'.

Indeed, the agenda that President Obama promoted in his speech drew a sharp contrast with the free market policies that are going to be central to the vision of the Republican presidential candidate.

'When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich,' President Obama said. 'It's because they understand that when I get tax breaks I don't need and the country can't afford, it either adds to the deficit or somebody else has to make up the difference.'

Unlike his three previous national addresses before Congress that had placed an emphasis on bipartisanship and cooperation with the Republicans, this time, President Obama tried to dramatise his ideological and policy differences with the Republicans.

The Republicans have used their control of the House of Representatives to sabotage many of the White House's initiatives.

If, as it is still widely expected, former business executive Mr Romney, whose estimated net worth is close to a quarter of a billion US dollars is nominated as the Republican presidential candidate, President Obama would be facing a rival who embodies a pro-business orientation not only in terms of his conservative political ideology but also in his background.

Mr Romney is one of the wealthiest Americans ever to run for the White House. More significantly, some of his wealth is held in the Cayman Islands and other foreign tax havens. Mr Romney, as an executive in the unpopular financial industry, made a fortune restructuring ailing companies and in the process laying off thousands of American workers.

The US tax system favours income from investment over income from wages. That explains why Mr Romney will pay around 15 per cent in taxes on his income. An American top wage earner could pay 35 per cent on his income.

That the US tax code is helping the rich get richer and help widen the social-economic gaps in this country - and that Republicans are championing policies that benefit Wall Street and the wealthiest Americans like Mr Romney - looks to be one of the major themes of President Obama's campaign as he tries to get re-elected for a second term.

Mr Romney and other Republicans have accused President Obama and the Democrats of fomenting 'class warfare'. They argue that the tax rates on business owners should remain low so as to provide incentives for these 'job creators' to create new jobs.

But the rise of the Occupy Wall Street movement has helped draw public attention to the unfairness of the economic system and President Obama is clearly hoping to highlight that by inviting Debbie Bosanek, the secretary of billionaire Warren Buffett to attend his address on Tuesday, sitting next to First Lady Michelle Obama in the chamber of the House of Representatives.

Berkshire Hathaway chairman Mr Buffett noted that his secretary's tax rate was higher than his, leading President Obama to promote the so-called Buffett Rule, requiring a minimum tax rate for Americans making more than US$1 million a year.

President Obama also used his address to pre-empt the economic nationalism of Mr Romney and the other Republican presidential candidates by proposing the establishment of a new 'trade enforcement unit' that would investigate unfair trade practices pursued by China and other economies and introduce measures to counter them.

In a way, President Obama seemed to be continuing to develop the narrative he had sketched earlier this year when he painted himself as the political heir to Teddy Roosevelt, one of the 20th century's most celebrated progressive American presidents who, very much like President Obama, tried to reform an American economy facing major global challenges. He also stood up to an out-of-control Wall Street and built the foundations of a viable welfare state that would protect the interest of the middle-classes.

President Obama hopes to follow in Teddy Roosevelt's footsteps by insisting as he did during his speech that he would oppose any efforts to return to the economic policies pursued by Republican administrations that brought about the 2008 financial crisis and to demolish the foundations of the existing welfare state.

And President Obama also used his address to respond to the accusations by Mr Romney and the other leading Republican presidential candidates that he has weakened US global strategic position. President Obama highlighted several of his foreign-policy achievements, including the mission that killed Osama bin Laden and withdrawal of all US troops from Iraq.

'America is back' as a world power, President Obama said.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Republican race gets wide open and more divisive

2012-01-24T12:06:00.000-08:00

Business Times - 25 Jan 2012

Republican race gets wide open and more divisive

It's possible the nominee to challenge Obama won't be decided till Republican convention

By LEON HADAR
WASHINGTON CORRESPONDENT

FORMER Massachusetts governor Mitt Romney has lost his earlier designation as his party's presumptive presidential nominee after his electoral defeat in the Republican presidential primary in South Carolina on Saturday.

His margin of defeat of about 14 per cent against Newt Gingrich, the former speaker of the House of Representatives, was quite devastating for him and came at the end of a week during which the former business executive seemed to be losing his political momentum.

First came the news that after a recount of the votes in the first Republican presidential contest this year, the caucuses in Iowa, Republican officials reversed their earlier estimate - that Mr Romney had come in first - and announced that former Pennsylvania senator Rick Santorum had won that race.

Then came the decision by Texas Governor Rick Perry and his endorsement of Mr Gingrich.

Republicans were expecting the social and cultural conservative Perry to do well among the rank and file of the party, especially in southern states such as South Carolina. But Mr Perry's poor performance in the televised debates disappointed many conservative Republicans - including the large contingency of Tea Party members. They also suspect Mr Romney of being a closet liberal.

These conservative Republicans divided their vote between Mr Santorum, the fiery crusader against abortion and gay rights; the veteran libertarian activist Ron Paul, a Congressman from Texas; and Mr Gingrich.

For a while, it seemed that Mr Santorum who came in second place in New Hampshire would be the main beneficiary of the anti-Romney vote. After all, it did not seem likely that the 67-year old thrice married serial adulterer Gingrich - his second wife told reporters last week that Mr Gingrich had suggested that they have an 'open marriage' while continuing an affair with the woman who would eventually become his third wife - would win the hearts and minds of the conservative Christian voters in the Bible Belt in the South.

But the rotund Mr Gingrich defied these low expectations. His oratorical skills and his savage attacks against the 'elite media' and 'secular liberals', spiced with racist innuendos aimed at President Barack Obama - calling him 'the greatest food-stamp president in American history' who exhibits 'anti-American' tendencies - appealed to many conservative Republicans in this former slave state.

According to opinion polls, close to a third of all Republican voters believe that President Obama is a Muslim.

In fact, Mr Gingrich turned around the accusations of adultery against him and exploited the interview with his ex-wife as an opportunity to blast the mainstream media that Republicans love to hate.

Moreover, both Mr Gingrich and Mr Santorum have continued to attack Mr Romney of not being a 'real' conservative. He has changed his earlier views on abortion and gay rights - he had supported both in the past - and, as the governor of Massachusetts, crafted government-backed health care insurance plan that served as a model for the one embraced by the president (Obamacare) that Republicans loath.

And then there have been the accusations by Mr Gingrich and Mr Santorum that working in Bain Capital, a company that helped restructure and refinance faltering businesses, Mr Romney engaged in so-called 'vulture capitalism' - making loads of money on the backs of laid off American workers.

Indeed, at a time when more and more Americans are becoming concerned over the widening economic gap in the US, these attacks against Mr Romney - a millionaire and a son of a billionaire and by definition, a member of the wealthiest one per cent of Americans - have clearly been hurting the former business executive in states like South Carolina where the unemployment rate is even higher than the (high) average.

Mr Romney has rejected the criticism of his work at Bain Capital and accused his Republican and Democratic attackers of engaging in the 'politics of envy' and in 'class welfare'. But Mr Romney's resistance to releasing his tax returns and reports that he maintains banking accounts in the Cayman Islands - coupled with comments that reflect a lack of concern about the plight of the poor - have raised concerns that he may be 'out of touch' with the economically distressed majority of Americans.

So it is not surprising that even members of the Republican Party's establishment who tend to feel comfortable with Mr Romney's centrist positions are getting worried that their favourite candidate would be vulnerable to the kind of populist us-against-them that President Obama is planning to launch against the Republicans.

The Democratic message is expected to depict the Republicans generally and their presidential candidate as political allies of Big Business who want to reduce taxes for their buddies in Wall Street while slashing social-economic programmes that help blue collar workers and the middle class.

Mr Romney's second place in South Carolina does not mean that he is not going to become the presidential nominee. Nor does Mr Gingrich's victory solidify his position as a front runner. The Republican bosses may be less excited about Mr Romney but they have even less confidence in the ability of the temperamental Mr Gingrich to win the votes of centrist independent voters and may conclude that they have no choice but to mobilise all organisational and financial resources behind the more moderate and telegenic Mr Romney.

In addition, Mr Santorum and Mr Paul are not planning to withdraw from the race anytime soon and will continue to compete with Mr Gingrich over the conservative and the Tea Party vote.

While Mr Romney may have an organisational advantage and the support of the Republican establishment in Florida where the next primary will take place, Mr Gingrich is benefiting from a growing political momentum and Republican sentiment in this southern state where the Republican convention which selects the presidential nominee will take place in the summer.

It is not inconceivable that Mr Romney, Mr Gingrich, Mr Santorum and Mr Paul will each arrive to the convention with their delegates and that the choice of the party's presidential nominee will be made there.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Romney faces new mood in his party

2012-01-17T12:42:00.001-08:00

Business Times - 18 Jan 2012

Romney faces new mood in his party

Republicans seem to be more attracted to his rivals' economic and foreign policy agenda

By LEON HADAR
WASHINGTON CORRESPONDENT

THE leading presidential candidates of the political party are blasting Wall Street private equity executives as 'vultures' who are destroying the livelihood of economically distressed blue-collar workers. 'They're just vultures,' one of this party's presidential aspirants declared recently, as he was describing what those greedy venture capitalists do for living. 'They're vultures that are sitting out there on the tree limb waiting for the company to get sick, and then they swoop in, they eat the carcass, they leave with that and they save the skeleton,' he concluded. His remarks would have been applauded even by Comrade Lenin.

And in the presidential primary of the above-mentioned political party, a leading anti-war activist who has been calling for the withdrawal of US troops from the Middle East, East Asia and Europe, and for getting rid of the Central Intelligence Agency - he even challenged the legality of the assassination of Osama bin Laden - ended up winning 23 per cent of the vote.

Does that mean that the Democratic Party is coming under the influence of hardcore Marxists and being taken over by 'anti-American appeasers' and 'secret Muslims'? Is American capitalism being threatened by attacks of European-style socialists and left-wing peaceniks?

Actually, this attack on Wall Street financiers has been led by Republican presidential contenders. Indeed, the attack against those capitalist 'vultures' was made by Comrade Rick Perry, the so-called 'conservative' Republican Governor of Texas, of all states, who has joined two other well-known socialists and presidential candidates - former speaker of the House of Representatives Newt Gingrich and former Pennsylvania senator Rick Santorum - in taking a shot at their main rival for their party's presidential nomination, former Bain Capital executive and multimillionaire Mitt Romney.

As the Republicans prepare for the next primary vote in South Carolina, a state with a large unemployment rate and where many blue-collar Republican voters have been devastated by the Great Recession, Mr Perry, Mr Gingrich and Mr Santorum have been depicting Mr Romney as a cut-throat capitalist who made his money in restructuring failed companies and in the process laying off thousands of workers. A group allied with Mr Gingrich has produced an anti-Romney television commercial in which some of the laid-off workers blame Bain Capital and Mr Romney for their economic misfortunes.

Mr Romney and his political supporters and financial backers counter that criticism by arguing that capitalism is all about 'creative destruction' under which some old jobs are lost while new ones are created, and at the end of the day the entire economy grows to the benefit of almost everyone. But while this kind of model of free-market capitalism continues to be espoused by well-to-do Americans and business executives who defend Mr Romney, much of the rank and file of the party, that does not reside in the wealthy suburbs, has been very critical of the government bailout of Wall Street, and may have difficulties identifying with, and voting for, the super-rich Mr Romney.

These Republicans seem to be more attracted to the populist and economic nationalist agenda that Mr Perry and Mr Gingrich are advancing. At the same time, many of the young and independent voters Republicans are hoping to win over in November reject the neo-conservative foreign policy that Mr Romney and the Republican Party establishment have embraced.

Indeed, it was the anti-war libertarian and the Congressman from Texas, Ron Paul, who came in second and won 23 per cent of the vote in the recent New Hampshire Republican primary, while former Utah governor Jon Huntsman, who has now pulled out of the nomination race, received 17 per cent of the vote by calling for a complete withdrawal from Afghanistan.

So if you consider that Mr Huntsman came in third in New Hampshire, winning 17 per cent of the vote, and you combine that number with the 23 per cent that Mr Paul mustered there, it is possible to conclude that 40 per cent of the Republican voters in New Hampshire rejected president George W Bush's global military adventures.

Moreover, the three most radical neocons in the race - Mr Gingrich, Mr Santorum and Mr Perry - who cannot wait to start bombing Iran and in the case of Mr Perry, to re-invade Iraq - got altogether 20 per cent of the vote in New Hampshire. The libertarian Mr Paul had been regarded as 'unelectable' and his critics argue that his anti-interventionist foreign policy positions are 'outside the mainstream' while they continue to take seriously the push for war with Iran by Mr Gingrich and Mr Santorum (not to mention their support for the bizarre anti-syariah campaign in this country).

It is true that it may be too early to predict whether Mr Paul would do as well (and perhaps even better) in the primary in South Carolina and other states in the South and Midwest - where Republicans tend to espouse more nationalist positions - as he did in New Hampshire and Iowa.

And the fact is that Mr Romney - who did win in Iowa and New Hampshire - continues to adhere to foreign policy positions that are very similar to those of Mr Bush and former presidential candidate John McCain. And he is widely expected to win the Republican primary race.

In fact, Mr Romney has surrounded himself with national security advisers who belong to the neo-conservative wing of the Republican Party and the conservative movement and continues to accuse President Barack Obama - under whom Osama was killed, the number of US troops in Afghanistan have increased and an effort to raise the diplomatic status of the Palestinians at the United Nation was averted - of 'appeasement', of gutting the US military and of abandoning Israel.

But Mr Romney, whose main strength has been his ability to adjust his earlier more moderate political views on social-cultural issues - such as abortion or gay rights - to the prevailing ultra-conservative views of the Republican establishment, will now have to deal with another changing political reality: The neoconservative strategy of maintaining American global hegemony has ceased to be the dominant view among ordinary Republican voters.

At the minimum, there is going to be a serious and heated debate among Republicans about the direction of US foreign policy in the coming years. Indeed, many conservatives have concluded that the notion of using the power of the US government to do 'regime change' and 'nation building' around the world runs very much contrary to conservative values that highlight scepticism about the ability of government to promote political and social change - whether it is in Dubuque, Iowa or in Baghdad, Iraq.

If Mr Romney wants to ensure that the supporters of Mr Paul and Mr Huntsman - that include many young voters and the kind of middle-class professionals that constitute the critical bloc of 'independent voters' - vote for him, he would need to respond to their opposition to military adventurism. But it is not clear that Mr Romney would be ready to re-invent himself once again by shedding off his neo-conservative position as well as his free-market fundamentalism. Or that his party's establishment would allow him to do so.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Are GOP squabbles helping Obama?

2012-01-11T12:38:00.001-08:00

Business Times - 12 Jan 2012

Are GOP squabbles helping Obama?

Republican candidates are fighting on social-cultural issues when the economy is on top of most American voters' agenda

By LEON HADAR
WASHINGTON CORRESPONDENT

WHILE the Republican presidential candidates in the United States have been blasting one another, things seem to be looking better than expected for President Barack Obama in recent days.

Last week's jobs report indicated that unemployment had dropped to 8.5 per cent in December, its lowest in three years. Nothing to celebrate about, but then any sign of improvement in the labour market may hint that the economic recovery is gaining momentum, raising the chances Mr Obama could be re-elected in November despite an expected strong challenge from the Republican candidate.

More importantly, the results of Tuesday's Republican presidential primary in New Hampshire suggest that it could take a long time for the party to select the man who will face Mr Obama.

There was almost no doubt that Mitt Romney, who had served as the governor of Massachusetts, would win the primary in the neighbouring state of New Hampshire. And he did.

Yet the libertarian and anti-war contender, Ron Paul, finished a close second in the primary, followed by former Utah governor Jon Huntsman. The two, as well as former Speaker of the House Newt Gingrich and former Pennsylvania senator Rick Santorum are not giving up and will show up for the coming primary in South Carolina and continue to try to deny Mr Romney his big victory.

All this suggests that the Republican race is going to remain close and for a long time.

Of course, Mr Romney and the other Republican presidential candidates dismissed the notion that the new jobs report is a sign of better economic times to come. It is true that the signs that the unemployment rate is falling could be misleading, and may only underscore the fact that many workers, discouraged by the lack of job opportunities, have stopped looking for jobs altogether.

Therefore, what the American economy is experiencing may be a shrinking labour force and not necessarily an increase in the number of jobs. In any case, the unemployment rate has traditionally been a lagging variable of economic growth.

But against the backdrop of more good economic news - or, at least, of less bad economic news - the improving job numbers provide a psychological boost for the economy as well as for Mr Obama's electoral fortunes.

And No-Drama Obama who has been criticised for his lack of political feistiness demonstrated last week that he is more than ready to pick up a fight with his Republican rivals when he announced that he would make a 'recess appointment' - meaning that he would not wait for Congress to approve it - of Richard Cordray to head the Consumer Financial Protection Bureau.

The Democratic White House occupant is hoping that appointment of a consumer protection chief, which has been opposed by Congressional Republicans while enjoying wide support among Americans, will help his re-election strategy.

It gives Mr Obama a chance to bash the 'do nothing' Republican-controlled Congress for failing to support his effort to protect the interests of economically distressed middle class and while, at the same time, going out of their way to propose more tax cuts for wealthy Americans.

At times it seems as though the Republicans in Congress as well as the ones who are hoping to challenge Mr Obama are doing their best to provide valuable assistance to the incumbent.

If anything, much of what has been taking place in the long and winding Republican presidential nomination process in recent months - including a score of televised debates among the candidates - has been dominated by numerous gaffes and nasty exchanges. And then there are the never-ending reports about ethical misconduct and sex scandals that have engulfed some of them and which have turned the party's White House hopefuls into the butt of jokes of television comedians.

Moreover, the continuing political infighting among the contenders during the Republican presidential campaign also helped expose the extent to which they seem to be so out of touch with the problems and aspirations of most Americans, and more particularly with independent voters - white middle class professionals - who are expected to determine the outcome of the presidential race.

Bizarre issues

First, there is the continuing preoccupation, if not obsession, of some of the leading candidates - including Mr Santorum, Mr Gingrich and Texas Governor Rick Perry - with social-cultural issues, such as abortion, gay rights and the theory of evolution (which they question).

In fact, one of the bizarre issues that was raised during the primary election campaign in New Hampshire was Mr Santorum's suggestion that states should have the right to make contraception and other forms of birth control illegal.

And with the exception of Mr Huntsman (who also served as US ambassador to China and Singapore), all the Republican candidates (including former Pizza business executive Herman Cain and Representative Michelle Bachmann of Minnesota who have dropped out of the race) want to outlaw abortion and deny homosexuals the right to serve in the military and get married.

Mr Santorum, Mr Perry, Mr Gingrich and Mr Paul of Texas have supported of the so-called 'personhood amendment' that would declare life beginning at fertilisation. And together with Mr Romney - one of the more moderate figures in the race - the candidates reject the current scientific consensus over climate change.

While these radical positions on social-cultural problems and the environment may help the candidates win support among religious activists, especially in the former slave-owning 'Bible Belt' states in the south, it could backfire against them when it comes to the more culturally tolerant independent voters around the country, and especially on the East and West Coasts.

And at a time when the economy is on the top of the agenda of most Americans voters, the attention that the Republican candidates seem to be paying to such issues as gay rights and abortion is probably going to antagonise many voters who had to watch the Republican candidates debating whether a state should be banning condoms or not.

It is economy that could force the Republican candidates to be left behind the political curve at a time when voters, perhaps under the impact of the Occupy Wall Street movement, seem to be more and more receptive to concerns over economic and social inequality favoured by the Democrats. Yet Mr Romney, the former financial business executive, and the other candidates have been accusing Mr Obama of trying to establish a European-style social-welfare state. They demand that he slash spending on social-economic programme and lower taxes on the rich aka 'job creators'.

Romney's problems

Indeed, Mr Paul wants to abolish many of the existing government agencies, including the US Federal Reserve, as well as the income tax, while Mr Santorum, who tends to emphasise his blue-collar upbringing, is promoting an economic nationalist agenda and, like Mr Romney, is advocating punishing China for its alleged unfair trade practices.

Mr Romney's problems go beyond his message and have to do with his personality and professional background. The son of a former car company executive and former governor, Mr Romney made millions as an executive with Bain Capital, a company that was involved in the financial restructuring of large American businesses, a process that included the laying off of hundreds of workers.

That even the pro-business Mr Gingrich and Mr Santorum have been depicting Mr Romney as someone who has made his money by firing people, only demonstrates the extent to which Mr Romney is vulnerable on an issue. Yet he is trying to make his extensive experience in the business sector into the centrepiece of his campaign. And Mr Romney did not help himself by remarking in one of his campaign appearances that: 'I like being able to fire people'.

The candidate who could probably do the best among independent voters and win support in major 'blue' Democratic inclined states is Mr Huntsman who has emerged as the most moderate and pragmatic candidate in the race. He has refrained from pandering to the religious right and has placed a lot of emphasis on his diplomatic experience and his support for a more realist foreign policy approach.

That may have helped him in the primary 'purple' state of New Hampshire that tends to swing between support for Republican and Democratic candidates but is certainly not going to lead him towards victories in the Republican votes in the South, including the next primary in South Carolina.

The best-case-scenario from a Republican perspective is that Mr Romney will get nominated as presidential candidate ASAP and that the other candidates and the rest of the party unite behind him and prepare for the big fight with Mr Obama and the Democrats. If opinion polls are any guide, that is all they have to do. But will they?

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Another War that nobody wants

2012-01-09T12:24:00.001-08:00

Business Times - 10 Jan 2012

Another war that nobody wants

But things can go wrong, and unexpected provocations and miscalculations may lead to West's confrontation with Iran

By LEON HADAR
WASHINGTON CORRESPONDENT

REPORTS that members of the European Union (EU) were planning to impose an embargo on Iranian oil as part of a US-led strategy to force Teheran to end its alleged nuclear military programme should not have come as a major surprise. Iran has been developing surface-to-surface missiles with a maximum range of 2,000km, that equipped with nuclear weapons could put France and its European partners - as well as Israel and US bases in the Middle East - within its range.

Or to put it differently, if Iran with nukes is indeed a strategic threat, it is the Europeans more than the Americans who should be worried about it.

Some Europeans were hoping to pursue once again their all-too-familiar approach of free riding on US military power - counting on the United States and/or Israel to attack Iranian nuclear facilities (Win I for Europe) while allowing European nations that depend heavily on Iranian oil to continue doing business with the Islamic Republic (Win II for Europe). They could have then distanced themselves from the American and/or Israeli action while facing no disruption in the flow of Iranian oil into their economies (Win III for Europe).

But as the Obama administration has already demonstrated in Libya, with the US military overstretched (hence, the plans to shrink it) and the American fiscal house in a mess (while the Europeans continue to maintain their expensive welfare programmes), the Americans were not going to allow the Europeans to do more free riding on their military power in the Middle East - which is (and that includes Iran) in Europe's strategic backyard.

Hence, the Obama administration has made it clear that it would not launch a unilateral military strike against Iran and would instead pursue a 'graduated' strategy of slowly escalating economic and military pressure on Iran. But that would require a unified Western front for it to succeed, since any proposed sanctions would not bite Iran without EU participation.

The expected EU decision to ban Iranian oil imports comes after President Barack Obama signed into law last month a measure (included in the Defense Bill) targeting Iran's central bank and financial sector following similar steps against Iran's financial institutions that the British had taken last November (in retaliation for demonstrators' storming of the British embassy in Teheran).

The new measures signed by Mr Obama in December would punish foreign firms that continue dealing with Iran's central bank to facilitate oil transactions by imposing restrictions on their access to the American economy and its financial sector.

But it would take some time for the US-EU moves to go into effect. The southern European countries that are heavily dependent on Iranian oil import (and are also in the midst of a devastating financial crisis) will probably resist the planned EU ban.

Moreover, Turkey and Japan have already requested waivers from the US financial sanctions against Iran (and Mr Obama has the authority to grant them), while China and Russia, two leading trade partners of Iran, could circumvent the sanctions, by shifting to barter deals with Teheran.

Feeling the heat

It is obvious that the Iranian economy has taken a hit in the form of rising food prices and a dramatic drop in the value of the Iranian currency as a result of the sanctions imposed on it by the US and the United Nations in recent years. So the new sanctions that would target Iranian oil exports on which its economy is dependent could have the effect of forcing it to the brink of bankruptcy.

But it is not clear that these Western steps are going to bring about the desired changes in Iranian policy. If anything, against the backdrop of the Iranian parliamentary elections in March and a growing split inside the leadership - pitting President Mahmoud Ahmadinejad and his political allies against even more conservative clerical groups - policymakers in Teheran are under pressure to project diplomatic and military toughness vis-Ã -vis Washington and its partners. That explains Teheran's threats to stop the flow of oil through the Strait of Hormuz if sanctions were imposed on its oil exports. It also threatens to stop US warships crossing this strategically important strait.

The West has cheered the emergence of the anti-clerical and more liberal Green Movement in Iran. But Iran's clerics and its notorious Revolutionary Guards could exploit the confrontation with the US to mobilise public support by stirring up nationalist sentiments.

The set of financial sanctions imposed on Iran by the US in September 2006, and that were integrated into a UN Security Council resolution in March 2008, have targeted Iran's elites and highlighted the growing isolation of the country. It also allowed the Obama administration to demonstrate that its non-military strategy on Iran was working while insisting the military option world 'remain on the table'.

White House officials argue that a war with Iran would not be cost-effective in terms of securing long-term US interests. A military strike against Iran's nuclear facilities could perhaps slow down Iran's drive to build nuclear weapons by a year or so. But it could also ignite an all-out Middle Eastern war involving Israel and the Hizbollah (Iran's allies in Lebanon) and lead to a major rise in world energy prices that could bring the US economic recovery to a halt.

At the same time, the Obama administration is facing enormous pressure from the Israeli government that has threatened to use military force against Iran if intelligence reports indicate that the Iranians are close to manufacturing a nuclear bomb. Interestingly enough, leading Israeli national security figures have echoed the American view by arguing that a war with Iran would result in many casualties while failing to end its nuclear programme.

Playing into the hands of Israeli and American supporters of the military option was a report issued earlier in the year, the Vienna-based International Atomic Energy Agency that expressed its concerns that Iran may be on the threshold of making a nuclear warhead small enough to be put on top of a ballistic missile.

Republican lawmakers and the leading presidential candidates of the party - and their neoconservative allies in the media and the think tanks - have accused the Obama administration of failing to force the Iranians to end their nuclear programme and have urged that Washington take immediate military action - or at least give Israel a green light to do the job.

Saddam-era scenario

These let's-bomb-Iran crowd consists of the same politicians and pundits that not so long ago were warning that Saddam Hussein's Iraq had weapons of mass destruction and that the world-as-we-know-it would come to an end unless the US invaded Iraq.

Recent reports suggest that the Israelis have agreed to refrain from taking military action against Iran while the Obama administration continues to use diplomatic means and widen the anti-Iran international coalition to pressure the clerics in Teheran to change course. American and Israeli officials have apparently drawn a set of 'red lines' that would determine if and when a use of a military option against Iran becomes acceptable to both sides.

Mr Obama and his diplomatic and national security aides are confident that they have a relatively long window of opportunity - at least until after this year's presidential and Congressional elections - in pursuing their diplomatic option. They believe that the collapse of the Assad regime in Damascus is imminent and this has deprived Iran of a central regional partner, making it much more difficult for the Iranians to provide support for Hizbollah if war breaks out with Israel. At the same time, the withdrawal of US military from Iraq makes it unlikely that American troops there would be threatened by Iranian retaliation in case of a war with Iran.

These developments coupled with the more assertive anti-Iran position of Saudi Arabia and its Gulf allies (that pledged to increase oil exports to the West and China if tighter sanctions on Iran's oil exports go into effect) may have weakened the diplomatic bargaining power of Iran and putting may be more pressure on Teheran to reach a compromise of sorts with the US and its European allies.

Turkey's role

Turkey, which notwithstanding some of the recent tensions with Washington and Paris - not to mention Israel - remains a Nato member and a key US ally, is emerging as a leading Middle Eastern power that is counter-balancing Iran and certainly does not want to see Teheran with nuclear arms.

But it also wants to avert a military confrontation between the US and Iran and could play a major role in trying to facilitate a diplomatic deal under which Iran could agree to put its nuclear programme on hold in exchange for enhanced diplomatic and economic ties with the West.

Moreover, notwithstanding the heated rhetoric coming out of Teheran, its leaders are worried about its growing diplomatic and economic isolation and the disastrous impact that a war with the US could have on the ability of the regime to continue maintaining its power in the long run.

Similarly, there is very little support for a war with Iran in the Obama administration which recognises that such a course could draw the US into a new costly military quagmire in the Middle East. And considering that both on Iraq (over the issue of maintaining US military presence there) and on Afghanistan (over the issue of changing the timeline for withdrawing troops) Mr Obama has been able to resist the pressure from the political right, it is not inconceivable that he could continue pursuing his graduated approach on Iran and counter the calls to go to war.

But things can go wrong. As Britain's prime minister during World War I, David Lloyd George, explained in his memoirs: 'Nobody wanted war' in 1914. 'The nations slithered over the brink into the boiling cauldron of war without any trace of apprehension or dismay,' he recalled.

Indeed, the danger is in a regional and global strategic environment under which the balance of power remains very shaky. US power is being challenged. The Iranian leadership feels that it is being pushed into a corner. The Israelis are feeling isolated as the Middle Eastern political system continues to go through dramatic changes.

Unexpected provocations and miscalculations could lead the kind of war that once again nobody wants.

The Republican primaries

2012-01-04T13:44:00.000-08:00

Business Times - 05 Jan 2012

Wide open GOP race after the Iowa primary

The Republican caucuses in the state have thrown up, not one, but three front-runners

By LEON HADAR
WASHINGTON CORRESPONDENT

THE Republican front-runner has changed seven times since leaders and activists started their party's process of nominating the 2012 presidential candidate early last year, according to an analysis of opinion polls issued by the Gallup company last Monday.

And after the year in which the candidates took part in numerous televised debates and the Republican race dominated the chatter on cable news, the radio talk shows and the biosphere, Republican voters were finally provided with their first opportunity to pick up a favourite candidate during the first presidential primary of 2012 in Iowa on Tuesday.

But the results of the Republican caucuses in Iowa have failed to determine who is going to emerge as the party's presidential candidate.

In fact, there now seem to be three front-runners, each representing three different political brands: former Massachusetts governor and business executive Mitt Romney, who represents the more moderate pro-business wing of the party; Representative Ron Paul from Texas, who is the leader of right-wing libertarians who want to abolish the Federal Reserve, legalise drugs and withdraw US troops from around the world; and former Pennsylvania senator Rick Santorum, a devout Christian who enjoys the support of Christian Evangelists and social conservative activists in the Republican Party.

No sure thing

None of the three now has a lock on the party's presidential nomination. Mr Romney is expected to win the Republican primary in New Hampshire next week but may not do as well in the coming primaries in the southern states, where Mr Santorum could gain new electoral momentum. Mr Paul has succeeded in mobilising young and enthusiastic supporters who could help him win more votes in other states.

And then there are the former front-runners who could come back to political life in the coming weeks and try to challenge Mr Romney and the other two new front-runners.

In the early summer last year, it seemed as though the main contender for the Republican vote in Iowa would be Representative Michelle Bachmann of Minnesota, an outspoken social conservative and a leading figure in the Tea Party movement who ended up winning the Republican Iowa Straw Poll in Ames, Iowa last August, narrowly defeating Representative Paul and dealing former Minnesota governor Tim Pawlenty (who finished in third place in the poll) a mortal electoral blow and forcing him to withdraw from the race. Ms Bachmann, who did not do well in Iowa on Tuesday, may now have no choice but to withdraw from the race.

Iowa Republican voters include a large number of Christian Evangelists and other social-cultural conservative, which explains why Christian broadcaster and former Arkansas governor Mike Huckabee won the Republican presidential primary four years ago and why former senator Santorum did so much better than expected on Tuesday.

But Mr Huckabee as well as four other popular Republican politicians - Indiana Governor Mitch Daniels, former Alaska governor (and the 2008 Republican vice- presidential candidate) Sarah Palin, New Jersey Governor Chris Christie, and Wisconsin Representative and House Budget Chairman Paul Ryan - decided to take a pass on running for the White House (Mr Huckabee and Ms Palin preferred to keep their lucrative jobs as Rupert Murdoch's Fox News pundits).

With those four political heavyweights as well as former governor Pawlenty out of the race and following a brief political infatuation with the potential presidential candidacy of business magnate and television personality Donald Trump, Republican voters seemed to be gravitating to Ms Bachmann, and next to Texas Governor Rick Perry, and then to former pizza executive Herman Cain - and a week or two before the Iowa vote even to former House of Representatives Speaker Newt Gingrich.

In a way, the Republicans were searching - and may continue to do so for a few more weeks - for the non-Romney candidate, reflecting their main political predicament.

The mostly conservative rank-and-file Republican primary voters, mostly working-class whites, and the members of the powerful Tea Party movement dislike ex-governor Romney, whom they perceive to be too moderate, if not a closet liberal (who at one point was opposed to banning abortions and supported an activist agenda to deal with climate change). They would prefer to see a 'real conservative' politician heading the party's presidential ticket.

Moreover, Mr Romney is a Mormon, and many Christian Evangelists in the South and Midwest regard the Church of Jesus Christ of Latter-day Saints as a non-Christian religious sect - which makes it difficult for the candidate to win the support of a large number of Republican primary voters.

Yet, according to opinion polls, Mr Romney is the only Republican candidate who has a better-than-even chance to beat Democratic President Barack Obama in the November election.

Indeed, most opinion polls suggest that President Obama's approval rating remains lower than Mr Romney's approval rating, and that economically distressed and very angry voters are clearly dissatisfied with the current White House occupant's management of the economy.

Mr Romney seems to be doing particularly well among independent voters, including those who had voted for Mr Obama in 2008 and who have deserted him since then. The members of this crucial bloc of voters seem to feel comfortable with the former governor of the very 'blue' state of Massachusetts and perceive the former business executive as an effective manager who would be able to fix the economy.

Swing voters

And these independent voters have the electoral power to deliver several key swing states to the Republican presidential nominee and get him elected as the next president.

President Obama and his political strategists believe that they could defeat Mr Romney or any other Republican nominee by launching a populist presidential campaign that would try to paint the former investment banker and the Republican leadership in Congress as the political allies of the 'fat cats' in Wall Street who want to lower taxes for the super-rich 'one per cent' of Americans - using the rhetoric of the Occupy Wall Street protesters - while gutting major social-economic programmes, such as the government-backed retirement and healthcare insurance systems, that help provide assistance to the middle class.

But if Mr Romney fails to force Mr Santorum and Mr Paul to withdraw from the race anytime soon - and if former Speaker Gingrich and Texas Governor Perry, or perhaps even former US Ambassador to China and Singapore Jon Huntsman, succeed in gaining new momentum - the Republican presidential primaries could end up being very long, very gruelling and very nasty.

And a divided Republican Party could prove to be President Obama's greatest electoral asset.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

My take on Ron Paul and Israel in Haaretz

2011-12-29T12:43:00.001-08:00

http://www.haaretz.com/print-edition/features/the-truth-about-ron-paul-1.404278

Home Jewish World News
Published 04:33 29.12.11 Latest update 04:33 29.12.11
The truth about Ron Paul
There is no anti-Israel aspect to the Republican presidential candidate's opposition to giving Israel aid, he is opposed in principle to foreign aid, which he sees as a waste of money.

