Global Paradigms

Business Times - 26 May 2009 There is such a thing as a middle ground By LEON HADAR WASHINGTON CORRESPONDENT IF YOU'VE been following American 24/7 television and radio talk shows or reading the op-ed columns in the country's newspapers (or the few that haven't been closed down yet), you've probably concluded that the people here are deeply divided over policies and legislation regarding national security and social-cultural issues. You would think that half the population - the so-called Conservatives and Right-Wingers - think that the government has the right to torture suspected terrorists, that abortion should be criminalised and that gay couples shouldn't be permitted to get married; and that the other half - the so-called Liberals and Left-Wingers - believe that suspected members of Al Qaeda should be treated just like other criminals, that society shouldn't be in the business of trying to prevent abortion, and that the US should legalise gay marriages ASA...

Business Times - 22 May 2009 Balancing act for new US envoy to China Republican Jon Huntsman, who speaks fluent Mandarin, is clearly qualified for the job By LEON HADAR WASHINGTON CORRESPONDENT TO say that US President Barack Obama's selection of Governor Jon Huntsman as the next American ambassador to Beijing came as a surprise to Washington's politicos and media types would be an understatement. Not only is Mr Huntsman a leading Republican figure. In fact, he is the governor of Utah, a state that is considered by political experts as very, very 'red'. Not the kind of red that Chairman Mao Zedong would have been keen on, but more like the colour associated with the Republican Party that has dominated the politics of this state where members of the conservative Church of Jesus Christ of Latter-day Saints or Mormons constitute the majority of the population. Utah has not voted for a Democrat for president since 1964 and, historically, Republican presidential nominees hav...

Business Times - 19 May 2009 Financial industry may not accept new rules willingly By LEON HADAR WASHINGTON CORRESPONDENT THEY have been described as 'exotic financial instruments' and for years most of us were embarrassed to admit that we really did not understand what these Big Shots in Wall Street were talking about. Indeed, while the financial instruments known as derivatives were created as a way of managing risk, they had grown over the last decade into a gigantic market. More importantly, the whiz-kids who invented derivatives used so much jargon that it made it seem like these financial products were a theoretical sub-field of the science of quantum mechanics. Of course, by now it is safe to say that most of those Americans who have seen their retirement money invested in the stock market evaporate into thin air and who are in danger of losing their homes have become familiar with the risky trade derivatives. They know now that derivatives have grown in a largely unregu...

Misreading the Map The Road to Jerusalem Does Not Lead Through Tehran Leon Hadar LEON HADAR is a Research Fellow in Foreign Policy Studies at the Cato Institute. As Israeli Prime Minister Benjamin Netanyahu comes to Washington for a meeting with President Barack Obama, U.S. policymakers are being urged to place the Palestinian-Israeli conflict on the back burner and spend their time and energy addressing the true menace supposedly confronting Arabs and Jews in the Middle East -- Iran. Deal with that threat, the sirens sing, and the other pieces of peace in the Holy Land will fall into place. Netanyahu framed the issue in a speech he made in Washington earlier this month. "There is something happening today in the Middle East, and I can say that for the first time in my lifetime I believe that Arabs and Jews see the common danger," he told supporters of the American Israel Public Affairs Committee. "This wasn't always the case," he added. Or was it? In fact, ther...

Pundits in Washington and elsewhere have yet to outline US President Barack Obama's Grand Strategy, or to provide an account of an Obama Doctrine of foreign policy akin to the more dramatic changes he has made in American economic policy. All they can point to is a series of "pseudo events," the term that historian Daniel Boorstin coined to depict activity that exists for the purpose of the media publicity and has no immediate effect on real life. From that perspective, Obama's recent trip to Europe, in which he addressed the G-20 and NATO summits and the Turkish Parliament, as well as his participation in the Summit of the Americas, have been regarded by most of the American media as foreign policy "successes." He has won praise for meeting with top world leaders and for his television appearances aimed at audiences in the Middle East, including the Iranian people. But in reality, Obama can claim no concrete diplomatic accomplishments. Europe's public a...

Business Times - 07 May 2009 COMMENTARY Stressing to the finish line But Bernanke seems to have reassured markets that US bank stress test results won't have big surprises By LEON HADAR WASHINGTON CORRESPONDENT THE 19 big US banks' stress test results are set to be finally made public by the Treasury Department after the financial markets close today in New York (early tomorrow morning, Singapore time). And Federal Reserve chairman Ben Bernanke, addressing Congress on Tuesday, tried to calm the markets by downplaying the possibility that the government would ask Congress for a new infusion of taxpayer money into ailing banks. In fact, the Treasury Department and the Fed began releasing information about their stress test on major banks by providing the banks with the preliminary results 12 days ago. The Fed also released its methodology ahead of a public announcement of the results. It indicated that the banks had to run their portfolios against assumptions about the potential ...

