US-Iran relations: Pundita names winners of her 2007 Silliest Analysis Award

I don't have to wait until the end of the year to bestow the award; nothing can top The Iran Option That Isn't on the Table by Vali Nasr and Ray Takeyh, which popped up on The Washington Post editorial page on February 8. The entire analysis is loopy but here is the passage that netted the authors a coveted Pundita prize:

... More than sanctions or threats of military retribution, Iran's integration into the global economy would impose standards and discipline on the recalcitrant [Iranian] theocracy. International investors and institutions such as the World Trade Organization are far more subversive, as they would demand the prerequisite of a democratic society -- transparency, the rule of law and decentralization -- as a price for their commerce."

The closer Russia edged toward WTO membership, the more they flouted democratic reforms. If the WTO carrot didn't bring China and Russia to transparency, the rule of law and decentralization, why should it work for Iran?

Messrs Nasr and Takeyh have no answer, no argument to support their observations -- unless they expect the reader to accept as answer their claim that "Iran has a political system without precedent or parallel in modern history."

Even so, the claim is not reason enough to overlook the lessons of China and Russia and embrace the fallacy of a cause-and-effect relationship between increased global trade and the institution of democracy.

Now what would cause two scholars to mount a downright silly argument? The only clue is the point of the opinion piece. What is the option for dealing with Iran that Nasr and Takeyh want the US administration to take up?

"... to liberalize the theocratic state [of Iran], the United States would do better to shelve its containment strategy and embark on a policy of unconditional dialogue and sanctions relief.

That explains why The Washington Post doesn't mind egg on its face for publishing silly putty; the Post is a conduit for opinion at the US Department of State and we can assume that at least one faction State favors the Iraq Study Group advice that the US should engage Iran in diplomatic dialogue.

As for Nasr and Takeyh, they are associated with the Council on Foreign Relations Cooking School. The think tank, which exists to support Nato doctrine, became a cooking school when a US administration had the temerity to reject a Nato-oriented foreign policy in favor of a US-centric one.

If the CFR was to keep a foot inside the door in official Washington after 9/11, they had to cook up analyses that made a nod to the US-centrics (often wrongly lumped with Neocons) while keeping the Natoists happy. No small feat of fusion cooking but the meals tend to be flavored to Brussels's taste.

Professor Nasr is also closely associated with the US military. He is Associate Chair of Research at the Department of National Security Affairs of the Naval Postgraduate School. Of course the official policy of the United States is to support Nato.

And Nasr is one of the go-to guys whenever the Bush administration wants a lesson on Sunni-Shia affairs. Nasr is considered by many in Washington to be an expert in contemporary Middle Eastern affairs and Islamic politics.

From all this, we can assume two things: 1) Nasr's advice on Iran meshes with the Nato view on whether the US should directly engage with Iran on the diplomatic front and suspend sanctions, and 2) There are factions in State and the Pentagon that favor the carrot approach to US relations with Iran.

Do Nasr and Takeyh present any reasonable argument in favor of rapprochement? Not that Pundita can see; they tend to contradict themselves. They fall back on blaming the US for the power that the Iran's hardliners enjoy; at the same time the authors observe:

The public sector accounts for more than 80 percent of the Iranian economy, and the constitution gives the clerical leadership most of the power.

I think they are correct in drawing a general conclusion that it's not so much the type of people who hold the power in Iran; i.e., clerics, as the amount of power they hold that is the deciding factor in how much they will fight to hold onto power. However, by that argument, the US is simply the handiest excuse for the clerics to keep an iron grip on power. Take away the US, Israel, and Islam, and those who hold vast power will find another excuse to hold onto it.

The authors also mount a very strange argument: After acknowledging the role that containment played in the dissolution of the Soviet Union, they claim that Iran would not buckle to the same pressure. It's unclear why they think Iran would not buckle; all they seem to offer by way of a reason is the following, after telling us that Iran's political system has no parallel in modern history:

The struggle [in Iran] is not just between reactionaries and reformers, conservatives and liberals, but fundamentally between the state and society. A subtle means of diminishing the state and empowering the society is, in the end, the best manner of promoting not only democracy but also nuclear disarmament.

Yet the state is always a perfect reflection of the society (often in the manner of the portrait of Dorian Gray) unless the government has been imposed from the outside. That does not seem to be the case in Iran.

However, from what I recall of the lessons taught by an Iranian author who guested on John Batchelor's program a few years back, it could be that the influx of non-Iranian Arabs to Iran's government during the Iranian revolution, and specifically Arabs who represented the brand of Islam that the Saudis sponsored, injected an element of foreign control into Iran's government, or at least foreign influence.

(Her name escapes me at the moment but I recall the author's account of her childhood in Iran during the revolution. Arab teachers replaced the Persian ones at her school and she was forced to learn to speak Arabic.)

In any case, Nasr and Takeyh do not explain how nuclear disarmament could flow from more power-sharing in the Iranian society. It didn't flow that way in France, India, the US or Israel.

Another tortured argument turns on itself:

[Mahmoud] Ahmadinejad's defiant rhetoric and populist posturing did not impress the Iranians who turned out in large numbers to elect city councils and members of the Assembly of Experts. Voters favored pragmatic conservatives and reformers who oppose their president's policies abroad and his economic programs at home.

Two paragraphs down -- and clearly on the assumption that readers of the Washington Post editorial page have the attention span of a gnat -- the authors inform us that:

The clerical regime has also proved to be enterprising in facing demands for reform, particularly by using elections to manage opposition within the bounds of the Islamic republic."

"Managing opposition" includes vote rigging. In other words, if Iran's clerics are now stuffing the ballot boxes against Ahmadinejad, it is not necessarily a sign of the collective will of the Iranian people to censure him or that they're rejecting him. However, it is a very clear sign that Berlin, Paris and Brussels are leaning hard on Iran's clerics to put a muzzle on Maddy.

Iran in the raw does not play well in West Europe's capitals and in particular with the EU. In years prior to Maddy's election Brussels went to great trouble to help Tehran's government present Iran to the world as a modern, forward-looking country that is just trying to make a buck in international trade.

Brussels does not want the entire Iranian society to be revealed to the world. Berlin does not want censure from the US because of Germany's trade with Iran; the same could be said for all EU members that do business with Iran. And New Delhi and Moscow don't want Iran's true face hanging out there for the world to see -- again, for reasons of trade with Iran.