By Leon Hadar
Tags: Israel US
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WASHINGTON - He probably won't be the Republican candidate for president in 2012, but Congressman Ron Paul of Texas has a good chance to win the Republican primaries in Iowa and New Hampshire in January, become a driving force in next year's campaign and continue to influence his party's agenda.

This isn't good news for Jewish Republican activists and neoconservative intellectuals who backed the Iraq War; they accuse the most influential libertarian legislator on Capitol Hill of being anti-Israel. The Republican Jewish coalition did not invite Ron Paul to participate in the candidates forum it held this month in Washington, claiming that he is far from the party's mainstream and has criticized Israel bitterly during his years in Congress.

My impression, as someone who was one of his foreign policy advisors during the 2008 presidential campaign, is completely different. Paul, a 76-year-old Baptist who has represented the 22nd District of Texas in Congress since 1979, has a profound knowledge of Jewish history, admires Israel and follows its political and economic developments with great interest.

But Paul is also a believer in the Austrian school of economics, whose standard-bearers include economists such as Josef Schumpeter, Friedrich Hayek and Ludwig von Mises. Like other Austrian-Americans, he tends to be skeptical of the need for government interference in the economy and believes that Washington's activist fiscal and monetary policies will lead America into bankruptcy, dangerous levels of inflation and the collapse of its currency. Paul calls for closing the Federal Reserve and other government offices and a significant reduction in the tax burden, along with broad cuts in government spending, including the military budget.

His belief that the government's growing role in the economy contradicts the value of individual economic freedom makes him a political ally of American conservatives, while his opposition to government enforcement of what are called "traditional values" and to undermining civil rights in the name of "national security" explains why he has also become very popular among liberals, but is loathed by neoconservatives.

However, his beliefs also lead him to strongly oppose U.S. military involvement around the world. He argues that military force should be a last resort in order to defend America's vital national interests, not part of an ambitious and expensive strategy intended to impose American ideals and interests on other nations. This policy leads to dangerous American involvement in international disputes that have no direct impact on it and strengthens the power of both the central government in Washington and the military-industrial complex.

It is therefore not surprising that Paul was one of the most prominent members of Congress to oppose the invasion of Iraq, and that today he refuses to support an American military attack on Iran. He believes that Iran - with or without nuclear weapons - does not present a direct threat to American interests, and that Israel has nuclear capability with which to deter Iran if and when the latter does develop nuclear weapons.

Nor is there any anti-Israel aspect to Paul's opposition to giving Israel economic aid. He is opposed in principle to foreign aid, which he sees as a waste of American money on leaders and countries whose interests and ideals are not necessarily in line with America's. Instead, he would encourage commercial ties with and American investment in Israel and other countries.

Thus the fact that Paul sees Israel as America's "close friend" in no way contradicts his opposition to giving Israel economic aid or to an American attack on Iran. He also emphasizes that when it comes to Israel's national interests with regard to Iran or the Palestinians, Washington doesn't have to "dictate" how Israel runs its affairs.

Hence if the Israeli government decided to attack Iran, or for that matter to reject an agreement with the Palestinians, Paul would honor those decisions. At the same time, President Paul would take it for granted that Israelis should be the ones to pay the price of these policies, and should not expect Washington to extricate them from a military or diplomatic hole they dug for themselves.

2012 the year of Counter-Revolution?

2011-12-29T12:28:00.001-08:00

Business Times - 30 Dec 2011

2012 the year of Counter-Revolution?

Members of the old order may fight back to protect the status quo just like Europe's counter-revolutionaries did in 1849

By LEON HADAR
WASHINGTON CORRESPONDENT

THE outgoing 2011 is the Year of the Protester, according to Time magazine. The insurgency targeting the ruling political elites, first in Tunisia, and then in Egypt, Libya, Syria, Yemen and Bahrain, has not been confined to the Middle East. Protests have taken place in Spain, Greece, Italy, France, Britain and Israel. And in the United States, the Occupy Wall Street protesters began demonstrating first in New York, and then in Washington, Chicago, and in other cities across the country.

The 2011 global uprisings against the status quo have been compared to the revolutions that swept through Europe in 1848, when working-class socialists and middle-class liberals in Paris, Milan, Vienna, Prague, Budapest and Berlin tried to bring down the old regimes.

And indeed, not unlike the Spring of Nations of 1848, the Arab Spring and the ensuing protests in New York's Zuccotti Park or Tel Aviv's Rothschild Avenue have raised expectations for change and the forging of a new order based on the principles of freedom and equality.

But with the benefit of hindsight, the 1848 revolutions are seen as failures. The old social and political order remained in power. So is it possible that the rebellions of 2011 could also leave some disappointment behind in 2012 if and when the members of the old order start fighting back to protect the status quo just like the counter-revolutionaries in 1849?

Of course, history does not repeat itself. But some of the reasons that led to the expiration of the revolutionary momentum in Europe after 1849 - tensions between and inside the opposition movements, the lack of wide public support and the enormous power retained by the ruling elites - could also end up stalling the pressure for change in 2012. Come the Counter-Revolution?

In the Middle East, expect the military to reassert its power and force fragile and precarious ruling coalitions with the rising Islamist movement. Expect Saudi Arabia and Turkey, with the support of the US and its allies, to lead an effort aimed at re-establishing a delicate regional status quo that protects Israel.

In the West, centrist political parties will contain the pressure for reining in the financial markets and take baby steps to reform the bloated welfare state. Washington will count more and more on its partners worldwide to help sustain its global interests.

The fall of the Arab nationalist rulers of Tunisia (Zine El Abidine Ben Ali), Egypt (Hosni Mubarak), Libya (Muammar Gaddafi) and Yemen (Ali Abdullah Saleh) in 2011 could be followed by the collapse of the Assad regime in Syria in 2012. But it has already become clear in 2011 that the secular, liberal and social-democratic members of the Arab opposition are not going to emerge as winners in the post-revolutionary struggle for power.

Indeed, the elections that took place in Egypt and Tunisia have demonstrated that the young, multilingual and Internet-savvy spokesmen for the revolution who had become prominent on Al Jazeera and CNN television coverage from Tahrir Square lack any strong base of electoral support.

Instead, Arab-Sunni Islamist political parties are expected to take power not only in Egypt and Tunisia, but also in Libya, Yemen and Syria, countries that will continue to be plagued by divisions along religious, ethnic and tribal lines. Shiite-Arab Islamist parties are already playing a dominant role in post-Saddam Hussein Iraq and in Lebanon, where Sunni Arabs are playing political defence.

The end of authoritarian rulers such as Mubarak, Gaddafi or, for that matter, Bashar Al-Assad, and the holding of free elections, giving citizens their first taste of political freedom, may provide some hope for those clamouring for change. But majority rule in countries that lack constitutional guarantees that protect individual rights, gender equality and religious freedom is likely to become rule by the Islamist parties that could pose a threat to women and religious minorities, such as the Coptic Christians in Egypt and Chaldean Christians in Syria and in Iraq. This could accelerate ethnic, sectarian and tribal rivalries in Libya, Yemen, Syria and Egypt and create the conditions for a series of civil wars in 2012 in these countries.

Moreover, much of the sectarian tensions between Sunnis and Shiites in Lebanon, Syria, Iraq or in Bahrain - where a Sunni minority rules over the Shiite majority - is going to be exacerbated by the growing concern by Saudi Arabia and its allies in the Gulf Cooperation Council - which is shared by Turkey - over the rising power of Shiite Iran and the potential for growing secessionist movements among their own Shiite minorities.

And like the Saudis, the Turks are interested in preventing the disintegration of Iraq, Syria and Lebanon into civil wars - which could provide an opportunity for Kurdish secession from Iraq - and in ensuring peaceful transition to power in Egypt, Tunisia and Libya; in maintaining the status quo in Jordan and Morocco; and in moving towards a resolution of the Israeli-Palestinian conflict.

In that context, helping create mechanisms for cooperation between political forces affiliated with Egypt's military and the Muslim Brotherhood aimed the establishing law and order and opening the road for economic recovery in that country will be one way that Turkey and Saudi Arabia, with the backing of the majority of Egyptians and the support of the US and Europe, will try to control the revolutionary change.

Thus, Saudi Arabia and Turkey will emerge as the two leading counter-revolutionary players in the Middle East in 2012, pursuing the kind of regional policies that seem to align with the interests of the US. Indeed, at a time of weakening American military power and eroding economic base, Washington will encourage regional powers such as the Turks and the Saudis in the Middle East, or its partners in East Asia (Japan; Korea; Australia) to play a more active role in promoting the global US security agenda.

This strategy could prove to be effective in 2012 but could face serious challenges in the coming years as these players embrace policies that may run counter to US interests.

But even as it sheds come of its military commitments in the Middle East (Iraq), the US will continue to play the role of a global balancer of the last resort in 2012, especially if it ends up being drawn into a diplomatic and military confrontation with Iran that will probably not ignite a full-blown war next year but could allow President Barack Obama to engage in an exercise in brinkmanship with Teheran around the time of the 2012 presidential campaign.

Western scenario

Not a lot will change in the way fiscal and monetary policies will be pursued in Washington whether Mr Obama vacates the White House in the aftermath of a Republican presidential victory in November or if he is re-elected. (And the same applies to France, if President Nicolas Sarkozy loses in next year's election).

The interests of the financial industry and Corporate America that fund the election campaigns of both parties will continue to pre-dominate the legislative and policy-making process while pressure from the electorate and labour unions representing public workers will make it difficult to slash the major government-backed retirement and health-insurance programmes.

There is no reason to believe that short of a devastating economic catastrophe, this kind of political-economic order that prevails also in much of Western and Central Europe will be brought down anytime soon.

Indeed, neither the Occupy Wall Street protesters on the left nor, for that matter, the members of the Tea Party movement on the right - or their political counterparts in Europe - have come up with new sets of ideas to help bring about major structural changes in the current political and economic status quo.

If anything, at a time of economic insecurity and political uncertainly, angry voters in the West or, for that matter, in the Middle East gravitate to the politics of identity that merge the explosive ingredients of nationalism, ethnicity and religion.

So if the most important legacy of the 1848 spring time of hope was the rise of German, Italian and other forms of nationalism in Europe, the insurgencies of 2011 could start igniting similar pressures in the Middle East and even in Europe in 2012 as disillusionment with the promise of change starts setting in.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

On the recent mess in Washington

2011-12-26T12:10:00.000-08:00

Business Times - 27 Dec 2011

Tax cut battle in House exposes divisions within Republican Party

The spectre of the party being taken over by radicals is bound to alienate moderates and help Obama win election

By LEON HADAR
WASHINGTON CORRESPONDENT

REPUBLICANS were licking their self-inflicted political wounds after what would probably be recalled as the Great Christmas-Eve Tax Cuts Battle (GCETCB) concluded with a legislative ceasefire but with clear political victory for President Barack Obama and the Democrats.

Indeed, after a week of unyielding opposition by Republicans in the US House of Representatives to a modest temporary or 'stopgap' legislative measure that enjoyed wide bipartisan support, both the House and Senate finally approved - just two days before Christmas - a short-term extension of the payroll tax cut and federal unemployment benefits.

It was a nice holiday present for President Obama who signed the legislation before leaving to join his family on vacation in Hawaii, and leaving behind the Republican House Speaker John Boehner with an eggnog splashed all over his face.

The legislation that extends the payroll tax cut, set to expire on Dec 31, through Feb 29 does very little to accelerate the sluggish economic recovery. But a failure to ensure that 160 million American workers do not see a reduction in their pay cheques and the jobless next year would have probably brought the slow recovery to a halt sooner than later.

In any case, lawmakers would still have to negotiate an extension of the payroll tax cuts and to decide whether to extend the long-term emergency benefits for all of 2012 after returning from their Christmas recess.

But the week-long tussle over the stopgap measure, pitting Speaker Boehner and the House Republicans against President Obama and the Democrats as well as against the Senate Republicans, has exposed deep political fissures in Republican ranks.

And together with the continuing resistance by Republican voters to nominate the relatively moderate former Massachusetts Governor Mitt Romney as their presidential candidate, the torturous legislative battle also raised the spectre of the possible takeover of the party by the Tea Party movement and other radical forces that would make it difficult for Republicans to defeat President Obama next year and win control over the Senate.

As much of the conventional wisdom in Washington put it last week, the Republicans seem to be on the way of snatching defeat out of the jaws of victory. After all, the same conventional wisdom has been suggesting for most of this year that with the unemployment rate between 8 and 9 per cent and with most indicators pointing to stagnant economic conditions - with the financial crisis in the eurozone elevating the threat of a double dip recession - any electable Republican presidential candidate had a better than even chance of beating President Obama.

These expectations for Republican victories next year - including the possibility of regaining control of the Senate (and maintaining a majority in the House) - were all based on the assumption that the independent voters who had helped elect President Obama in 2008 would switch their allegiance to the Republicans in 2012.

But most of these independent voters describe themselves as 'centrist' and 'moderate' in terms of their political orientation. What they want to see is an end to the gridlock in Washington and a president that is able to bring together the two major political parties to advance a mixed bag of pragmatic policy programmes aimed at reviving the American economy and reducing the national debt while protecting the interests of the middle class.

What these independent voters are clearly not looking forward is the coming to Washington of extreme right-wing Republican leadership trying to press forward a radical policy agenda that would make it impossible to achieve any sort of a bipartisan programme to put America's fiscal house in order.

But that is exactly the kind of nightmare political scenario that seemed to be occurring in Washington last week, as the notions of ideological purity and political partisanship were driving the Republicans to try to sabotage a deal that was actually going to ensure that Congress would approve a tax cut for the middle class (in the form of the extension of the payroll tax cuts) which remains one of the most cherished Republican goals.

In fact, Senate Republicans had earlier struck a deal with the White House and the Democrats to support the two-month extension and it seemed that Mr Boehner and the House Republicans would join their counterparts in the other legislative chamber and pass the bill.

But Speaker Boehner found himself facing strong opposition to the move, especially from lawmakers who are affiliated with the Tea Party who insisted they that didn't care whether taxes would go up and unemployment benefits would be eliminated as long as the White House refused to accept all their conditions. So what if the deal does not win Congressional approval? As far they were concerned, the most important thing was that President Obama suffered another political defeat and that the economic recovery got stuck, making it unlikely the current White House occupant will be re-elected next year.

This radical Republican approach only played directly into President Obama's hands, helping him paint the Republicans as obstructionists who are putting their ideology and political interests before the interests of the people - not to mention just pure political common sense. So it was not surprising that by the end of the week, Speaker Boehner and his colleagues raised the white flag and agreed to approve the deal.

Yet the recent Washington spectacle seems to fit into the general election strategy being pursued by President Obama that is aimed at portraying the Republicans as radical ideologues who protect the interests of the wealthiest Americans. Calling for raising the tax rate on super-rich Americans, President Obama and the Democrats are hoping to market themselves to the voters next year as the allies of ordinary Americans, of the so-called 99 per cent.

The debate taking place between the leading Republican presidential candidates that tends to highlight their radical right wing positions - for example, former speaker Newt Gingrich's call for abolishing some of the child labour laws or of the social conservative agenda of Representative Michelle Bachmann - is not going to help the party win more support among the moderate independent voters.

Moreover, a few pieces of good economic news - signs of recovery in the housing markets; drop in unemployment in 43 states in November; a more bullish stock market; more stability in the eurozone - could also provide President Obama with added political momentum, which seems to be reflected in results of public opinion polls that point to rising support for the president.

Indeed, according to the most recent Washington Post-ABC News poll, President Obama's approval ratings are continuing to go up while that of the Republicans in Congress is falling. President Obama's approval ratings have risen to 49 per cent from 44 per cent approval last month. And most Americans prefer the way President Obama has been managing the economy over that of the Republicans in Congress.

And the polls also suggest that President Obama would defeat all the declared Republican presidential candidates if the general election were to take place this month, with one exception. He is running even with Mr Romney, suggesting that notwithstanding all the good news, President Obama remains electorally challenged. But then, the Republicans could shoot themselves in the foot once again by not selecting Mr Romney as their presidential candidate.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The German Spring in TNI

2011-12-19T08:47:00.001-08:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Dec 19, 2011): http://nationalinterest.org/commentary/springtime-merkel-germany-6244
Springtime for Merkel and Germany

| More [1]
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December 19, 2011
Leon Hadar [2]
For the first time since its founding in 1871, Germany seems to be in a position to achieve its long-standing objective of bringing much of Europe under its control, through peaceful means this time around.

True, some people—for example, Greeks and the Italians—are resisting the new form of German geoeconomic hegemony in Europe, achieved through a new form of French collaboration. But the pundits are disparaging these Mediterranean people as a lazy bunch of beach dwellers and party goers on the periphery of Europe who have yet to acquaint themselves with the basics of twenty-first-century financial literacy.

Indeed, much of the prevailing media discourse views the euro-zone debate as being over economic policies—or, as New York Times columnist David Brooks has suggested, a struggle between the “effort-reward formula that undergirds capitalism” (Germany and the United States) and those Europeans who have yet to embrace the “values, habits and social contract upon which the entire prosperity of the West is based.”

Brooks ridicules the notion that the Germans are “besotted with some semi-senile superstition about rampant inflation.” But his disclaimer ran on the same day that the front page of the Times carried a report from Germany headlined, “German Fears About Inflation Stall Bold Steps in Debt Crisis.” Brooks seems to think there is some kind of software that provides nations with instructions on how to do capitalism.

This is the same kind of economic determinism promoted by the intellectual allies of the Davos Men, who since the end of the Cold War have been insisting that a universal ideology of economic liberalism would usher in the victory of capitalism here, there and everywhere.

In reality, there are many versions of capitalism, from Ayn Rand’s ideal of a free market to China’s “state capitalism.” These generally are products of unique historical conditions and cultural traditions. That Germany and the United States have experienced enormous economic growth in the post-World War II period has to do with the power exerted by their values and their histories as national communities.

The Anglo-Saxon form of capitalism practiced in the United States, with its emphasis on individual initiative and unregulated markets, is quite different from the model of “social capitalism” found in Germany. This version assumes close cooperation among governments, business and labor unions. It may be difficult to compel Greeks and Italians to play by the rules of thrift and social responsibility that underpin the German model, but, then, no one could force Germans to practice America’s rowdy and individualistic form of capitalism, either.

That Germany will likely come out of the euro-zone crisis in “win-win” position is testimony to the success of its model and the skill with which its political and economic elites have been pursuing their nation’s strategic interests. After successfully unifying the divided nation following the collapse of the Berlin Wall, Germany agreed to bolster the European Union and create a euro zone as part of an effort to allay the fears of its former French and British antagonists. But that also provided abundant opportunities for its financial institutions.

On one hand, Germany could dominate the euro zone, and by extension the entire EU, by dictating fiscal and monetary policies that favor its interests. Or it could form the core of a small and more cohesive group of economies—including France, Holland, Belgium, and former communist-bloc countries in Eastern and Central Europe—that would become the economic engine of Europe.

Either way, the rise of Germany as the leading continental power is reviving old and new political fears among Europeans. In an interesting political twist, right-wing nationalist parties in France and Holland, as well as elsewhere in Europe, have emerged as the most vocal opponents of the idea of a German-led EU (in addition to their strident opposition to Muslim immigration).

These right-wing parties get much of their electoral support from working-class voters who in the past tended to back the socialist and communist parties. Thus, what many now see as a debate over economic policies could produce a powerful nationalist backlash. Merkel’s Germany is not the Fourth Reich, but it is positioned increasingly to impose its will on its neighbors. And that inevitably generates fears.

Leon Hadar, a Washington-based journalist and global affairs analyst, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).

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Will Gingrich be the Obama of 2012?

2011-12-15T12:15:00.000-08:00

Business Times - 16 Dec 2011

Will Gingrich be the Obama of 2012?

By LEON HADAR
WASHINGTON CORRESPONDENT

FOUR years ago, after a large number of candidates had entered the Democratic Party's presidential primaries, the conventional wisdom among the political professionals was that New York Senator and former first lady Hillary Clinton would win the race.

She had the political experience and skills, the name recognition and well-organised election campaign and fund-raising operations. Members of the party's establishment as well as many activists loved her. She was ready for Prime Time. She was unbeatable. The nomination was hers to lose; which she did.

After the field of Democratic presidential candidates narrowed to a duel between Senator Clinton and a young and relatively unknown Senator from Illinois, most political experts continued to underestimate the African-American with the exotic name of Barack Obama. They insisted that he didn't have the experience or the skills to enter into the most powerful national office, especially at a time when the United States was engaged in two major wars. There was no way that Americans would elect a black politician whose father was a Kenyan-Muslim as the next US president; but they did.

Now fast forward four years later, when a large number of candidates are vying for the Republican Party's presidential nomination. Once again, the political pros are convinced that another experienced and skilled politician, former Massachusetts governor Mitt Romney who has a team of successful consultants and fund raisers and the support of the party's bosses and is ready to do business on his first day in office, is going to win the race. The pundits may be wrong again. This time the politician who is closing in on the presumptive frontrunner is not young. Nor is the former Speaker of the House of Representatives Newt Gingrich a political unknown. In fact, most Americans recognise the name of the former Republican Congressman from Georgia who had led his party to a historic Congressional victory 20 years ago. He later presided over the impeachment proceedings against then Democratic president Bill Clinton.

But like Mr Obama four years ago, Mr Gingrich is doing well in the public opinion polls and has a good chance of winning the first Republican presidential contest that will take place Iowa early next year - and perhaps even of getting the nomination itself.

And what is driving Mr Gingrich's electoral momentum now - very much like that of Mr Obama in 2008 - is the anger of the activists who determine the outcome of the primaries and the voters in the general election who decide who will spend the next four years in the White House. The Democratic primary voters who had made Mr Obama a winner in Iowa were furious that America had been drawn into a bloody and senseless war in Iraq and were angry at Senator Clinton for voting in favour of the Congressional resolution that provided then Republican president George W Bush with the authority to invade Iraq.

Many Democratic activists perceived Senator Clinton to be a member of the party's oil establishment, while Senator Obama was lauded as an anti-war and progressive public figure who was going to bring 'change' to Washington.

The Clinton-Obama race remained close through the primary process, but with Mr Obama gaining a steady lead in pledged delegates.

This time, the Republican primary voters - who tend to adhere to the conservative agenda of the Tea Party and who could lead Mr Gingrich to victory in Iowa - are angry at President Obama and the Democrats for allegedly trying to bring the American economy under the control of the federal government and to impose his liberal-secular values on God-fearing Americans. And these Republicans regard former governor Romney as a Rino (Republican in Name Only) who is a closet liberal while they see Mr Gingrich - despite the fact that he has been a Washington lobbyist and was a serial adulterer - as an authentic anti-government conservative who would kick the 'socialist' Obama out of office.

Candidate Obama's image as a vigorous young reformer and a message of 'change' won him the support of voters - mad as hell at the way Washington had brought America to the edge of economic disaster in 2008 - and carried him into victory in a general election. Mr Gingrich may not have the political organisation that Mr Obama succeeded in building in 2008.

But it's not inconceivable that many of the same voters who concluded that nothing really changed in Washington may be angrier today than they had been in 2008, so angry that they would elect someone who they perceive to be a grumpy and mean old man as the next US president.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

my new piece in Haaretz

2011-12-13T22:42:00.000-08:00

http://www.haaretz.co.il/news/world/1.1589951

לכודים במזרח התיכון

לי-און הדר 13.12.2011 12:00

וושינגטון

בתחילת נובמבר, כאשר הנשיא ברק אובמה אירח פסגה של מנהיגי מדינות מזרח אסיה ואזור האוקיינוס השקט בהוואי, יצא לאקרנים בארצות הברית סרט חדש, "היורשים" שמו. ג'ורג' קלוני הוא מאט קינג, עורך דין המתגורר בהונולולו, נצר לנסיכה הוואית שנישאה במאה ה-19 לבנקאי אנגלו-אמריקאי, שמתלבט האם למכור לחברה משיקגו שטח אדמה בהוואי שהיה בבעלות משפחתו במשך כמה דורות, או לשמר אותו כאתר מורשת משפחתית.

כמו מאט בסרט, גם אובמה נולד וגדל בהוואי והוא תוצר של נישואים מעורבים ושל קשרים היסטוריים ותרבותיים בין אזור האוקיינוס השקט (אסיה) והאוקיינוס האטלנטי (ארה"ב). אובמה, שכינה את עצמו "הנשיא הפסיפי הראשון של ארה"ב", עומד בפני דילמה דומה, אך מסובכת מזו של מאט. וושינגטון רוצה להסיט את תשומת הלב המדינית והכלכלית שלה מאזור האוקיינוס האטלנטי והמזרח התיכון לאזור האוקיינוס השקט ומזרח אסיה, אך היא חייבת לאזן את האוריינטצייה הפסיפית הזאת עם ההתחייבויות הדיפלומטיות והצבאיות שלה במערב אסיה.

"העתיד של הפוליטיקה הבינלאומית יוכרע באסיה, ולא באפגניסטאן או בעיראק, וארצות הברית חייבת להיות במרכז המערכת", כתבה שרת החוץ הילרי קלינטון במאמר בגיליון נובמבר של המגזין "פוריין פוליסי", שכותרתו, "המאה הפסיפית של אמריקה". "חיזוקה של אסיה עומד בראש סדר העדיפויות של אמריקה ושל הנשיא אובמה".

אך האמריקאים חוששים כי סין לא תהיה מוכנה לחלוק אתם את אזור ההשפעה באוקיינוס השקט, ורוצה להפוך להגמון שם. זהו בדיוק המסר שוושינגטון מקבלת מסינגפור ואוסטרליה, שמעוניינות שהיא תאזן את כוחה הגובר של סין באזור, אך חוששות שההשקעה הצבאית במזרח התיכון, הבעיות הפיסקאליות של אמריקה ומצב הרוח הבדלני של הציבור שם, יובילו דווקא להפחתת הנוכחות האמריקאית באוקיינוס השקט. לפיכך, הודעת אובמה בעת ביקור באוסטרליה, שארה"ב מתכוננת לפרוס 5,000 נחתים במדינה זאת, ביקורה של קלינטון בבורמה, המהלך לחיזוק קשרי ההגנה עם הפיליפינים, והתחייבות אמריקאית מחודשת לסייע למדינות דרום מזרח אסיה להתמודד עם הלחץ הצבאי הסיני בים הסיני הדרומי - כל הצעדים הללו, לצד יוזמות סחר חדשות, מיועדים להדגיש את הנוכחות האמריקאית באזור.

"אחד האתגרים החשובים ביותר במדיניות החוץ של ארה"ב הוא המעבר מהאתגרים המיידיים והמתישים של המזרח התיכון לטיפול בבעיות החשובות לטווח הארוך באסיה", אמר באוגוסט קורט קמפבל, עוזר שרת החוץ לענייני מזרח אסיה והאוקיינוס השקט. היה זה בשעה שארה"ב החלה לסגת מעיראק ולבחון את האסטרטגיה שלה באפגניסטאן, כשהיא מביעה התנגדות לפריסת כוחות יבשה אמריקאיים בלוב.

אולם הבעיה היא, שבנוסף לצורך להגיב למהפך החברתי-פוליטי המתמשך בעולם הערבי, הבית הלבן נתון ללחץ מתמיד לנקוט פעולה צבאית נגד אתרי הגרעין של איראן, או לפחות לתת אור "ירוק" לישראל לנקוט בפעולה כזאת. ועימות צבאי עם איראן, שעלול להוביל למלחמה כוללת במזרח התיכון ולהביא לעלייה חדה במחירי הנפט, יסיט שוב את תשומת הלב והמשאבים האמריקאיים ממזרח אסיה למערבה.

מאט מהסרט מחליט בסופו של דבר שלא למכור את האדמה ולשמר את זהותו כיליד אזור האוקיינוס השקט. "היורשים" אמור להיות מועמד לאוסקר. מלחמה עם איראן עלולה לאלץ את הנשיא הפסיפי הראשון לדחות את תחילת המאה הפסיפית של אמריקה, ולשחק בסרט מזרח תיכוני נוסף, שספק אם יזכה באוסקר דיפלומטי.

Will Obama's populist message win him votes next year?

2011-12-12T12:22:00.001-08:00

Business Times - 13 Dec 2011

Will Obama's populist message win him votes next year?

The US president seems to be picking up the political mantle of the legendary Theodore Roosevelt in recent days

By LEON HADAR
WASHINGTON CORRESPONDENT

PRESIDENT Theodore Roosevelt is one of the three most revered Republican presidents in US history (the other two being Abraham Lincoln and Ronald Reagan) which raises an interesting question: why is Democratic President Barack Obama trying to sound like that Republican president as he prepares to confront his Republican challenger next year?

But then it is doubtful that TR would be celebrated by present-day conservative Republicans. He was, in fact, a self-proclaimed 'progressive' who had rallied against the big corporations and financial institutions of his day and admonished Americans to promote more social and economic equality. The populist message advanced by 'Teddy' would be decried today by the likes of Glenn Beck and Sarah Palin as 'socialist' and 'anti-American'.

At the same, TR - an urbane New Yorker and a fiery environmentalist who would probably be hailing Mr Obama's government-backed health care insurance programme - would not feel at home today among the anti-elitists and climate-change deniers of the Tea Party who seem to be united by their absolute disdain for the so-called Obamacare and other components of the American welfare state that he and his fifth cousin, President Franklin Delano Roosevelt, helped to create.

Blasting the current Republican leaders and activists for trying to demolish this welfare state, Mr Obama seemed to be picking up the political mantle of TR on Tuesday when he visited the town of Osawatomie (population: 4,600) in eastern Kansas where in 1912 Mr Roosevelt unveiled his programme of the New Nationalism, and called for enacting the kind of social legislation that has been embraced by the US and other Western nations in the 20th century -Â theÂ minimum wage, the eight-hour workday, women's right to vote and the federal income tax.

At a time when leading Republican presidential candidates describe the national retirement-insurance programme as a 'Ponzi scheme', and urge schools to hire poor children as janitors and place at the centre of their election campaigns a promise to slash spending on social-economic programmes for the middle class and the poor while cutting taxes on the wealthiest Americans - Mr Obama seems to think that embracing TR's progressive message of 1912 would help him get re-elected in 2012.

And, indeed, Mr Obama's 55-minute speech in a high school in Osawatomie echoed the political themes in the address that TR had made a century earlier, including the denunciation of the greed and reckless behaviour of Wall Street and the lobbyists in Washington who protect their 'special interests' and a call for a strong and central federal government that would help protect the interests of ordinary Americans on Main Street. What Mr Obama was trying to do was to frame the debate of the presidential (and Congressional) campaign of 2012 as one that is pitting the proponents of inclusiveness, fairness, and American middle-class values - the Democrats - against a Republican social and economic agenda that is helping to squeeze a struggling middle class while making the rich richer. 'This is the defining issue of our time,'Â Mr Obama said before the crowd in Osawatomie.

There are intriguing historical parallels between the evolution of the American economic and political systems in the early 20th century and the changes that are taking place in the country a century later.

During the so-called Gilded Age of the 19th century Americans had witnessed the widening of social-economic inequality and the expansion of the financial industry and the development of new industries (railroads) and technologies that helped foster super-rich elite with its powerful lobbyists in Washington.

TR targeted 'the unholy alliance between corrupt business and corrupt politics' and called for more public regulation of Wall Street and the big corporations, and the new industrial economy that was developing at the time. He warned that without more government regulation and new labour laws, antitrust legislation and health care and retirement programmes, the growth of the new economy would make it difficult to preserve the American tradition of equal opportunity and maintain the common bonds of the community.

Hence, his call for a New Nationalism and for a Square Deal for America's struggling middle class. 'This country will not be a permanently good place for any of us to live in unless we make it a reasonably good place for all of us to live in,' Mr Roosevelt said.

Against the backdrop of a new technological innovation and a transforming American and global economy and the rising social and economic inequality that they have fostered, Mr Obama has an opportunity to adapt TR's populist message and progressive agenda to the new political and economic realities by trying to convince America's middle class of the need to prevent the tearing down of 20th-century social-economic programmes and government regulation.

'This is a make-or-break moment for the middle class and all those who are fighting to get into the middle class,' Mr Obama stated. 'At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home and secure their retirement,' he insisted, reiterating his commitment to the forgotten middle class, while admonishing his Republican rivals for allying themselves with the super-rich.

Echoing TR's rhetoric as well the battle-cry of the Occupy Wall Street movement, Mr Obama detailed the growing gap in average salaries of CEOs' salaries from 30 times the average worker a few decades ago to 110 times today and denounced the rise in the influence of the financial elites on the American politics that was making it more likely that Americans now 'run the risk of selling our democracy to the highest bidder'.

He hailed the establishment of the Consumer Finance Protection Bureau as an example of the progressive policies that Democrats are advancing and the Republicans are rejecting.

And like TR in 1912, Mr Obama stressed that the new technologies and economic changes should benefit all Americans, and not just a small minority of business executives and financiers, and that it was the role of the federal government as a ally of the middle class to ensure that that would happen.

Will this populist message strengthen Mr Obama's electoral position at a time when the Republicans will point out the economy under his leadership is not doing so well?

Mr Obama and his aides are hoping that Americans will agree with him that the Great Recession and the current economic and social problems facing the middle class are a result of the kind of the radical free market and anti-government policies that have been pursued by Republicans administrations and that it is the Republicans who are making it now impossible for the current White House occupant to make the reforms that are needed to revitalise the economy and create new jobs.

The Republicans are confident that Americans daydream about the good old days of Ronald Reagan. The Democrats are confident that the voters would like to bring back the political spirit of TR back to Washington. The results of the 2012 elections is going to prove one of them wrong.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The American Conservative

2011-12-07T12:39:00.000-08:00

The American Conservative

US unfazed by Chavez's latest act of bravado

2011-12-07T12:36:00.001-08:00

Business Times - 08 Dec 2011

US unfazed by Chavez's latest act of bravado

By LEON HADAR
WASHINGTON CORRESPONDENT

NOW that Iraqi president Saddam Hussein, Al-Qaeda leader Osama bin Laden and Libyan leader Muammar Gaddafi cannot play any more the roles as Washington's favourite bogeymen, Venezuela's President Hugo Chavez has been trying to fill the void. The recent formation of a new regional bloc, called the Community of Latin American and Caribbean States (Celac) - that includes 33 member states but excludes the United States and Canada - seems a strategy on the part of Mr Chavez to demonstrate that Latin American nations are gradually detaching themselves from Washington's influence.

The Venezuelan leader, taking up the mantle of the South American liberator Simon Bolivar, hosted leaders from all across Latin America and the Caribbean in Caracas last Friday to inaugurate the new continental group which he described as the 'the most important political event in our America in 100 years or more'.

Among the heads of state who had flown to the Venezuelan capital for the two-day event were Brazil's President Dilma Rousseff, Argentinian President Cristina Kirchner, Cuba's President Raúl Castro, Colombia's President Juan Manuel Santos and Mexico's President Felipe Calderón. Chile's president, the pro-US Sebastián Piñera, was elected the first chairperson of the new organisation.

'A giant has been born,' Mr Chavez declared, as he tried to draw a contrast between the new grouping that is supposed to promote Bolivar's goal of uniting Latin American nations against imperial domination by external powers, and the Organization of American States (OAS) which is headquartered in Washington, DC, is led by the US and includes all of the states in Latin America (and Canada) - but excludes Cuba.