Business Times - 05 May 2009 Obama should now work on his trade agenda The fact that he's avoided to push his protectionist agenda can be considered good news By LEON HADAR WASHINGTON CORRESPONDENT IN most of the commentaries marking US President Barack Obama's first 100 days in office there has been almost no mention of the new president's global trade agenda. That was not very surprising since Mr Obama has said very little on the issue since entering office; and he certainly has not made any important decision that affected US trade policy. And that is the good news - and the bad news. Indeed, through his presidential election campaign candidate Obama pledged to renegotiate the North American Free Trade Agreement (Nafta), hinted that he would discard the Colombian Free Trade Agreement (FTA) and threatened to punish China for manipulating its currency to increase exports. Hence the fact that Mr Obama has refrained from coming through on his campaign's protectionist tra...

Business Times - 30 Apr 2009 Obama's real tests yet to come Putting America's economic house in order is his main challenge and the one that may determine his political legacy By LEON HADAR WASHINGTON CORRESPONDENT WHEN a future historian examines US President Barack Obama's first 100 days in office, he or she will not be able to point to any major international crises that could have tested the new White House's occupant's performance as a commander-in-chief. It is true that giving a green light to US commandos to kill three Somali pirates and rescue a kidnapped American captain may have been another demonstration of Mr Obama's gift of maintaining his cool under pressure. But the incident and its successful outcome could not be compared to, say, President John Kennedy's Cuban missile crisis or, for that matter, President George W Bush's response to the 9/11 attacks in New York and Washington. And while Mr Obama did take Europe by storm during the G-20 s...

Business Times - 24 Apr 2009 Bailout fatigue starting to show Congress and citizens alike are becoming dissatisfied with Washington's piecemeal rescues of big financial institutions By LEON HADAR WASHINGTON CORRESPONDENT DURING his much anticipated testimony on Capitol Hill this week, US Treasury Secretary Timothy Geithner indicated that most of America's banks had sufficient reserves on hand to cover possible future losses. And he defended the federal government's US$700 billion bank rescue plan, insisting that the federal bailout fund still had enough money to cover future capital demands of troubled banks. Mr Geithner's testimony came as Congress was studying the Obama administration's proposal to provide regulators with power to seize financial institutions in future when their collapse could potentially devastate the entire financial system. At the same time, Americans regulators were preparing to release the results of the 'stress tests' that will dete...

Business Times - 17 Apr 2009 Obama should reverse policy on US trade embargoes By LEON HADAR WASHINGTON CORRESPONDENT ONE of the most dramatic changes in US foreign policy embraced by President Barack Obama has been his decision - announced this week on the eve of a summit with the leaders of South and Central America - to ease the US relationship with Cuba by lifting travel and spending restrictions on Americans with family on the island. The move amounts to an admission on the part of Washington that the policy of isolating the communist regime first imposed by the administration of former president John F Kennedy has failed. Moreover, as the United States takes the first steps towards normalising relations with Cuba, American officials and lawmakers should consider one of the main lessons of a half-century of failed policy towards Havana: trade embargoes only tend to help strengthen the power of the targets of these embargoes (the ruling authoritarian regime), while slowing - not ac...

Business Times - 15 Apr 2009 U, V, L or W - a question over the shape of recovery By LEON HADAR WASHINGTON CORRESPONDENT AFTER several months of depressing economic news and gloomy forecasts about the coming of Great Depression II, US President Barack Obama and his top economic aides are pointing to some progress on the horizon, including a rise in bank lending, easier credit for small businesses, and signs that economic stimulus spending is beginning to trickle down into infrastructure and energy projects. Indeed, the US President referred to 'glimmers of hope' when he spoke with reporters after meeting members of his economic team as well as with government banking regulators and the chairman of the Federal Reserve in the White House on Friday. 'We feel very good about the progress that we're making in unlocking lending in some particular markets,' said Mr Obama, noting that Americans were starting to get their first cheques as part of the tax cuts included in the...

Business Times - 10 Apr 2009 Republicans praying that Obama fails to fix economy By LEON HADAR WASHINGTON CORRESPONDENT NOW is not a great time to be a Republican in Washington. Despite the continuing economic meltdown and the never-ending attacks by the Republicans against President Barack Obama, the new White House occupant and the Democratic Party enjoy the support of the majority of Americans. According to the recent New York Times/CBS News poll, two-thirds said they approved of his overall job performance, including the handling of the economy and foreign policy. In fact, according to the same poll only 31 per cent of Americans had a favourable view of the Republican Party, the lowest in 25 years. By more than three to one, voters said they trusted Mr Obama more than they trusted Republicans in Congress to make the right decisions about the economy. Even when it comes to national security, traditionally a policy issue over which the Republicans maintained some strength, Americans ...