Can the same be said for the technocrats in Iran's government who want to wrest power from the clerics? It is certain that the technocrats want Iran to show a moderate face to the world; I doubt that is the only factor influencing their tussle with the clerics but it's an important one.

What I find astonishing about the blizzard of opinion on Iran during the past year is that it avoids focusing on Iran's military. I don't see Iran's technocrats and theocrats as calling the shots; I look at Iran's government as a thinly disguised military dictatorship.

In any case if Iranians came from another planet, that would be the only reason for the US government to reference sociological studies of Shia-Sunni affairs and political analyses of Iranian society while trying to construct policy toward Iran. But the golden rule for developing foreign policy initiatives is to keep in mind that human nature trumps differences between cultures.

Learning about the sociology stuff and becoming expert on a country's political system is for the diplomats -- those who must help convey policy in a negotiation framework. But first must come the policy, which should be shaped by a nation's self interest and an awareness of the byways of human nature.

The US is confronted with a purely military situation. The bottom line is that no matter how much talking we might do with Iran, the US will not stand down in Central Asia and the Middle East.

Is this enough reason not to talk with Iran? No. It is the height of stupidity for a hyperpower to prod other countries to do their talking for them, and it causes the hyperpower to lose face.

The US practically invented the modern form of multilateralism and our government has clung to multilateralism even if this meant accepting massive contradictions in US defense policy. So the US needs to poop or get off the pot.

If you push multilateralism at all costs you can't tell other countries, "You go talk to that fiend government. I'll make comments on the side."

Life won't let you get away with that much contradiction. If you espouse a multilateral approach to problem-solving in foreign relations, you have to make yourself part of the approach.

So if Washington wants to stick with the multilateral approach, which Pundita does not favor on principle, we should definitely join the EU3 (Britain, Germany and France) at the negotiation table with Tehran. For many reasons, not the least of which pouring oil on troubled waters, the US should also publicly invite Moscow to get more involved the talks and work hard behind the scenes to bring Russia to the negotiations.

Should we ditch the multilateral approach with Iran and offer Iran bilateral talks? I think we have gone too far down the road with the EU3 to ditch them at this point. But if I could turn back the clock to 2003, I'd say that bilateral talks couldn't have done worse than years of the EU3 playing cat and mouse with Tehran -- and certainly, bilateralism in this case would have saved US face.

With regard to sanctions on Iran, check out this development: Iran loses more aid from nuclear agency:

(Associated Press) VIENNA - February 9: The International Atomic Energy Agency on Friday suspended nearly half of the technical aid it was providing Iran, carrying out sanctions imposed by the United Nations Security Council because Tehran refuses to suspend its uranium enrichment program.

As the agency's director general issued the report to his 35-nation board, Iran's top nuclear negotiator reversed course on a decision to stay away from a security conference in Germany. After telling organizers earlier Friday that he would not attend for health reasons, the negotiator, Ali Larijani, said in the evening that he would go to Munich, said Klaus Treude, a spokesman for the conference. [...]

The rest of the report is interesting but the above is enough to convey a general rule: if you want a government to engage in serious negotiations with you, you have to give them at least one serious reason to come to the table in a negotiating frame of mind. If Tehran is not yet in a serious frame of mind about negotiations, sanctions should remain and increase.

I've already received letters asking whether I think the recent six-party negotiations with North Korea should serve as a model for US negotiations with Iran. I will reply in tomorrow's post.

Money talks in the global warming debate

I think one has to be in the right frame of mind to get a laugh out of Dan Riehl's fascinating coda to the global warming debate. But after spending the weekend immersed in the grim implications of Vladimir Putin's speech at the Munich security conference (see the following Pundita post), I consider the pay-per-scientific opinion machinations to be comic relief. Of course it's not a funny subject:

Amid unfounded and frivolous charges that the Bush administration and the American Enterprise Institute are involved in pay for play science on Global Warming, it seems Theresa Heinz Kerry previously directed an unrestricted cash gift of up to a quarter million dollars to a nuclear scientist become climatologist, now leading the charge of doom-sayers on Global Warming. Additionally, one scientist recently quoted by the New York Times now appears to be disagreeing with his own extensive research and an exclusive preview of a soon to be published research paper from another Harvard scientist raises serious questions about a key item Global Warming proponents have recently enlisted in their cause. [..]

The piece gets even more interesting as it goes along. The clash of opinions on global warming is just why Pundita has been unable to think up policy advice on the matter.

US-Russia relations: On the road to Munich, the US stages a provocation

For months prior to the 43rd Munich Conference on Security Policy, rumors flew in diplomatic circles that Vladimir Putin planned to use the conference as a platform for a major foreign policy speech that would set the direction for his successor.

Instead of a comprehensive speech about Russia's broad aims on the world stage, on Saturday President Putin recounted a list of US actions that he said added up to a frightening abuse of power and a grave threat to global security.(1) And he as much said that the United States was engaging in provocation with Russia.(2)

Putin's criticisms of US foreign policy are not new, and his rebuke was very tame next to his remarks at a press conference he called after the Beslan massacre -- remarks that did not receive mention in the US media outside of a few blogs, including Pundita's. Yet Putin's speech should be taken seriously because he is reacting to what he views as US provocation.

RIA Novosti reported last week that:

Speaking to the U.S. House of Representatives Wednesday, Chairman of the Joint Chiefs of Staff Peter Pace said: "I think we need the full range of military capabilities. We need both the ability for regular force-on-force conflicts because we don't know what's going to develop in places like Russia and China, in North Korea, in Iran and elsewhere."(2)

The Moscow Times reported the same comments as coming from Robert Gates before the "House Armed Services Committee," but while I haven't seen a transcript, I tentatively assume that the Moscow Times report is in error. In any case, testimony before an official US body that lumps Russia with North Korea and Iran as much says that Russia now poses a significant military threat to the United States.

In addition, the US government-funded Freedom House's latest Freedom in the World survey places Russia in the "not free" category, alongside North Korea, Cuba and Libya -- "countries where the U.S. is waging or considering military action," as RIA Novosti puts it.(2)

This framing of Russia as a looming military foe has to be seen in light of recent US actions in Russia's neck of the woods:

Russian analysts argue that Washington's consistent efforts to redeploy its missile defense system closer to Russia's borders may be an indication the U.S. administration seeks to revive the "Cold War" against Moscow and its allies. Washington has recently moved its largest sea-based missile defense radar in the Pacific from Hawaii to the Aleutian Islands, not far from Russia's Kamchatka Peninsula. It has also announced plans to install a radar system in the Czech Republic and a missile interceptor site in Poland, which it says it needs to protect itself against a potential threat from Iran.