The launch of Celac fits into Mr Chavez's strategy of promoting anti-Americanism as a way of strengthening his domestic political support before next year's presidential election and of shoring up Venezuela's influence in the region.

The event in Caracas registered almost no reaction in Washington where officials and lawmakers have adopted a policy of benign neglect towards the Venezuelan president, hoping to deprive him of any opportunity to win more political brownie points through a public confrontation with the US.

Shortly after becoming president, Barack Obama actually shook hands with Mr Chavez - and was blasted by Republican and conservative critics for making that gesture - during a 34-country summit of the Americas in Trinidad in April 2009, where the new US leader pledged to improve America's relationship with its Latin American neighbours as an 'equal partner'.

And in March this year, Mr Obama made his first trip to South America, visiting the continent's rising economic giant Brazil, which leads another important South American regional group called Unasur (Union of South American Nations); Chile, one of America's leading allies in the region, and El Salvador, which is led by a leftist but pro-American government.

The conventional wisdom in Washington is that Latin American nations have been trying to assert their economic power and diplomatic independence, and that part of that process includes an effort to distance themselves from the US and strengthen ties with other global players, including China and the European Union.

But when it comes to the leading powers in the region - Brazil, Chile, Argentina and Mexico - this approach has not acquired anti-American overtones. In fact, Mr Obama, unlike his predecessor in office, enjoys popularity among the elites and people in the region.

Moreover, while Mr Chavez retains some support among left-leaning governments and groups in the region, Venezuela is a marginal player there, and there is very little concern in Washington that Celac will eclipse the OAS any time soon, notwithstanding Mr Chavez's bravado. He described the OAS as a 'toothless, old body' and asserted that Celac was 'born with a new spirit'. Yet while the OAS has a well-funded and a professionally managed bureaucracy, has acquired a sense of legitimacy in Latin America and has proved to be quite effective in promoting a common political and economic agenda, Celac doesn't even have a permanent secretariat or any structure for decision-making.

Interestingly enough, not unlike what is happening in East Asia where the rise of China has led America's partners in the region to support continuing US engagement there as a countervailing force vis-a-vis Beijing, the rise of Brazil as a regional economic and political power in Latin America is actually raising the interest on the part of other nations in the region to strengthen their ties with Washington in order to counterbalance Brazil's influence.

From that perspective, the OAS is seen as an effective instrument to tame aggressive regional and global powers.

And, indeed, the US Department of State issued a statement on the eve of the Celac summit that Washington would continue 'to work through the OAS as the pre-eminent multilateral organisation, speaking for the hemisphere'. The statement didn't even mention Mr Chavez by name.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Marathon man up against the short-distance runner

2011-12-06T13:57:00.001-08:00

Business Times - 07 Dec 2011

Marathon man up against the short-distance runner

The US Republican contest for presidential nominee seems to be boiling down to a race between Romney and Gingrich

By LEON HADAR
WASHINGTON CORRESPONDENT

IT does seem that we may be arriving at the end of the Amateur Hour(s) of the Republican Party's presidential primaries. At some point in the coming weeks, the grown-ups will be taking charge of the process that will culminate in the selection of the Republican presidential candidate.

According to many political pundits, the party's presidential nominee would have a better than an even chance to beat President Barack Obama in next year's race for the White House.

It is not surprising that many veteran Republican political hands have been feeling a certain sense of nostalgia for the good old days before the age of the open and democratic presidential primaries in the 1960s, for a time when the 'bosses in the smoke-filled rooms' - the party's elders and funders and not its rank-and-file members - would be making the choice on who would eventually run as the Republican (or Democratic) presidential candidates.

Indeed, it is difficult to imagine that if the bosses were controlling the process of the Republican Party's presidential nominations this year, they would be giving a greenlight to the likes of the pizza business executive Herman Cain to even consider joining the presidential race.

Laughing stock

Indeed, that someone who believes that China has yet to develop a nuclear bomb, that the Taliban is vying to take power in Libya, and that people in Cuba speak 'Cuban' was at one point leading as the Republican favourite to win the presidential race, is a testimony to the skewed electoral system that has turned the Republican presidential primaries into the laughing stock of late-night television comedians.
In fact, television comedians such as Jon Stuart are quite depressed now that Mr Cain - in the aftermath of a series of revelations about his infidelity and accusations of sexual abuse - was forced to withdraw from the race.

It was not so long that opinion polls suggested that former Alaska governor Sarah ('I can see Russia from my house') Palin and then casino owner and television show host Donald Trump were the Republicans' top choices for the party's presidential nomination.

The two were later eclipsed by Ohio Representative and Tea Party's favourite Michelle Bachmann who argued that taking a vaccine against cervical cancer could induce one to commit suicide and who pledged that if elected, she would close down the US embassy in Teheran (which had been vacated in 1979).

She, in turn, was later overshadowed by Texas Governor Rick Perry who described the US government retirement insurance programme (Social Security) as a 'Ponzi scheme' and who could not even recall during a televised debate the names of the three federal government agencies he was planning to close down (which was only one of many 'brain freezes' he has experienced).

Ms Bachmann and Mr Perry are not planning to withdraw from the race anytime soon and are scheduled to take part in one of the many televised debates that the Republicans will be holding, including the next one that will be moderated by Mr Trump himself. But no one is expecting either of these two colourful figures to win the nomination.

Instead, it is now the former Speaker of the House of Representatives Newt Gingrich, who has emerged as the frontrunner in most opinion poll and is followed by former Massachusetts governor Mitt Romney, who most experts predict would eventually be elected as the nominee.

As the Republicans prepare for the first four early tests of the season next month - starting with the caucuses in Iowa and followed by the primaries in New Hampshire, South Carolina and Florida - the contest seems to be turning into a two-man race between Mr Romney and Mr Gingrich.

That most of the smart money in the Republican party continues to say that Mr Romney will be the one facing President Obama in general election is a reflection of the kind of political common sense that would have guided the party bosses in the past.

After all, Mr Romney has been running for the president since the 2008 race for the White House when he lost the Republican nomination to Arizona Senator John McCain. He has been involved in electoral politics for many years, scoring big when running as a moderate Republican he was elected as the governor of a major Democratic leaning ('blue') state, Massachusetts, in 2002.

Mr Romney who was raised in famed political family - his father was the governor of Michigan and a presidential aspirant - has made a fortune as a successful business executive and has been happily married since 1969. In a way, Mr Romney is the steady and assured long-distance runner in the race, who has been training all his life this exhausting electoral marathon, has a strong organisation and financial support, and who has learnt how to adjust his pace, even if that means adapting his earlier moderate political position to the more conservative views of the Republican conservative rank and file.

Mr Gingrich, on the other hand, seems to do a great job as a short-distance runner. A former history professor, he demonstrated that he has good political instincts and rhetorical skills when he led the Republicans into a historic victory in 1994 when they took control of the House of Representatives and elected him as a Speaker. But Mr Gingrich lacked the steady hand needed for governing. After the failed effort to impeach president Bill Clinton and a series of ethical scandals, Mr Gingrich was forced to resign from his position.

In addition, Mr Gingrich who is now in his third marriage - he had an adulterous affair with his current wife who is 23 years his junior while his second wife was recovering from cancer - is an unabashed self-promoter who tends to put his foot in his mouth quite frequently. Just recently, he proposed revising child labour laws to allow schools to fire janitors and replace them with poor children.

While Mr Gingrich seems to be in a position to win the votes of conservative Tea Partiers who had considered voting for Mr Cain, Ms Bachmann or Mr Perry - which explains why he is currently rising in the opinion polls - he lacks the kind of national organisation and financial resources that provide Mr Romney with a long-term advantage over the former House Speaker in a race that could continue for quite a long time.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Romney and China

2011-12-02T12:07:00.001-08:00

Business Times - 03 Dec 2011

Romney's dangerous anti-China rhetoric

Accusing Beijing of manipulating its currency and stealing US jobs is not based on any sound economic policy and everything to do with electoral politics

By LEON HADAR
WASHINGTON CORRESPONDENT

AS the US presidential and congressional election campaigns are getting started, no one should be surprised that both Democrats and Republicans have been doing a lot of China-bashing. After all, the economically distressed American voter is in a very angry mood, blaming the Wall Street elites and the Washington bureaucrats for the nation's economic mess, and ready to listen to a populist message that fuses nationalism, xenophobia and protectionism. And according to recent opinion polls, a majority of Americans believe that China is intent on - and will succeed in - supplanting the US as the world's leading economic and geopolitical power.

In this political environment, scapegoating China for destroying US manufacturing and stealing American jobs seems to be a cost-effective strategy for any politician running for office in 2012. That explains why a bipartisan coalition of lawmakers has crafted legislation aimed at punishing the Chinese for allegedly manipulating their currency in order to make its exports more globally competitive against American products. Or why the leading Republican presidential candidates as well as President Barack Obama are sharpening their criticism of Chinese policies - not unlike the way Chinese politicians try to win public support by promoting anti-American nationalist themes.

Yet the extent to which the former Massachusetts governor and investment banker Mitt Romney, who is most likely to be nominated as the Republican presidential candidate next year, has been playing the 'blame China' card and has been accusing Beijing of exploiting its weak currency, the renminbi, to steal American jobs has been quite perplexing.

'China is on almost every dimension cheating,' Mr Romney insisted during several presidential debates. 'We got to recognise that,' he stressed. 'They're manipulating their currency and by doing so they're holding down the price of Chinese goods and making sure their products are artificially low-priced,' Mr Romney explained, adding: 'It's predatory pricing. It's killing jobs in America.'

And responding to criticism from another Republican presidential candidate, former ambassador to China and Singapore Jon Huntsman, Mr Romney sounded as though he was relishing a fight with the Chinese. 'I'm afraid that people who've looked at this in the past have been played like a fiddle by the Chinese,' he said. 'And the Chinese are smiling all the way to the bank, taking our currency and taking our jobs and taking a lot of our future. And I'm not willing to let that happen.'

Mr Romney is a member of a political party that since the administration of President Ronald Reagan has placed the advancement of global free trade at the centre of its economic and foreign policies. Moreover, Mr Romney, a former business executive who has worked and travelled extensively abroad, belongs to the internationalist wing of the Republican Party that for years has been successfully containing pressure from the more isolationist and protectionist forces of the party.

In fact, the one piece of good news coming out of Washington in recent months has been the cooperation between President Obama and the Republican Congressional leaders in winning support on Capitol Hill for the approval of three free trade accords, including with South Korea, despite opposition from labour unions affiliated with the Democratic Party and the Republican lawmakers with ties to the populist Tea Party movement.

Indeed, as far as the Republican leaders and their allies in the business community were concerned, there was nothing to criticise and a lot to applaud about the more energetic Pacific-centred trade liberalisation agenda that President Obama had unveiled when he hosted the APEC Leaders Summit in Honolulu, Hawaii, and during his visit to Australia and Indonesia in November.

And yet, a senior adviser to Mr Romney went on to blast the White House's trade policies, suggesting that President Obama was 'treated as a doormat' by China. Indeed, the Romney campaign has turned China's currency policy into a central component of the candidate's speeches and television commercials, arguing that if elected, Mr Romney would force China to appreciate its currency which would lessen the advantage for Chinese exporters and allow US manufacturers to expand and create more jobs.

Rejecting the accusations that such policies would lead to a trade war with China, Mr Romney responded that he was not declaring a trade war on China. 'We are already in a war,' he declared. He also said that he would label China a manipulator on his first day in office, and that he would impose tariffs on Chinese imports to the US if China continued with its currency policy. (In reality, a US president needs Congressional approval for any trade sanctions.)

As a graduate of the Harvard Business School and with a long-time experience in managing global businesses, Mr Romney probably recognises that China's policies are not responsible for American unemployment and that the economic case for further appreciation of the Chinese currency is weak.

Hence, the gradual appreciation in the value of the renminbi has had almost no effect on the size of US trade deficit with China.

Moreover, while the appreciation in the value of the renminbi could make Chinese exports to the US more expensive, it does not help bring jobs back to the US. Instead, low value-added manufacturers will relocate their operations from China to countries like Vietnam; and these low-cost products will continue to compete with American exports.

But Mr Romney's China-bashing rhetoric is not driven by the advice of economists. It is Mr Romney's political advisers who have concluded - and rightly so - that there is nothing remotely populist in their candidate's political and professional background and persona. If anything, Mr Romney looks and sounds like your friendly investment banker, which was what he was. As a top executive in the Boston-based Bain Capital, Mr Romney made a fortune by buying floundering firms at low cost, stripping away any parts that were not profitable and laying off excess workers. At a time when the American public seems to be responsive to the message of the Occupy Wall Street movement, Mr Romney is bound to be seen by voters as a member of the wealthiest one per cent of Americans.

And since Mr Romney and the leaders of the Republican Party continue to oppose increasing the tax burden on wealthy Americans like Mr Romney - while calling for reducing government support for retirement and health-care insurance programmes - the leading Republican candidate is clearly not in a position to market himself to the 99 per cent of Americans as a Man of the People.

Which brings us back to China. Campaigning in swing states such as Ohio, Michigan and Pennsylvania with their eroding manufacturing base and high unemployment rates, Mr Romney is hoping that his tough message on China - and blaming President Obama of 'appeasing' China on the issue of its undervalued currency - would help him win the vote of angry blue collar workers.

But Mr Romney is not campaigning in a global economic vacuum. By pressing President Obama to label China a currency manipulator, a step that the administration has been unwilling to embrace because they worry that it would provoke Beijing to retaliate, Mr Romney could affect the political and legislative debate in Washington.

The US Senate has already passed a bill that called for labelling China as a currency manipulator. Sixty-three Senators voted for the bill, including 16 Republicans. But in the House of Representatives, opposition from Republicans has slowed the momentum of supporters of a similar legislation. But Mr Romney's anti-China stance could help tip the balance in the Congressional debate over whether to impose sanctions on China.

Not unlike other presidential candidates who had bashed China during their election campaigns, Mr Romney would probably move in the direction of economic engagement with China after getting elected to office. But meanwhile, his irresponsible rhetoric on the issue raises doubts about whether he should be elected.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Can you see Brussels and Teheran from Honolulu?

2011-11-30T12:21:00.001-08:00

Business Times - 01 Dec 2011

Can you see Brussels and Teheran from Honolulu?

By LEON HADAR
WASHINGTON CORRESPONDENT

IN THE same week in November that US President Barack Obama was hosting a summit of East Asian leaders in Honolulu, Hawaii, a new film starring George Clooney as a Honolulu attorney and trustee of his family's ancestral land in Hawaii opened in American movie theatres.

In The Descendants, that is expected to win an Oscar or two, Clooney's character is a descendant of the great-great-grandmother of a Hawaiian princess who married a white banker and passed on a rich chunk of real estate.

Matt King is under pressure from his family to sell it to developers while native Hawaiians urge him to keep the land unspoiled.

President Obama, who (like King) was born and raised in Hawaii and is a product of a mixed marriage, has described himself as 'the first Pacific president' and is facing a similar but more difficult dilemma.

Washington wants to reorient US geostrategy and economic policy from the Atlantic and the Middle East to Pacific and East Asia, but must balance it against its existing military and diplomatic commitments in Europe and West Asia.

During the Apec Leaders Summit in Honolulu, which was followed by visits to Australia and Indonesia, President Obama and US Secretary of State Hillary Clinton tried to assure Washington's military and trade partners in the Asia-Pacific region that, despite its overstretched military, fiscal problems and a growing isolationist public mood at home, the US will continue to maintain its presence in the region and serve as a strategic counterbalance to a rising China.

Hence Mr Obama's announcement during the visit to Australia that the US was planning to deploy 2,500 marines to that country, as well as Mrs Clinton's visit to Myanmar; the move to strengthen defence ties with the Philippines; the renewed US commitment to help Southeast Asian countries to resist Chinese military pressure in the South China Sea; coupled with new American trade initiatives - all these are aimed at demonstrating US engagement in the region.

Yet as Mr Obama returned to Washington in the aftermath of these events that were supposed to mark the start of America's new Pacific Century, there were clear signs that the US would not be able to decouple its core economic and strategic interests from the Atlantic region and the Middle East area anytime soon.

Whether the American economy continues to recover or heads back to another recession depends very much on the decisions that will be made (or not) by leaders in Europe and the Middle East in the coming weeks.

When President Obama met with European leaders in Washington on Monday, he and his advisers made it clear that a failure on the part of Germany, France and other governments in the eurozone to resolve the region's financial crisis could have catastrophic effects on the US economy.

Against the backdrop of continuing uncertainty in the euro region, including the prospect of its break-up, Mr Obama said the US economy was likely to continue to struggle until Europe got its financial house in order.

'If Europe is contracting, or if Europe is having difficulties, then it's much more difficult for us to create good jobs here at home,' the president said after a summit with European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso.

President Obama and his Treasury Secretary Timothy Geithner have been trying to convince the Europeans to provide the European Central Bank (ECB) with the kind of powers that the US Federal Reserve has to serve as a lender of last resort and extend more credit to the struggling eurozone economies.

But Germany's leaders, who are inflation hawks, have resisted the US pressure. Washington lacks the economic and diplomatic leverage to change their position.

So President Obama and his aides are hoping for the best and planning for the worst, including the threat to American companies exposed to European debt and the possibility that a collapse of the eurozone could lead to a renewed recession.

And then there is the Middle East. The continuing political upheaval in the Arab countries, aka the Arab Spring, has already led to the collapse of two pro-American leaders and could ignite a civil war in strategically placed Syria.

Moreover, Israeli leaders have warned that unless the US and its allies force Iran to put its alleged nuclear military programme on hold, Israel would have no choice but to strike at Iran's nuclear sites - a drastic move that could trigger an all-out Middle East war that is bound to draw in the US and put upward pressure on energy prices.

And, like in the case of the eurozone, the Obama administration seems to have only a limited effect on what is happening in the Middle East, even as it pledges to try to shape the political and economic future of the Asia-Pacific region.

Clooney's character in The Descendants decides eventually not to sell the land in Hawaii and maintain his identity as a son of the Pacific.

But a break-up of the eurozone or a new Middle East war may leave President Obama no choice but to continue playing a leading role in the old Atlantic movie instead of a new Pacific one.

And it is doubtful that he will win a diplomatic Oscar for playing that role.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

America's Long-Delayed Pacific Century

2011-11-22T12:07:00.000-08:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Nov 21, 2011): http://nationalinterest.org/commentary/americas-long-delayed-pacific-century-6175

America's Long-Delayed Pacific Century

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November 21, 2011
Leon Hadar [2]
When President Bill Clinton was hosting the Leaders Summit of the Asia-Pacific Economic Cooperation (APEC) forum in Seattle in 1993, the Middle East started to feel like old news. Resisting pressure to oust Saddam Hussein and to launch new military campaigns in the Middle East, Clinton promoted a trade-liberalization agenda in East Asia and tried to transform APEC from a "talking shop" into a pillar of an Asia-centric foreign policy.

But when President Barack Obama hosted the leaders of the APEC forum in Honolulu, Hawaii, close to two decades after the Seattle Summit, it felt like a diplomatic Groundhog Day, with U.S. officials insisting once again that the time has come to shift American global priorities from the Middle East to the Asia-Pacific region, proclaiming the Obama administration’s vision of “America’s Pacific Century.”

That Obama, born and raised in Hawaii, America’s self-described “first Pacific president,” is hosting the APEC leaders meeting in one of America’s territorial possessions in the Pacific was meant to symbolize these changing U.S. priorities.

“The future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the center of the action,” Hillary Clinton wrote in the November issue ofForeign Policy. She added: “Harnessing Asia's growth and dynamism is central to American economic and strategic interests and a key priority for President Obama.” Clinton stressed that America’s diplomatic and economic frontiers this century lie not in the Middle East or Europe but in Asia.

And so America once again embraces an outlook that was front and center in the Bill Clinton years, before 9/11 pulled the focus of American diplomacy and national security back to the broader Middle East. The U.S. war on global terrorism necessitated a new set of priorities. Washington invaded Afghanistan and Iraq and tried to bring democracy to the Middle East.

Indeed, East Asian officials and pundits criticized Bush throughout his presidency for changing the course set in Seattle in 1993. He was scored for investing so much time and resource on the Mideast-centered war on terrorism while treating the dramatic geopolitical and economic changes in Asia as a global sideshow.

Hence, Asian diplomats were furious when former secretary of state Condoleezza Rice skipped the 2007 Association of Southeast Asian Nations' Regional Forum in Manila and instead traveled to the Middle East for discussions in Egypt and Saudi Arabia and visits to Israel and the West Bank.

Adding to those angers, President George W. Bush also postponed talks with leaders of the ten ASEAN states, scheduled in Singapore for September. Instead, Bush focused his attention on the “surge” in Iraq.

Even when Bush and Rice did spend time in Asia, much of their concentration was on terrorism. Asian leaders wondered why Americans invested so much effort to "remake" the Middle East, “restart" the Israeli-Palestinian “peace process” and adjudicate the bloody Iraqi tribal wars. After all, they noted, in East Asia they did not have to invade countries in order to maintain their trade and military presence.

And while the Americans are being pulled into Middle Eastern quagmires, the Chinese, with their much less expansive defense budgets, could devote their resources to strengthening their economy.

But now most Americans are exhausted from the costly military intervention in the Middle East, and many Washington politicians recognize that a diminishing economic base is constraining America’s ability to maintain its hegemony in southwest Asia. Thus, the Obama administration has a new opportunity to reorient U.S. geostrategic priorities.

Indeed, Kurt Campbell, assistant secretary of state for East Asian and Pacific Affairs, said earlier this year that U.S. foreign policy needed to transition from the Middle East to Asia. “One of the most important challenges for U.S. foreign policy is to effect a transition from the immediate and vexing challenges of the Middle East to the long-term and deeply consequential issues in Asia,” Campbell said in August.

All of this sounds good to East Asians. And the Obama administration, moving beyond rhetoric, has increased its economic and military cooperation with South Korea, India, Australia and ASEAN countries that have called for the U.S. to expand its presence in the region as a counterweight to a more assertive China.

Congress recently approved a free-trade agreement with South Korea, and Obama indicated that his administration plans to speed up negotiations on the establishment of another free-trade system, the Trans-Pacific Partnership. The initiative originated with a regional free-trade agreement among Brunei, Chile, New Zealand and Singapore, but negotiations now involve the United States, Australia, Peru, Malaysia and Vietnam. Japan might also join the effort.

Washington wants to ensure that the United States assumes a leading position in this new Asian free-trade arrangement, while China prefers a looser trade arrangement that includes China, Japan, South Korea and the ASEAN nations—but excludes the United States, Australia and New Zealand.

Does that suggest President Obama will be listening more intently to the leaders of Singapore and other southeast Asian nations and spending less time with Levantine figures who spent so much time schmoozing with his Oval Office predecessor?

Still, it is essential to remember that the United States remains the leading global power in the Middle East and faces there ongoing challenges, including prospects for a costly diplomatic and military confrontation, this time with Iran.

This focus is tightened by the inconclusive outcomes of the wars in Iraq and Afghanistan and the collapse of two leading pro-American leaders in the region (Egypt and Tunisia). Also, America must continue to maintain the balance of power in the region and protect the interests of its leading military partners there, including Israel, Saudi Arabia and other oil-producing states in the Persian Gulf.

President Clinton's efforts to refocus U.S. attention on Asia took place at a time when Washington could maintain American hegemony in the Middle East on the cheap. He could walk in the Middle East and chew gum in Asia at the same time. It is not clear that Obama can repeat that performance at a time when America is only starting to withdraw from Iraq and has yet to reassess its strategy in Afghanistan and when the White House is under pressure from Israel and Saudi Arabia—as well from both Democrats and Republicans—to take military action against Iran. America's Pacific Century, alluring as it is, may have to wait.

Leon Hadar, a Washington-based journalist and global affairs analyst, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).

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When leaders fail to lead

2011-11-22T12:06:00.001-08:00

Business Times - 23 Nov 2011

When leaders fail to lead

America's politicians have not been able to muster the will to make unpopular and painful decisions

By LEON HADAR
WASHINGTON CORRESPONDENT

TO no one's surprise, the US congressional Super Committee ended its effort to put America's fiscal house in order ended with a whimper. The Democratic and Republican members of the special deficit-reduction committee admitted that after three months of work, they had failed to meet the deadline for an agreement on cutting about US$1.2 trillion from the US national debt - which topped US$15 trillion last week. The mountain could not even give birth to a mouse.

In a way, not unlike their counterparts in the eurozone, the members of the America's political class have not been able to muster the will to make the unpopular and painful decisions that require slashing government spending (by eliminating public services) and raising new revenues (by increasing the tax burden), displaying once again a profile of political cowardice.

In Greece and Italy, the politicians have decided to shift the responsibility for making these choices to a group of apolitical technocrats. In Washington, the politicians had first tried to square the fiscal circle through the creation of the bipartisan Super Committee.

The move came following the political and legislative battles of the summer over the issue of raising the debt ceiling and the decision by the credit agency Standard & Poor's to downgrade US debt after concluding that 'America's governance and policymaking is becoming less stable, less effective'.

The 12 respected Republican and Democratic lawmakers in the Super Committee were granted enormous legislative power to fashion a plan that had to win only seven votes and then be either rejected or approved - but not altered - by Congress before the end of this year.

But the deep ideological divisions between the Democrats and the Republicans that were on display during the debate over the debt ceiling has made it also impossible to overcome the differences between the representatives of the two political parties in the Super Committee.

Indeed, the stalemate in this deficit reduction body only helped to accentuate these differences as the two sides tried unsuccessfully to chart a common fiscal policy. The Republicans members insisted that most of the cuts in the debt would have to come from reducing spending on cherished social and economic programmes - including the government-backed retirement and health insurance plans - and that a very small amount of government revenues involving a few changes in the tax rates will contribute to the deficit-cutting process.

But the Democrats rejected any major cuts in the Social Security and Medicare programmes without corresponding increases in taxes on the wealthy, including by eliminating the tax cuts on households making more than US$250,000 a year that were enacted during the administration of former Republican president George W Bush.

While a failure to resolve the debate over the debt ceiling in the summer could have forced the federal government into bankruptcy and devastate the financial markets, the current Congressional deadlock should have only limited short-term economic impact. The lawmakers had ensured that if the Super Committee had failed to reach a compromise, a set of automatic trigger mechanisms would lead to US$1.2 trillion in cuts next year, divided almost equally between domestic and defence spending.

Yet some Republican lawmakers are trying now to make those automatic trigger mechanisms less, well, automatic, by proposing new legislation that could save the defence budget from major cuts. Defence Secretary Leon Panetta has also argued that US military capabilities will be undermined by the proposed reductions to the Pentagon budget.

In any case, Democrats and Republicans have already started to blame the other side for the failure on the part of the Super Committee to reach a deal. Both sides - and that includes Democratic President Barack Obama - are planning to turn the debate over how to reduce the federal debt into the central theme of next year's presidential and congressional elections.

'Fairness' agenda

The White House and the Democrats are hoping that a changing public mood, reflected in the support for the Occupy Wall Street Movement, will be more in tune with their 'fairness' agenda that stresses the need to change social economic priorities by getting the wealthiest one per cent of Americans to help support a long-term plan to cut the federal deficit and ensure that the interests of the members of the middle class (the 99 per cent) will be protected in the process.

Republicans, on the other hand, continue to espouse the anti-Washington rhetoric of the Tea Party movement and argue that only drastic cuts in government spending would resolve the deficit crisis; and that raising taxes on Americans will only diminish economic growth and constrain the ability of businesses to increase production and hire new workers.

If President Obama and the Democrats are expected to portray the Republicans as the puppets of the 'fat cats' in Wall Street, the Republicans will accuse their political rivals of protecting the interests of the 'bureaucrats' in Washington.

Hence, each side is hoping that the results of the 2012 election will provide the political mandate that it needs to pursue the kind of fiscal policies that are in line with the interests and the values of most Americans.

From that perspective, the Super Committee may be ending its work with a whimper. But its failure also marks the start of an election campaign that may - or may not - end with a big political bang.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Republicans fighting in the wrong arena

2011-11-17T12:35:00.000-08:00

Business Times - 18 Nov 2011

Republicans fighting in the wrong arena

Silly for their candidates to portray Obama as weak in foreign policy and national security

By LEON HADAR
WASHINGTON CORRESPONDENT

IT is difficult to decide whether to laugh or cry when listening to the debate on foreign policy among Republican presidential candidates. It's either militarist and pro-war or a display of ignorance of global affairs.

During televised National Journal/CBS debate devoted entirely to foreign policy issues last week, former Massachusetts Governor Mitt Romney - most observers expect him to eventually win his party's presidential nomination - and former Speaker of the House of Representatives, Newt Gingrich, sounded as though as they were planning to follow in the footsteps of George W Bush - the last Republican to occupy the White House - and lead America into a new war in the Middle East.

While President Barack Obama is engaged in a delicate balancing act on Iran - using diplomacy to press Teheran to put its alleged nuclear military programme on hold - both Mr Romney and Mr Gingrich, two candidates who should be knowledgeable about foreign policy, called for the US to use military action against Iran if diplomacy failed to do the job.

Mr Obama insisted that the economic sanctions against Iran had 'enormous bite', and that he was united with Russian and Chinese leaders in ensuring that Iran does not develop an nuclear weapon. Speaking at a news conference at the end of the Asia-Pacific Economic Cooperation (Apec) summit in Honolulu, he did not specifically say he would consider military action if Teheran were to persist in arming itself with a nuclear weapon, but added: 'We are not taking any options off the table. Iran with nuclear weapons would pose a threat not only to the region but also to the United States.'

If you are a responsible Republican leader who is hoping to become the next US Commander-in-Chief, you should first and foremost provide the current Commander-in-Chief with all the diplomatic space he needs to manage what is clearly seen as a very explosive foreign policy issue. The last thing you want to do is goad him to a point that forces the US towards military action against Iran at a time when the country is already occupying two countries in the Broader Middle East and has neither the financial resources nor the popular backing to be drawn into another military adventure there.

'If we re-elect Barack Obama, Iran will have a nuclear weapon,' Mr Romney stated during the debate. 'And if you elect Mitt Romney, Iran will not have a nuclear weapon,' he said. 'If all else fails, if after all the work we've done there's nothing else we can do besides take military action, then of course you take military action,' Mr Romney added.

And what happens if Mr Romney is elected as president and Iran does have a nuclear weapon? Will he go to war against Iran? Attack its nuclear sites? Invade the country? That no serious politician can or should lock himself to a fixed strategy on such an issue during an election campaign only makes it clear why he or she should not try to politicise it.

Which is exactly what Mr Romney, Mr Gingrich, Texas Governor Rick Perry, Congresswoman Michelle Bachmann, former Senator Rick Santorum, and former business executive Herman Cain were doing during the debate.

Public opinion polls

There is something silly, if not bizarre, in the continuing efforts by the Republican candidates to paint Mr Obama - who presided over the killing of Osama Bin Laden, the overthrow of Libya's Muammar Gaddafi, the build-up of US forces in Afghanistan, and a get-tough approach towards Pakistan - as indecisive and weak in handling US national security concerns.

Ironically, public opinion polls indicate that most Americans approve of the way Mr Obama is responding to the threat of terrorism and handling foreign policy in general. In a way, the Democratic President is 'stealing' national security from the Republicans, who traditionally were regarded as the party that was tough on the issues in contrast to the supposedly less assertive Democrats.

One of the Republican presidential front-runners seems to exhibit what amounts to total ignorance of the rest of the world. Former head of a pizza company, Herman Cain, warned recently that China was about to acquire nuclear capability (which it did in 1964). And during an interview with the Milwaukee Journal Sentinel editorial board, Mr Cain first said that he disagreed with Mr Obama's decision to back Libyan rebels - and then added that he likely would have done the same.

The Republican candidate with the most experience in foreign policy is Jon Huntsman, a former ambassador to China and Singapore (and former Governor of Utah) who has called for accelerating the withdrawal of US troops from Afghanistan and shifting the focus of US foreign policy in the 21st century to East Asia.

During the debate on Saturday, Mr Huntsman challenged Mr Romney's suggestion that Washington formally accuse China of currency manipulation at the World Trade Organisation (WTO), warning that 'I don't know that this country needs a trade war with China'.

Instead, the US 'should be reaching out to our allies and constituencies within China', Mr Huntsman said.

But Mr Huntsman remains at the bottom of Republican polls and has no chance of winning his party's presidential nomination this year. As he told Politico, as the Republican candidate with the most foreign policy experience, he felt as though he 'got left in Siberia'.

That says a lot about where the Republican Party is these days.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Don't write off re-election of Obama just yet

2011-11-15T12:09:00.001-08:00

Business Times - 16 Nov 2011

Don't write off re-election of Obama just yet

By LEON HADAR
WASHINGTON CORRESPONDENT

AT around this time next year, we are going to find out whether or not US President Barack Obama is going to occupy the White House for another four years. Many political experts and historians have almost written him off, pointing out that no incumbent US president won re-elected since 1945 with an unemployment rate of over 7 per cent. If the unemployment rate continues to hover around 9 per cent in 2012, Mr Obama's chances of winning a second term are under 50 per cent.

In fact, in the case of the seven successful re-election bids, the national unemployment rate averaged 5.17 per cent. Only once since 1948 had an incumbent president - Ronald Reagan - been re-elected when the national unemployment rate was over 5.5 per cent. Interestingly enough, not unlike Mr Obama, Reagan's first two years in office were dominated by a stream of bad economic news, with the national unemployment rate at 10.8 per cent in November 1982, but falling to 7.2 per cent by the time of the election in November 1984.

Moreover, coming out of a painful recession, the American economy had grown by 4.5 per cent in 1983, and would end up growing by an additional 7.2 per cent in 1984. But no serious economic forecaster expects Mr Obama to 'do a Reagan' with the American economy before next year's election. If anything, public opinion polls suggest that Americans are dissatisfied with the way Mr Obama has managed the economy and are in a very depressed mood about the future of the country.

That by a large margin, moderate independent voters - a voting bloc that tends to determine the outcome of national elections - share these sentiments explains why no gambler is going to bet his or her fortune on an Obama victory next November. Yet the models that political pollsters use to predict elections' results are not a product of exact science, and may not take into consideration many changing political and social variables, with the most dramatic being the shifting demographic trends, not to mention unforeseen developments such as an earth-shaking international crisis.

So it is not inconceivable that notwithstanding the lousy unemployment numbers, Mr Obama could win re-election. Consider the following four scenarios: Firstly, the momentum of the economic recovery could help change the mood of the voters. Just a slight improvement in the job numbers, with the unemployment rate falling to, say, less than 8 per cent next year, could make a difference.

Most Americans have figured out that Mr Obama was not responsible for the financial meltdown and the ensuing Great Recession, and recognise the magnitude of the economic crisis. They just do not believe that Mr Obama's policies have worked. A sense that the economic recovery is finally getting on track could help change the attitudes of many independent voters.

Secondly, it all depends on the Republicans' choice of presidential candidate. The conventional wisdom is that at the end of the day, the Republicans will get smart and despite their lack of enthusiasm about former Massachusetts Governor Mitt Romney, they will choose this moderate Republican who could be in a position to win the support of independent voters. But if the Republicans under the pressure of the Tea Party wing of the party end up selecting as their presidential candidate one of the more radical and controversial figures vying for their support in the primaries, they are going to make it more likely that Mr Obama will emerge as the winner.