Business Times - 07 Apr 2009 New US brand name, new policies? Obama's revamp of the American image abroad has won approval; now he must follow through with appropriate action By LEON HADAR WASHINGTON CORRESPONDENT THE first and probably most important thing that was going for US President Barack Obama during his meetings with world leaders in Europe was that he was not George W Bush. Indeed, many observers have contrasted the former and current US presidents in terms of their personalities - the gauche and clumsy Mr Bush versus the charming, and urbane Mr Obama, and proposed that the new White House occupant has captivated the world with his charisma while his predecessor had repulsed them with his crudeness. But that kind of explanation for Mr Obama's rock-star performance in London, Strasbourg, Prague and Ankara, and the perception that he handled the many economic and geopolitical policy issues on the agendas of the Group of 20 (G-20) and Nato summits like an international s...

Business Times - 02 Apr 2009 Obama, transformative president in the making By LEON HADAR WASHINGTON CORRESPONDENT IF you were listening to some of the criticism directed against Democratic presidential candidate Barack Obama last year, you might have concluded that his detractors were confusing the African-American senator from Illinois who was raised by a young single mother of modest means and who had to study and work hard before being accepted by Columbia University and Harvard Law School with the scion of a wealthy WASP (White Anglo-Saxon Protestant) family from New England, who had studied in a prestigious preparatory school before his well-connected dad helped him get into an Ivy League university. Indeed, Mr Obama was depicted by some of his rivals as a salad-eating, Chardonnay sipping, over-educated and snobbish intellectual, who was out-of-touch with the concerns and values of hard-working 'regular folks' in the small towns and rural communities of America. Republican...

Business Times - 31 Mar 2009 Suffering 'hegemonic fatigue', Washington seems unwilling to pay the economic and political costs of promoting free trade By LEON HADAR WASHINGTON CORRESPONDENT THE leaders of the 20 economies who met in Washington last November made a commitment to resist taking protectionist measures that could end up devastating an already ailing global economy. But according to the recent World Bank report, most of these governments, including the US and China, have violated that promise by imposing direct and indirect restrictions on imports, raising the spectre of a costly trade war. As it is, global trade has suffered the sharpest decline in 80 years. Indeed, not a day goes by without new reports about governments around the world making subtle moves (subsidies and bailouts for failing industries) and taking not-so-subtle steps (direct tariffs and taxes on imports) to 'protect' their frail domestic industries from foreign competition. Hence, the US an...

Business Times - 27 Mar 2009 NEWS ANALYSIS The buck stops here - or does it? By LEON HADAR IN WASHINGTON AGAINST the backdrop of next week's G-20 summit in London, several emerging economies led by China and Russia have been promoting the idea of halting the use of the US dollar as the main global reserve currency and replacing it with a new one. This could pose huge economic problems for the Obama administration which is planing to continue paying for the financial bailout and the economic stimulus by printing more dollars and by selling more Treasury bills to foreign private investors and central banks. In China which is the largest holder of US dollar assets, with American greenbacks making up more than half of its US$2 trillion in foreign reserves, including US Treasury bonds worth about US$750 billion, there is concern over US deficits that could erode the greenback and the value of China's foreign reserves. China's central bank governor, Zhou Xiaochuan raised the poss...

Business Times - 25 Mar 2009 NEWS ANALYSIS Is the plan enough to save his job? Treasury chief under pressure; his future rests on new plan's success By LEON HADAR IN WASHINGTON AMERICAN and global markets have responded positively to US Treasury Secretary Tim Geithner's much anticipated programme aimed at buying up hundreds of billions of dollars worth of 'toxic' assets currently on the books of US banks. But will it be enough to save Mr Geithner's own neck? When he first mooted the plan, his wooden delivery and the lack of specifics caused the Dow to fall about 300 points on Feb 10. The Obama administration's leading economic policymaker has come under more pressure since then over the bonuses that were granted to American International Group (AIG) executives. There have been calls for him to step down. And although President Barack Obama has reiterated his confidence in Mr Geithner, the threat of a rising populist fury undermining his efforts to resuscitate Wa...

Business Times - 20 Mar 2009 NEWS ANALYSIS Populist backlash may wreck Wall St rescue By LEON HADAR IN WASHINGTON TRADITIONALLY, Americans have admired the rich too much to resent them. But public anger at the way that Washington has handled the bailout of insurance giant American International Group (AIG) now threatens to smash the ambitious and expensive strategy of the Obama administration to revitalise the ailing financial system. Bonuses of about US$165 million paid out to executives of AIG, which already received more than US$170 billion in emergency federal aid, have seen lawmakers lining up to score populist points. 'We will take this money back by taxing virtually all of it,' said New York Democratic Senator Charles Schumer who took to the floor on Tuesday. 'So let the recipients of these large and unseemly bonuses be warned: If you don't return it on your own, we'll do it for you.' And Iowa Republican Senator Charles Grassley who proposed on Monday tha...