Gleb Pavlovsky, Russia's most famous spin-doctor, said that U.S. plans to build missile defense sites in Central Europe may spur an arms race.

"This surely is the beginning of an arms race in some sense," he said. "Which is all the more unjustified given that Russia has never, not on a single issue, expressed an intention to confront the U.S. or to deter it."

Add to these military actions, US meddling in Russia's internal affairs has continued -- and to such an extent that Gary Kasparov, who is pro-US and rabidly anti-Putin, recently pleaded with top Bush administration officials to stop the meddling.

Add to this, Washington is attempting to block Russia at the UN over the matter of Kosovo's independence from Serbia -- even though the US has no strategic interest in the matter. (3, 4)

When you put it all together, it's provocation, which couldn't have come at a worse time for the US war effort. If the US is engaging in hypocrisy on Kosovo, Russia is being two-faced on Iran. They claim they're providing weapons to Iran so that Iran won't feel cornered -- a lame excuse if there ever was one.

Putin's Saturday speech has been called aggressive by some Western analysts, and by John McCain. I'd call it unvarnished opinion shorn of diplomatic niceties. After all, it was not very diplomatic to name Russia as a potential military threat to the United States while both countries were on the road to the Munich conference.

Unfortunately, Kasparov's advice falls on deaf ears where it's most needed. In his speech Putin took care to exempt President Bush from the roast, saying that Bush is his friend and a decent man, and that he was unfairly blamed for everything wrong with US policy.

Putin clearly intended to imply that Bush is hostage to cadres in the US government that have run away with US policy on Russia and other ex-Soviet regions.

The implication is on target, but the buck stops at the President's desk. It is up to Mr Bush to call Mr Gates, Ms Rice, and certain congressionals to his office and read them the riot act.

And regarding the UN resolution on Kosovo, this is one vote the US should sit out. That would help pour oil on troubled waters.

1) Putin Castigates U.S. Foreign Policy, U.S. Defense Department and Reuters via The Moscow Times

2) Russian analysts suspect U.S. of intentions to revive "Cold War", RIA Novosti

3) Kosovo independence will open up Pandora's box . . ., RIA Novosti

4) Putin Hints at Veto on Kosovo, The Associated Press via The Moscow Times

Connecting many dots: China, NAFTA, Mexican immigration, global warming, big government, and chicken feed. Chicken feed? Read on.

The other day Dave Schuler wrote a thought-provoking post that connects several dots: China's flooding of Mexico's markets with very cheap goods, the flood of Mexican immigrants to the US, the impact of energy conservation policies on markets, and the impact of global warming-related natural disasters on governments. He notes that "It's a bear how these things are interrelated."

Dave also catches columnist George Will in a misstatement. Will writes:

But now that the government is rigging energy markets with mandates, tariffs and subsidies, ethanol production might consume half of next year’s corn crop. The price of corn already has doubled in a year. Hence the tortilla turbulence south of the border.

Dave notes:

American corn is used mostly in Mexico for animal feed and what white corn (the kind used in tortillas) Mexico imports from the United States has been diminishing due to Mexican price supports for local growers.

Read the post for the rest of Dave's comments on the situation. Dave's good catch helps illustrate that the energy conservation/global warming debates are littered with the kind of errors George Will made. The problem is that one small error in interpreting the data can lead to hugely wrong conclusions, which lead to bad legislation.

The data on energy conservation and global warming are so vast and complex that this is why, out of the more than 600 Pundita posts I've published, I have only discussed the global warming issue once. And that one time was to ask whether anyone has a done a study on the effects on weather resulting from large amounts of steam released into the atmosphere by large-scale use of ethanol fuel. No one wrote me with an answer.

But I digress. Yes, it's a bear how all these things are related. Dave warns that government failures to properly address the impact of global warming on economies will translate to the need for much larger government. Something for fans of small government to think about.

Many situations are driving the flood of immigration to the US from Mexico. Consider this January Washington Post report: In Mexico, 'People Do Really Want to Stay' by Peter S. Goodman.* The report addresses the downsides of NAFTA for Mexico's chicken farmers and the impact on Mexican immigration to the US. The report highlights two factors that haven't received much attention from officials who study the immigration problem: Mexico's population explosion and the great disparity between business efficiencies.

[...] The demographic wave that has carried unprecedented numbers of Mexicans to the United States is the consequence of a baby boom that began in Mexico four decades ago, when improvements in rural health care allowed more infants to survive.

From 1993 to 2006, as those born during the boom reached adulthood, Mexicans of working age swelled from 34 million to 44 million [...]

Population pressure, combined with the lifting of subsidies on the farm, sent rural Mexicans in search of higher wages. They moved within Mexico in vast numbers. Many crossed the border. By 2002, 14 percent of all people born in Mexican villages were living in the United States [...]

An archetype of efficiency, the American poultry industry is dominated by enormous brands that control all aspects of production -- employing computerized feed mills that mix grains, mechanized slaughterhouses, and hatcheries that use genetic science to breed disease-resistant chicks.

At Garcia's feed mill [in Mexico], workers shovel grain by hand. At his slaughterhouse, a man slices throats with a wood-handled blade.

And, as Dave Schuler points out, there is the pesky issue of subsidies, which afflicts both sides of the border:

Feed amounts to nearly 60 percent of the cost of raising a chicken. For the American poultry industry, the cost has been held down, historically, by subsidies for corn production. In 2005, American cropland for corn received a range of subsidies worth more than $10 billion, according to a Washington Post analysis of data from the U.S. Department of Agriculture.

Labor, where Mexico has an advantage, makes up only about 5 percent of production costs.

And it's not only China that is flooding Mexico with cheap exports:

Already, Garcia is feeling the pressure. Americans prefer breast meat, while Mexicans opt for dark. So U.S. poultry producers can sell leg quarters -- dark meat -- in Mexico at low prices and still make money.

From January 2005 to January 2006, even though a 59 percent tariff applied to some chicken imports, the wholesale price of chicken leg quarters sold in Mexico City plunged by nearly one-fourth, according to the U.S. Department of Agriculture.

Next year, as NAFTA's final provisions kick in, the door opens to unlimited imports.

"The price will fall," Garcia said. "It could drop by half."

With that, I'd say that fans of playing connect the dots have had their fix for the day.

* Goodman's report seems so well researched that I wanted to give a mention to journalism's unsung heroes: the researchers. Washington Post Database Editor Sarah Cohen contributed to the report.