Thirdly, Mr Obama's electoral coalition of 2008 could prove to be decisive once again in 2012. Indeed, Mr Obama's election victory three years ago highlighted the growing electoral power of new alliance of young voters, educated urban professionals, Hispanics, and African-Americans, that together helped produce a Democratic win in 'red' and 'purple' states like Virginia, North Carolina, Ohio, Colorado, and Nevada, where the traditional Republican electoral base - older white Americans and blue-collar workers - is eroding.

The main question is whether these 'Obama voters' are going to show up in large numbers next year like they did in 2008.

Fourthly, it is not inconceivable that the current diplomatic tensions between the US and Iran could evolve into a full-blown international crisis, including a American-led quarantine of Iranian ports. A dramatic face-off between Mr Obama and Iran's Ayatollahs is bound to provide the Commander-in-Chief with a political boost and help him win the election.

The prospects for a slight improvement in the economy, for a Republican presidential candidate other than Mr Romney, for young voters going to the polls, and for a confrontation with Iran, explain why no gambler is going to bet his or her fortune on an Obama defeat next November.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

America's Asia shift not so soon

2011-11-11T12:25:00.000-08:00

Business Times - 12 Nov 2011

America's Asia shift not so soon

As the Iran crisis may keep the US heavily engaged, both militarily and diplomatically, in the Middle East, its 'Pacific Century' will take a long time to come

By LEON HADAR
WASHINGTON CORRESPONDENT

BEFORE US President Barack Obama left Washington for Honolulu, Hawaii, where he is hosting leaders of the Asia-Pacific Economic Cooperation (Apec) forum for their annual summit this weekend, American officials reiterated once again renewed US commitment to diplomatic and economic engagement in Asia.

US Secretary of State Hillary Clinton - the first top American envoy to leave for Honolulu to attend the meeting of the regional grouping and who will travel to the Philippines, Thailand and Indonesia later this month - has been underscoring what she described the Obama administration's vision of 'America's Pacific Century' in several public addresses and published commentaries.

In fact, trying to convey to US economic and military partners in Asia its determination to project power in the region, Mrs Clinton will travel to Bali on Nov 17-19 for the East Asia Summit and the US-Asean Leaders Meeting, the first time that the United States is attending this regional forum.

Mr Obama will also travel to Bali for a meeting with East Asian leaders and will visit Australia as part of a calculated strategy to raise American profile in the region.

So has the Asia-Pacific region been placed on the top of the US foreign policy agenda after years during which the focus of American diplomacy and national security has been on the Broader Middle East? Some East Asian officials and pundits have criticised Washington for investing so much of its time and resources on the Middle East-centred war on terrorism, including the invasion of Afghanistan and Iraq, while treating the dramatic geo-political and economic changes taking place in Asia - signified by the rise of China as a global power - as a foreign policy sideshow.

Changing priorities

American officials insist that they are going to change their diplomatic priorities - and shift their full attention to Asia, now that the Obama administration is starting to pull out US troops from Iraq and preparing to end its decade-long war in Afghanistan in the next year or two.

The narrative that is being shaped is that Mr Obama, who was born in Hawaii and who described himself as the 'first Pacific President', hosting the Apec leaders meeting in one of America's territorial possessions, symbolises these changing priorities.

And, let us not forget, America is underscoring its membership in a group that represents the most dynamic part of the global economy at a time when the economies of the European Union are in the midst of a devastating crisis.

'The future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the centre of the action,' Mrs Clinton wrote in the November issue of the Foreign Policy magazine. 'Harnessing Asia's growth and dynamism is central to American economic and strategic interests and a key priority for President Obama,' she wrote in her article, stressing once again that America's diplomatic and economic frontiers this century lie, not in the Middle East (or Europe), but in Asia.

Kurt Campbell, US Assistant Secretary of State for East Asian and Pacific Affairs, said during a presentation this year that US foreign policy needed to transition from the Middle East to Asia. 'One of the most important challenges for US foreign policy is to effect a transition from the immediate and vexing challenges of the Middle East to the long-term and deeply consequential issues in Asia,' Mr Campbell said in August.

East Asia would 'shape the future of the 21st century', said Ben Rhodes, deputy national security adviser for strategic communications. Americans 'will see him (Obama) advocating for US jobs and US businesses', Mr Rhodes said. 'Increasingly, the centre of gravity in the 21st century is going to make the Asia-Pacific critical to all of our interests.'

All of this may sound good to many East Asian ears. Certainly, the Obama administration has moved beyond rhetoric and seems to be putting its money where its mouth is, increasing its economic and military cooperation with partners such as South Korea, India, Australia, and the Asean countries that have called for the US to expand its presence in the region as a counterweight to China - but without igniting a confrontation between Beijing and Washington.

The US Congress recently approved a free trade agreement with South Korea and Mr Obama has indicated that his administration was going to speed up the negotiations on the establishment of another free-trade system, the Trans-Pacific Partnership (TPP), which would include several Asian countries and Australia.

But the celebration of a new US Asia-centric strategy in Honolulu and all the talk about effecting 'a transition from the immediate and vexing challenges of the Middle East to the long-term and deeply consequential issues in Asia', is premature.

The US remains captive to Middle East politics and issues. And now there are some indications that it may be drawn into a new and costly diplomatic and military confrontation, this time with Iran.

To begin with: The US remains committed to protecting the interests of two of its leading military partners there, Israel and Saudi Arabia (and other Arab oil-producing states in the Persian Gulf) because of the inconclusive outcomes of the wars in Iraq and Afghanistan coupled with the collapse of two regimes with pro-American leaders in the region (Egypt and Tunisia).

In that context, the International Atomic Energy Agency's (IAEA) report on Iran's nuclear programme claims that there is 'credible' evidence that Iran has been seeking to obtain nuclear weapons technology. IAEA chief Yukiya Amano's own impartiality is in question, now exposed thanks to WikiLeaks, but it raises the possibility that Israel might bomb Iran's nuclear sites.

Major war

Indeed, Israeli leaders have warned that they might do that if the US and the international community do not force Iran to end its nuclear programme, raising the prospect of an Israeli military attack against Iran - with or without US approval - that would almost certainly draw in the Americans as well as some of Iran's military partners, such as the Hizbollah militia in Lebanon. Such a crisis could turn into a major regional war with damaging consequences for the global economy, including rising energy prices and that could bring the current faltering global economic recovery to a halt.

It would also ensure that Washington would remain locked into its 'immediate and vexing challenges of the Middle East', never mind its profession of interest in East Asia.

However, the notion that Israel would attack Iran without a green light from its major global backer does not seem like a realistic scenario. More likely, the Obama administration and the Israelis, with support from the Europeans, have been orchestrating the series of recent media reports about a possible Israeli attack on Iran as part of a coordinated diplomatic and psychological strategy aimed at persuading the international community - with China and Russia being the main targets of this campaign - to join in an United Nations-backed effort to impose new draconian sanctions on the Iranians.

Moreover, the Americans want to ensure that most of the US troops would be out of Iraq and do not become hostages to possible Iranian military retaliation before this diplomatic campaign gains momentum and leads to, say, a US-led naval blockade of Iran.

The Obama administration is trying not to repeat the mistakes that the Bush administration made in Iraq. Hence the reliance on a report issued by a UN agency, rather than claims from its own spy agencies or those of its allies. The strategy seems to be slow but steady multilateral pressure on Iran and a proclaimed commitment to employ military means only as the last resort. Washington is also hoping that such a strategy to contain Iran would allow the Americans to deploy some of its troops leaving Iraq in Qatar and other states in the Gulf.

But even if the best-case-scenario excludes a war with Iran, it still raises the prospects of continuing heavy US military and diplomatic involvement, with all its budget-sapping potential, in the Middle East. 'America's Pacific Century' will be a long time coming.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Job numbers no boost for Obama's re-election

2011-11-10T12:23:00.001-08:00

Business Times - 11 Nov 2011

Job numbers no boost for Obama's re-election

US October jobless data brought cheer, but may not be good enough to meet job targets

By LEON HADAR
WASHINGTON CORRESPONDENT

IS THE American economy showing some indications that it is experiencing a slow but steady recovery? The US jobs report issued by the Labor Department last week suggested that that may be the case. Eighty thousand American jobs were added in October - spread out in health care, hotels and restaurants and other temporary work - which helped to bring down the unemployment rate from 9.1 per cent to 9 per cent, the first decline since July and the lowest unemployment rate since April.

The net gain of 80,000 jobs in October was about 20,000 fewer than had been projected, but revised estimates from August and September showed the economy created 102,000 more jobs than initially thought (suggesting that we could see upward revisions to the October numbers). And heading into positive territory was the number of long-term unemployed - those out of work for 27 weeks or longer - which fell to 5.9 million.

That job creation turned to be even better than expected and the unemployment rates ticked down a little suggested that the US economy was not facing any risk of a double-dip recession right now. At the same time, one should not jump to the other conclusion that could be derived from the unemployment numbers - that the jobless recovery may be coming to an end.

When the previous jobless recovery was over in October 2004, the US economy started creating 250,000 to 300,000 new jobs a month for the next couple of years. But that is not going to happen anytime soon. In fact, many of the jobs that were created after 2004 would not ever come back, according to Keith Hall, a Labor Department economist.

'To keep up with just the population growth, you probably need - my estimate is around 130,000 jobs,' Mr Hall told a Congressional committee last week. 'So, at 80,000, you're not quite even keeping up with population,' he concluded, adding: 'So, in fact, over a long time, you might even see the unemployment edge back up.'

Also arguing that the unemployment cup was half-empty was the Federal Reserve, warning that unemployment was not expected to fall much through the end of next year and will be hovering around 8.5 to 8.7 per cent next year.

And that explains why President Barack Obama - whose advisers had projected that their policies would help bring the unemployment rate to about 6 per cent next year - will be facing an uphill political battle as he tries to win re-election next year.

Interestingly enough, two of the demographic groups that seem to be particularly vulnerable in the current economy and who have problems getting, or holding, a job are workers who are nearing retirement and younger workers who are getting out of college.

They constitute two electoral blocs - the middle-aged and the young voters - whose support Mr Obama needs next November, if he wants to win the presidential race.

Moreover, there are disturbing signs on the job front that are probably driving a sense of despair among voters who believe that their country was headed in the wrong direction, according to results of recent opinion polls.

A study conducted by the independent Pew Fiscal Analysis Initiative found that 4.4 million Americans or 31.8 per cent of those who were unemployed have been jobless for a year or more, a historic high rate for the period since the end of World War II.

According to the study, this long-term unemployment rate has doubled since 2009; some analysts suggest that the rate is even higher since many of the long-term unemployed who give up looking for work are not included anymore in the unemployed figure. And they warn that figures that point to a fall in the rate of long-term unemployment are thus misleading.

In any case, long-term unemployment becomes a structural, as opposed to a cyclical, problem; since the longer the workers are out of work, the harder it is to find work as their skills tend to deteriorate.

The Obama Administration and the Democrats argue that reducing unemployment will require additional fiscal stimulus. But there is a zero chance that Congress would approve more government spending. And no one expects that new steps by the Fed to loosen monetary policy would have any short-term effect on the unemployment number.

So it is not surprising that American voters are angry. The consensus among political experts is that under current economic conditions, which are clearly not going to improve by much in a year, Mr Obama would probably fail in his bid for re-election. This would be especially so if he ends up facing the former Governor Mitt Romney, a relatively moderate conservative, as his Republican challenger.

Yet what Mr Romney and other Republicans have to offer to re-energise the economic recovery and create new jobs is to cut taxes and reduce government spending. Opinion polls indicate that most Americans do not believe that such policies are going to improve things.

But if you are in your 50s and have been looking for a job for more than a year and your kid who has just graduated from college also cannot find a job, why would you re-elect the person who has been presiding over this economic 'recovery' for the last three years?

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The Revolt of the Political Man

2011-11-09T07:47:00.001-08:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Nov 9, 2011): http://nationalinterest.org/commentary/revolt-political-man-6136
The Revolt of the Political Man

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November 9, 2011
Leon Hadar [2]
Nation-states would have to give up some of their sovereignty to accommodate the forces unleashed by the flow of capital, labor and information, insisted globalization cheerleader Tom Friedman during the height of the booming 1990s.

If a state wanted to attract investment and create an environment conducive to economic growth, its government had to sacrifice some of its freedom to make economic policy, allowing global entities such as capital markets and multinational corporations to direct the government’s monetary and fiscal policies. As Friedman put it, governments needed to be tied in “the golden straightjacket;" otherwise, capital would flee to more capital-friendly economies.

Since it was inconceivable that governments would ask the heads of large private banks and corporations to decide whether they had to reduce deficits, curb inflation or change currency-exchange rates—choices traditionally made in democracies by the people and their elected representatives—political leaders handed the power to trigger the mechanisms that determine their nations’ economic policies to supranational entities and vested more power in the hands of apolitical central banks.

In the case of the European Union (EU), that “golden straightjacket” took the form of a common currency adopted by members of the eurozone and a European Central Bank (ECB), based in Frankfurt, setting monetary policy for the national governments and restricting their ability to embrace fiscal policies that expand deficit and ignite inflation.

In the United States, the growing prestige and power of the Federal Reserve under the chairmanship of Alan Greenspan, coupled with the increasing influence of Wall Street lobbyists on shaping legislation and policy making, ensured that the interests of investors would take precedence over those of voters when decisions on interest rates and fiscal priorities were made.

Voters in Europe and North America were willing to submit to what amounted to diminished democratic control over their economies during the 1990s and early twenty-first century for the same reason that Chinese citizens refrain from challenging their regime today: During times of economic growth and rising standards of living, voters seem to be less preoccupied with the quality of their political system. Eager consumers become apathetic voters.

During the period of economic prosperity in the West, it was the United States that remained in control of the global economy and set its rules. This forced painful changes in policies of emerging economies in exchange for assistance and investment during the financial crises in the 1990s. In the context of the EU, it was Germany and the German-controlled ECB that were supposed to encourage Greece and other southern economies to become fiscal and monetary clones of their northern eurozone brethren in exchange for never-ending flows of investment and financial aid.

But not only did the straightjacket start feeling tight in the aftermath of the financial crisis and the ensuing Great Recession; it also seemed to be losing its golden luster. Indeed, at a time of economic decline and lowering living standards, Americans and Europeans who could not consume as much as they did in the 1990s were turning into angry voters. They wanted to retake control of their political institutions and force them to set the rules of the economic game in a way that would respond to the interests of the majority of the people, which is how things are done in democracies.

You do not have to be an Occupy Wall Street protester or a member of the Tea Party to conclude that the erosion in state sovereignty and the placement of more economic power in the hands of the proxies of the global financiers and corporations have not benefited most of the citizens in the West. They found their tax dollars supporting the same multinational and globalized entities that were in business to make them more prosperous.

Friedman and other fans of globalization were correct in suggesting that removing the regulations that had limited the ability of capital to move easily across borders has helped accelerate global economic growth. The problem is that the nation-state has not disappeared, and most citizens of nation-states continue to live, work, consume and do business in the confines of national economies and societies that are subject to national rules and laws. Each national economy experiences different rates of growth and wealth distribution among its citizens, reflecting distinctive cultural identities, traditions and values, as well as political and economic choices.

From that perspective, the traits of industriousness, thrift and good government that characterize Germany and other northern European nations are at the root of their economic success and cannot be imposed through ECB policies on Greece, Italy and Spain, with their higher levels of job idleness, financial profligacy and corruption.

Notwithstanding the daydreams of cosmopolitan corporate executives, bureaucrats and intellectuals, the national identities and interests of the French, Germans, Greeks and Italians and other European nations remain vibrant and preclude the creation of a United States of Europe that could agree on common monetary and fiscal policies.

Similarly, the sense of economic insecurity felt by individuals and households in the United States helps strengthens collective identities that provide communal and social support and trigger political action. The Tea Party movement and the Occupy Wall Street protesters both signal this return of the political man bent on changing governmental choices and removing the golden straightjacket of the Wall Street-Washington axis.

It is the European nation-state that provides the most legitimate and effective mechanism for making decisions on war and peace as well as fundamental economic choices. After all, the long-term interest of investors is to have a viable political system under which they could operate and prosper.

The creation of the eurozone was an attempt to create a system that would respond to the needs of these globalizing economic elites while circumventing the political leverage of the people. Hence EU bosses and managers of the global economy are panicked over the "threat" of allowing Greek voters to decide whether to adopt draconian measures that would probably devastate the country's middle class. Of course it would, however, generate confidence among members of the global investor class.

A better approach would be a free-trade area along the lines of the Euro-skeptic view of former British prime minister Margaret Thatcher—a loose confederation of nation-states, devolving political power back to elected governments in Athens, Rome, Berlin and Paris. That would be a more viable political-economic project—a Europe of nations, as French president Charles de Gaulle envisioned it—than the current fantasy of a political federation of centralized monetary, and eventually fiscal, policies. Let Greece be Greece, and let Germany be Germany.

Leon Hadar, a Washington-based journalist and global affairs analyst, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).

Image: David Shankbone

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Overhauling U.S. Policy in the Middle East

2011-11-03T13:16:00.000-07:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Nov 2, 2011): http://nationalinterest.org/commentary/overhauling-us-policy-the-middle-east-6087
Overhauling U.S. Policy in the Middle East

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November 2, 2011
Leon Hadar [2]
The prevailing American narrative about the political upheaval in the Middle East maintains that the collapse of authoritarian regimes in the region would lead to a collision between democratic forces and Islamist movements and that the United States and its allies—including Israel—have an interest in ensuring that the former gain the upper hand in this power struggle.

But the changes emerging from the so-called Arab Spring go beyond a clash between pro-Western movements and Islamist groups. The shifting balance of power in the Middle East—triggered in part by eroding American influence in the region—is bringing to the fore realpolitik concerns that likely will overcome ideological considerations in the new Middle East. The Israel-Hamas prisoner exchange, the U.S. role in Libya’s civil war and the end of the U.S. military presence in Iraq all point in that direction.

Let’s begin with the prisoner exchange. The interesting thing about the exchange of one Israeli soldier for more than 1,000 jailed Palestinians was not that it happened, but that it happened now, when Islamist influence seems to be on the rise in Egypt.

Israeli leaders, with the support of most of the public and the elites, have been negotiating a deal along these lines for the last five years with Egyptian security officials playing the main role as mediator.

But following the fall of Hosni Mubarak’s pro-American in Egypt, the conventional wisdom in Cairo and Jerusalem was that the Israeli-Hamas negotiations would collapse. Pundits were predicting that the fall of a pro-American leader committed to the peace accords between Israel and Egypt would make it difficult for any new government to embrace policies perceived as beneficial to Israel.

In fact, anti-Israel rhetoric and demonstrations emanating from Tahrir Square and elsewhere—coupled with the growing diplomatic strains between the ruling Israeli Likud government and Islamist Turkish leaders and the continuing military tensions between the Jewish state and the Ayatollahs in Tehran—seemed to play directly into Israeli fears of being surrounded by a hostile Muslim entity.

Yet this nightmare scenario assumed that the Muslims in the Middle East—Egyptians, Turks, Iranians and Saudis as well as multiple tribes, sects and ethic groups—were going to form a unified political and military front to confront Israel. This scenario is based in part on real fears about the policies of Iran and Turkey and the rhetoric emanating from the Arab Street. But such fears have been amplified by Israeli ultra-nationalists and American neoconservatives with an agenda: They want to resist any serious challenge to the Israeli-Palestinian status quo and mobilize Israelis and their Washington supporters into new confrontations in the Middle East.

That the current Egyptian military leaders have decided to help the Israelis gain the release of Sergeant Noam Shalit was clearly not a reflection of dormant pro-Israeli inclinations in Cairo. Neither was the freedom of the Palestinian prisoners a reflection of any support for the Palestinian cause. Like Anwar Sadat and Mubarak, these leaders operate based on what they consider Egyptian national interests. And those interests include preserving the peace agreement with Israel and avoiding a military conflict with that country for the foreseeable future.

Indeed, contrary to what some Americans seem to believe, it is not the Egyptian-Israeli treaty agreement of 1979 or the billions of dollars in U.S. economic and military assistance to Egypt that have induced the Egyptians to refrain from going to war with Israel. The 1979 accord reflected the reality that the evolving power balance led both Israel and Egypt to conclude that a war between them would be too costly and detrimental to their interests.

The global and regional developments since 1979 have strengthened the determination of both sides to maintain peace. Egypt, economically bankrupt and unable to feed and educate its own people, is certainly not positioned to pursue military confrontation with Israel.

Moreover, the rise in power and influence of Egypt’s Muslim Brotherhood makes it more likely that future governments in in Cairo will have an interest in co-opting Gaza Strip Hamas leaders, whose movement is a political offshoot of the Islamist party founded in Egypt in 1928.

In a way, Hamas may be evolving into a client (mini)state of a more Islamist-oriented Egypt. In that context, Egypt’s interest would be in providing Hamas with enough support to prevent it from coming under the influence of the more radical players in the region, such as Iran. At the same time, driven by the kind of calculus that affects any relationship between leading powers and client states, Cairo would need to ensure that Hamas’s policies would not draw Egypt into a military conflict with Israel. Helping negotiate the Hamas-Israel deal fits nicely into such a strategy. It encourages Hamas to start reorienting its foreign policy from Syria, and by extension Iran, and more towards Egypt. That could create conditions for more pragmatic deals between Israel and Hamas, negotiated with Egyptian assistance. These wouldn’t likely bring about a peace accord between the two sides but might allow the ministate in the Gaza Strip to become an Egyptian protectorate of sorts that could coexist with Israel for some time to come.

That Turkey has also played an active role in negotiating the Israel-Hamas prisoner exchange is also an encouraging sign, notwithstanding the stresses in the relationship between Ankara and Jerusalem. The Turks have no interest in exacerbating tensions between Israel and its Arab neighbors because that could destabilize the Middle East, Turkey’s new diplomatic and economic frontier.

It’s probably not realistic to expect the emergence of a diplomatic and military axis between Egypt and Turkey that would join with Saudi Arabia and the other Persian Gulf oil sheikdoms to counter the influence of Iran and its satellites in Iraq and Lebanon and to manage the power transition in Syria. Turkey and Iran, after all, share common interests in curbing Kurdish irredentism inside their borders. Unlike the Saudis and the Israelis, Turkey wants to avoid a military confrontation between the United States and Iran.

But the reemergence of new cooperative and competing centers of power in the Middle East—Egypt, Turkey, Iran, Saudi Arabia—provide the United States, the European Union (EU) and Israel with new strategic opportunities. Instead of wasting time and resources on fantastical freedom agendas and countering the imaginary or real influence of political Islam, a more effective policy would be to hedge one’s strategic bets by forming ad hoc partnerships with these players to advance concrete interests.

Hence, in the aftermath of the agreement with Hamas, Israel could improve its relationship with Cairo and Ankara and perhaps even create the conditions for some sort of coexistence with Hamas-ruled Gaza. This could, not coincidentally, put more diplomatic pressure on the Palestinian Authority in the West Bank.

Indeed, the Israeli-Egyptian-Turkish collaboration that led to the prisoner exchange is one example of such a creative strategic approach that seeks new opportunities rather than fixating on old threats.

What this suggests for the United States is that there may be cost-effective ways of securing American interests in the Middle East at a time of political change there and of diminishing American military and economic resources. Libya offers a better approach than Iraq. Rather than pursuing hegemonic and ideologically driven policies, the United States could provide incentives for other players to handle some of the heavy lifting.

Indeed, the Iraq War could provide a case study of how not to pursue U.S. interest in the Middle East. President George W. Bush and his neoconservative advisers disregarded the ethnic and sectarian realities in Iraq and the balance of power in the Persian Gulf. Thus they helped shift power in Iraq from the Arab-Sunnis to the Arab-Shiites, all the while strengthening Iran.

That policy only harmed U.S. interests while failing to advance democratic values in Iraq, and it antagonized regional partners (Saudi Arabia; Turkey) as well as global players with interests to protect. The EU, for example, might have provided military and financial support to a more modest project aimed at containing Saddam Hussein’s Iraq.

In Libya, on the other hand, it was the European powers that took the military lead in bringing about regime change. America encouraged Britain and France to do so while it accepted a supporting military role.

The Obama administration’s policy in Libya, coupled with the announcement on withdrawing U.S. troops from Iraq by year’s end, may not signal that Washington is about to embrace a grand new strategy for the Middle East. But it is does suggest it is beginning to adapt its policies to the changing balance of power in the region.

Leon Hadar, a Washington-based journalist and global affairs analyst, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).

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The not-so-super committee

2011-11-03T13:15:00.000-07:00

Business Times - 04 Nov 2011

The not-so-super committee

Voters and investors are waiting nervously for Nov 23 to see if the Joint Deficit Reduction Committee succeeds in its task

By LEON HADAR
WASHINGTON CORRESPONDENT

ON NOV 23, the members of Congress who are members of the Joint Deficit Reduction Committee - AKA the 'super committee' - charged with cutting the US federal budget deficit will have to come up with a plan. They have to reach a minimum target of US$1.2 trillion in reductions.

The six Democrats and six Republicans who were selected by their parties to serve on this bipartisan Congressional panel and who have been meeting since September will have to reach an agreement on reducing the deficit by between US$1.2 trillion and US$1.5 trillion - with most of the spending cuts coming from cumulative alterations in the budgetary baseline over 10 years. Or to put it in simple terms, the lawmakers will have to propose cuts that would amount to about 3 per cent reduction in the amount of money that the US government would be spending in the next decade.

If the Democrats and Republicans fail to reach such an agreement, Congress will have no choice but to support automatic and across-the-board budget cuts in spending.

Â Optimists are hoping that a bipartisan agreement will be reached, as part of a historic solution to America's debt crisis. At the minimum, investors could feel more confident about the willingness and the ability of the politicians to end the political gridlock in Washington and to begin a process of putting the nation's fiscal house in order.

Â Moreover, a deficit-reduction deal between the Republicans and the Democrats that will come on the eve of the Christmas shopping season may provide a psychological lift for American consumers (who need to spend more) and businesses (that need to create more (jobs), producing the kind of virtuous circle that could finally start accelerating the American economic recovery.

Â But realists maintain lower expectations about the final product of the super committee and its impact on the economy. After all, it is important to recall that the establishment of the super committee resulted from the major gap between the two parties over fiscal policy, reflecting in turn, the wide ideological divisions between them.

Indeed, a deal on limited spending cuts and the forming of the deficit reduction panel was part of an effort to reach an agreement on raising the debt ceiling and avoiding a shutdown of the federal government in the summer.

Both Republicans and Democrats were concerned that the public would blame them for another political showdown over the budget.

Hence the unique legislative mechanism they agreed upon: if the members of the super committee fail in their mission, there will be across-the-board cuts that would affect spending on national security and domestic programmes.

Neither the Republicans nor the Democrats will be able to play 'chicken' and use the threat of a government shutdown in order to extract budgetary concessions from the other side.

Â That under any conceivable outcome of the negotiations the US government will not shut down before the end of the year is good news. But that is about it.

If anything, the political and ideological rift between the two parties has been widening since the debt ceiling debate, and there are no signs that the two sides are willing to reverse their positions.

The Republicans continue to insist that any long-term plan would require huge cuts in spending on the government-backed social-economic programmes but that they would not support increasing the tax burden in order to provide the government with new sources of revenue.

Â In fact, all the leading Republican presidential candidates have committed themselves to oppose any form of tax increase; and the continuing pressure from the anti-government Tea Party Movement ensures that the Republicans are not going to change their position on the issue.

At the same time, the Democrats would agree to back major cuts on government spending but only if the deficit reduction plan is based on increasing government revenues through higher tax rates on wealthy Americans.

Â President Barack Obama - who has come under a lot of criticism from members of the progressive wing of his party for making so many concessions to the Republicans during the negotiations over the raising of the debt ceiling - has been moving to the left in recent weeks. He now stresses his support for raising the tax rate on those Americans making more than US$1 million a year - a view that is shared by a majority of Americans, according to opinion polls.

Moreover, the emergence of the Occupy Wall Street movement has helped create a more ideologically divided political environment in which reaching a compromise on a deficit reduction programme becomes more difficult for the Republicans and the Democrats.

Yet it is not inconceivable that the Republicans and the Democrats on the super committee would surprise all of Washington - including themselves - by reaching some sort of a deal before Thanksgiving. Both sides are worried that the automatic, across-the-board cuts that could occur without a deal would impact on their respective spending programmes.

Republicans, in particular, are aware that such cuts could shrink the defence budget in a very dramatic way, while Democrats want to avoid major cuts in spending on medical and retirement insurance programmes. And both sides are coming under pressure from lobbyists and interests to ensure that such cuts are averted.

Â Â There is also a chance that members of the super committee could arrive at an agreement on an overhaul of the tax system, including the elimination of tax loopholes for businesses and consumers, as part of a plan to reduce the deficit. But strong opposition from business lobbyists and the general public is likely to derail dramatic changes in the tax code before next year's presidential and congressional elections.

Both Republicans and Democrats are hoping the elections will help tip the balance of power in Washington in their direction and allow them to get their own deficit plan enacted in 2013.

Voters - as well as investors - are watching nervously.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Tea Partiers, Wall Street Occupiers' ideas not new

2011-10-31T13:16:00.000-07:00

Business Times - 01 Nov 2011

Tea Partiers, Wall Street Occupiers' ideas not new

By LEON HADAR
WASHINGTON CORRESPONDENT

THERE is a lot of uneasiness among members of the political establishment in Washington these days. The rise of the Tea Party movement on the political right may have provided a short-term electoral lift for the Republicans by energising grassroots activists and helping the party mount a successful mid-term election campaign against President Barack Obama and the Democrats last November.

But Republican leaders are now concerned that the anti-establishment message of the Tea Partiers has convinced many centrist independent voters that the party has been hijacked by right-wing ideological fanatics. Republican leaders worry the Tea Partiers among presidential primary voters will wreck the chances of former Massachusetts Governor Mitt Romney, the most moderate and electable candidate, of winning the party's nomination.

A similar kind of ambivalence has characterised the attitude of many Democratic officials and lawmakers towards the emergence of the Occupy Wall Street movement on the political left. The protests against economic inequality and for using government to promote social justice seem to provide an effective political counter-balance to the influence of the anti-government Tea Partiers. The Occupiers' message is more in line with the general policy direction of the Obama Administration.

But there are also some worries in the White House and among congressional Democrats that the growing confrontations with the police and the more radical rhetoric espoused by some Occupiers could end-up producing a political backlash among the same centrist and independent voters that Democrats need to win over in order to gain the electoral upper-end in the presidential and congressional races next November.

While radicals and fanatics in both movements tend to gain a lot of media attention - whether it is a Tea Partier using racial epitaphs on President Obama or an Occupier trying to smash a police car - the most remarkable thing when trying to deconstruct their respective ideological messages is that neither of these movements has been able to articulate any new ideas on how to resolve America's current economic and social problems.

To put it in simple terms, the Tea Party seems to be promoting nothing more than the most recent version of Reaganism - the ideological agenda that was unveiled by former Republican president Ronald Reagan and his allies in the conservative movement in the 1970s and which called for reducing the control of government over the economy, deregulation and lower taxes and the unleashing the power of the free markets.

Reagan as well as his ideological ally in Britain, former Prime Minister Margaret Thatcher, proved to be successful in fulfilling some of those ambitious ideological goals, by reducing the income-tax rate and loosening a few government regulations. But the size of the federal government has continued to grow since then as Reagan's ideological descendants - for example, the Republican heading the Contract-With-America movement in the 1990s - tried to complete the job, and with only limited success.

In a way, while blaming the policies of the federal government for the recent financial crisis, what the Tea Partiers propose is that Republicans and conservatives take advantage of the fiscal insolvency of the government in order to bring the Reagan Revolution to its victorious conclusion by abolishing most of the federal social-economic programmes. At the same time, notwithstanding their image as an incarnation of the radical student movement of the 1960s, the ideological agenda being advanced by the Occupiers is more conservative than revolutionary, in a sense that they want to preserve - and strengthen - the foundations of the Welfare State president Franklin D Roosevelt had built in the 1930s through his New Deal policies.

So if the Tea Partiers are fans of the Reagan Revolution, the Occupiers should be regarded as New Deal buffs. Indeed, much of what the two sides are promoting is a form of ideological nostalgia - abolish government and cut taxes on the right; preserve the role of the government and increase taxes on the rich on the left - with some push for 'change'. Occupiers propose a Glass Steagall II and Tea Partiers put forward a plan for 'flat tax'.

It is true that the two movements have played an important role in setting the debate in Washington and around the country with the Tea Partiers drawing attention to rising government spending and the Occupiers raising the issue of growing income equality. But neither of the two has come up with a new set of innovative ideas that take into consideration the changing realities at home and abroad.

Instead they continue to make a lot of noise by recycling old ideas and intensifying the partisan split in Washington; and that only leads to more political stalemate and ensures that no change will take place anytime soon.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Change in US only after political elites go

2011-10-27T13:13:00.000-07:00

Business Times - 28 Oct 2011

Change in US only after political elites go

It seems as though the US is experiencing symptoms of a pre-revolutionary political system

By LEON HADAR
WASHINGTON CORRESPONDENT

SCIENTIFIC methods and techniques of polling a demographically representative sample of public opinion were used for the first time in the 1930s, so we would probably never know how the majority of the French in 1789 or the Russians in 1917 had felt about their respective rulers who ended up being overthrown in two of the modern age's historic revolutions.

But thanks to the most recent polls conducted by a leading opinion research group, we do know that 89 per cent of Americans say they distrust their government to do the right thing and 84 per cent of them believe that their politicians are leading their country in the wrong direction.

Moreover, according to the latest New York Times/CBS News poll, 69 per cent of the public thinks that the Republicans who control Congress favour the interests of the rich and two thirds of Americans believe that wealth should be distributed more evenly.

Americans' distrust of their ruling elites has never been so high. It sounds as though the United States may be experiencing the symptoms of a pre-revolutionary political system.

And, indeed, the rise of major populist trends on both sides of the political spectrum - the Tea Party movement on the political right and the more recent Occupy Wall Street protests on the left - reflect the growing American disenchantment with their political system.

Against the backdrop of the worst economic crisis since the Great Depression of the 1920s and a continuing high rate of unemployment at a time when economic and social inequality has been widening in the country, Americans seem to be coming to the conclusion that they cannot look to Washington to fix their problems.

If anything, the politicians there only seem to be making a bad situation worse, as demonstrated in the ugly spectacle of partisan fighting during the summer over whether to raise the nation's debt limit and the ensuing concerns about America's credit-worthiness.

The non-partisan Congressional Budget Office issued a report this week confirming what everyone knows, that the top one per cent of earners more than doubled their share of the country's income over the last three decades.

It is not surprising, therefore, that 66 per cent of those polled in the New York Times/CBS News survey believe that money and wealth should be more evenly distributed among Americans, a view shared by the majority of Democrats and Independents and a third of Republicans.

In a way, what seems to bother most Americans has to do with the way the relationship between Washington and Wall Street has evolved since the 1980s in the aftermath of the de-regulation of the financial industry under Ronald Reagan.

With the growing political power of the Wall Street's lobbyists in Washington, the two political parties benefiting from a stream of financial support from the big banks and hedge funds are perceived by both the Tea Partiers and the Occupiers as being in the pockets of the much-reviled 'fat cats'.

The rage of both the Tea Partiers and the Occupiers has been directed against the government's bailout of the too-big-to-fail financial institutions with the two movements calling for breaking up the political bonds between the elites in Washington and the Wall Street.

If the Tea Partiers believe that the unholy marriage between the politicians and the financiers is a product of machinations by liberal apparatchiks which violates the traditional principles of the free markets and runs contrary to the interests of hard-working Americans and entrepreneurs in Main Street, the occupiers argue that this Washington-Wall Street axis results in the concentration of political and economic power in the hands of one per cent of Americans to the detriment of the interests of the rest.

These competing explanations by populists on the right and on the left rest on ideological doctrines that fail to take into consideration the complexities of the economic and social transformation that has been triggered in turn by dramatic technological and demographic changes and the evolution of the entire global economic system.

This populism comes with strains of anti-intellectualism, anti-government and anti-capitalism, and is also playing into the hands of right-wing and left-wing demagogues that scapegoat immigration or trade or China for the nation's problems.

At the same time, the structural impediments to political change, including a stagnant legislative system, a gigantic bureaucracy and the continuing influence of the lobbyists, make it close to impossible for reformers to work for change from within the system, highlighting the growing detachment between the public and the political class.

It is very doubtful that next year's presidential and congressional elections are going to help create a political environment more conducive for change. More likely, Republicans and Democrats will try to exploit the populist fury for partisan purposes.

Change will only come if and when the members of the current political class would leave the scene, helping facilitate new ideological and political realignments. It probably would not look like the French or Russian revolutions. But it would not be a pretty picture.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Conflicting thoughts of Republicans

2011-10-25T13:26:00.000-07:00

Business Times - 26 Oct 2011

Conflicting thoughts of Republicans

US moves on Libya and Iraq may be a sign it's adapting its policies to changing balance of power in the region

By LEON HADAR
WASHINGTON CORRESPONDENT

REPUBLICAN politicians, including the party's leading presidential candidates, as well as Fox News' right-wing pundits and the armchair warriors on the conservative blogosphere have been suffering from an acute case of foreign-policy cognitive dissonance in recent months.

They have been bashing President Barack Obama for failing to stand up for US interests in the Middle East and for cosying up to anti-American (and anti-Israeli) Arabs and radical Islamists. Yet this same president is the one who ends up assassinating Osama bin Laden and other Al-Qaeda figures and helps topple (and kill) Libya's Muammar Gaddafi, the notorious godfather of international terrorism and long-time symbol of Arab radicalism.

And Mr Obama also takes a tough stand in dealing with Pakistan's political and military leaders, insisting that they end their support for anti-American guerrillas who are hindering the United States' anti-Taliban campaign in Afghanistan that has been bolstered by, you know, the 'un-American' and 'appeaser' of terrorism, President Barack Hussein Obama.

Trying to resolve this cognitive dissonance, Republican Senator Marco Rubio from Florida - a Tea Party favourite who is regarded as a possible vice-president candidate - refrained from congratulating the US for helping rid Libya of Col Gaddafi, and suggested that France and Britain deserve credit for carrying 'the load' of the mission in Libya and criticised Mr Obama for not acting earlier.

Ironically, a large number of Republicans and conservatives were critical of the White House for its decision to provide logistical support for the military operations in Libya. Republican presidential candidate Michele Bachmann, a Representative from Minnesota, insisted that Washington had no strategic interests to protect in Libya, a view shared by some of her Republican colleagues who seemed to be all over the political map when it came to Libya, accusing Mr Obama simultaneously of doing too much and too little there.

And now after Mr Obama announced a day after Col Gaddafi's killing that the US would be pulling the rest of its troops from Iraq in the coming months - following through on a decision that had been made by his Republican predecessor - the Republicans are also accusing Mr Obama of foreign-policy ineptitude and weakness, charging that ending the US military occupation of Iraq would provide an opportunity for Iran to expand its influence in Iraq and strengthen its position in the region.

This Republication position totally disregards the fact that it was the earlier decision by Republican president George W Bush in 2003 to invade Iraq and topple Saddam Hussein that helped bring to power a Shiite-led government in Baghdad with ties to Teheran. It also removed the main strategic counter-balance to Iran in the Persian Gulf.

Moreover, comparing the different strategies employed by the US to bring about changes in regimes in Libya and in Iraq suggests that in choosing the most cost-effective policies in trying to secure American interests in the Middle East at a time of political change in the region and of diminishing American military and economic resources, Washington should eschew a hegemonic and ideologically driven course and attempt to lead 'from behind' by providing incentives for regional and other interested players to take action and do some of the heavy lifting.

The Iran factor

Indeed, the Iraq war could provide a case study of how NOT to pursue US interest in the Middle East. Embracing an ideological dogma that assumed that America and the West were in the midst of a global clash with radical Islam ('Islamofascism') and that Washington would win that war by 'liberating' Iraq and promoting its own version of political and economic freedom, Mr Bush and his neo-conservative advisers disregarded the ethnic and sectarian realities in Iraq and the balance of power in the Persian Gulf. They unleashed a military confrontation that helped shift power in Iraq from the Sunnis to the Shiites which strengthened Iran's position.

That policy only harmed US interests and failed to advance liberal and democratic values in Iraq and the region, and it antagonised regional partners (Saudi Arabia; Turkey) as well as global players with interests in the Middle East, such as the European Union.

In Libya, on the other hand, it was not the Obama administration that orchestrated the rebellion against the regime of Col Gaddafi, and its insistence on not sending ground troops left the European powers with no other choice but to take the military lead in bringing about a regime change there.

While Washington denied Britain and France the opportunity to depose Egypt's leader Gamal Abdel Nasser in 1956 as part of a process aimed at achieving American hegemony in the Middle East, a half-of-a-century later the Americans were encouraging these two European powers to help get rid of a dictator in neighbouring Libya and return to a military role in their geostrategic backyard.

The Obama administration's policy in Libya coupled with the announcement of withdrawing US troops from Iraq may not signal that Washington is about to embrace a new grand strategy for the Middle East. But it may be a sign that it is beginning to adapt its policies to the changing balance of power in the region.

Instead of trying to enforce its agenda and impose its will on the Middle East, Washington should play a more modest and effective role of the strategic balancer of last resort, using its diplomatic power to form coalitions aimed at containing potential threats, and applying its military power in a limited fashion - and only if and when other regional and global players with direct interests in what is happening there cannot get their act together.

Only fools rush into military interventions. The wise consider the costs and the alternatives.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

And now it's time for 'Cainesian' economics

2011-10-20T13:33:00.000-07:00

Business Times - 21 Oct 2011

And now it's time for 'Cainesian' economics

Former pizza salesman Herman Cain could well be next Republican presidential candidate

By LEON HADAR
WASHINGTON CORRESPONDENT

POP psychologists have proposed that there is a certain kind of woman who consistently tends to reject Mr Right, the trustful, responsible, hard-working and intelligent man who loves and wants to marry her. Instead, she seems always attracted to Mr Wrong who almost everyone knows is just not good for her. These days it seems that the entire Republican Party may be suffering from this Rebuffing-Prince-Charming disorder.

Republicans will have to marry - electorally speaking, that is - one of their party's presidential candidates in the coming months in a wedding ceremony aka 'presidential primaries' with the prospective groom carrying them straight into the White House (hopefully) after next year's elections.

But the man who has been courting the Republicans for the last eight years - good family, attractive, successful, smart - has yet to win the heart of the prospective bride. She is still looking around, going on dates with all kinds of weirdoes, and is unable to make up her mind.

Poor Mitt Romney. You have to feel sorry for a guy who looks like an actor that a Hollywood movie director would cast in the role of an American president. He is a member of a prominent Republican political family (his father, George Romney, served as a successful governor of Michigan and also ran for president), a graduate of Harvard University's schools of law and business and a successful business executive who made a lot of money.

He also served as the CEO of the Organising Committee for the Salt Lake City 2002 Winter Olympic Games, and was elected as the governor of Massachusetts, a Democratic-leaning and liberal state.

Moreover, with Democratic President Barack Obama losing public support as the American economic recovery continues to stagnate, the Republicans seem to have a good chance of winning the 2012 presidential race. And public opinion polls indicate that Mr Romney, a centrist and moderate Republican who is doing particularly well among independent voters, a crucial voting bloc, has a better-than-even chance of defeating Mr Obama next year.

And this guy is not good enough for you, Ms Republican? Apparently not. In fact, Republican voters had already rejected the overtures from Mr Romney once, when they nominated Senator John McCain from Arizona as their (failed) presidential candidate four years ago. But Mr Romney has not given up and is asking for his party's hand once again.

And, unfortunately, he continues to get the cold shoulder from Republicans who just do not seem to be falling in love with him.

First, there was some talk that former Alaska governor (and ex-vice-presidential candidate) Sarah Palin was the preferred candidate. But it seems that she prefers making money on the lecture circuit and as a talking head on Fox News television in the coming years, and she can make more money than she would make in the White House.

And then there was the fling with celebrity millionaire and television entertainer Donald Trump who was leading in the Republican opinion polls for a few weeks. But that died out after a while, and was followed by a brief but sizzling affair with Congresswoman Michelle Bachmann from Wisconsin, a favourite of the Tea Party and a social conservative whose husband is a therapist specialising in 'curing' homosexual men and helping them to become 'straight'.

But that was before Texas Governor Rick Perry showed up at the door and asked our Republicans to a dance. That seemed to be love at first sight. The tall, beefy and folksy cowboy and a man of (Christian) faith, governing a state that has done economically better than the rest of the country, Mr Perry rose to become the leading Republican presidential candidate for a while.

That however did not last very long. Mr Perry performed miserably in the televised debates between the Republican presidential candidates and his commitment to restricting illegal immigration from Mexico was challenged after it was discovered that he had allowed the US-born children of these 'illegals' to study in the state's public schools.

So after the Republicans started losing that loving feeling towards Mr Perry - and following their unsuccessful attempts to get New Jersey Governor Chris Christie to join the race - some speculated that Mr Romney could end up after all as the default Republican choice.

Well, not so fast, please. Enter Herman Cain, a former CEO of Godfather's Pizza who has almost no political experience - and brags about it, describing himself as the only 'non-politician' among the Republican candidates. The former pizza salesman who also happens to be African-American - raising the prospects of a presidential race between two black candidates - seemed to have won many Republican hearts with his so-called 9-9-9 tax overhaul plan that calls for lowering income and corporate tax to 9 per cent while adding a 9 per cent sales tax.

Independent analysts have concluded that contrary to Mr Cain's claim that his plan would be a boon for the middle class, the 9-9-9 plan would actually reduce the tax burden on the wealthy and increase it on lower and middle-class voters. Yet Republican voters seem to like that idea as well as his other proposals - for example, to build an electric fence on the border between Mexico and the United States.

So Mr Cain continues to lead in the Republican presidential polls, leaving poor Romney behind. But Mr Romney and his aides are confident that it would not be long before that romance too would come to an end and that Republicans would do the right thing and come back home to Mr Right.

There is always hope.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Republican presidential candidates and foreign policy

2011-10-18T09:14:00.000-07:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Oct 18, 2011): http://nationalinterest.org/commentary/reaganite-among-neocons-the-2012-gop-race-6020
A Reaganite among Neocons: The 2012 GOP Race

| More [1]
|
October 18, 2011
Leon Hadar [2]
It is tempting to predict U.S. foreign policy under prospective presidents by deconstructing their campaign statements. But such exercises can produce misleading conclusions. Woodrow Wilson and Franklin Roosevelt both campaigned on pronouncements that they wanted to keep the United States out of European wars. Both later led the country into direct military involvement. And two Republican presidential candidates who had run on staunch anticommunist platforms ended up transforming U.S. ties with communist rivals: Richard Nixon’s opening to China and policy of détente with the Soviet Union; and Ronald Reagan’s historic nuclear arms-control agreement with Moscow.

More recently, presidential candidate Bill Clinton bashed then-president George H.W. Bush for "coddling" Beijing. Once in office, he promoted normalized trade relations with China and its accession to the World Trade Organization. Who could forget candidate George W. Bush’s campaign pronouncement that "nation building" should not be an integral part of U.S. foreign policy. As president, he embraced a resolve to liberate, democratize and “remake” Iraq, Afghanistan and the rest of the Middle East.

Indeed, presidents frequently have acted contrary to the attitudes they expressed on the campaign trail. But even if actual policy is poorly predicted by what is said on the stump, a close look at the candidates' stated foreign-policy approaches does provide insights into what they likely will do in office.

Consider, for example, Barack Obama’s foreign-policy views as expressed during the 2008 presidential campaign. The candidate’s statements provided valuable insights into what would become his main national-security and diplomatic priorities, including his shift in strategic concerns from Iraq to Afghanistan, his effort to improve relations with Russia and the Muslim World, and his resolve to reenergize Israeli-Palestinian peace efforts.

Obama had been an early opponent of the Iraq War and a critic of the neoconservative unilateralist and militarist foreign policy embraced by the second President Bush. But candidate Obama never suggested that his position was grounded in any leftwing or progressive anti-interventionist principles. Instead, he reiterated several times during the campaign that he respected the “realpolitik” types who were responsible for the more traditional internationalist diplomacy of the first President Bush. In fact, Obama consulted with one of these realist luminaries, former national security adviser Brent Scowcroft, about his foreign-policy picks for the new administration.

Indeed, Obama’s foreign policy reflected pragmatic and realist inclinations similar to those of George H.W. Bush—as opposed to being driven by strong ideological convictions. Domestic political and bureaucratic pressure and the global balance of power in the aftermath of the Great Recession made it difficult for Obama to achieve some of his more ambitious goals on Iran and Israel/Palestine or in Afghanistan. But his cautious response to the political upheaval in the Arab World recalled the pragmatic strategies of Bush in response to the collapse of the Soviet Union and of the Nixon-Kissinger team following the U.S. defeat in Vietnam.

The downfall of the pro-American autocrats in Tunisia and Egypt and the growing threat to regimes that are either allied with Washington (Bahrain) or doing business with it (Yemen) amounted to a devastating blow to U.S. strategic interests in the Middle East. Add to this the costly military intervention in Iraq, the inconclusive war in Afghanistan, the deadlocked Israeli-Palestinian peace process, Iran's nuclear military program, and the diverging U.S. and Turkish interests. In the face of all this, Obama recognized the constraints on America’s ability to maintain its hegemony in the region and eschewed the announcement of any new Grand Strategy.

Adjusting to the political changes in the Middle East, Obama accepted the inevitable (Egypt), sought to mold it (Bahrain), used limited military power (Libya) and treated through diplomacy (Libya)—while pressing European and Arab allies to assume more responsibilities in the region and seeking to generate a sense of momentum on the Israeli-Palestinian front.

With American economic foundations eroding and its military overstretched, Obama’s policies have been sensible and cost effective. Yet listening to the Republican criticism of Obama’s foreign policy one could conclude that the United States is still at the height of the post-Cold War “unipolar moment” and America’s global preeminence is under challenge only as a result of the president’s alleged failure to stand up for American interests and values, including its Pax Americana in the Middle East.

These Republicans reject the notion that the international system already—well before Obama—was acquiring more multipolar characteristics as China and other powers began to challenge the United States in the geostrategic and economic arenas. Among GOP presidential candidates, former Masschussetts governor Mitt Romney clearly is in this camp, as reflected in his recent foreign-policy address at the Citadel in South Carolina.

“America is not destined to be one of several equally balanced global powers,” Romney declared, pledging to ensure this will be another “American century.” He pledged to increase the construction of naval ships, strengthen the alliance with Israel, enhance the deterrence against Iran, appoint a top official to act as U.S. proconsul in the Middle East, and perhaps even slow the withdrawal of U.S. forces from Afghanistan.

This mishmash of policy ideas assumes that Washington should and could reverse its military and economic decline. But it does not explain how that would happen or how the United States could ensure that it will not become “one of several equally balanced global powers.”

In a way, Romney and most of the other Republican presidential hopefuls call to mind Churchill’s stated insistence that Britain would retain its empire in India and elsewhere after 1945. That was a fantasy, as is the idea that America can call the shots in the Middle East with budget deficits rising to the stratosphere and the American public losing its appetite for a rerun of George W. Bush’s military adventures, nation building and democracy promotion. Romney and other Republicans miss the reality that it was George W. Bush’s Mideast policies that weakened American power in the region—by strengthening the power of Iran and its regional satellites.

Moreover, while Romney and other Republicans appreciate that China is emerging as America’s main global competitor—Romney has chastised China’s trade policies as harming U.S. interests—they fail to acknowledge that U.S. diplomatic preoccupation with the Middle East and its military intervention there have made it impossible to invest more time and resources in strengthening its power in East Asia.

The only Republican presidential candidate who comes close to recognizing these changing strategic and economic realities—and in particular, the rise of China—is Jon Huntsman, who is fluent in Chinese and served as U.S ambassador to Beijing.

In an address in Southern New Hampshire University on Monday, Hunstsman called for a reversal of the policies of George W. Bush. “It's time to erase the old map,” he said. “End nation building, engage our allies and fix our economic core.”

Sounding more like President Obama and Herbert Walker Bush, he insisted that “we need a foreign policy based on expansion—the expansion of America's competitiveness and engagement in the world through partnerships and trade agreements.” He called for a new era of U.S. global engagement based on strong economic partnerships and a leading role in what he said would be a new “Pacific Century.”

Huntsman refrained from promoting ambitious U.S. military commitments abroad and proposed instead “more agility, more intelligence and more economic engagement with the world.” America “must right-size our current foreign entanglements,” he said. “Simply put, we are risking American blood and treasure in parts of the world where our strategy needs to be rethought.”

Huntsman reiterated that he would withdraw most U.S. forces from Afghanistan while leaving a small core of troops on the ground there next year. “It is cultural arrogance to think we can make tribal leaders into democratic leaders,” he said. “It is wishful thinking to believe that our troops, by staying for a couple more years, will prevent further instability or even civil war.”

In some ways, Huntsman sounded more “Reaganite” than both Romney and Obama. He pledged to develop strong economic ties with fast-growing Asian nations; hailed the expected passage of pending trade deals with South Korea, Colombia and Panama; and said he would pursue agreements with Japan and Taiwan and conclude negotiations on a trans-Pacific partnership trade accord, which he said would open markets in Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Such policies would not only boost the American economy but also would allow the United States to strengthen ties with Asian countries that could serve as a counterweight to rising Chinese power.

In contrast to his opponents for the Republican nomination, Huntsman reflects the Republican tradition of a prudent foreign policy and a strong role in the global economy—which in turn serves as a road map for reshaping the U.S. position in a changing international system. It is unfortunate that Republican voters aren’t likely to embrace his proposals. But a President Romney, bitten by reality, may have to abandon his campaign rhetoric and govern more along the lines of Jon Huntsman’s outlook.

Leon Hadar, a Washington-based journalist and global affairs analyst, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).

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What the three new US FTAs portend

2011-10-17T13:10:00.001-07:00

Business Times - 18 Oct 2011

What the three new US FTAs portend

Given Democratic opposition, Obama is likely to shelve any fresh foreign trade initiatives until after the 2012 elections

By LEON HADAR
WASHINGTON CORRESPONDENT

PROPONENTS of global trade liberalisation in Washington and elsewhere are cheering the passage of three long- delayed free-trade agreements (FTAs) in the US Congress last week. The FTAs with South Korea, Colombia and Panama are the first such agreements since 2007, and the deal with South Korea (the world's 15th-largest economy) is regarded as the most important trade agreement since the passage of the North American Free Trade Agreement (Nafta) in 1994.

The good news is that all three deals gained some bipartisan support, which allowed them to pass by wide margins. In the House of Representatives, the Colombia FTA passed by a vote of 262 to 167, the Panama deal passed 300 to 129, and the South Korean measure by a margin of 278 to 151. The Senate saw similarly large margins in favour of the bills with the Colombia one passing 66 to 33, the Panama one by a vote of 77 to 22 and the South Korea measure 83-15.

The bad news is that despite the Obama administration's strong support for the measures, many of those in Congress who voted against the bills were members of the President Barack Obama's own party - including Senate Majority Leader Harry Reid, who voted against all three bills, demonstrating the weakening power of the pro-free trade wing in the Democratic Party.

Indeed, the 15 votes against the South Korean deal in the Senate were all from Democrats, while in the House of Representatives, 130 of the 151 'no' votes were Democrats.

Strategic relationship

The passage of the South Korea FTA was particularly significant and timely. South Korean President Lee Myung-Bak arrived in Washington for a state visit last Thursday and made a trip to Detroit with President Obama during the weekend.

The Obama administration hopes that the approval of the trade deal with South Korea will underscore the economic ties as well as the strategic relationship between Washington and Seoul at a time when both governments remain concerned about North Korea's military nuclear programme and the increasing assertiveness of China in the region.

The United States and South Korea and Panama had originally signed the FTAs back in 2007 while the one with Colombia had been concluded in 2006. But the Democrats who had taken over Congress at that time refrained from bringing the FTAs for a vote, reflecting the opposition to the trade deals from their allies in the trade unions.

And President Obama, who had campaigned as a proponent of 'fair trade', contributed to the stalemate on the three FTAs by demanding that they be revised to take into consideration the concerns of US businesses and workers.

Moreover, the White House and the Congressional Democrats insisted that before sending the three trade agreements to Congress for ratification, Congress renew a Trade Adjustment Assistance (TAA) package that would provide assistance to workers laid off as a result of free-trade agreements. The Republicans had initially opposed such a move, arguing that it would add to the ballooning budget deficit but eventually reached a compromise with the Democrats on the issue.

But at a time when much of the legislative work on Capitol Hill has been stalled as a result of the political deadlock between the White House and the Congressional Republicans, the ratification of the treaties (which was largely negotiated by the previous Bush administration) could be regarded as a unique development: a victory for both President Obama and Republicans leaders on Capitol Hill as well as for numerous businesses that are expected to benefit from removing restrictions on trade between the US and its three trade partners.

Indeed, the main reason for Mr Obama's decision to enunciate the benefits of free trade has been his conclusion that accelerating trade liberalisation could help create new jobs in the US at a time when the rate of unemployment remains stuck above 9 per cent. Advocates of the three deals have argued they would stimulate the ailing US economy and generate employment by helping to gene- rate US$13 billion in new US exports, primarily to South Korea, and having the potential to create as many as 300,000 jobs.

'I look forward to signing these agreements,' the president said, hailing the passage of the deals as 'a major win for American workers and businesses', and emphasising that they would 'significantly boost exports that bear the proud label 'Made in America', support tens of thousands of good-paying American jobs and protect labour rights, the environment and intellectual property'.

Echoing that view was President Obama's leading Congressional nemesis, the Republican Speaker of the House of Representatives John Boehner, who said in a statement that 'these significant trade pacts will provide new opportunities for American small businesses, farmers and manufacturers to expand and hire more workers', adding that 'these common-sense agreements reverse that trend, level the playing field, and provide US job creators access to new customers and markets to sell their products'.

But against the backdrop of the anti-Wall Street demonstration spreading around the country, many Democrats are expected to warn that much of the gains from the trade deals will take the form of new profits for US businesses and will come at the cost of layoffs among American workers because of more competition from South Korean imports. Worse, the burden will fall on older workers without tertiary education who are losing their jobs in the declining manufacturing sector.

Elimination of jobs

Richard Trumka, president of the AFL-CIO, the leading American labour union, warned that the trade pact with South Korea would lead to the elimination of 159,000 US jobs.

That the approval of the three trade agreements with overwhelming Republican support came a day after the Republicans succeeded in forcing the Senate not to proceed with President Obama's US$447 billion plan to create new jobs and in the same week that Democrats joined by a few Republicans pressed through the Senate a bill aimed at punishing China for pursuing a 'misaligned' currency policy poses a major political dilemma for President Obama.

In the coming months, he could join forces with the Congressional Republicans in trying to revive the dormant global trade liberalisation agenda and pursue trade agreements with Japan and Taiwan while concluding negotiations on a Trans-Pacific Partnership trade accord, which would open markets in Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. That could help not only create new American jobs, but would also strengthen the US strategic position in East Asia.

But, more likely, facing the strong opposition of the Democrats, labour union and other left-leaning groups, President Obama is likely to place the rest of his trade agenda on the policy backburner until after next year's presidential and Congressional elections, when the issue will be taken up by him - or by the Republican who replaces him in the White House.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The conning of Barack Obama

2011-10-13T13:12:00.000-07:00

Business Times - 14 Oct 2011

The conning of Barack Obama

A controversial new book claims that the idealistic president has been systemically thwarted in his reform programmes

By LEON HADAR
WASHINGTON CORRESPONDENT

EVEN in the age of 24/7 news when the most recent gossip in the blogosphere can ignite never- ending debate on cable TV news shows, forcing a politician to resign from office or produce a diplomatic row, the printed pages of that most archaic form of 'dead-tree-ware' - the Book - can still upstage the Web page and make a difference in Washington's online media-saturated universe.

Indeed, every once in a while, excerpts from a soon-to-be-published non-fiction book (which critics immediately denounce as, well, fiction) are circulated among officials and journalists, creating a 'buzz' and, in the process, redefining the political discourse and resetting the policy agenda.

For example, a series of books by prominent investigative reporter Bob Woodward that provided insiders' accounts of policymaking and of political and bureaucratic infighting and backstabbing under President George W Bush drew attention to the ineffective decision-making process in the White House that resulted in the military fiasco of the Iraq War.

It also helped shape the attitudes of the media and Congress towards the former Republican president and his national security team.

And now another prominent journalist, trying to provide a deconstruction of the response of President Barack Obama and his administration to the mess on Wall Street and the Great Recession has ignited an explosive debate in Washington over the economic policies pursued by the current White House occupant and his top economic advisers.

More specifically, in his just-released Confidence Men: Wall Street, Washington and the Education of a President (New York: Harper, 2011), Pulitzer Prize-winning author Ron Suskind tries to explain why a young and talented politician who had promised during the election campaign not only to rescue and revive the ailing American economy, but also to transform the way Washington works, has failed to maintain the support of an economically distressed electorate.

Indeed, he is now facing the prospect of not getting re-elected to a second term in office.

Insiders dishing dirt

Suskind's tale of the economic policy- making woes of the Obama administration (which, as in the case of Woodward's book, relies heavily on accounts of insiders dishing dirt on one another) raised the political temperature in Washington even before it hit the shelves in bookstores three weeks ago.

The media reported that Mr Obama was portrayed in the narrative as an inexperienced president whose ineffective managerial style, including his struggles with a divided group of economic advisers, was at the heart of what many see as the failure by the administration to deal with the economic crisis.

In fact, in one of the more sensational revelations in Confidence Men, Suskind reports that US Treasury Secretary Tim Geithner ignored a direct March 2009 order from President Obama calling for dissolving banking giant Citigroup as part of an effort to reconstruct the financial industry.

Mr Obama told Suskind that he was trying to be decisive but 'the speed with which the bureaucracy could exercise my decision was slower than I wanted'.

When asked how he felt after finding out that the Treasury had failed to carry out his order, the president recalled that 'agitated may be too strong a word'.

'The Citibank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president's authority was being systematically undermined or hedged by his seasoned advisers,' Suskind writes in his book.

And he quotes former National Economic Council chief Lawrence Summers telling his bureaucratic rival, former Office of Management and Budget (OMB) director Peter Orszag, that there was 'no adult in charge' at the White House during the first two years of the Obama presidency.

Mr Summers has denied making that comment, and the White House has launched a major media campaign aimed at discrediting Confidence Men and undermining the assertions made by Suskind.

But notwithstanding the accuracy of this or that quote (Suskind, who taped most of the 200 or so interviews he conducted, stands by most of them), the book raises a more fundamental issue than just President Obama's managerial skills.

Even Mr Obama's harshest critics would argue that the challenges he faced (and still faces) were clearly more formidable than those of his predecessor.

At the centre of Suskind's narrative is the following thesis: not unlike President Franklin D Roosevelt (FDR) - who was elected during the Great Depression by an American public that wanted him to transform the entire structure of the American economy - President Obama, who entered office during the Great Recession, was provided by the American people with a similar political mandate to redefine the relationship between Washington and Wall Street.

The way Suskind sees it, the American voters expected President Obama to embrace a New Deal-like economic and social agenda that would have re-empowered the federal government to take bold action to tame and regulate a wild and irresponsible financial industry, and ensure that its institutions would operate under tight public scrutiny and cease to be 'too big to fail'.

Moreover, Suskind seems to believe that Mr Obama could have emerged as a transformative president like FDR by mobilising public and Congressional support - and by managing the bureaucracy - as part of a strategy to change the way Washington does business.

He should have checked the power of lobbyists and their corporate clients, and thus empowered the American people. Instead, Suskind blames Mr Geithner, Mr Orszag, Mr Summers, and former White House chief of staff Rahm Emanuel, and other members of the White House's economic team of pursuing the kind of Wall Street- friendly policies that President Bill Clinton had promoted in the 1990s and of placing major obstacles on the way towards New Deal II envisioned by President Obama.

The White House occupant, in turn, lacked the managerial skills to overcome this kind of alleged obstruction by the unelected bureaucrats.

Congress power balance

But the notion that Mr Obama had a mandate to carry out a set of transformative social-economic policies in line with the agenda of the progressive wing of his political party tends to disregard the balance of power on Capitol Hill in the aftermath of the 2008 election.

Even the most progressive president could not have won a clear majority in the House of Representatives and the Senate for such dramatic steps as nationalising some of the ailing financial institutions or establishing a government-controlled healthcare insurance system.

It was not only the opposition from the Republicans that would have made it impossible for Mr Obama to gain support for these and similar progressive plans; conservative Democrats (who constitute at least a third of Democrats in the Senate) would have constrained President Obama's ability to move in that direction.

And that assumes that the president himself was committed to left- of-centre ideological principles - as alleged by his Republican and Tea-Party critics and imagined by many progressive Democrats and Suskind. But contrary to the fears on the right and the hopes on the left, Mr Obama had no intention of becoming another FDR.

In fact, by bringing former Clinton administration officials like Mr Geithner and Mr Summers into his administration, President Obama made it clear that, if anything, he was hoping to pursue a series of Clinton-like centrist economic policies.

And in many ways, Mr Obama and his economic team proved to be successful in implementing that kind of agenda.

They did save the financial system, rescue the auto industry, pass a massive health reform bill and a historic financial-reform act - while getting Congress to approve a major stimulus plan to counterbalance the disastrous drop in GDP.

It is possible that they could have done better and achieved more - but in the circumstances, everything they did achieve sounds very transformative.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The preferred villain of US politicians on the make

2011-10-11T11:06:00.000-07:00

Business Times - 11 Oct 2011

The preferred villain of US politicians on the make

By LEON HADAR
WASHINGTON CORRESPONDENT

TAKING swipes at China has been a Washington pastime for years. China's growing economy and its military assertiveness at a time when the foundations of American economic power and geo-strategic pre-eminence are eroding make it a convenient scapegoat for Democrats and Republicans. They accuse the Chinese of stealing American jobs and threatening US military interests in East Asia, hoping to appeal to the distressed voter (never mind that America's economic problems have very little to do with China and that the US continues to outspend and outperform in the military arena).

But every time tensions in Sino-US relations seemed to be getting out of hand you could depend on the countervailing forces of American businesses, the free traders on Capitol Hill and the 'grown-ups' in the White House and the Senate (considered to be a less populist and more deliberative body than the House of Representatives) to contain the China-bashing politicians and interest groups and to defuse any potential crisis with the Chinese.

That does not seem to be happening this time. In fact, it is the Senate that is leading an effort aimed at punishing China for allegedly manipulating its currency. All the signs are that the campaign of Senator Charles Schumer, a Democrat from New York, is gaining Congressional support. The Senate has advanced legislation to punish countries (read: China) that manipulate their currencies to gain a trade advantage over other countries (read: US).

The Bill that will compel the Obama administration to impose tariffs and other penalties against China and other countries for having 'misaligned' currencies is expected to be passed by the Senate next week, and it has a better- than-even chance of being approved by the Republican- controlled House. And this time the signs are that the members of the pro-free trade coalition on Capitol Hill have not been able to counter the drive to punish the Chinese. Even more significant, neither President Barack Obama nor the leading Republican presidential candidate who hopes to replace him in 2013 - former Massachusetts Governor Mitt Romney - are ready to campaign against the Bill. In fact, it seems that both men are jumping on the anti-China bandwagon.

Mr Obama has accused China of manipulating its currency and ordered US Trade Representative Ron Kirk to lodge a complaint in the World Trade Organization (WTO), alleging that China may be violating global trade rules with government subsidies to some of the country's clean energy businesses. 'China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States,' Mr Obama said last week.

Meanwhile, Mr Romney promised during a recent Republican presidential debate that he would designate China as a 'currency manipulator' and impose trade sanctions if he is elected president. Taking into consideration that Republicans tend to portray themselves as free traders, it was interesting that former US Ambassador Jon Huntsman was the only Republican presidential candidate who criticised Mr Romney's proposal, warning that 'now is not the time, in a recession, to enter a trade war'.

But some Republican politicians, including lawmakers representing districts in the South and the Midwest where industries face tough competition from foreign companies and where the rate of unemployment is high, seem to be welcoming a trade war with China. Indeed, 12 Republican senators resisted pressure from the pro-business Congressional leadership of their own party and joined a Democratic majority last Thursday in voting to proceed with Mr Schumer's proposed legislation.

There are also signs of a growing rift among Republicans in the House of Representatives where Speaker John Boehner has been trying to scuttle attempts to bring a version of the Senate Bill for a vote. And it is not clear that Mr Boehner will be able to contain the anti-China sentiment of populists in his party, including the 99 Republicans who joined most Democrats in SeptemberÃ‚ in backing a similar legislation.

While many Republicans affiliated with the Tea Party describe themselves as strong proponents of free market principles, they seem ready to buck pressure from their leaders and pro-business lobbyists on the issue of China.

Against the backdrop of the anti-Wall Street demonstrations by left wing groups in New York and other parts of the country, and the continuing influence of the Tea Partiers, China could emerge as one of the preferred targets for populists on the political right and left. The White House and Congress, Democrats and Republicans, all seem set to raise the ante in the current Sino-American dispute, marginalising the few remaining 'grown ups' who are trying to diffuse it.

Indeed, China is now set to become a favourite villain for every US politicians on the make.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Is Bernanke trying to jump into political fray?

2011-10-06T13:13:00.000-07:00

Business Times - 07 Oct 2011

Is Bernanke trying to jump into political fray?

He partly blames his Congressional critics for what he calls faltering economic recovery

By LEON HADAR
WASHINGTON CORRESPONDENT

AT ONE point during his Congressional testimony on Tuesday, it sounded as though Federal Reserve chairman Ben Bernanke was about to join the demonstrators protesting in New York and other US cities against Wall Street and corporate greed.

The protesters were blaming 'with some justification the problems in the financial sector for getting us into this mess', Mr Bernanke said after being asked about the protests during his appearance before Congress's Joint Economic Committee.

'At some level, I can't blame them,' he said as he pointed to the above 9 per cent unemployment rate.Â Americans were 'dissatisfied with the policy response here in Washington', the head of the US central bank warned American lawmakers, directing much of his criticism towards the legislative and political stalemate on Capitol Hill that has made it close to impossible for Washington to start putting the nation's fiscal house in order.

Indeed, after months during which Republican lawmakers and presidential candidates have been going out of their way to bash Mr Bernanke for pursuing a loose monetary policy and serving as an institutional enabler for President Barack Obama's robust fiscal policy, Mr Bernanke seemed to be joining Washington's political fray by placing part of the blame for the slow economic recovery - the 'faltering' economic recovery, as he put it - on the shoulders of his Congressional critics.