Sebastian Mallaby blows a gasket over China's policy on Sudan and slams China's foreign aid and development programs

"Chinese understanding of development threatens to undermine the Western one. Western development aid is increasingly linked to measures of good governance, and investment from Western corporations and banks comes with conditions designed to ensure that ordinary people benefit. This promising advance cannot succeed if African dictators can ignore Western conditions with Chinese assistance.

"But then there is an even more disturbing question: What does China's policy toward Sudan say about the West's policy toward China? The West is engaging with China on the theory that economic modernization will bring political modernization as well; otherwise, the West would merely be assisting the development of a communist adversary. China's Sudan policy is an assertion that this link between economic and political modernization is by no means inevitable, even in the extreme case. You can construct oil refineries, educate scientists, build ambitious new railways -- and simultaneously pursue a policy of genocide."(1)

Pundita,
I'm assuming you saw Sebastian Mallaby's Washington Post op-ed yesterday about China's aid to Sudan. What interests me particularly is that his view of China's threat to Western development and aid programs tracks exactly with yours. So now there's two of you shouting at Washington from inside a glass booth, but I think his harsh criticism of China is new for him.
Jan in Reston

Dear Jan:
From what I have read of his columns, I think Sebastian Mallaby "tracks" more with the view in Brussels, which supports the Chirac School's multipolarity doctrine. The doctrine tolerates just the kind of foreign policy that has now greatly upset Mr Mallaby.

Mallaby was out in front of the rest of the media on the Darfur story and his reports on the situation lit a fire in official Washington. The genocide in Darfur is his special cause. So Hu Jintao picked the wrong country on which to make a stand regarding China's foreign policy. Whatever Mallaby thought about China's policy before Hu's trip to Sudan last week, Hu said the magic words when he called on the world to respect Sudan's sovereignty then wrote a check to build a palace for Sudan's president.

Now that Mr Mallaby is hopping mad about China's aid and development programs, the West European media will take note. From there, we could see movement from Brussels; eventually that could translate into the International Monetary Fund working themselves up to a stand about China's aid and development policies.

All that plus 50 cents won't get us far, if Beijing is allowed to make a token bow to world opinion about the Sudan issue while continuing to write big checks to despots. The token bow is China's modus operandi whenever their record on human rights comes before the United Nations.

The only way to deal with China about their development policy toward third world countries is if the major multilateral lending institutions, with the World Bank leading the charge, threaten to scale back China's shareholder status unless Beijing stops overwriting their development policies.

With regard to China's foreign aid policy, the lead has to come directly from the G7 governments. I don't see the eighth member of the club -- Russia -- making a stand against China on such matters, but China's aid policies should be an issue for this year's G8 meeting. The issue should stay on the table, no matter how many token bows Beijing makes in the runup to the meeting.

All this said, I have two disputes with Mallaby's wonderful scorched-earth essay. The first is that he contends that "15 years" ago the West "discarded" the kind of development policy that China now practices. It is true that a consensus started to build in the 1990s, but the World Bank -- the world leader in development policy -- did not put teeth into their anti-corruption policies until Paul Wolfowitz took the helm at the Bank. The uncompromising approach has met stiff resistance from many quarters, even from within the World Bank.

If I sound as if I am nitpicking about the dating of the revolution in development circles, I think Mr Mallaby has been nitpicking about the way in which Wolfowitz has instituted and pushed anti-corruption policies. So now that his pet cause is getting stomped on, maybe he will help put some wind behind Wolfowitz's sails.

And maybe now Mr Mallaby will take a closer look at the fine print in the multipolarity doctrine. If a government makes furthering multipolarity into a guiding principle, it has a toothless argument against despotic governments that demand the same accords as the democratic nations.

My second dispute with Mallaby's essay is more of a question that Pundita has been thinking about for many months. If you remove mention of China and Sudan, how much do you disagree with the statement that a nation's sovereignty should be protected? China argues that it's a slippery slope for nations to intervene in the affairs of other nations in the name of human rights abuses. Do you think that is a valid argument?

Mallaby is correct when he observes:

... since the end of the Cold War, the Western view of sovereignty has grown increasingly contingent. If a nation slaughters its civilians (think Rwanda, Kosovo), harbors terrorists (Afghanistan) or refuses to cooperate with U.N. weapons inspectors (yes, Iraq), it forfeits its right to sovereignty. It may not be invaded, but it certainly can expect to face sanctions.

Sudan, by these standards, is an easy candidate for sanctions. But China's talk of "sovereignty" is code for the opposite policy. As well as paying for a presidential palace, Hu used his trip to cancel $80 million of Sudanese debt, to announce a plan to build a railway line and to visit an oil refinery that China partly owns, basking in the fact that 80 percent of Sudan's oil goes to his country.

Hu's visit was a statement that, in the Chinese view of the world, the principle of sovereignty trumps even the most appalling human rights abuses: It brushed aside the memory of the Rwandan genocide and the Holocaust.(1)

But is the rationale underpinning the contingency a defensible one when governments argue with other governments on the issue? China says no. What do you think?

This is a foreign policy blog, so what Pundita thinks on the matter is that she wants US policy to bash China back over the line yesterday, not sometime in the coming century. From that viewpoint, governments are on thin ice if they fall back on political philosophy arguments in the effort to prod China's government to action on development policy. If they want action, the best course for the G7 governments is to keep the discussion very narrow. For example:

If China belongs to the World Bank while at the same time running development policy that completely works against Bank policy, you can ask Beijing why they bother to belong to the Bank.

This approach does not mean ducking the philosophy questions; it means that you are not going to win an argument that has many shades and sides, which is not even resolved among the developed nations, and which is a sore point among the developing nations. The developing nations don't want the developed countries to attach strings to aid and development if the strings violate their sovereignty. Yet the argument is on solid ground if you limit it to a government's responsibility as a member of a multilateral lending organization.

China's aim is to see that more developing nations have a bigger say in how the World Bank and its Asian and European counterparts are run -- in particular, the ones that stand solidly behind China's policies. In other words, unless the developed nations make China's aid and development policies a battlefield, even the most enlightened development assistance can be forced back into the antiquated model that Sebastian Mallaby decries.

1) A Palace for Sudan: China's No-Strings Aid Undermines the West by Sebastian Mallaby. February 5, 2007; Page A-15, The Washington Post.

Backchannel wars

Two posts up on Saturday. Regarding the earlier post -- I hope you'll be sure to read both links that Dave Schuler at The Glittering Eye provided in his post on the 2/2 complaint brought by the US against China. So, are the complaint and the circumstances that provoked it just a bump in the globalization road, or another sign of the rising tide of nationalism around the globe?

In December, I think it was, Caesar asked Pundita for an update on where things stand today. My posts since then have been about issues that are describing the early part of this century. The task is to fit all the pieces into a clear picture takes deep thought.

I received a letter from a reader who plowed through Thomas Fingar's 2001 testimony (see Saturday's second post) and who does not see how he got things so terribly wrong, in that he did mention the threat by al Qaeda and the "terrorist threat" in general.

I would ask the reader to zero in on Fingar's statements about "state-sponsored terrorism." The State Department, and maybe also the CIA, are still having a hard time catching up with the modern era of warfare. That al Qaeda uses terrorist tactics does not make them a terrorist organization. They are a mercenary army for hire by governments that want to wage backchannel wars.

But if you go in that direction of analysis, you quickly bump up against China -- China's relationship with Sudan, China's relationship with Pakistan, China's relationship with North Korea, with Libya, and so on. And you bump up against big US trading partners and US allies that do business with governments that wage backchannel wars. So there are reasons why State favored blindness in 2001.

Now, one might argue that today's backchannel operations practiced by countries such as Saudi Arabia and Iran are an imitation of the CIA-MI6 covert wars and 'black' operations during the Cold War. America and Britain didn't invent covert war but yes, to be human is to play Monkey See, Monkey Do. Today, many countries can wage highly effective covert wars, which they can deny to the sky when called out. It does not help the matter, if US intelligence bureaus refuse to name a phenomenon for what it is.

I have some free time today, which I will spend plunged in thought, in the effort to pull together the big pix for Caesar. If I post tomorrow, it will be at 8:00 AM; otherwise, look for a post on Thursday at 8:00 AM.

Regards to all,
Pundita

Thomas Fingar and the scary new day in US intelligence work

"Happily, the severity of specific threats to our nation, our values, our system of government, and our way of life are low and likely to remain so for the foreseeable future." (1)
-- Thomas Fingar, while Acting Assistant Secretary of State for Intelligence And Research, speaking before the Senate Select Committee on Intelligence hearing on current and projected national security threats to U.S., February 2001

“We get it. We [in the intelligence community] realize we have got to rebuild confidence [in intelligence work].”
-- Thomas Fingar, Chairman, National Intelligence Council and deputy director of national intelligence for analysis, Office of the Director of National Intelligence, January 2007

Thomas Fingar is no more suited for US threat analysis work than Miss Beazley. So if Pundita had a really dark sense of humor, she might quip that the DNI was created solely as a desperation measure to dislodge Fingar from State because the man couldn't be fired.

I can dream on but even with the will to fire him, it would have been virtually impossible to do so. Why? Because for decades Fingar's China analyses were very useful to US administrations that wanted to normalize relations with China and downplay intelligence suggesting that China posed any kind of security threat to the US. But about 15 years ago Mr Fingar's intelligence analysis work at the US Department of State began to encompass all countries. I don't believe it's coincidental that during those years State developed a terminal case of Clientitis and was rendered as a blind as a bat.

Yet State's ineptness at assessing security threats and significant political changes in every region on the globe has been held up as a model of effective intelligence analysis. State's INR (Intelligence and Research) bureau has been exempted from DNI (Director of National Intelligence Office) oversight and is deemed the winner in intelligence analysis when compared to the CIA. The comparison is akin to asking whether a tricycle or pogo stick is the fastest means of cross-country transportation.

If that's not enough to give you nightmares, today Mr Fingar is the "keeper of the crown jewels," as one writer termed it. John Negroponte plucked Fingar from State to be the Number Two at DNI:

"The intelligence reorganization legislation gives Fingar responsibility and authority for setting standards and coordinating objectives for U.S. intelligence efforts, although it leaves the analysts at their respective agencies with the goal of allowing them to present independent views. Fingar will also have what a senior intelligence official involved in the process described to reporters yesterday as "governance" over the President's Daily Brief, the summary of most important items given to Bush each day."(2)

Now what is Mr Fingar's idea of "standards" for the US intelligence community? Well, "objectivity" -- meaning intelligence that is not shaped to political ends -- is the buzzword in the new day. How does Fingar plan on bringing in more objectivity? We can glean clues from noting his scholarly background -- he's a China scholar -- and studying a program called SHARP. Watch carefully; don't blink:

Hey, Let's Play Ball
The insular world of intelligence reaches out for a few new ideas
By David E. Kaplan
U.S. News & World Report, October 29, 2006

At a modest office building just outside Boston last July, senior U.S. intelligence officials quietly set in motion an unusual experiment. For four weeks, a handpicked group of 20 outside experts brainstormed, argued, and chewed the fat with 20 top analysts from the CIA and eight other intelligence agencies. Their mission: to understand why people join terrorist organizations and other groups engaged in antisocial activity. The issues went to some of the most basic questions confronting Washington's intelligence mandarins: What's driving the spread of extremism around the globe, and how can it be stopped?

Dubbed the Summer Hard Problems workshop, or SHARP, the program is modeled after a highly successful project by the code-breaking National Security Agency, which for years has brought in top mathematicians to tackle cutting-edge issues in encryption. SHARP similarly threw together leading specialists, but from the social sciences: experts in anthropology, social psychology, insurgency, and Islamic thought, among other fields. But for all the esoteric talk about jihadism, group dynamics, and social networks, the SHARP participants had a second mission: to change the way U.S. intelligence agencies do their job, by opening the notoriously insular espionage community to the rest of the world.

SHARP is the brainchild of the 18-month-old Office of the Director of National Intelligence, which is charged with overseeing and reforming the nation's sprawling $44 billion intelligence community. Key to that effort is an organized attack on the kind of "groupthink" that resulted in U.S. intelligence agencies getting dead wrong, among other things, nearly every facet of Saddam Hussein's banned weapons programs. Reformers at the DNI and other agencies hope to answer critics who call the nation's spy agencies obsolete -- a bunch of big bureaucracies so addicted to secrecy that they can't cope in the Internet age. "This culture of secrecy in an information-rich world is totally anachronistic," says Phil Williams, an international security expert at the University of Pittsburgh who often consults with intelligence agencies.