And that, in turn, led to several angry exchanges between the Fed chairman and Republican lawmakers who expressed their displeasure with Mr Bernanke's comments and performance.

Mr Bernanke's appearance on Capitol Hill, a few days before the release of a new report on America's unemployment rate, coincided with a blast of bad economic news, including the debt crisis in Europe, weak consumer confidence and poor job numbers that have been placing a downward pressure on US economic growth.

And, indeed, the economic picture painted by Mr Bernanke was bleak and depressing. He said that the economic recovery was 'close to faltering' and told the lawmakers they cannot 'safely or responsibly' delay making 'difficult and fundamental fiscal choices'.

The recent data pointed to 'the likelihood of more sluggish job growth in the period ahead', he warned, pressing the lawmakers to 'to make sure the recovery continues and doesn't drop back'.

It is not a political secret that Congressional Republicans have been frustrating the efforts by the White House to advance a 'grand bargain' over fiscal policy that would involve taking steps to reduce the huge deficit through a combination of large government spending cuts and raising taxes on America's wealthiest. By continuing to resist any plan that would involve raising taxes, the Republicans have brought the progress towards a deficit-cutting deal to a halt.

Mr Bernanke, a student of Milton Friedman and a staunch free market-oriented economist who was first appointed to his job by Republican president George W Bush, did not blame the Republicans for the mess in Washington. But it was not difficult to conclude after listening to him that he would have liked to see them working together with the White House to come up with a new bipartisan fiscal policy.

The Republican lawmakers, in turn, made it clear that they regard Mr Bernanke as Mr Obama's monetary twin. Hence, Representative Mick Mulvaney, a Republican from South Carolina, contended that the Fed's drive to lower interest rates was encouraging the Obama administration to borrow more.

'One of the unintended consequences of doing what you're doing is you're making it easier for us to continue to do what we're doing, which is to borrow money,' he told Mr Bernanke.

'I don't think that's a valid point,' Mr Bernanke responded. 'We keep interest rates down somewhat. I don't think that eliminates the responsibility of Congress to take its own action.'

All the leading Republican presidential candidates have been very critical of Mr Bernanke and have promised not to reappoint him after replacing Mr Obama in the White House. Republican lawmakers echoed these sentiments during Mr Bernanke's Congressional appearance. Leading the charge were Tea Party fans such as Senator Mike Lee, a Republican from Utah, who charged that the Fed was operating under a 'general veil of secrecy'.

Mr Bernanke described these charges as 'urban legend', noting that the Fed has been 'very thoroughly audited at this point', insisting that 'nobody's found any impropriety whatsoever'.

In a way, Mr Bernanke's comments were directed at both Republican and Democrats and the entire political and media class in Washington. The Fed would not be able to rescue the economy and prevent another recession, he said, adding, monetary policy was not a 'panacea' for America's economic problems.

A Super-Committee consisting of Democratic and Republican lawmakers is trying to draw the outlines of a plan to cut US$1.2 trillion of the US annual deficit. Most observers do not expect the bipartisan group to reach a deal before next year's presidential and Congressional elections. In that case, the cuts of that magnitude would be imposed automatically and across the board.

But Mr Bernanke argued that even US$1.2 trillion would not be enough in terms of achieving long-term fiscal targets. 'Accomplishing that goal would be a substantial step; however, more will be needed to achieve fiscal sustainability,' he told the Joint Economic Committee.

Mr Bernanke did make it clear that the Fed would be ready to take 'appropriate' action to help the economy, but in reality there is not much that it can do at a time when interest rates are close to zero, with the Fed announcing that it would keep it that way for the next two years.

Some Republicans have claimed that Mr Bernanke's 'easy money' policies are producing inflationary pressure, but there are no indications that this was happening.

Under Mr Bernanke, the central bank has been pursuing out-of-the-box monetary schemes. Most recently, it announced in September that it would be overloading its portfolio with longer-term securities, buying up US$400 billion of long-term bonds while selling off the same amount in short-term securities aka 'Operation Twist'.

Democratic lawmakers defended Mr Bernanke during his appearance, noting that the central bank's mandate includes fighting inflation and unemployment. But some Republicans want to change that and reduce the Fed's mandate to containing inflation, and not to maximising employment.

This is the way politics as usual plays out in Washington.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Democrats out to chash on yuan bill

2011-10-05T13:15:00.000-07:00

Business Times - 06 Oct 2011

Democrats out to cash in on yuan bill

Their move on the bill in Senate and long-delayed FTAs is all about politics and, more specifically, about the jobs issue

By LEON HADAR
WASHINGTON CORRESPONDENT

SO HERE is the good news: The White House sent three long-delayed free trade agreements (FTAs) to Congress on Monday, putting the deals with South Korea, Colombia and Panama on a road towards final approval after several years of being mired in Capitol Hill's legislative jam.

That probably means that after being stuck in the political limbo for the last two years - thanks to Washington's nasty partisan infighting - the White House and Congress are going to revive the dormant trade liberalisation agenda. Right?

Well, not so fast, because here comes the bad news: The Senate also voted to advance legislation pressuring the Chinese government to stop undervaluing its currency, raising the spectre of a costly Sino-American trade war, which clearly does not sound as a prelude to a re-energised effort to placing the promotion of global trade on the US policy agenda.

So which is it? Is Washington on the path to advancing free trade or to creating trade friction?

It is quite possible that we are not asking the right questions here and that these two recent developments have less to do with the global trade policies per se and are in essence all about politics; more specifically, about the issues that will be dominating the presidential and congressional election campaigns next year: jobs, jobs, and jobs.

The United States signed the trade pacts with South Korea, Panama and Colombia in 2007 under former Republican president George W Bush, and the Democratic-controlled Congress never brought the agreements up for a vote, passing it to the administration of Democratic President Barack Obama.

During the election campaign and in the first months of his presidency, Mr Obama, reflecting the views of his allies in the labour unions and other protectionist interest groups, embraced the notion of 'fair trade' and his administration spent time renegotiating items it found objectionable in the three trade deals.

But against the backdrop of a sluggish economic recovery and high unemployment rates, Mr Obama has decided to place the trade deals at the centre of his activist job-creating economic agenda, arguing that the pacts would help create tens of thousands of jobs and boost US exports by US$13 billion annually.

And notwithstanding the never-ending political battles between the White House and the Republicans on Capitol Hill, the pro-business Republican leadership seemed to agree with Mr Obama on the need to approve the three trade agreements.

But the two sides have been locked in a procedural battle that also involved the issue of jobs. Mr Obama insisted that he would not send the final version of the trade deals until the Senate approved an assistance programme to train workers who lose their jobs to competition from foreign trade.

The Republicans countered that spending on the Trade Adjustment Assistance (TAA) would make it more difficult to reduce the federal budget deficit which, they argue, was the main obstacle to growing the economy and creating new jobs. After months of negotiations, coupled with pressure from the US Chamber of Commerce and other business groups, a coalition of Republicans and Democrats finally passed the TAA legislation last week. And after the Republicans assured the White House that they have now enough votes to pass the legislation in the House of Representatives, Mr Obama sent the trade agreements to Capitol Hill.

House Majority Leader Eric Cantor, a Republican from Virginia, said he expected the House to approve the trade deals next week, raising the possibility that the trade agreement with South Korea would be ready for final passage in Congress when South Korean President Lee Myung-bak arrives at the White House for a state dinner on Oct 13.

The trade deal with South Korea could boost US exports by US$11 billion a year and it could also demonstrate US strategic commitment to an important military ally in Northeast Asia at a time when North Korea is raising major concerns in Seoul. Washington also has an interest in highlighting its military and economic partnership with South Korea as part of a strategy to counter-balance China that has been asserting its influence in the region in recent years.

But, then, it is China and not the US that is South Korea's main trading partner. About a quarter of all South Korean exports go to China and only 10 per cent to the US, while 17 per cent of its imports come from China and only 9 per cent from the US.

So it is quite likely that South Korea's political and economic leaders are going to be very worried about the China-bashing mood on Capitol Hill after the Senate voted 79 to 19 to consider a bill aimed at punishing China for its alleged manipulation of its currency. While the bill has yet to be brought before the House for a vote, the strong support in the Senate by both Democrats and some Republicans for the Currency Exchange Rate Oversight Reform Act of 2011 demonstrates that lawmakers, reflecting widespread public sentiment, are blaming the Chinese for America's job woes.

The proposed legislation would replace the current system under which the Treasury Department is required to cite countries that 'intentionally' manipulate their currencies (which is difficult to prove) to one under which the Treasury would determine whether any foreign currencies are in fundamental misalignment, and propose ways to correct the imbalance with countries that are named. Countries that fail to fix their currencies would be subject to anti-dumping duties and other penalties.

In a way, the campaign against China is part of an effort by the Democrats in the Senate, led by Senator Charles Schumer from New York, to promote the image of their party as the defender of the interests of American workers against China.

'China is by far the biggest exploiter of predatory currency practices,' Mr Schumer said. He insisted that the Chinese currency policies 'artificially raise the price of US exports and suppress the price of imports into the United States, undermining the economic health of American manufacturers and their ability to compete at home and around the globe'.

In fact, it is doubtful that raising the value of the Chinese renminbi against the US dollar will actually help American manufacturers sell their products in China or to encourage them to relocate their factories back to the US. Instead, the manufacturers would probably move their operations to Vietnam and other low-wage economies in Asia and elsewhere.

But Mr Schumer and other Democrats are confident that the passage of a measure targeting China's currency practices would help them win support from voters next year in states such as Ohio, Michigan and Pennsylvania that have lost many manufacturing jobs in recent years, and where unemployment rates remain stubbornly high.

That some leading Republicans in the Senate and the House have expressed their opposition to the anti-China legislation could help the Democrats depict their political rivals as advancing a trade agenda that protects the interests of Big Business and helps destroy American jobs.

Senator Bob Corker, a Republican from Tennessee, warned that the proposed legislation would ignite a trade war with China and devastate the American economy, while Senator John McCain, a Republican from Arizona, argued that the undervalued Chinese currency was not the main reason for America's high unemployment rate.

'China's currency may be part of the problem, but the majority of jobs have been lost for other reasons,' Mr McCain said. 'I have to express amazement that the issue of China currency is taking precedence over the myriad of other issues we should be acting on.'

A key player in the debate over the trade accords with South Korea, Colombia and Panama as well over the legislation targeting China's currency practices is Dave Camp, a Republican from Michigan, who is the chairman of the powerful House Ways and Means Committee. Mr Camp, who is a regarded as a strong ally of US businesses and a supporter of free trade, is unlikely to back an all-out campaign to punish China for its low currency value and would probably try to kill a version of the legislation approved by the Senate.

That could play directly into the hands of the Democrats who are expected to counter the Republican message that their party was opposed to attempts to hurt the 'job creators' - the term they use to describe American businesses - by accusing the Republicans of assisting the 'job destroyers', by refusing to take action against China's currency practices that supposedly help destroy American manufacturing jobs while providing an incentive for American companies to relocate their operations to China.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Tea Party tax rant a case of barking up wrong tree

2011-10-03T13:19:00.000-07:00

Business Times - 04 Oct 2011

Tea Party tax rant a case of barking up wrong tree

Accusing Mr Obama of being a Marxist means putting Mr Buffett in the same boat

By LEON HADAR
WASHINGTON CORRESPONDENT

REPUBLICAN lawmakers and the party's presidential candidates are bashing President Barack Obama's proposal to increase the tax rate on America's millionaires as a form of 'class welfare'. Speaking to conservative radio host Michael Berry, Tea Party Representative Allen West, a Republican from Florida and a Tea-Party icon, insisted that by calling to raise the tax burden on the wealthy, Mr Obama was intentionally harming the US economy because he was a 'Marxist' and a 'socialist'.

And so apparently is Warren Buffett, the second-wealthiest person in America. After all, as Mr Obama explained, his proposal to make Americans such as Mr Buffett pay more of their income to the federal government was based on the advice he had received from that infamous Marxist, Warren Buffett . . .

The 'socialist' plan advanced by Mr Obama suggests that those Americans earning more than US$1 million a year pay at least the same tax rate as middle-class earners whose median income is about US$50,000 and who pay some 20 per cent in taxes a year.

As Mr Buffett has been telling audiences across America in recent months, the hundreds of millions that he makes every year are taxed at just over 17 per cent - a lower rate than what his secretary pays. Hence, the so-called Mr Buffett Rule: If you make more than US$1 million a year, you should pay at least the same tax rate as your secretary and janitor.

In fact, those making more than US$1 million a year - or for that matter, US$500,000 a year - are supposed to be taxed at a rate of about 35 per cent. But thanks to a series of tax deductions and loopholes approved by the Wall Street- friendly Congress in recent decades, they pay well less than that. For example, capital gains, which is the main source of income for financial tycoons such as Mr Buffett, are now taxed at 15 per cent and a bunch of well-paid tax lawyers and accountants allow the Buffetts of the world pay as little as possible in taxes.

If one listens to the narrative promoted by conservative Republicans and their allies in the Tea Party, business executives, Wall Street bankers, and hedge fund managers are seeing their wealth being taken over by those socialist bureaucrats in Washington and are being forced into destitution while their money is being redistributed to the lazy and non-productive people.

In reality - as opposed to the imaginary universe where many of the Republicans seem to be residing - the marginal tax rates on the wealthy has been dropping and are the lowest they has been since 1945. Under the Dwight Eisenhower administration, it was more than 90 per cent and it has been falling dramatically since then, thanks to legislation promoted by presidents from both parties and approved by large majorities in Congress.

Much of this kind of reverse wealth redistribution has been initiated and administered by politicians in Washington, driven by the influence of the free-market ideology preached by Republican president Ronald Reagan as well as by Democratic White House occupant Bill Clinton.

And, indeed, lower taxes and less regulation seemed to be raising productivity levels in the US. The economic boom of the 1990s helped create a political environment under which the wealthy were encouraged to make even more money and allowed to pay even less taxes on it. That was when the tax rate on capital gains dropped from 35 per cent to 15 per cent and the accompanying deregulation of the financial industry took place.

After all, at a time when the economy was growing and even members of the middle class were getting richer - or at least that was the way things looked then - there seemed to be less political pressure to extract more tax money from the new class of billionaires. The revenue of the federal government was growing, allowing Washington to continue subsidising a very generous welfare state - while balancing its budget.

That may explain why for so many years there has been almost no discussion in Washington and elsewhere over the growing income gap in the US, where the top one per cent's share of national income has doubled over the past three decades - from 10 per cent in 1981 to well over 20 per cent today, and the richest one-tenth of one per cent's share has tripled.

These numbers should have probably ignited political debate even before the start of the financial meltdown and the ensuing Great Recession. No democratic system can remain viable in the long run when a small minority of the citizens end up controlling larger and larger chunks of the national income.

But the collapse of the financial system and the destruction of what had served as the main sources of the (imaginary?) wealth for the middle class in the last two decades - rising house prices and pension plans that were invested in the stock market - made most Americans poorer than ever.

Adding insult to injury was what amounted to another form of reverse wealth-distribution. The tax money of middle class Americans was utilised to bail out the financial institutions on Wall Street at a time when most Americans were losing their wealth and their jobs.

And just when more and more Americans required more and more assistance - unemployment benefits, welfare payments, housing assistance, healthcare costs - from a welfare state that depends in turn on revenues from a debt-ridden federal government in order to survive another day, Republicans are proposing that the time has come to, well, shrink the welfare state in order to pay the debt of the US government. At the same time, the Republicans want to reduce the tax rates on what they refer to as 'job creators'.

The notion that raising the tax rate - by a few percentage points - on Mr Buffett and his wealthy friends is going to discourage them from creating new jobs makes very little sense at a time when companies are not hiring because they recognise that the demand for their products is going to remain low for some time to come.

In fact, Mr Buffett and other millionaires and billionaires recognise that the obliteration of America's middle class is bound to erode the foundations of the American economy and create a political backlash that could harm their own interests. Better to pay more now in order to help sustain the welfare state - while reforming and making it more cost-effective - than face, in the not-so-distant future, an angry electorate bent on punishing the rich.

Moreover, America's productive job creators benefit when the nation's infrastructure is being rebuilt, its schools produce educated workers, its citizens are healthy, and its police and fire-fighters can protect their property and business.

So it is not surprising that many of the nation's wealthiest do not buy into the radical Tea Party's no-taxes dogma and are adhering to the genuine conservative principles. They are willing to pay their fair share in helping their fellow citizens rebuild the ailing national economy.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The IMF meeting achieves not a lot

2011-09-27T13:19:00.000-07:00

Business Times - 28 Sep 2011

IMF meeting makes little difference in current crisis

The main obstacles to resolving the economic woes are political in nature

By LEON HADAR
WASHINGTON CORRESPONDENT

WHAT happens if a tree falls in the forest and everyone does hear it - but then no one cares? Assessing the outcome of the weekend's meetings of the International Monetary Fund (IMF) in Washington - a lot of important attendees, including finance minister and central bankers and a lot of media hype - the answer is: Not much happens.

The global economy may be on the verge of another devastating financial crisis that could be precipitated by Europe's government debt problems. That is the main reason why the financial markets have been trembling in recent days.

But after days of meetings in Washington where leading financial officials from around the world convened for the IMF-World Bank fall meeting, it was obvious that notwithstanding another statement in which the 187 members of the IMF pledged to work decisively and in a coordinated way to deal with European debt problems, the ability of the IMF as an institution to affect the policy decisions of its member states was very limited.

In a way, the IMF can help only those who want to and can help themselves. If governments in Europe's capitals - or for that matter, in Washington and Beijing - lack the political will and power to make the painful political decisions to fix their respective economies, there is not a lot that any multilateral organisation - whose decisions, after all, reflect the interests of its most powerful members - can do.

There was a time not long ago in the 1990s that the Anglo-American model of economic reform and growth (aka the Washington Consensus) could provide the road map for resolving global economic crisis. That was when Time magazine referred to Fed chairman Alan Greenspan, Treasury Secretary Robert Rubin and his deputy, Lawrence Summers, collectively as the 'Committee to Save the World'. This committee could apply the financial resources of the IMF (dominated then by the US and its allies) to help the economies of Russia, Asia and Latin America to avoid financial bankruptcy by forcing them to embrace the kind of fiscal and monetary policies that seemed to be working for the Americans and the Europeans.

Timothy Geithner had served at that time as a junior member of the Committee to Serve the World. But unlike in the 1990s, now the European and the American economies are on the verge ofÂ bankruptcy and need to be saved.

So there was something pathetic at the sight of Treasury Secretary Geithner providing advice to his European counterparts on how to deal their monetary mess. Specifically, he called for relying on a more powerful European Central Bank (ECB) to solve the Greek debt crisis.

Mr Geithner was offering this crash course to the Europeans a few days after the most recent decision by the US central bank - which is supposed to serve as a model for the ECB - launched a new US$400 billion Operation Twist aimed at lowering long-term interest rates that has clearly failed to cheer the financial markets.

Moreover, as Mr Geithner was addressing the European financial officials, lawmakers on Capitol Hill were still arguing over a spending Bill that should have extended government operations into the new fiscal year and provided federal funds for disaster relief. The wrangling again raised the spectre of a federal government shutdown.Â

Indeed, the failure of politicians in Washington or in Berlin and Athens to provide an effective response - or any response, for that matter - to their respective economic problems demonstrates once again that the main obstacles to resolving the current economic crisis are political in nature.Â

The 'concrete' actions that the stock markets as well as consumers and business are waiting for cannot be agreed on by the IMF, but only by the national governments that are responsible for making painful decisions that are bound to upset economically distressed voters and create backlash from powerful interest groups.

That explains why Christine Lagarde, the new IMF managing director and the first woman to head the organisation, failed to mobilise support from the members and in particular, of the eurozone, for concrete action, such as the recapitalisation of the ECB.

That Ms Lagarde had served the France's finance minister and played a leading role in advancing her government's strategy during the ongoing European financial crisis may not even help her to influence the decisions made by current French economic officials.

In any case, the IMF does not have the financial resources to respond to the needs of a eurozone that is trillions of dollars in debt. It cannot bolster the current US$384.5 billion European rescue fund. Whether the Europeans will agree to increase the resources available to the fund will depend very much on the decisions made by the governments and parliaments of Germany and the other wealthy members of the eurozone (whose taxpayers will have to pay for the rescue) and by the governments and parliaments of Greece and the other debtor economies (whose citizens will have to adopt unpleasant austerity measures).

That these political decisions could have a huge effect on the outcome of the next elections in Germany and France is one reason why it has become so difficult to make them.

And politics is also central to the US response to the crisis in the eurozone. Many American banks are exposed to Europe's debt problem and a collapse of financial institutions in Europe could force the US economy into another recession and ensure that Barack Obama would not be re-elected as president next year.

A weak American political leader presiding over a weak American economy is now waiting to see whether the weak European political leaders in charge of a weak European economy would make things even worse than they are for him. But one thing is clear. He cannot rely on any Committee to Save the World to help him save his own presidency.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Pax Americana is over

2011-09-23T12:12:00.001-07:00

http://www.haaretz.com/opinion/pax-americana-is-over-1.386383

Home Opinion
Published 20:16 23.09.11 Latest update 20:16 23.09.11
Pax Americana is over
By Leon Hadar
For several decades, the world’s leading superpower has been trying to help Jews and Arabs reach an agreement over a disputed territory in the Middle East, and to secure its own hegemonic status in that region. But another diplomatic effort to make peace in the Holy Land reached a deadlock, because it was becoming too costly for the superpower to maintain its military presence and diplomatic influence in Egypt, the Levant, the Persian Gulf, the Eastern Mediterranean and South Asia, at a time of growing financial constraints and challenges from new international players.

On Friday afternoon, February 21, 1947, the British ambassador to Washington, Lord Inverchapel, showed up at the State Department and informed Under-Secretary of State Dean Acheson that his country could no longer continue providing financial and military support to Greece and Italy. The British “are abdicating from the Middle East,” Secretary of State George Marshall told President Harry Truman.

Indeed, with defense accounting for 40 percent of the British budget in 1947 and the Americans pressing London to repay the huge loans it owned them, Britain adjusted to the new geopolitical realities by ending its prized mandate of Palestine in May 1948, less than a year after giving up the “jewel in the crown” of India.

The transition from Rule Britannia to Pax Americana in the Middle East was completed during the 1956 Suez Crisis, when the United States threatened to withhold financing that Britain desperately needed unless its forces withdrew from the Suez Canal. And the United States attained what amounted to the dominant position in the Middle East in the aftermath of the end of the Cold War and the ensuing victory in the first Gulf War, in 1991.

Like Great Britain in 1947, the United States is finding it more and more difficult to maintain its military and diplomatic status in the Middle East. Its defense expenditures constitute close to a third of its overall budget, at a time when the burden of its fiscal debt is becoming unsustainable.

The failure to defeat the Taliban insurgency in Afghanistan, the specter of a nuclear Pakistan turning into a failed state, rising concerns about the decline of Iraq into a civil war after the U.S. withdrawal, the growing power of Iran and its regional satellites, the threat that the Arab Spring is posing to regimes that were willing at least to accept the U.S.-backed status-quo, and the deadlocked Israel-Palestinian peace process − all these are clear indications that the era of Pax Americana in the Middle East is over.

But unlike Great Britain in 1947, the United States cannot pass the Middle East torch to a friendly global power willing to assume its responsibilities. The European Union lacks either the military capability or political will to play that role. America’s presumptive rival, China − its largest creditor nation with over $3 trillion in foreign exchange reserves, mostly in U.S. dollars − could use its economic power to exert pressure on the United States. But the Chinese are not interested in getting stuck in the quicksand of the Middle East and prefer to allow the Americans to continue wasting their military and economic resources there.

So the Americans will continue muddling through in the Middle East for some time to come, juggling their numerous and incompatible alliances ‏(with Israelis, Arabs, Turks‏) and commitment ‏(to order and change‏) while trying to cut their strategic and economic costs. And all this is happening as Turkey and other regional actors try to form a post-American order in the Middle East that even under the best-case-scenario will include support for an independent Palestinian state, and will certainly not be compatible with the positions of the current Israeli government.

Israeli leaders should take advantage of a narrow window of opportunity in the form of the ability of the United States to still maintain some level of global influence, in order to try to reach a regional agreement that would favor their own interests. When that window of opportunity closes, Israel is likely to find itself operating in an international system in which its American friend would be only one of several poles of power.

Dr. Leon Hadar is a Washington-based journalist and global affairs analyst.

Fed takes action despite Republican opposition

2011-09-22T13:09:00.000-07:00

Business Times - 23 Sep 2011

Fed takes action despite Republican opposition

By LEON HADAR
WASHINGTON CORRESPONDENT

ALL signs are suggesting the recovery of the United States economy has been slowing and may be even coming to a halt: the unemployment rate is hovering around 9 per cent; consumer and business confidence is continuing to fall; a political stalemate over fiscal policy in Washington has already brought about a US credit downgrade; and the sovereign debt crisis in Europe is making things worse.

All these problems have put pressure on the US Federal Reserve to do something about the American economy and prevent it from experiencing the dreaded double-dip recession.

Indeed, the International Monetary Fund (IMF) warned that the US could slip back into recession without further fiscal and monetary stimulation. So the Fed will try once again to stimulate the weak economy - that grew at an annual rate of less than one per cent over the first half of the year - by using another monetary policy tool.

This time the central bank is taking steps to put downward pressure on long-term interest rates which (in theory at least) could provide some lift for the struggling housing market.

Fed chairman Ben Bernanke and his colleagues are hoping to do the trick by launching a new US$400 billion programme (AKA 'Operation Twist') under which it will sell shorter-term notes and use the added funds to buy longer-dated Treasuries and add them to its US$2.85 trillion balance sheet.

At the same time, the Fed also plans to reinvest profits from maturing mortgage bonds back into the mortgage market in the hope that such a strategy would help revive the weak sector that has yet to recover from the devastating effects of the financial crisis.

'Recent indicators point to continuing weakness in overall labour market conditions, and the unemployment rate remains elevated,' the Fed said in its statement issued after its policy committee ended two days of deliberations on Wednesday afternoon. The Fed insisted that its new programme 'should put downward pressure on long-term interest rates and help make broader financial conditions more accommodative'.

One of the reasons the markets have invested so much of their hope in the Fed's policy is the perception that the central bank is a respected institution that operates above the fray of the current - and very nasty - political infighting in Washington that has made it less and less likely that the White House and Congressional Republicans would succeed in embracing a fiscal strategy to help re-energise the economy.

But it now seems that Mr Bernanke and the Fed have been drawn into the partisan battles and could even become a major issue in the 2012 presidential and Congressional election campaigns.

Indeed, Republican lawmakers and leading Republican figures who hope to replace President Barack Obama in the White House in 2013, have been trying to 'Obamise' Mr Bernanke by bashing the loose monetary policies embraced by the Fed chairman and by suggesting that these policies are not only ineffective, but that by 'printing money' and putting downward pressure on interest rates, the Fed is creating inflationary pressures and eroding the value of the US dollar.

There is something of an irony in that Mr Bernanke - a conservative Republican economist and disciple of free-market guru Milton Friedman, who was first nominated to his job by ex-president George W Bush - is now being depicted by the Republicans as a political collaborator of the current Democratic president and as a proponent of irresponsible monetary policy.

In fact, all the Republican presidential candidates have promised that if elected they would fire Mr Bernanke from his job. One of these candidates, Republican Texas Governor Rick Perry, went so far as to describe Mr Bernanke's monetary policies as 'treasonous'.

Moreover, in a clear attempt to turn the Fed into a political punching bag, Congressional Republican leaders sent a letter to Mr Bernanke in which they urged him not to launch a new stimulative monetary campaign. 'We have serious concerns that further interventions by the Federal Reserve could exacerbate current problems or further harm the US economy,' the four top Republican leaders in Congress said in their letter.

But it does not look like the Republican tactics have had any effect on the Fed, where Mr Bernanke and the majority of the members of the policy committee have decided that by shifting their bond holdings, they could have a positive stimulative effect on the economy by encouraging mortgage refinancing and creating incentives for investors to buy corporate bonds and stocks.

The move seemed to respond to the recommendation by the IMF that as long as there were no signs of inflation, the Fed should consider easing its monetary policy.

In short, notwithstanding the political pressure from the Republicans, Mr Bernanke has concluded that while he may end up losing his job in 2013, the Fed could not remain on the sidelines of the current economic crisis. He should be commended for his stand.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Obama's class warfare or just plain fairness?

2011-09-20T14:06:00.001-07:00

Business Times - 21 Sep 2011

Obama's class warfare or just plain fairness?

With his debt-reduction plan, he hopes to change the terms of the debate over fiscal policy

By LEON HADAR
WASHINGTON CORRESPONDENT

AFTER months of urging Congress again and again to start doing something about America's ballooning federal deficit, US President Barack Obama decided that it was time for him to set the agenda and provide some leadership on the issue.

US lawmakers may not be ready to come up with a concrete plan to put America's fiscal house in order. But Mr Obama made it clear on Monday that he had a debt-reduction plan. He challenged Republicans on Capitol Hill and those who are hoping to get him out of the White House next year to a fight over the nation's social and economic priorities.

He framed the debate thus: Who would have to carry the main burden of balancing the budget? The struggling middle class and the poor or the country's millionaires and billionaires?

The plan that Mr Obama outlined calls for a US$3 trillion saving, including US$1.5 trillion in new revenue generated largely by higher taxes on the wealthiest Americans as well as an increase in premiums on the government-backed medical insurance programme for individuals with higher incomes starting in 2017.

'We are not going to have a one-sided deal that hurts the folks that are most vulnerable,' Mr Obama said at a media event in the Rose Garden at the White House during which he offered a strong defence of tax hikes on the highest earners. Cuts in government spending alone 'will not solve our fiscal problems', he said. 'We can't just cut our way out of this hole,' he added.

'It's going to take a balanced approach,' Mr Obama concluded. 'If we're going to make spending cuts - many of which we wouldn't make if we weren't facing such large budget deficits - then it's only right that we ask everyone to pay their fair share.'

And in an indication that he was ready to battle the Republicans by promoting a progressive social-economic agenda while portraying his rivals as the political allies of the rich, Mr Obama promised to veto any debt-reduction legislation that cuts benefits while failing to include higher taxes on the wealthy.

'I will not support any plan that puts all the burden on ordinary Americans,' he said.

The message to the Republicans was concise and clear: I will not support a plan that makes deep cuts in government-financed social-economic program-mes for the elderly, the poor and the middle class without raising taxes on wealthier Americans and corporations.

In the aftermath of the angry partisan exchanges during the negotiations over the debt limit, Mr Obama seemed to have abandoned his gentlemanly approach towards the Republicans. No more talk about a vague 'grand compromise' on the deficit. Instead, the president sounded blunt and specific. He proposed US$310 billion in new cuts to some of the federal healthcare programmes as well as US$270 billion in other cuts in government spending.

But the most contentious part of his plan that is bound to lead to major political and legislative warfare with the Republicans was the proposal for US$1.5 trillion in new tax revenue that would be financed mainly by the wealthiest Americans and corporations.

'Middle class families should not pay higher taxes than millionaires and billionaires,' Mr Obama said, suggesting that he intended to embrace this message during the election campaign next year. 'That's pretty straightforward. It's hard to argue against that.'

And as he drew a sharp contrast between his approach and that of the Republicans, Mr Obama said that he would allow all the 2001 and 2003 tax cuts to expire at the end of 2012 if Congress is not able to reach an agreement on a comprehensive reform of the tax code.

In a way, what Mr Obama is hoping to achieve is nothing less than changing the terms of the debate over fiscal policy from one focused on the need to cut spending on federal social-economic programmes to one that recognises the need to provide for new government revenues by taxing wealthy Americans.

While the Republicans have been trying to mobilise public support by blaming government spending for the nation's economic ills, Mr Obama wants Americans to pay more attention to the way the current tax system is eroding the standard of living of the middle class while providing even more sources of wealth for the wealthiest Americans and the big corporations.

'Anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out,' Mr Obama said. 'They should have to defend that unfairness, explain why somebody who's making US$50 million a year in the financial markets should be paying 15 per cent on their taxes when a teacher making US$50,000 a year is paying more than that, paying a higher rate. They ought to have to answer for that.'

The White House and the Democrats will not succeed in resolving their differences with the Republicans over fiscal policy before next year's election. While Mr Obama and his aides are not excluding the possibility that the Democrats and the Republicans would be able to come up with short-term measures to stimulate the economy, they also want to make sure that voters blame the Republicans' insistence on protecting the interest of their wealthy supporters for the legislative deadlock over the budget in Washington.

The Republicans are confident that voters would blame Mr Obama for failing to accelerate the economic recovery and help create new jobs. They have depicted Mr Obama's plan as nothing more than political histrionics and an attempt to ignite 'class warfare'.

'Veto threats, a massive tax hike, phantom savings and punting on entitlement reform is not a recipe for economic or job growth, or even meaningful deficit reduction,' said Senate Minority Leader Mitch McConnell, in response to the plan outlined by Mr Obama.

'Pitting one group of Americans against another is not leadership,' insisted the Speaker of the House of Representatives, John Boehner, a Republican.

It is too early to predict whether Mr Obama's strategy would succeed in improving his chances of getting re-elected for a second term, or even whether his new message of 'fairness' for the middle class would overwhelm the effective campaign against him and his 'tax-and-spend' policies that the Republicans have been conducting against him. But it is a debate that will be central to next year's elections.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

What Would Ataturk Do?

2011-09-16T20:03:00.000-07:00

http://www.huffingtonpost.com/leon-t-hadar/turkish-foreign-policy-israel_b_967100.html

Leon T. Hadar Journalist and foreign affairs analyst

Turkish Foreign Policy: What Would Ataturk Do?
Posted: 9/16/11 09:02 PM ET
ween Israel and Turkey over the raid on the Gaza "Peace Flotilla" had erupted last December, right-wing Israelis and American neoconservatives were promoting a new Grand Narrative: Turkey was joining forces with Iran and Syria in an anti-American and anti-Israeli Islamofascist Axis of Evil, seeking to destroy the Jewish State as part of a long-term strategy of re-establishing the Ottoman Empire and a Global Caliphate. Turkey was becoming the New Iran.
Indeed, according to a report in Haaretz, Israeli Prime Minister Benjamin Netanyahu told his cabinet last January that Turkey was "consistently gravitating eastward to Syria and Iran rather than westward over the last two years" and that "the trend certainly has to worry Israel."

Moreover, Netanyahu provided his "full backing" for the diplomatic campaign that his foreign minister Avigdor Lieberman was conducting against the Turkish Prime Minister Reccep Tayip Erdogan -- Lieberman compared Erdogan to Venezuela's president Hugo Chavez -- which included the summoning of the Turkish ambassador to Israel for a meeting in which he was seated in a low sofa, and facing him, in higher chairs, were Israeli officials delivering a reprimand.

And following the Israeli raid on the flotilla, Israeli politicians, pundits and commentators reflecting the Likud-necon narrative were suggesting that under the leadership of the Islamist Justice and Development Party (AKP) Turkey was setting aside the secular and pro-Western orientation of Mustafa Kemal Ataturk, the founder of modern Turkey, and was being transformed into a radical Islamist state that was pursuing a Neo-Ottomanist strategy aimed establishing close ties with the Arab World and de-legitimizing the Jewish State.