Wiki-spies?
To help change the way the nation's espionage agencies do business, senior DNI officials are pushing an effort unlike any seen since the height of the Vietnam War, nearly 40 years ago. The SHARP workshop is but one of a wide array of outreach projects now underway, involving millions of dollars in contracts, fellowships, conferences -- even wikis and blogs -- directed at scholars and other outside experts. DNI officials are mindful of the past, when Vietnam War-era funding drew loud protests on campus, amid charges that the CIA had skewed academic research on Asian studies and secretly backed groups like the National Student Association. The new effort has also begun to stir controversy, but for those who respond, the rewards can be considerable, including contracts, lucrative stipends, and a chance to influence analysis at the CIA and 15 other intelligence agencies. The scope is broad: A classified DNI survey this year yielded 240 pages of outreach efforts involving virtually every U.S. agency that generates intelligence information. Those interested (and invited) enter a world of exclusive conferences, workshops, studies, sabbaticals, and scholarships. Participants include not only academics but experts at think tanks, international groups, foundations, and businesses, as well as medical doctors and scientists.

"The intelligence community will never be big enough, will never have enough analysts," says Thomas Fingar, the DNI's chief of analysis. "There's an absolute need to go outside."

Fingar's office is spearheading the charge. The DNI's new plan, "A Strategy for Analytic Outreach," reviewed by U.S. News, calls for a major effort at building "communities of interest" with outside experts and revamping security regulations to allow far greater contact with the outside world. Fingar hopes to replicate what he accomplished as head of the State Department's small but respected intelligence arm, the Bureau of Intelligence and Research. [...]

So there you have it; Mr Fingar wants to do for all US intelligence agencies under DNI's oversight what he did for State. And he wants to inject into the intelligence community a high degree of dependence on scholarly opinion. The latter is another way of saying that Fingar wants more emphasis on forensic-style proofs in intelligence work, which of course is a contradiction in terms.

Set aside troubling questions about a much closer relationship between academia and intelligence work that Fingar's approach suggests, and which the U.S. News report examines in some depth. What are the biggest flaws in the SHARP approach to intelligence work?

Firstly, anyone who has seen the TV FBI drama Numb3rs knows that there is a very direct, very close relationship between mathematics and threat analysis. So the NSA mathematics project, on which SHARP is modeled, makes good sense. But where is the direct connection between anthropology and threat analysis? Between social psychology and threat analysis?

Secondly, even if you could develop a sound rationale for the All is Everything school of intelligence analysis, what the hell kind of data filters would you require, in order to make all the cross-discipline analysis useful for timely threat assessment?

You would end up with the same problem that NSA data analysts always face, which is Garbage In, Garbage Out. You would end up with zillions of teeny tiny data mosaics that may or may not add up to anything useful for threat assessment.

Mr Fingar is not stupid. He understands what I'm saying. So what is his real goal? He wants to purify US intelligence work of the dross of threat assessment.

That is another way of describing State's approach to intelligence work since being infected by the Clientitis bug. Over the decades, the mission of the US foreign office devolved from supporting US strategic objectives to "coordinating with the rest of the world," as one writer put it.

Now, after bringing Mr Finger to DNI, John Negroponte is headed back to State; it does not seem likely that Fingar will follow him back there. Keeping Fingar away from State would be a good thing for State, but keeping him at DNI would be very bad news for US intelligence work. Yet there is nothing you and I can do about the situation; Mr Fingar is burrowed too deep in the intelligence community to hope that anything but retirement will dislodge him.

So, taking a page from the cross-discipline approach, Pundita will attempt an assessment of the situation by quoting Tom Colicchio, head judge for the Top Chef competition. When a semi-finalist complained about the behavior of another semi-finalist in the kitchen throughout the weeks of competition, Colicchio replied:

"We're not judging your behavior in the kitchen. We're judging your food. I really don't care what happens in there, to tell you the truth."

By the same token, nobody outside the spy community really cares how spies make good evaluations. We just want the US government to become skilled at threat analysis. The only thing that is going to rebuild our confidence is if the intelligence community gets threat analysis right on all the big stuff.

1) Fingar 2001 testimony.

2) The Washington Post

A deafening silence on the US trade complaint against China

Pundita returned late and walked into a storm of emergency projects, so I won't have today's post up until 6:00 PM. However, I note that Blogger has scheduled a maintenance outage for this afternoon, so if the post isn't up on schedule, I'll post it at 8 AM tomorrow.

In the meantime, Dave Schuler has a jaw-dropping post at The Glittering Eye on the US trade rep's far-ranging complaint against China and the historic implications -- which have been ignored by the media.

[The] complaint accuses China of providing unfair tax breaks and other subsidies that benefit Chinese exporters and discriminate against their foreign competitors.

Dave explains why this is big news, so please be sure to read the post.

Regards to all,
Pundita

The rise of the Purple Team and China's Ponzi scheme

In the last post I quoted Bill Gertz's comments on the Red Team, to which the Red Team would surely snort, "Gertz is Blue Team." The Blue and Red teams, which take their names from colors assigned during China's war games, are on opposite sides of the question: Does China pose a military threat to the United States? The Blue team argues on the yes side and Red says no.

It should be noted that while the teams are simply a way of categorizing the China views of influential American intelligence and policy advisors, journalists, congressionals, and military decision-makers, the disagreements between the teams are not academic.

Since the Nixon era, the Red Team shaped US defense policy toward China and US relations with China. The Blue Team views began to gather steam in the 1990s but in the wake of 9/11 the Red Team managed to reassert their view except at the Pentagon. (At State, Blue Team members are as scarce as hen's teeth.)

The battle lines hardened long ago between the teams, which boils down to calling your opposite crazy in place of reasoned discussion. Then came China's spectacular test of their antimissile satellite. It wasn't just the test itself that sat the Red Team back on their heels; it was Beijing's stony silence about the test and its meaning that alarmed Washington and threw a clinker into Red Team arguments that you had to be madder than a hatter to believe that China posed a military threat to the US.

Finally Elizabeth Economy, senior fellow at the noted cooking school, the Council on Foreign Relations, and director of their Asia studies program, organized a rescue. In a January 25 The Washington Post opinion piece titled China's Missile Message, Economy mixed Blue Team and Red Team views until they came out a nice shade of purple.

If you want to join the Purple Team, how should you be thinking? China's rise as a global power is going to be a big headache for every country and yes, China could pose a military threat to the United States but the best way to handle China is for the United States to become a perfect nation so China has no excuse not to follow suit.

The last is a nod to Red Team's reply to all concerns that China could pose a threat to the US: China can only become a threat if they believe the US perceives China as a threat.

Economy's effort is a typical fusion dish to expect from the cooks at CFR, but I doubt that members of the Red and Blue teams, which view each other as Satan Incarnate, will eat it up. Yet Economy works sound points into her essay:

[...] the truth is that China, with its rapidly growing economy and large population, already exerts an unsettling and often negative impact on the world. China is the largest or second-largest contributor to many of the most vexing global environmental problems, including climate change, the illegal timber trade, ozone depletion and marine pollution in the Pacific. It is squeezing manufacturing industries from South Africa to Thailand to Mexico, placing stress on economies ill-equipped to compete. And its weak public health infrastructure but strict media regulations rank it at the top of potential incubators for the next global health pandemic.

While such effects might be excused as unintentional consequences of China's rapid growth, others cannot be so easily dismissed. China's insistence that it doesn't mix business with politics in its foreign relations, while sounding benign, has the perverse effect of contributing to violence and repression throughout much of the world. Its political and financial support for regimes in Sudan, North Korea, Zimbabwe and Burma, among others, cannot in any way be construed as contributing to global peace and stability. Moreover, China's export of unsavory environmental and labor practices in countries where it is aggressively extracting natural resources has contributed to anti-Chinese demonstrations from Peru to Zambia.

All that and much more about China's threat to the global order is tenaciously ignored by China's apologists. I was struck by that again when I reviewed a portion of a guest blog posted at Simon World in the summer of 2005. I have lost the link, so I will have to look up the author's name and the link and post them later, but here are the passages I find amazing for their blindness to facts on the ground:

I'd like to share a recent piece written by my very first boss, Dr. William Overholt, today director of RAND's Center for Asia-Pacific Policy, on why China's rise is good for the world. Entitled "China and Globalization", he explains in a very pithy, cogent report why the world needs a strong China, and why a weak, unstable China was much worse. As the testimony was for a Congressional hearing, he put it in very simple language that American politicians could understand. He states:

"Before reform, China was the world's most important opponent of globalization. It had an autarkic economy. It opposed the global economic order. It opposed the global political order and the major global institutions such as the IMF and the World Bank. It believed that global disorder was a good thing, and under Mao Zedong it actively promoted disorder throughout the world, including promotion of insurgencies in most of China's neighbors, in Africa and Latin America, and even in our universities. [...]"

Mr Overholt needs to learn the difference between simplification and blowing smoke. Yes, China became a member of the IMF and World Bank -- and then Beijing mounted a policy of undercutting the IMF and the Bank as part of China's policy with regard to other developing nations. And are we to believe that modern China's promotion of repressive regimes and outright dictatorships is preferable to Mao's promotion of insurgencies?

Why is it so hard for US policymakers to develop a clear-eyed view of China? Elizabeth Economy proffers a thesis in her essay:

[...] senior U.S. officials, with a growing list of challenging issues on their China agenda, are reluctant to focus for too long on the reality of China's rise. Doing so would only make cooperation more difficult and provide support to an often obstreperous anti-China lobby in Congress. It is easier to paint China's rise as a work in progress -- one that the United States has the ability to influence.

That's one part of the explanation, but there are several reasons why Washington skids away from objective analysis of China. However, one of Simon World's readers ("Tamquam Leo Rugiens"), in commenting on the Simon World post I quoted, presents some bald facts about China that form the most telling reason of all: studying China with too much objectivity means noticing that Pandora's Box is open:

China is not competing on the level playing field as it claims to be. As long as the vast majority of Chines enterprises are dummy corporations which are in fact wholly owned subsidiaries of the Chinese government market reforms can never truly penetrate their economic system.

Secondly, the level of lying, cheating and corruption endemic to the Chinese cultural system cuts it off from reality based standards necessary to truly become a member of the World Economy. Nobody, and I do mean literally nobody, has a clue as to what is really happening to China's economy. As far as I can see, the whole of the Chinese economy is a titanic Ponzi scheme which will not only devastate China itself, but all those whose economies are linked with it. [...]

You do not want to think about the size of the financial interventions that will be necessary, when the Ponzi scheme collapses.

The enemy within and a question about John Negroponte

"Montaperto's conviction [for espionage] was a blow to the influential group of China affairs specialists in the U.S. government and private sector who share similar benign views of China. The group has been called the Red Team by critics and are known to harshly criticize or discredit anyone who questions or criticizes China's communist government and its activities."(1)

Ronald Montaperto's treason was punished by loss of his job at the Defense Intelligence Agency and three months in prison. That was in June 2006. A year earlier, a report for John D. Negroponte, the director of national intelligence, concluded that US intelligence agencies had failed to recognize more than a dozen key military developments in China during the previous decade.

The report blamed the intelligence failures on China's "excessive secrecy" about their military affairs and US spies for not gathering enough intel on China's military and for failing to work their way into China's government. But Bill Gertz of The Washington Times noted that officials who criticized the report claimed that it wasn't spies or China's secrecy but US intelligence analysts who were to blame for the failures. The analysts played down or dismissed growing evidence of growing Chinese military capabilities.

[The officials said] the report looks like a bid to exonerate analysts within the close-knit fraternity of government China specialists, who for the past 10 years dismissed or played down intelligence showing that Beijing was engaged in a major military buildup.

"This report conceals the efforts of dissenting analysts [in the intelligence community] who argued that China was a threat," one official said, adding that covering up the failure of intelligence analysts on China would prevent a major reorganization of the system.

A former U.S. official said the report should help expose a "self-selected group" of specialists who fooled the U.S. government on China for 10 years.

"This group's desire to have good relations with China has prevented them from highlighting how little they know and suppressing occasional evidence that China views the United States as its main enemy."(2)

Bill Gertz added that the report had been sent to Thomas Fingar, "a longtime intelligence analyst on China who was recently appointed by John D. Negroponte, the new director of national intelligence, as his office's top intelligence analyst."

Yesterday, 18 months after he filed that report, Gertz reported for The Washington Times:

A senior U.S. intelligence analyst has been formally criticized for "poor judgment" after writing a letter and e-mails in support of a convicted former Defense Intelligence Agency analyst, U.S. intelligence officials said.

Lonnie Henley, the deputy national intelligence officer (NIO) for East Asia, was given a letter of reprimand several months ago after an investigation within the Office of the Director of National Intelligence (DNI).

Mr. Henley, who could not be reached for comment, was a close friend and protege of former DIA analyst Ronald Montaperto, who was convicted in June on espionage charges that included supplying secrets to Chinese military intelligence. Mr. Henley wrote a letter to the judge supporting Montaperto, and an e-mail that criticized the FBI investigation of the former analyst. [...]