The policy implication of such an account was that the U.S. and Israel had no choice but to regard Turkey -- like Iran -- as an assertive strategic and ideological power that was posing a direct threat to Western interests and the survival of Israel.

So it was a bit surprising that the recent decision by Ankara to downgrade its diplomatic relations with Israel has not triggered the same kind of Turkey-bashing by the usual suspects in Jerusalem and Washington. While rejecting Turkish demand that Israel apologize for the killing of nine people aboard the Mavi Marmara, Netanyahu insisted that Israel "regrets the loss of human life" and expressed his hope "that the way will be found to overcome the differences with Turkey." Israel "never wanted its relations with Turkey to deteriorate, nor does it want them to deteriorate right now," Netanyahu stressed.

"Turkey is not Israel's enemy and Israel is not Turkey's enemy," former Prime Minister Olmert said in a speech last week. "Turkey has previously functioned as a bridge to important and sensitive contacts of the highest importance to our interests, and it can continue to be so in the future," he said, reflecting a more realistic, if not accommodative approach towards Turkey that is shared by many Israelis.

Even a right-winger like Netanyahu recognizes that in the aftermath of the collapse of the friendly regime of Hosni Mubarak in Egypt -- and against the backdrop of the regional political instability being ignited by the Arab Spring -- Israeli leaders do not have the luxury of turning Turkey into a full-fledged enemy.

Moreover, it was difficult to accuse Turkey of allying itself with Iran and Syria in the same week that Ankara was giving the diplomatic cold shoulder to both Tehran and Damascus. It announced that it would install a radar system designed by the United States as part of a NATO shield against a possible missile attack by Iran on Europe and it joined the United States and the European Union (EU) in condemning the Syrian government's violent repression of demonstrators.

Indeed, the earlier notion that the Netanyahu-Lieberman duo were advancing -- and that was echoed by their allies in Washington -- that Erdogan and the AKP were pursuing a foreign policy based on an Islamist agenda reflected a common fallacy, that ideological principles -- as opposed to considerations of national interest -- are the main driving force behind the foreign policy of Turkey, or, for that matter, of other governments ruled by political movements committed to secular or religious doctrines.

Historians who have studied Soviet foreign policy have noted that many of the major decisions on war and peace that were made by Soviet leaders -- such as signing the pact with Nazi Germany and later joining the West in fighting Hitler -- were based less on abstract communist doctrines and more on traditional core geo-strategic of imperial Russia. In a way, Peter the Great would have probably approved of many of the critical foreign policy choices made by Stalin.

There are of course cases in which ideology does end up being elevated above the pursuit of national interests, For example, the self-destructive policies that were followed by Nazi Germany. Hence, German's Chancellor Bismarck would have not approved of the most important decisions made by Adolph Hitler before and during World War II.

From this perspective, it is very likely that Ataturk would have approved much of the foreign policy agenda being pursued by Erdogan. Or to put it in more concrete terms, most of the decisions made by Erdogan -- remaining in NATO while improving strategic ties with Turkey's neighbors; continuing to campaign for EU membership while strengthening Turkey's economic position in the Middle East; the "trust-but-verify" approach towards Iran's nuclear military policies; conditioning the maintenance of the partnership with Israel on its treatment of the Palestinians -- fit very much with the kind of Realpolitik foreign policy embraced by Ataturk and his secular political successors.

Indeed, there was nothing very "Islamist" in the decision made by Turkey not to support the American invasion of Iraq in 2003 and its refusal to allow U.S. forces to cross Turkish territory on their way to Iraq, regarded as a turning point in the relationship between Washington and Ankara. The ousting of Iraq's Saddam Hussein and the Americans attempts to "remake" the Middle East were seen as running contrary to Turkish national interests by religious and secular Turks alike, concerned -- and rightly so -- that U.S. policy would destabilize the Middle East.

And the collapse of the U.S. hegemonic project in the Middle East and the rise of Iran as the new regional power, and French and German opposition to Turkish membership in the EU have created incentives for Turkey to fill the strategic vacuum by strengthening its political and economic ties with Saudi Arabia, Syria, Iraq and other Arab governments as well as with Iran. This Turkish strategy would have been embraced even under the leadership of the staunchest secular leadership.

Nor was the general direction of the Turkish policy towards Israel a demonstration of a new "anti-Israeli" approach. Erdogan's diplomatic effort to serve as a mediator between Syria and Israel made a lot of strategic sense, especially at a time when Washington's power in the region was eroding in the aftermath of the Iraq War, and offered long-term benefits to all those involved in the process, including the Israelis.

At the same time, the 2008 Israeli military operation in Gaza, which led to the collapse of the Israeli-Syrian talks under Turkish auspices, ran contrary to the interests of Turkey which was trying to co-opt the Islamist movement of Hamas and persuade it to moderate its positions. The television images of Palestinian civilian casualties in Gaza helped ignite anti-Israeli sentiments in what is after all a functioning democracy. In a way, the democratically elected governments in Ankara -- unlike the military governments that preceded them -- do have to respond to pressure from an electorate that sympathizes with the Palestinian cause. After all, the neoconservatives in Washington should be celebrating the victory of democracy in Turkey. Not!

In any case, the view that there is a direct relationship between the Islamist ideology of the current Turkish government and the deterioration in the relationship with the Jewish State derive from a myth about a "special relationship" between Ankara and Jerusalem. But Turkey has never regarded Israel as an ally -- but as just another important regional player with which it shares some mutual interests. The need to contain the pressure from Arab nationalists led by Egypt's Gamal Abdel Nasser and backed by the Soviet Union helped strengthen Israeli-Turkish cooperation during the Cold War. But even then, the relationship suffered a setback when Turkey downgraded its relationship with Israeli after forming the Baghdad Pact with Iraq in 1955 and pledged to come to the support of Jordan if attacked by Israel.

If anything, the recent diplomatic crisis between Ankara and Jerusalem resembles similar dips in the relationship between the two countries that had taken place when secular and/or military regimes ruled Turkey. Growing Arab-Israeli tensions and waves of rapprochement in the relationship between Turkey and the Arab states had major impact on Ankara's ties with the Jewish State under Ataturk's heirs.

In 1947 Turkey voted against the United Nations partition plan and the creation of Israel; but in 1949, after Egypt and Jordan signed armistice agreements with Israel, Turkey became the first Muslim state to recognize Israel. Diplomatic missions were opened in December 1950 at the legation level in Ankara and Tel Aviv, although from 1956, following the attack by Israel against Egypt, the legation in Tel Aviv was reduced to the lowest diplomatic level of charge d'affaires. That changed only in December 1991, six weeks after the start of the Arab-Israeli peace conference in Madrid, the Turks decided to upgrade the diplomatic representation of Israel -- and the PLO -- to the ambassadorial level.

Earlier on during the First Intifada, Turkey had signaled its support for the Palestinian cause by becoming the fourth country -- and the only government then maintaining diplomatic relationship with Israel --to recognize Palestine as an independent state. Turkey also joined most of the Arab and Muslim governments in denouncing Israel in response to its invasion of Lebanon in 1982 and the Israeli policies in the Palestinian territories.

Hence, Turkey's long-term interests have always been based on the understanding that geographical proximity, economic interests and civilizational considerations require that it normalize the relationship with its neighbors. This explains why it is unlikely that any government in Ankara would now establish a full-fledged alliance with a Jewish state as long as Israel remained at war with the Arab world. Israelis may not like that. But Ataturk would have approved.

The changing narratives of US president campaigns

2011-09-14T13:08:00.000-07:00

Business Times - 15 Sep 2011

The changing narratives of US president campaigns

By LEON HADAR
WASHINGTON CORRESPONDENT

AMERICANS will have to wait for 14 more months before having the opportunity to decide who will occupy the White House for four more years. Yet it is starting to feel as though the country is already in the midst of a heated presidential election campaign, providing a lot of business for pollsters, consultants, pundits, and making it all seem like paradise on earth for your average political junkie.

The Republican presidential candidates have been holding televised debates almost every other week, and much of the discussion on cable television news shows and the blogosphere has been focused on who was 'up' and who was 'down' in the Republican race, which will open officially only early next year when the party's first presidential primaries take place in Iowa and New Hampshire. Already it seems that the members of Washington's political punditry have changed their Republican Presidential Narrative several times. First, we were told to watch closely the battle between former Massachusetts governor Mitt Romney and former Wisconsin governor Tim Pawlenty, with most experts betting on the younger and more conservative Mr Pawlenty.

Then after Tea Party darling Michelle Bachmann had won the Republican 'straw poll' in Iowa - and Mr Pawlenty, who had lost, withdrew from the race - every expert insisted that the ultra-conservative Congresswoman from Wisconsin had a good chance of winning the Republican presidential nomination next year; perhaps even of beating President Barack Obama in the presidential election.

That was the narrative until Republican Governor Rick Perry announced two weeks ago that he would be joining the presidential race. Like Ms Bachmann, Mr Perry is very popular among the Tea Partiers and the Christian Right. But Mr Perry is also a governor of a large and conservative state and exudes the kind of authentic cowboy-like vigour so admired by the current Republican electorate.

So now Ms Bachmann seems to be 'out' and the conventional wisdom is that it is Mr Romney vs Mr Perry. Recalling the 1980 Republican presidential race, Mr Romney is being compared to the favourite of the party's establishment that year, George WH Bush, who ended up losing the primaries to the more conservative Ronald Reagan. Indeed, Mr Perry is now being compared by pundits to Reagan who had been bashed by the political and media establishment in 1979 as being an 'extremist' and whose very conservative positions on social-cultural and economic issues would make it difficult for him to win the election against the then Democratic incumbent Jimmy Carter.

Reagan did win the Republican nomination and the presidency, which raises the possibility that Mr Perry, despite his views on the popular government-backed insurance programme for retirees and on Fed chairman Ben Bernanke, could get the support of the Republican electorate in the primaries and defeat President Obama next year.

Anything can happen at a time when miserable economic conditions and never-ending wars have made the angry American voters more susceptible to the kind of the populist and fuming rhetoric spouted by Mr Perry. But President Obama is taking no chances. He has been campaigning this week in Virginia and Ohio, two 'swing' states that had voted for him in the last election but now seem to be leaning in the Republican direction.

And to the delight of the members of his political base, President Obama is sounding more and more like the 'old' presidential candidate Obama of 2007. Gone is the Professor Obama that seems to be playing to role of the president in the last three years - lecturing the American people and trying to reach 'compromises' with the Republicans whose only goal was to destroy his presidency.

Instead, President Obama has embraced his own version of populism, demanding that the Republicans in Congress approve 'immediately'Â his US$447 billion plan to create new jobs. He would do this with funds raised by increasing the tax burden on the oil companies and other large corporations as well as on America's rich.

Public opinion polls suggest that the majority of American voters, including the crucial bloc of independents, like what they hear from President Obama and are getting tired of the Republican tactics. They do want Washington to start doing something about the economy, and in particular, about the large number of people without jobs.

So it is going to be a very long and gruelling presidential election campaign, during which the Republicans will be blaming President Obama for an economy that is not going to get better anytime soon - while the White House and the Democrats will be accusing the Republicans of being the obstructionists. It is too early to predict who is going to win. But it is probably safe to say that it is not going to be the American economy.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Will Obama's plan save US jobs - and his own?

2011-09-12T13:07:00.001-07:00

Business Times - 13 Sep 2011

Will Obama's plan save US jobs - and his own?

If the Republicans try to torpedo plan, that could ironically help Obama in the 2012 poll

By LEON HADAR
WASHINGTON CORRESPONDENT

US PRESIDENT Barack Obama is hoping that the US$447 billion mix of tax cuts and spending that he proposed during a televised address to the politically divided Congress and the economically distressed American people last week would 'restart' the slow economic recovery and avert a double-dip recession. No doubt, he must also be hoping that it will revitalise his limping presidency, regain the support of the electorate and ensure that he get to serve a second term in the White House.

Indeed, as Mr Obama delivered his 30-minute-long speech - challenging lawmakers to pass his job plan as soon as possible - both the American economy and the Obama presidency seemed to be heading into dangerous territories. With the unemployment rate stuck at 9.1 per cent while consumer confidence remains low and the housing market is still in a mess, there are growing concerns in Washington and Wall Street that a vicious circle in which consumers are not spending and businesses are not hiring could result in another economic downturn that could spell disaster for the American and global economies.

Adding to the growing sense of economic gloom has been the failure of Washington to embrace an effective strategy to control the ballooning federal deficits that pose long-term threats to America's global economic standing and endanger its credit rating and damage the value of the US dollar. The responsibility of drawing the outlines of a plan to put US fiscal house in order is now in the hands of a 'super' bi-partisan Congressional committee. But the ideological differences between Republicans (cut spending; no taxes) and Democrats (cut some spending and tax the rich) reduce the chances that Congress would agree on a long-term deficit-cutting plan before the 2012 election.

At the same time, these economic problems that have been aggravated by the crisis in the eurozone and instability in the energy-rich Middle East, have been reinforcing Mr Obama's political troubles. His approval ratings have fallen under 50 per cent as he fails to win any brownie points with independent voters, while losing support even among members of his own electoral base. With the presidential election only 14 months away, it seems quite likely that Mr Obama could lose his second race to the White House.

In fact, recent opinion polls indicate that either of his two main potential Republican challengers - the Tea Party favourite Governor of Texas Rick Perry and the more moderate former Governor of Massachusetts Mitt Romney - could beat him in the election in November 2012.

Indeed, Mr Romney and Mr Perry have emerged as the main Republican presidential contenders during a televised debate between the main presidential candidate that took place last Wednesday (and forced Mr Obama to postpone his address from Wednesday to Thursday). Mr Romney, Mr Perry and the other Republican candidates blamed Mr Obama for the current economic stagnation and high rate of unemployment. In particular, they insisted that Mr Obama's efforts to grow the economy through fiscal stimulus programmes have failed and have actually worsened the economic problems.

The Republican message is that the only way to revive the economy is by cutting taxes on households and businesses while eliminating various regulations on the private sector.

Yet Mr Obama decided to introduce what amounted to his third economic stimulus package that, like the two earlier ones, includes both tax cuts (US$245 billion or 53 per cent of the total package) and targeted government spending on infrastructure and aid to states (US$140 billion or 31 per cent of the total), plus US$62 billion to help the unemployed until they find a job.

It is possible that the economic recovery could be re-energised if Congress approves his package right away. While his US$447 billion job-creation programme falls short of the grand fiscal stimulus plans advocated by Keynesian economists, it could in theory make some difference. Hence the tax cuts Mr Obama proposed would reduce the amount that employees and employers contribute towards retirement as part of the government-backed national insurance programme (Social Security).

In a way, Mr Obama's plan extends an existing programme that cuts workers' contribution and applies it also to the payments that employers are required to make (by matching their employees' contributions). The theory is that employees will now have more money to spend. That in turn raises demand and provides incentives for businesses to use additional money they gained from the tax cuts to hire more workers.

The problem is that there are no guarantees that either employees or employers are going to use the extra money in their disposal in the way that the Obama Administration hopes they would. Instead of spending the money on new cars or other purchases, employees could end-up saving it or using it to pay off their debts. And if consumers are not spending on their products, why would businesses use the extra money to invest in hiring new workers to make the products that no one is going to buy?

The US$140 billion in government spending on retaining and rehiring teachers and police and fire-fighters, modernising public schools, rehabilitating vacant property and rebuilding America's infrastructure (through a national infrastructure bank), could have a more immediate effect by, for example, preventing the lay-off of up to 250,000 teachers and keeping policemen and firefighters on the job.

But the approval and implementation of funding for constructing highways and airports takes a long time. And in any case, there is no reason to expect that the Republicans who control the House of Representatives as well as some of the conservative Democrats in the Senate are even going to approve the spending package that Mr Obama is proposing.

Even under the best case scenario, under which the Federal Reserve also adopts new monetary policies to stimulate the economy, the chances for a dramatic reduction in the unemployment rate before the 2012 election are not very good, which means that Mr Obama's jobs plan is probably not going to create or even save a lot of jobs.

But if, as expected, the Republicans will try to sabotage even the modest programme the White House is proposing, Mr Obama will be in a better position to blame the Republicans for the slow economic growth and high unemployment. If he succeeds in doing that, he may yet save his own job.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

No more Mr Nice Guy against Republicans

2011-09-06T08:58:00.001-07:00

Business Times - 06 Sep 2011

No more Mr Nice Guy against Republicans

Obama should blame them for the political and economic mess in Washington

By LEON HADAR
WASHINGTON CORRESPONDENT

IT HAS been common practice in Washington for more than two centuries: The US president sends a letter to the leaders of Congress in which he asks to be allowed to address the two legislative chambers on matters of national importance. There has never been an instance in which Congress denied the White House's request.

But there is always a first time for everything in Washington. And in a year dominated by nasty political and legislative fights, it was not surprising that even the tradition of an American president addressing a joint session of Congress - reflecting bipartisanship and a sense of national unity and political civility - was going to be challenged.

After Congress had shut down for the summer recess - following the nasty battle over raising the debt limit (and the ensuing downgrading of US credit rating) - President Barack Obama told reporters that he would be delivering an address before Congress, outlining his plan to grow the economy and create new jobs, when lawmakers return to Washington this month.

Indeed, the US government report issued in Washington on Friday that job creation in the US came to a halt in August only helped highlight the pressure on Mr Obama to speak of new plans to re-ignite the economic recovery.

Economic gloom

The report indicated that the unemployment rate was unchanged at 9.1 per cent coupled with other new signs that economic growth is at a standstill - slowdown in the manufacturing sector; falling consumer confidence; a continuing crisis in the housing industry. All of this has only added to the sense of economic gloom in Wall Street and Washington. And that in turn should have made it more likely that Congress and the White House end the political bickering and join forces as soon as possible behind a new economic plan to foster recovery. Should have; but won't.

Mr Obama did send a letter to the Speaker of the House of Representatives John Boehner in which he requested to address a joint session of Congress at 8pm tomorrow. Reporters in Washington assumed that that is exactly what would happen: a joint session of Congress at 8pm tomorrow.

But, hey, this was after all Mr Obama asking for an invitation from the Republicans in Congress, including lawmakers who continue to believe that the current White House occupant is 'un-American', if not 'anti-American', not to mention the 'base' of the Republican Party that is dominated by activists who insist that Mr Obama was born in Kenya, that he is a secret Muslim and a raging socialist.

In fact, the Republican Senate Majority Leader Mitch McConnell has made it clear that his top political priority is to deny Mr Obama a second term in office, and, indeed, much of what the Republicans have been doing in the last three years has been aimed at sabotaging his entire policy agenda - including policies that they had supported in the past - as part of an effort to make it impossible for him to take the steps to revive the American economy, and by extension to de-legitimise the Obama presidency.

So why should anyone be shocked when Mr Boehner sent a letter back to the White House denying Mr Obama's request and asking him to reschedule his appearance for Thursday.

The Republicans blamed the White House for the mess. Their party's leading presidential candidates were scheduled to hold a televised debate at the Ronald Reagan Library tomorrow at the same time that Mr Obama had scheduled his Congressional address.

And the Republicans accuse the White House of trying to divert attention from this event - in which Texas Governor Rick Perry will make his first debate appearance.

Mr Obama ignored 'a mutually agreeable date and time before making any public announcement' on the date and time of his address, said a spokesman for Mr Boehner, a Republican from Ohio who had led the troops in the recent fight with the White House and the Democrats over the debt ceiling.

In a way, the outcome of that debate was seen as a major political defeat for Mr Obama who had failed earlier in the summer to win congressional support for legislation that would have provided for a balanced approach towards deficit cutting - a mix of cutting government spending and raising taxes on the rich.

At the same time, opposition from the Republicans on Capitol Hill makes it unlikely that Congress will approve any new bills that would stimulate the weak economy and could (perhaps) help create new jobs. But notwithstanding the politics that seems to be running against him, Mr Obama is expected to propose in his congressional address to spend money to generate jobs in the short run while cutting spending and reforming the tax code over the long haul.

In fact, last Wednesday, the same day that the White House and the Speaker were exchanging letters regarding Mr Obama's address, the president called on Congress to pass a spending bill to finance airport rebuilding projects before it expires at the end of September. He noted that 74,000 temporary layoffs could result if that spending bill is not approved.

Republicans' priority

But the Republicans have made it clear that cutting government spending remains their main priority. Indeed, some Republican lawmakers have stressed that any new emergency government-financed measures in response to the destruction brought about by hurricane Irene would only be approved in exchange for equivalent cuts in other government spending.

Many Democrats have urged that Mr Obama take a tougher stand against the Republicans who seem to be getting away with setting the agenda. They did it once again last Wednesday when Mr Boehner ended up winning another political round in his fight with the White House, forcing Mr Obama to reschedule his address for Thursday.

According to White House sources, Mr Obama will call during his address for extending a cut in payroll tax beyond its expiration day at the end of the year, for congressional approval of the proposed free trade agreements with South Korea, Colombia and Panama, and for funding for infrastructure projects.

No one expects an extension of the cut in payroll tax and the approval of the FTAs to have any dramatic effect on job growth before the November election next year. Providing funding for infrastructure projects as part of a wider fiscal stimulus package could have done the trick. But the Republicans are dead set against even the most modest stimulus package.

So Democrats and allies of the White House are telling Mr Obama that since under the current political balance of power in Washington he would not be able to do anything that will bring about more job growth before the election, he should frame his address on Thursday and the rest of his political strategy in a way that places the blame on the political and economic mess in Washington on the real culprits, the Republicans.

After all, he has almost nothing to lose at this point.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Troubled economy in search of a solution

2011-08-30T14:15:00.000-07:00

Business Times - 31 Aug 2011

Troubled economy in search of a solution

Despite what was said at Jackson Hole, markets are still waiting for reassuring messages

By LEON HADAR
WASHINGTON CORRESPONDENT

IN THE aftermath of the decision by Standard & Poor's (S&P) to downgrade the US credit rating, Wall Street has been waiting for Washington - whether it's the White House or Congress or the Federal Reserve - to do something, or at least say something that would reassure the markets that the economy was getting better. At the very least, they wanted to be told the economy would be getting better in the not-so-distant future.

So it was not surprising that Fed chairman Ben Bernanke's speech delivered last Friday at the policy conference held at Jackson Hole, Wyoming was described by pundits as one of those 'much-anticipated' events.

Against the backdrop of the political and legislative stalemate in Washington that has made it close to impossible for the White House and Congress to agree on steps to put America's fiscal house in order, investors and other market watchers were hoping that the head of the US central bank would be laying out a monetary strategy to accelerate economic recovery.

Indeed, the US Commerce Department reported that gross domestic product rose only one per cent from April through June - less than the 1.3 per cent that most economists had predicted.

But Mr Bernanke seemed to have failed to fulfil those high expectations that, in retrospect, can be seen as wishful thinking. If anything, during his address, the Fed chairman seemed to be laying the blame for the poor American economic performance on the politicians in the White House and Congress.

Mr Bernanke insisted that the recent political infighting in Washington over the federal government's budget had sent the wrong message to the markets 'and probably the economy as well'. The United States 'would be well served by a better process for making fiscal decisions', he said.

And he warned the Obama administration and the Republican-led Congress that political battles over the federal government's borrowing and spending that dominated Washington during the summer 'could, over time, seriously jeopardise the willingness of investors around the world to hold US financial assets or to make direct investments in job-creating US businesses'.

But what really mattered to the markets, beyond Mr Bernanke's scolding rhetoric and his general commitment to 'employ (the Fed's) tools as appropriate', was the failure by the Fed chairman to discuss the monetary tools that the Fed would be ready to employ - if and when it decides to move in that direction at all.

No major action

Mr Bernanke did defend during his speech the Fed's announcementÃ‚ early in August that it planned to hold down short-term interest rates until mid-2013.

But he refrained from raising the possibility that the Fed would be taking any major action, disappointing economists and officials and lawmakers in Washington who have been arguing that a more aggressive approach on the part of the central bank by injecting more money into the economy could stimulate growth.

But in his address at the conference sponsored by the Federal Reserve Bank of Kansas City, Mr Bernanke seemed to be placing an emphasis on the constraints operating on the ability of the Fed to use monetary policy (such as managing interest rates) in dealing with the long-term problems facing the American economy.

'Most of the economic policies that support robust economic growth in the long run are outside the province of the central bank,' he said.

More specifically, there was not even a remote suggestion in Mr Bernanke's speech that the Fed would be ready to launch a third round of quantitative easing (QE3) - purchases of Treasury securities and other financial assets aimed at helping the economy by keeping long-term interest rates down while encouraging spending and pushing up stock prices.

But the idea of a QE3 or any other proposal to inject more money into the economy are not very popular among the conservative Republicans on Capitol Hill and those inflation hawks who are part of the Fed's policymaking committee.

These opponents of easing US monetary policy argue that, at a time when interest rates are close to zero, a QE3 would produce upward inflationary pressures and erode the value of the US dollar. But supporters of a more activist Fed approach note that in addition to its responsibility for price stability, the Fed's mandate also includes maintaining 'maximum employment', and that monetary policy remains the 'only game in town' as far increasing economic growth and bringing unemployment down are concerned.

Indeed, the expectation that the politicians in Washington would get their act together remains very low. Congress and the White House agreed to raise the debt ceiling as part of a deal to cut government spending by US$2.1 trillion. But Congressional committees still have to negotiate the details of those cuts before the November elections next year.

Anxious markets

Republicans remained opposed to any deficit-cutting programme that includes increasing the tax burden on rich Americans. And the White House and the Democrats will not agree to a plan that is based entirely on reducing government spending.

So the anxious financial markets are now waiting for other reassuring messages from Washington. President Barack Obama is planning to deliver a speech after Labour Day detailing proposals for job creation and spending cuts that some hope would put pressure on the Congressional committees to take action ASAP.

And then there is the scheduled meeting of the Federal Open Market Committee in late September, which would be extended to two days from one day 'to allow a fuller discussion', as Bernanke put it during his address. That's something to look forward to - but don't hold your breath.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Obama's right in "leading from behind" in Libya

2011-08-25T13:58:00.001-07:00

Business Times - 25 Aug 2011

Obama's right in 'leading from behind' in Libya

By LEON HADAR
WASHINGTON CORRESPONDENT

REPUBLICAN lawmakers and neoconservative pundits have been very critical of President Barack Obama for failing to assert US leadership in the foreign policy arena. In particular, they have blasted his somewhat muddled response to the insurgency in Libya.

For example, Republican Senator John McCain from Arizona who ran for the White House in 2008 seemed to suggest that the US should have led a more muscular military effort in Libya aimed at deposing Libya's Muammar Gaddafi.

Indeed, Obama bashers on the political right have been quoting ad nauseam from a New Yorker magazine article authored by Ryan Lizza in which an administration official described Mr Obama's action is Libya as 'leading from behind'. America should lead from the front - not from behind, argue the critics.

But the administration official was trying to contrast Mr Obama's approach in Libya with former president George W Bush's strategy in Iraq. While Mr Obama's predecessor embraced a unilateral US-led and very costly (in American and Iraqi lives and in money) invasion of Iraq to overthrow Saddam Hussein and 'liberate' the country, the current White House occupant has refrained from deploying US ground troops into Libya and allowed Nato allies France and Britain to take the lead there and providing them, at the same time, with some US air support.

Considering the very limited effect that developments in Libya would have had on core American strategic interests and the fact that the US military had already been embroiled in two full-blown wars in Afghanistan and Iraq, Mr Obama's decision not to be drawn into another direct military intervention in another Muslim country makes a lot of sense.

Instead, the administration agreed to join a multilateral effort that had first averted a humanitarian catastrophe in Libya and then helped the anti-Gaddafi insurgents to establish themselves as an effective military force that seems to be now in a position to gain control of the capital, Tripoli.

It is unlikely that the collapse of the Gaddafi regime is going to bring about the establishment of liberal democracy in Libya. If anything, one should expect more political chaos, violence, and perhaps even a civil war among the various tribes in the country.

But for the cheerleaders for Mr Bush's Iraq War to criticise Mr Obama for his performance in Libya is just very, well, neocon-ish.

The fall of the Saddam regime was also followed by political chaos, violence and a civil war among the ethnic and sectarian groups in the country. But the cost of that disaster was paid in Iraqi and American lives and US taxpayer funds. The invasion helped Iran and its allies emerge as the real winners.

That a post-Gaddafi Libya could be facing a similar outcome should certainly be of concern to the Libyan people and to some of the countries in the region that could be affected by the developments there.

But the point is that, as at today, the costs of the US military involvement in Libya amount to what Americans spent in a week of occupation of Iraq.

The US should now take steps to bring to an end even that limited military intervention in Libya and encourage the Libyan people to rebuild their country while expanding American diplomatic and economic cooperation with a new Libya.

Fortunately, American military forces are not going to occupy Libya anytime soon, avoiding the US-made post-Saddam military and political mess in Iraq. If there is going to be a similar mess, the responsibility for that would be laid squarely on the Libyan people and their leaders.

In a way, the basic idea of the US 'leading from behind' means that when it comes to civil and regional wars, Washington should encourage the local players that have a stake in the outcome - like the Europeans and the Arabs in Iraq - to protect their own direct strategic interests in a way that does not require direct US military intervention.

The use of direct American military force should be reserved only for those instances when core US interests are being threatened.

In Iraq, those US interests had not been threatened. But under the leadership of Mr Bush and the neoconservative ideologues, the US lurched ahead and used its full military power - with disastrous results for all concerned.

Unfortunately, those who insist on doing reruns of this kind of disaster are still around in Washington and they are hoping to return to lead Americans into more unilateral military adventures in the Middle East and elsewhere. They may even get back into power. You have been warned.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

In the Huffington Post: Deposing Gaddafi 'From Behind'?

2011-08-23T10:29:00.000-07:00

Leon T. HadarJournalist and foreign affairs analyst
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Deposing Gaddafi 'From Behind'?
Posted: 8/22/11 05:44 PM ET

Neoconservative critics have blasted President Barack Obama for failing to assert U.S. leadership in the foreign policy arena, with his somewhat muddled response to the anti-Gaddafi insurgency in Libya serving as a case in point. Indeed, the neocons have being quoting ad nauseam from a New Yorker article by Ryan Lizza, in which an indentified administration official described Obama's actions in Libya as "leading from behind."

The official was trying to contrast Obama's efforts to depose dictator Muammar Gaddafi in Libya with former President George W. Bush's strategy in Iraq, the argument being that while Obama's predecessor embraced a unilateral, U.S.-led and very costly (money-wise and in American and Iraqi lives) military action in Iraq that, among other things, helped ignite a civil war in Mesopotamia, the current White House refrained from deploying U.S. troops to Libya and instead allowed its NATO allies to take the lead there while providing them with some air support.

I have been very critical of Obama's response to the upheaval in Libya and continue to believe that neither direct nor indirect U.S. military action was required in Libya, considering the very limited effects that developments there would have on core U.S. national interests, not to mention the fact that the White House should have received authorization from Congress before taking such action.

I personally did not have any problem with France or Britain -- or, for that matter, any other European or Arab government -- using military force to help the rebels and depose Gaddafi. But as I suggested in an earlier article, the French have succeeded in maneuvering the Obama Administration into a more active military involvement in Libya that has the potential to draw the U.S. into a military and diplomatic quagmire in that country even if Gaddafi is deposed and the insurgents take power (and it seems that that could happen sooner than later).

My guess is that the collapse of the Gaddafi regime is not going to bring about the establishment of liberal democracy in Libya and could instead unleash political chaos and violence and perhaps even ignite a civil war between the various tribes there. But for the cheerleaders for Bush's Iraq War to bash Obama for his performance in Libya is just very, well, neoconish.

After all, we had that kind of disastrous outcome in Iraq but with much of the costs paid by American soldiers and taxpayers, and with Iran and its allies emerging as the real winners in the story. That a post-Gaddafi Libya could be facing a similar outcome should certainly be of concern to the Libyan people and to some of the countries in the region that could be affected by the developments there.

But the point is that the costs of the (unnecessary) U.S. military involvement in Libya amount to the costs of a week or so of the American military occupation of Iraq. The U.S. should now take steps to bring to an end even that limited military intervention in Libya and encourage the Libyan people to rebuild their country while expanding American diplomatic and economic cooperation with them. And if the Brits, the French, the Italians or some of Libya's neighbors have an interest in establishing military ties with the new government, well, that is their business.

In a way, the basic idea of the U.S. "leading from behind" makes a lot of sense if it means that Washington should encourage regional players to protect their own direct strategic interests in a way that does not require direct U.S. military intervention. The use of direct American military force should be reserved only to those instances when core U.S. interests are being threatened.

In Iraq, on the other hand, those interests had not been threatened, and under the leadership of Bush and the neocons the U.S. lurched ahead and used its full military power, with disastrous results to all concerned. Unfortunately, those who insist on doing reruns of this kind of disaster have not been left behind in Washington.

Follow Leon T. Hadar on Twitter: www.twitter.com/leonhadar

What's wrong with the US Fatca tax law

2011-08-22T13:12:00.001-07:00

Business Times - 23 Aug 2011

What's wrong with the US Fatca tax law

Apart from violating financial privacy laws, the new rules will prove costly for FFIs

By LEON HADAR
WASHINGTON CORRESPONDENT

IN RESPONSE to protests from American businesses, the federal government decided to repeal earlier this year a complex and intrusive tax scheme aka '1090' that would have required companies to collect tax identification numbers for any of their suppliers whenever they did more than US$600 of business - that included, for example, out-of-town hotels the company's salesman were staying in - and then send the required paperwork to the Income Revenue Service (IRS).

Demonstrating some common sense, officials and lawmakers in Washington decided to eliminate the '1090' after arriving at the conclusion that the tax rule amounted to the kind of bureaucratic and financial nightmare that would impose unnecessary burdens on American businesses at a time when the government's main goal was to help revive an ailing economy.

But Washington has not exhibited the same kind of refreshing common sense when it came another new component of the US tax law known as the Foreign Account Tax Compliance Act (Fatca), that would require non-American financial institutions to scrutinise billions of dollars of deposits to find US citizens who might be hiding money. Not unlike the '1090', the Fatca is basically trying to force private companies to join the IRS in searching for tax evaders.

The reason why the Fatca is getting less attention in Congress and the US media than the '1090' provision is clear. The '1090' could have had an adverse effect on big and small American businesses that continue to exert political power on Capitol Hill and whose anti-tax plight could ignite some sympathy among many Americans who detest the federal government's intrusion into their lives and are critical with what they regard as the IRS's abusive methods.

American 'imperial overreach'

The Fatca rules, on the other hand, would target institutions that most Americans love to hate these days - banks. And if these banks are foreign and are being suspected of sheltering the billions of dollars that are supposedly hidden by those reviled American 'fat cats', what is there not to like in the Fatca?

On one level, it makes a lot of sense in our age of globalisation and the free-flow of capital worldwide for the US to ensure that American citizens would not avoid paying their personal income taxes on foreign dividends and interest by hiding their funds in overseas bank accounts.

Until recently, the government required US taxpayers to report overseas bank accounts on their personal returns but lacked the means to force them to do that.

The new Fatca provisions not only require Americans with more than US$50,000 in foreign assets to report them and the income they earn. They also place the burden of policing the law on foreign financial institutions (FFIs) that are now compelled by law to report the IRS each year all the available information on the accounts of American citizens. A 30 per cent withholding tax penalty on all US payments of dividends, interest, and security proceeds would be imposed on any FFI failing to provide this kind of report on its American client.

'Imagine the US reaction if a foreign power - say China, Japan, or Russia - enacted legislation requiring US financial firms to report similar information on their citizens, and imposed a stiff penalty on US firms that failed to comply,' American economist Gary Hufbauer wrote in a report issued last month by Peterson Institute for International Economics.

'One hopes that Congress and the Administration would scream to the roof-tops,' Mr Hufbauer, a senior fellow with the Washington-based think tanks who describes the Fatca as a form of American 'imperial overreach'.

In addition to raising concerns about violating existing laws with regard to financial privacy (in Switzerland, for example), the new Fatca rules are going to burden FFIs with enormous bureaucratic and financial costs, including by making millions of dollars in investment in new software and staff to deal with the added tasks.

Moreover, it is not even clear that the huge regulatory system that would affect American individuals and companies engaged in cross-border economic activity is going to produce major economic benefits for Americans. In particular, it could affect thousands of Americans who work abroad and/or are married to non-American spouses - as well as foreigners who legally reside in the US and are required to pay taxes according to American tax law - who may not be allowed now to open accounts in FFIs.

The Peterson Institute's Mr Hufbauer has called on Congress to delay the implementation of Fatca for five years. 'During that time, the Treasury Department should be instructed to negotiate cooperative, two-way, reporting agreements that would require financial institutions in both countries to report the holdings of foreign taxpayers who are citizens of the other country,' he wrote.

Mr Hufbauer believes that such reporting requirements should not target all Americans and their foreign counterparts but only high-net-worth households, with households with fewer holdings being targeted on a random basis. Then after five years, the Treasury 'should dispassionately evaluate' the reporting burdens and the additional revenue raised. At that point, a sensible decision can be made on whether Fatca should be allowed to take effect, Mr Hufbauer concluded in his report.

Contrary to vision

That is certainly a proposal that makes a lot of sense. Or Washington should go even beyond that and like in the case of the '1090' tax provision, eliminate the Fatca from the law books. After all, the rules run so much contrary to the vision promoted by President Barack Obama of a United States that is committed to a diplomatic and economic engagement with the rest of the world.

If anything, Washington should be celebrating the role of American multinationals and entrepreneurs, including members of the Asian diasporas that are operating abroad and are helping to spread American economic and political ideas, serving as the unofficial ambassadors of American capitalism in countries like China and India. Washington should certainly not be punishing them.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

my new op-ed in Haaretz אידיאולוגיה ביקום חלופי

2011-08-22T09:45:00.001-07:00

w w w . h a a r e t z . c o . i l

עודכן ב- 07:21 19/08/2011
לי-און הדר | אידיאולוגיה ביקום חלופי

מאת לי-און הדר | וושינגטון

תארו לעצמכם יקום חלופי, שבו ראש הממשלה בנימין נתניהו ומנהיג הרפובליקאים בקונגרס אריק קנטור מחליפים תפקידים.

נתניהו ייהפך לאחד ממנהיגי הרפובליקאים, מחויב לתפישת השוק החופשי ולמדיניות חוץ נצית, שתתמקד בברית ישראלית-אמריקאית, ותומך בשותפות עם הימין הדתי והתנועות הפופוליסטיות, המסתייגות מהאליטות הישנות של השמאל, ומ"האחר", הזר.

קנטור, אחרי שיעלה לישראל ויצטרף להנהגת הליכוד, יעשה בירושלים כמעט בדיוק את מה שיעשה נתניהו האמריקאי בוושינגטון. את תמיכת חברי "מסיבת התה", נוצרים אוונגליסטים ומצביעים לבנים מהשוליים, יחליף קנטור בתמיכת מתנחלי הגדה המערבית, פוליטיקאים חרדים ומצביעים רוסים מנוכרים.

אלא ששני הפוליטיקאים האלה אינם צריכים להחליף מקומות. השניים, החולקים פילוסופיות פוליטיות וכלכליות דומות, מתמודדים במקביל, בשתי המדינות, עם התנגדות חריפה לניסיונותיהם להפוך את האידיאולוגיה שלהם למדיניות.

נתניהו וקנטור, המשקפים את התחושות בקרב תנועותיהם הפוליטיות, מתעבים את הנשיא ברק אובמה ואת כל מה שהוא מייצג, ולאחר שהכניעו אותו במהלכים פוליטיים מחוכמים, הם מקווים שלא ייבחר לנשיאות בשנית. נתניהו, בעזרת קנטור, הצליח לטרפד את יוזמת אובמה לחדש את השיחות בין ישראל לפלסטינים. ואילו הרפובליקאים הצליחו לאלץ את אובמה לנטוש את תוכניתו המאוזנת לצמצום הגירעון הלאומי באמצעות הפחתת הוצאות הממשל והעלאת המסים על העשירים, לאחר שאיימו בהתנגדות להעלאת תקרת החוב האמריקאי.

במובן מסוים, הן תנועת המחאה החברתית-הכלכלית בישראל והן הבעיות הפיסקליות בארה"ב הן תוצר של ההתנגדות האידיאולוגית של הימין להסתגל למציאות פוליטית וכלכלית משתנה.

הצעדים לתיקון התפקוד הלקוי, פיקוח היתר והבזבזנות שאיפיינו את מדינת הרווחה היו הגיוניים בשנות ה-80 וה-90, איפשרו לכלכלות המערב להגביר את הפריון ולהתחרות בכלכלה הגלובלית והביאו לפריחת ההיי-טק. זה היה תהליך של רפורמה, לא מהפכה, שקיבל גיבוי מרונלד רייגן הרפובליקאי וביל קלינטון הדמוקרטי בארה"ב; ממרגרט תאצ'ר מהמפלגה השמרנית ומטוני בלייר מהלייבור בבריטניה; ובישראל - משני ראשי ממשלה, אהוד ברק ונתניהו.

ואולם הצמיחה והעושר חסרי התקדים גם מגבירים את האי-שוויון החברתי, בה בשעה שהמוסדות הממשלתיים מתקשים לספק מוצרי יסוד ושירותים בסיסיים לאזרחים זועמים. כל זאת בלי להזכיר את המשבר הפיננסי ההרסני שנגרם עקב העדר רגולציה. כל אלה יוצרים לחץ להנהגת רפורמות חדשות, שיחייבו לצמצם את הפערים החברתיים-הכלכליים, תוך כדי הגדלת יעילות הממשלה.

אובמה הפרגמטי הכיר בכך, שתהליך ארוך טווח של רפורמה ידרוש הן קיצוצים בהוצאות הממשלה והן העלאת מסים לעשירים. אלא שהוא מתמודד עם התנגדות עזה של רפובליקאים, המעוניינים בפירוק מה שנותר ממדינת הרווחה האמריקאית. כמה מהם, בהם שרידי התנועה הניאו-שמרנית החולמים על מעורבות צבאית אמריקאית חדשה, מסרבים לכל קיצוץ בהוצאות הביטחון.

לוויכוח בוושינגטון עשויות להיות כמה השלכות מעניינות על תנועת המחאה בישראל ועל התגובה עליה מצד ממשלת הליכוד. במלים פשוטות: האם יאמץ נתניהו את הגישה המעשית של אובמה, שתחייב ויתור על עקרונות אידיאולוגיים, או ילך בעקבות קנטור והרפובליקאים הדוגלים בשוק חופשי?

זאת ועוד, הדיון האמריקאי מציב דילמה נוספת מול הימין הפוליטי בארה"ב ובישראל. שינוי סדרי עדיפויות כלכליים יחייב קיצוצים בתקציבי הביטחון, שבתורם יחייבו שינויים במדיניות החוץ. מבחינת ארה"ב, פירוש הדבר צמצום המעורבות הצבאית במזרח התיכון. מבחינת ישראל, זו ההוכחה לכך שחיזוק היסודות הכלכליים והקצאת משאבים נוספים לתוכניות חברתיות-כלכליות מוכרחים להיעשות בשילוב עם אסטרטגיה עקבית להשגת הסכם עם הפלסטינים, כולל הפסקת בניית התנחלויות חדשות. אלא שכל זה יקרה ביקום חלופי, שבו נתניהו יתחלף בתפקידים לא עם קנטור, אלא עם אובמה.

לי-און הדר כתב את הספר "Sandstorm: Policy Failure in the Middle East"

Reagan-like win unlikely in 2012

2011-08-16T13:10:00.000-07:00

Business Times - 17 Aug 2011

Reagan-like win unlikely in 2012

Most voters favour Obama's approach to dealing with deficit

By LEON HADAR
WASHINGTON CORRESPONDENT

IN 1964, Barry Goldwater, a Republican senator from Arizona - charismatic, highly intelligent, a World War II air force pilot and an ultra-conservative politician calling for the dismantling of the welfare state and defeating the Soviet Union - won his party's presidential nomination after beating the head of its liberal wing (Nelson Rockefeller).

Mr Goldwater went on to lose the general election to Democratic president Lyndon Johnson by a huge landslide, with Mr Goldwater carrying only Arizona and five southern states and the Republicans losing many seats in the House of Representatives and Senate.

In 1980, Ronald Reagan, a former Republican governor of California and a former Hollywood movie star - charismatic, telegenic, and an ultra-conservative politician calling for the dismantling of the welfare state and defeating the Soviet Union - won his party's presidential nomination after defeating the leader of its moderate wing, George H W Bush.

Mr Reagan went on to defeat Democratic president Jimmy Carter in the general election, carrying 44 states with 489 electoral votes to 49 electoral votes for Mr Carter who carried six states and Washington, DC.

Mr Reagan also ended up winning re-election in 1984, carrying 49 of 50 states after defeating democratic candidate Walter Mondale who carried only his home state of Minnesota.

In 2012, with the ultra-conservative wing of the Republican Party - represented by the populist anti-government and anti-Syariah Tea Party movement - on a roll, the conventional wisdom is that the leader of what remains of the moderate wing of the Republicans, former Massachusetts governor and former business executive Mitt Romney, would find it very difficult to win his party's presidential nomination.

The betting is that one of the more ultra-conservative presidential candidates (declared and presumed)Â - Congresswoman Michelle Bachmann from Minnesota, Texas Governor Rick Perry or former Alaska governor and 2008 Republican vice-presidential candidate Sarah Palin - would be elected to head the Republican presidential ticket and face off Democratic President Barack Obama.

So the big question is whether an ultra-conservative Republican presidential candidate will be able to capture the White House in the same way that Mr Reagan did in 1980 and 1984? Or will Republican presidential candidates Perry, Bachmann or Palin - not unlike Mr Goldwater in 1964 - be rejected by the voters who would go on to re-elect a moderate Democratic president?

Political specialists and historians are still debating why Mr Goldwater lost big in 1964 while Mr Reagan made it to the White House in 1980. After all, they both looked the way US presidents had to look then and their views on the major policy issues of the day were quite similar - dismantle the welfare state and take on the Kremlin.

One explanation is that Mr Johnson was a popular political figure who presided over an American economy that was in the midst of its post-World War I growth, while the unpopular Mr Carter was managing an economy plagued by high inflation and high unemployment.

At the same time, conservatives suggest that Americans were 'not ready' for their particular message in 1964, but that the ailing economy, social strife and a perception of declining US global power helped make conservatism - with its emphasis on free markets and strong defence - a winning ideology in 1980 while reducing the appeal of liberalism that placed an emphasis on using government to promote social progress.Â

But those Republicans and conservatives who are daydreaming about a repeat of a Reagan-like electoral victory in 2012 need to recognise (to paraphrase Bob Dylan) that the times they have been changing since 1980, including what it means to be 'conservative'.Â

While it is true that, running for the presidency in 1980, Mr Reagan was bashed by liberals as 'extremist', pointing to his alliance with the Christian Right, the former California governor and Hollywood film actor was a mainstream public figure whose main interests revolved around economics and national security. Mr Reagan's partnership with the conservative social-cultural wing of his party was more a reflection of Realpolitik considerations than cultural affinities.

But the three leading conservative figures vying for their party's presidential nomination are the 'real thing' when it comes to the issues that dominate the conservative social-cultural agenda - same-sex marriage (they want to ban it), abortions (they want to criminalise it), religious tolerance (they perceive a Muslim threat to promote Syariah religious law), and science (they do not believe in Darwin's evolution theory and demand 'creationist' or 'intelligent design' theories in school curricula).

Hence, Ms Bachmann, who has won the recent 'straw poll' among Republican voters in Iowa, is an Evangelical Christian that has spent much of her political career dealing with such cultural issues (her husband Marcus is a therapist who specialises in 'curing' gay men). Ms Palin, who has yet to announce her presidential candidacy (and she might not run), is opposed to abortionÂ even in cases ofÂ rapeÂ andÂ incest.

And Mr Perry, who proudly wears his Christianity on his political sleeve, proclaimed on Aug 6 as a Day of Prayer andÂ Fasting and invited governors across the country to join him to participate in The Response, a Christian prayer meeting held in a huge stadium in Houston, which was organised and hosted by a conservative Christian organisation.

While many Americans in general tend to report higher church attendance than, say, the French or the British, the social-cultural positions embraced by these three presidential candidates - and by the majority of Republican Party activists - run contrary to those of most voters, especially younger Americans and independent voters, who tend to subscribe to more moderate and tolerant views on issues such as gay marriage and abortion.

Interestingly, after retiring from the Senate, Mr Goldwater decried the growing influence of the Christian Right on his party. That enormous influence has forced moderates such as Mr Romney to change their earlier, more accommodating positions on abortion and other social-cultural issues that in Mr Romney's case had actually helped him win the governorship of the liberal state of Massachusetts.

Republicans, however, are hoping that against the backdrop of the economic discontent, most voters, especially in economically distressed states such as Pennsylvania, Ohio, Michigan and Wisconsin, would be attracted to the economic message of economic revival espoused by Mr Perry, Ms Palin, or Ms Bachmann - and pay less attention to their views on abortion or gay marriage.

But the problem is, contrary to the Republican conventional wisdom, it is not clear that the radical economic prescriptions - cutting government spending, abolishing socio-economic and health programmes, imposing no new taxes - promoted by the three and, in fact, the rest of the Republican candidates, Â are going to win the support of a majority of voters. According to opinion polls, most voters favour Mr Obama's balanced approach to dealing with the nation's deficit - cutting spending and imposing taxes on the wealthy while preserving the foundations of the welfare state.Â

Indeed, even Mr Reagan, who had led a major reform of the economic system by cutting some regulations and reducing the level of taxation, was never a proponent of changes in the government-backed insurance plans for retirees and the elderly and during his first four years in office demonstrated that he was more of a cautious reformer than a radical revolutionary. And this is the way that Mr Obama in 2012 is hoping to sell himself to the American people.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

The Middle East Needs an ASEAN

2011-08-15T11:04:00.000-07:00

Published on The National Interest (http://nationalinterest.org)
Source URL (retrieved on Aug 15, 2011): http://nationalinterest.org/commentary/the-middle-east-needs-asean-5755

The Middle East Needs an ASEAN

August 11, 2011
Leon Hadar [2]
During the roaring globalization years of the 1990’s when “Friedmanism”—Tom, not Milton—was all the rage, Israel’s elder statesman was putting fantasy to paper in The New Middle East (Henry Holt, 1992).

Peres, the chief architect of the Oslo Agreement with Yasser Arafat, imagined the birth of a democratic and free-market-oriented region. Israelis and Palestinians would be integrated into a reconstructed Middle East, a regional economic and political superstructure, along the lines of the European Union, providing enduring security and lasting prosperity for “all the nations of the Middle East.”

To borrow Friedman’s favorite metaphors, the “Lexus” was destined to crush the “olive tree” with young Israelis and Arabs surfing the Internet and enjoying the fruits of globalization instead of continuing to fight over ancient religious sites. Immanuel Kant’s “perpetual peace” would be spreading not only to the new liberal democracies emerging in eastern and central Europe but also to the eastern Mediterranean and the Persian Gulf.

But for close to twenty years the Middle East seemed to be not getting “new” but “older” on certain levels, with Muhammad beating Kant in the war of ideas as the atavistic sources of identity of ethnicity, religion and tribalism gain momentum and ignite pressure towards the breakup of states instead of providing incentives to form regional superstructures.

If anything, one could drive a Lexus on the way to liberating the grave of a religious saint in the Holy Land and use a blog to mobilize support for one’s side in the sectarian wars in Mesopotamia or the Levant. And while the dreams of the New Middle East have been fading, there are signs that nationalism and other forms of particularism are beginning to erode the foundations of the EU, with calls for protecting national currencies, closing borders to immigration and partitioning existing states raising the prospects for the reemergence of an Old Europe.

Yet it would be wrong to suggest that the only choice facing the Middle East is between disintegration into the messy tribalism of sub-Saharan Africa—Robert Kaplan’s forecast of the “coming anarchy”—and a post-Westphalian, if not postmodern, vision of “imagine there is no country” that seems to have pervaded the thinking of European political and economic elites and the Eurocrats in Brussels in recent years.

Instead, the preferred regional model of cooperation for the governments in the Middle East should be the Association of Southeast Asian Nations (ASEAN). There is nothing post-Westphalian or pseudo-utopian in this geopolitical and economic grouping of ten Southeast Asian countries. Established in 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand and expanded to include Brunei, Burma (Myanmar), Cambodia, Laos and Vietnam, the ASEAN is the kind of marvel of realpolitik—as opposed to an exercise in idealism—that would have made a Metternich or a Bismarck proud.

Underlying the EU’s raison d’être is the claim that Western principles of liberal democracy are universal in their application and should serve as the ideological foundations of the organization and as the acceptable standards for membership as well as for relationship with non-EU countries. But notwithstanding the so-called Arab Spring, no one seriously believes that liberal democratic values are going to dominate Middle Eastern politics anytime soon. Even under the best-case scenario it would be unrealistic to expect that common ideological bonds would—or should—help advance cooperation between the governments of the region.

The ASEAN, on the other hand, is based on “mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations,” “the right of every State to lead its national existence free from external interference, subversion or coercion” and the principle of “non-interference in the internal affairs of one another.”

Indeed, the ASEAN members have not been brought together by common ideology—or religion or culture, for that matter—but by the recognition of their mutual economic and political interests. It is a mosaic of various political systems and old and new civilizations in various stages of economic development: The most populated Muslim country and an evolving democracy under the influence of the military (Indonesia) and a constitutional monarchy and messy democracy where the primary religion is Buddhism (Thailand); A harsh military dictatorship (Myanmar), a communist-ruled state (Vietnam) and a former U.S. dependency (the Phillippines); Booming economic success stories (Singapore; Malaysia) and struggling developing countries (Cambodia; Laos).

Which reminds us very much of the existing Middle Eastern mosaic of monarchies (Saudi Arabia; Jordan; Morocco), military regimes with socialist systems (Egypt; Algeria) and democracies with free-market economies (Israel; Turkey); of multi-sectarian states (Iraq; Lebanon) and states with large minorities (Israel; Turkey; Morocco; Algeria); of Arab and non-Arab states and entities (Turkey; Iran; Israel; Kurds; Berbers) and large concentrations of non-Muslims (Maronites; Copts; Assyrians; Israeli Jews).

In a way, in addition to becoming a vehicle for facilitating trade and investment in the region and with outside economies, the ASEAN has also served as geopolitical system under which the regional hegemonic tendencies of powerful states like Indonesia and Vietnam were contained—and tensions between old antagonists like Singapore and Malaysia were managed—while U.S. military presence was institutionalized in the aftermath of the Vietnam War and the economic and political integration of China was eased.

Currently, the ASEAN countries are hoping to ensure that the United States will continue to project its military and economic presence in East Asia to counterbalance the rise of China, which has disputes with Vietnam and other members over competing claims in the South China Sea.

Consider now the idea of applying the ASEAN model to a strategic part of the Middle East—the Fertile Crescent or the Levant. Notwithstanding the current divisions between Israelis, Palestinians, Syrians, Jordanians and Iraqis, the governments of Southwest Asia—not unlike the members of the ASEAN—share mutual geopolitical and economic interests.

It goes without saying that the formation of a free-trade zone in the area, one that would make it possible to utilize its large and educated middle class and to combine Israel’s high-tech industry, Lebanon’s financial center and Iraq’s energy resources—not to mention large Diaspora communities—and traditional ties to the EU and the oil-producing states in the Gulf, could transform it into a global economic powerhouse.

Moreover, the potential members of the Association of Southwest Nations (ASWAN) have an interest in maintaining friendly relationships while containing possible challenges from the three rising regional powers—Turkey, Iran and Egypt—an interest they share with the U.S. and the EU as well as with Saudi Arabia. An ASWAN system will also provide a regional system to help co-opt the Shiites in Iraq and Lebanon and provide a broader response to Palestinian and Kurdish aspirations.

The United States and the EU could help form the foundations for such a regional group by leading an effort towards an Israeli-Palestinian agreement and a peaceful political transition in Syria. The facilitation of an Israel-Palestine accord and the coming to power of a Syrian government that downgrades partnership with Iran and Hezbollah and upgrades an effort to reach accommodation with Lebanon and Israel could fit into a new overall U.S. strategy to prevent Iran from emerging as the hegemon in post-U.S-occupation Iraq and Middle East. That is the kind of strategy that could win support from Turkey and Egypt and help maintain U.S. influence in West Asia—in the same way that the ASEAN assists the U.S. in remaining a central player in East Asia.

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Source URL (retrieved on Aug 15, 2011): http://nationalinterest.org/commentary/the-middle-east-needs-asean-5755
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S&P is right on the money

2011-08-12T13:06:00.000-07:00

Business Times - 13 Aug 2011

S&P is right on the money

Policymaking in Washington has indeed become 'less stable, less effective and less predictable' , given how the Tea Partiers are open to a US govt debt default

By LEON HADAR
WASHINGTON CORRESPONDENT

IMAGINE if Standard & Poor's had not issued a downgrade on US government debt last week. Obama administration officials and the same economic pundits that are now blasting the global credit rating agency for lowering its US debt score one notch - from the riskless AAA to AA+ - would be spinning S&P's decision to maintain the triple-A rating as a clear sign that America's financial foundation remains strong, notwithstanding the mounting federal deficit and the just-concluded bruising debate over raising the debt ceiling.

'I think that S&P showed really superb judgment,' US Treasury Secretary Timothy Geithner would have stated on one of the television news shows if S&P had concluded that US debt remained risk-free, hailing the decision made by the rating agency as 'professional and credible'.

ButÂ in the aftermath of S&P's downgrade, Mr Geithner, joined by a chorus of angry officials, lawmakers and pundits, has been raising doubts about the professionalism and credibility of S&P, citing its performance before the 2008 financial crisis when it handed AAAs to the same banks that had been on the verge of bankruptcy and had posed a clear and present danger to the entire financial system.

Indeed, any serious examination of what could have turned out to be a financial Armageddon will cast S&P and the other major credit rating agencies that had assigned top grades to subprime securities and other financial weapons of mass destruction - in exchange for tidy fees from the same institutions they were rating - as one of the main villains in the historical narrative of the Great Recession.

And, yes, the analysts who staff these agencies - and they include many whiz-kids - do make small and big errors when they add up the numbers. We all do.

But the notion that the markets should not take the judgments made by S&P, Moody's or Fitch too seriously will remain wishful thinking on the part of the critics for at least some time to come.Â In an imperfect world, business and consumers have to make their decisions operating under time pressure and as they are bombarded by a lot of information that do not always makes a lot of sense.

In that context, the evaluations made by recognised 'experts' - ranging from your smart brother-in-law or neighbour to reporters and analysts on leading cable television business networks and credit rating agencies - are going to affect the choices of market participants in one way or another.

Moreover, there is something mystifying about the one major element in the criticism in Washington of the recent S&P decision on US debt - that it was too 'political', especially when that negative assessment is made by American, well, politicians.

After all, taking into consideration the political risk that is involved in making decisions on whether to invest in a certain economy or do business in this or that country has been an integral part of the way American companies operate worldwide, whether they are members of the energy sector that study the political stability of governments in oil-producing countries (and they were certainly quite busy recently), businesses that are trying to penetrate the markets of politically unstable emerging economies, or for that matter, non-American companies trying to figure out how changes in the balance of power on Capitol Hill - determined by political factors - are going to affect US trade and investment policies.

In fact, there is a huge industry in Washington and elsewhere devoted to assisting companies in estimating political risk and in trying to do something about it, which includes intelligence gathering operations, private security contractors and those infamous lobbyists who provide foreign companies with access to American politicians. These lobbyists will also propose ways to influence political decisions.

And there is even a US government agency - the Overseas Private Investment Corporation (OPIC) - that helps American companies expand their operations in emerging markets by providing them with, among other things, political risk insurance.

So why exactly should S&P avoid making the judgment that policymaking in Washington has become 'less stable, less effective and less predictable' - a view that seems to be shared by many credible American political analysts - especially when Republican Tea Partiers admit that they were willing to allow the US government to default on its debt obligations if President Barack Obama and the Democrats refused to raise the political white flag by agreeing to their demands?

The view that dysfunctional governments have been responsible for the financial problems afflicting many developing economies has been part and parcel of the evaluations made by the World Bank, the International Monetary Fund (IMF) and other international economic bodies studying the performance of political institutions around the world. And there is no reason to exempt Washington from that kind of scrutiny.

While the financial mess in the United States as well as in the eurozone has been analysed to death by economic experts trying to deconstruct the decisions made by central bankers and finance ministers and the positive and negative response by the bond markets, it is important to understand that the American and European financial crises are political in their core.

In Europe, the move to launch a common currency in the 1990s was the outcome of a political decision by the German and French elites to accelerate European integration in the post-Cold War era without creating the necessary political institutions that would provide for a common European fiscal policy.

And the major dilemma facing the European Union today is in essence political - whether the prosperous, mostly Protestant and Nordic North, led by Germany, the Netherlands and Scandinavia, is willing to subsidise the less advanced (and more corrupt) economies that with the exception of Ireland are in southern Europe (Greece, Italy, Spain, Portugal).

Interestingly, the split between North and South is reflected in the political divisions within European countries such as Italy and Belgium. France, with its mixture of northern and southern characteristics, finds itself somewhere in the middle of this political debate, while Britain and some of ex-communist European governments are more sympathetic to the views of Germany and its northern allies.

Similarly, the debate in Washington and around the country over US fiscal policy reflects more than just the philosophical disagreements over economic policies that have received so much attention in the last two years. In a way, this economic debate has also exposed a deep political- cultural split that has all the making of a cold civil war.

On the one hand, you have the Republican electoral base that is located mostly in the Midwest and the South (and other mostly rural 'Red' areas) and consists of a large bloc of older, White and Christian voters whose intellectual roots tend to be conservative, traditional and nationalistic, with its emphasis on the original interpretation of the Constitution, on 'state rights' and a commitment to religious (Christian) values. These people fear the 'Muslim threat' that borders on xenophobia and nativism.

On the other hand, the Democratic electorate is concentrated in the east and west coasts and the large urban centres of the country and includes a coalition of educated professional, minorities and young voters whose members espouse a set liberal, secular, multi-ethnic and open political-cultural system that is more tolerant towards immigrants and more sensitive to the rights of gays and women.

If the Democratic-liberal coalition helped elect the first African-American president, the Republican-conservative bloc has given birth to the Tea Party whose obsessive resentment towards Barack Obama and his real and imaginary traits is well documented.

The political bottom line is this: The Tea Partiers believe that eroding the foundation of the American welfare state - the proud creation of the Democratic-liberal president and Congress - would be a devastating political blow to Mr Obama and the 'coastal' elites that they associate with the 'secular liberals' they despise.

Some of the more centrist Republicans express a genuine concern over rising budget deficit and anti-business attitudes among the Democrats. But the current Republican leadership in Congress is driven first and foremost by political and ideological zealots that have no interest in reaching compromises over fiscal or other policy issues with the other side.

And that may be an unresolved political problem that, in turn, explains why it will be so difficult to form a bipartisan national consensus in Washington anytime soon.

btworld@sph.com.sg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

No Captain America to save the US economy

2011-08-11T13:10:00.000-07:00

Business Times - 12 Aug 2011

No Captain America to save the US economy

By LEON HADAR
WASHINGTON CORRESPONDENT

ONE of this summer's film hits is the silly but entertaining Captain America: The First Avenger. Based on the comic book superhero, the movie tells of a short and frail young man who is transformed into a super soldier that leads US military forces to victory over Nazi Germans.

In the real world, the US did defeat Nazi Germany and Imperial Japan in World War II. But that military victory was achieved only after America's political and military leaders had formed a powerful international alliance and deployed the largest military force in human history.

Fast forward to today and Washington's response to the rising threats to the US and global economy seemed to be taking place in a make-believe world. Political paralysis makes it impossible for the White House and Congress to do anything more than establish a Super Committee that should - but probably won't - come up with a plan to put US fiscal house in order.

That may explain why there was so much wishful thinking in Washington and Wall Street in the aftermath of the bitter political fight over the debt ceiling and the ensuing Standard & Poor's downgrade of the US debt rating - and before the Federal Reserve's policymaking committee meeting on Tuesday.

The markets expected the low-key and soft-spoken former professor by the name of Ben Bernanke and his team of nerdy economists to save the day, substituting for the entire political leadership in Washington. They were expected to succeed where the White House and Congress have so miserably failed. The Fed would launch a new round of quantitative easing (QE3) or something along these lines that will help bring back to life a moribund economy.

But the Fed chairman did not turn superhero. Instead, he was, at best, the hero of the day in Washington and Wall Street. The Fed's policymaking committee announced on Tuesday that interest rates for banks that borrow from the Fed would remain near zero per cent for the next two years, a move that was described by some pundits as 'unprecedented' and 'bold' and a 'breakthrough'. For more than two years, the Fed has kept saying that it would keep interest rates low for 'an extended period' which is Fedspeak for 'a while'. By insisting that they would keep the rates low at least through the middle of 2013, the Fed was signalling a policy change of sorts.

Indeed, the Fed's announcement helped provide a certain level of clarity for the markets that abhor uncertainty. In a way, what Mr Bernanke and his colleagues have done was to counteract the fears ignited by the S&P downgrade - that interest rates would rise and slow the economy. The Fed was basically assuring the markets that that would not happen for the next two years. Global stock markets were excited - at least for while - after the Fed issued its statement.

But then, there was the big downside to the Fed's announcement in the form of an admission that the economy will be stuck in slow growth - and perhaps no growth at all or even slip into another recession - for at least another two years.

Which gets us back to square one: If the current sluggish economic recovery - and it certainly does not look at all like a recovery on Main Street - is just another example of an economy making very slow progress after a devastating financial meltdown, then the Fed's decision to keep interest rates low could help.

But if the American economy is facing deep structural problems, including an unqualified workforce, crumbling infrastructure, a failing education system - all of which is made worse by the mounting deficits - only the White House and Congress have the power to do something really big, a la Superhero, to fix that. But the politicians don't seem to have the will to do what is necessary. And the Fed cannot force them to cut spending and raise taxes and get the US economy moving again.

Some fans of the Fed note that, in its statement on Tuesday, the policymakers also stressed that they would continue to monitor and review and take any action necessary to the size and composition of their balance sheet, which could mean that the Fed was opening the door to additional quantitative easing in the future, and that Mr Bernanke may announce his intention to move in that direction at the Jackson Hole, Wyoming, meetings later this month.

But then Mr Bernanke may be facing strong opposition of some of the policymakers on the Fed's board who, very much like conservative Republicans on Capitol Hill, are worried that low interest rate policies could risk inflation and drive the US dollar down.

Indeed, the intense debate inside the central bank - not unlike the one taking place in the rest of Washington - could make it quite difficult for Mr Bernanke to even try playing the role of a superhero.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

Published four years ago...

2011-08-11T10:20:00.000-07:00

...timely as ever

and I', not even sure whether the San Diego Union Tribune is still around

Time for 'benign neglect' in Mideast?

By Leon Hadar
August 14, 2007

Muslims and non-Muslims have been fighting over this territory for years, resulting in thousands of casualties and hundreds of thousands of refugees, as negotiations mediated by foreign governments have failed to resolve the conflict.

But nobody is calling on Washington to launch a new peace initiative. Why? Because we're not talking about the Israeli-Palestinian conflict, we're talking about the Armenians and Azeris clashing over Nagorno-Karabakh.

Most Americans know what is happening in the West Bank, thanks to the prominent news coverage the Arab-Israeli conflict receives. For years, pundits have been warning that unless Washington does something to end the bloodshed – revive the “peace process,” send a new special envoy to the Middle East, convene a peace conference – the entire region could unravel, triggering another oil embargo or even World War III.

But Nagorno-Karabakh receives little attention. Yet, this territory has been the source of a bitter dispute between Armenia and Azerbaijan since the beginning of the 20th century. The two nations fought over the disputed territory in the final years of the Soviet Union. Since the war ended in 1994, most of Nagorno-Karabakh has remained under Armenia's control, while the parties continue to hold talks.

There is no doubt that the United States and the rest of the international community would welcome a resolution to the conflict. Indeed, many have been trying to help the Azeris and Armenians overcome their differences.

Washington also has been trying for some 30 years to resolve the dispute between Greece and Turkey over Cyprus – and to end the Turkish occupation of the northern part of the island.

In all likelihood, however, we are going to learn to live with such conflicts, ranging from the dispute between India and Pakistan over Kashmir and the civil war in Sri Lanka to the bloody disputes that continue to ravage sub-Saharan Africa.

The fact that Washington focuses so much of its energy and attention on the Arab-Israeli conflict, while turning a blind eye elsewhere, indicates that U.S. foreign policy has lost its focus.

In the past the test was simple: Are vital U.S. national security interests at stake? During the Cold War, any nation that served as a buffer or counterweight to the Soviet Union could legitimately be considered a vital ally. With the Soviet threat long gone, it's time to reevaluate.

The U.S.-led “peace process,” as even a casual observer realizes, has accomplished little. Yet, like the Energizer Bunny, it keeps going, and going, and going. Indeed, President Bush recently announced plans to convene an international conference to help restart Israeli-Palestinian talks.

Has anybody considered the possibility that America's preoccupation with the Arab-Israeli conflict – motivated by the commitment to Israel and the need to appease the Arab oil-producing states – may be doing more harm than good? By pursuing the illusion that the United States has the power and moral authority to broker a “peace” in the Middle East, Washington has created unrealistic expectations that cannot be fulfilled. Meanwhile, America's repeated failures as an “honest broker” ends up producing an anti-American backlash, which creates even more pressure on Washington to “do something” or else.

It may be time for Washington to consider a new policy of “benign neglect” toward the Palestinian-Israeli conflict, not different from the policy it employs in dealing with Nagorno-Karabakh and other conflicts.

The United States should be more than ready, if necessary, to work with other international players to facilitate a resolution to the conflict but only if and when both sides are ready to make peace, and deal seriously with core existential issues, such as Israel's right to exist securely and in peace, the fate of the remaining Jewish settlements, and the status of Arab refugees and the city of Jerusalem.

Even in that (unlikely) case, Washington should refrain from making long-term security and economic commitments. If the two sides want even a fragile peace to work, they will make it work – with or without U.S. involvement.

Such “constructive disengagement” from the Israeli-Palestinian conflict could actually create incentives for the two sides to achieve real peace. If they fail, they will – not unlike the Azeris and the Armenians – have no one to blame but themselves.

Hadar is a research fellow in foreign policy studies at the Oakland-based Independent Institute (www.independent.org).

apropos the London riots

2011-08-10T13:59:00.000-07:00