Montaperto's admissions of passing highly classified data to the Chinese coincided with the loss of a major U.S. electronic eavesdropping operation against China in the late 1980s, U.S. officials said.

Mr. Henley is in line for promotion to the top post of NIO for East Asia, but the appointment could be derailed by the reprimand, officials familiar with the internal inquiry said.

Mr. Henley is favored for the job by National Intelligence Council Chairman Thomas Fingar, who officials say shares the views of Mr. Henley and Montaperto on China.(1)

Just to be clear, the military advances somehow missed by US intelligence were not things like new camouflage uniforms and an advance in hand grenade technology. This was major stuff, which included:

> China's development of a new long-range cruise missile.
> The deployment of a new warship equipped with a stolen Chinese version of the U.S. Aegis battle management technology.
>Deployment of a new attack submarine known as the Yuan class that was missed by U.S. intelligence until photos of the submarine appeared on the Internet.
> Development of precision-guided munitions, including new air-to-ground missiles and new, more accurate warheads.
> China's development of surface-to-surface missiles for targeting U.S. aircraft carrier battle groups.
> The importation of advanced weaponry, including Russian submarines, warships and fighter-bombers.(2)

The DNI office refused to comment on Mr Henley's reprimand, saying that it was an internal administrative matter. It's not just an internal matter, when Mr Henley is line for promotion to a very influential position with regard to China affairs, and when the man favoring his promotion is the chair of the National Intelligence Council and a fellow member of the Red Team.

Henley sent his email to:

[...] a closed group of more than 100 China specialists known as "Chinasec" that included several high-ranking CIA and other U.S. intelligence officials and private China affairs specialists.

The two-page e-mail criticized the FBI for investigating Montaperto. Mr. Henley stated that he had spoken with Montaperto and that he regarded his passing of secrets to Chinese intelligence as inadvertent and minor security violations.(2)

Let us assume for the sake of discussion that Henley's view of Montaperto's espionage activities is correct. After all, why shouldn't we extend the benefit of the doubt, given that it's US policy to adhere to a double standard on China?

The Red Team is not a rogue element in the US government; the Chinasec specialists are supposed to shape intelligence so that it supports the State Department's line on China and the line favored by successive Democratic and Republican administrations going back to Nixon. During the Cold War, the US military outright gave China US military secrets as part of the effort to play China against the Soviets.

From that perspective, anything Montaperto handed the Chinese was espionage only on a technicality. But the issue of espionage is almost beside the point. The central question is how US intelligence agencies failed to report on a country's weapons buildup that was as obvious as a herd of elephants galloping across a plain. By 2000 China's big military buildup was open knowledge in Washington. It's just that the knowledge was blocked from official intelligence reports and analysis, so that it could not be worked into policy decisions on China -- and US defense.

If all the above sounds familiar, substitute "Saudi Arabia" for China and you have the willful blindness during the 1990s that led to US intelligence failures on the Arab threat to the US. In the same manner as China, the Arabists in successive US administrations demanded intelligence reports that were shaped to downplay and dismiss the threat from state sponsors of Arab terrorism.

In fact, you can go down the list of massive US intelligence failures since the late 1980s and see the same pattern in effect with regard to the entire Middle East, the entire FSU region, and all of Latin America, and Africa.

The pattern is the same, no matter which country is involved: an analysis conclusion gets written up as policy, then all acceptable analysis follows the same conclusion -- no matter how much new data emerges since the policy was formed!

So my question is whether John Negroponte wants to downplay the role that analysis played in the intelligence failures on China. If yes, this does not bode well for his role at State, where he'll have the number two position there, and where one of his specific duties will be overseeing the China desk and negotiations with North Korea, which is a Chinese satellite.

It is perfectly possible to massage the data and arrive at the conclusion that China poses no military threat to the US. It is equally possible derive the opposite conclusion from the same data. So what is the guideline? Is there an objective filter that can be applied for analysts?

Sure. All Messrs Henley and Montaperto needed to insure their objectivity was to study their I.D. badge, which had "defense" written on it, not "China policy." Their job at the defense agency was not to analyze China, but to analyze possible threats to the United States from China. A big part of their job boils down to plowing through mountains of data in search of bad news. Then it's for people much higher on the decision tree to determine whether the intel adds up to a threat to the US. The analysts just needed to do their job, but clearly they lost their job description.

If they say they couldn't do their job without being fired -- then it's the job of the Congress to impress on US intelligence directors that intelligence analysis needs to oriented to the empirical viewpoint. Studiously ignoring the viewpoint at the official level is America's greatest enemy within.

1) Analyst rebuked over his support of spy for China

2) Analysts missed Chinese buildup

Michael Wright chases away the Bogeymen

Pundita: I've been having nightmares recently. Last night I had another one.

Michael Wright: What was it?

Pundita: I dreamed Robert Gates was running the Pentagon.

Michael Wright: He's just a place marker.

Pundita: That's the most dangerous sentence in the English language.

Michael Wright: Dick Cheney and Russian military advisors will be running the war.

Pundita: That's not funny!

Michael Wright: So what is that sound? A Pundita sneeze? Stop worrying. You got your wish; McCain's plan was chosen.

Pundita: My biggest wish was to seal Iraq's borders.

Michael Wright: I've told you before that's not going to happen.

Pundita: Then they're still emptying the ocean with a sieve. You got your wish also; one part of the new plan is to pile equipment on Iraq's military.

Michael Wright: I'm not sure the equipment includes attack helicopters.

Pundita: It better not happen, or there won't be a Sunni village left standing.

Michael Wright: You said yourself that the Saudis won't let that happen.

Pundita: Thomas Ricks is reporting that the new plan is doomed to fail because it will be successful. The military observers he interviewed say that the plan will work initially to quell the violence and then by the summer, when al Qaeda and the militias have figured out the new tactics, they'll strike again with renewed force.

Michael Wright: By the summer Lukoil will be back in business in Iraq.

Pundita: Are you pulling my leg?

Michael Wright: No, it's in the papers, at least in Europe.[1] Iraq's parliament is set to ratify their hydrocarbon law, which honors any preexisting contracts to develop Iraqi oil fields. Lukoil is already in negotiations with [Iraq's] oil ministry. That didn't happen without US okay.

Pundita: Then you weren't joking about Russian military advisors.

Michael Wright: If the US doesn't provide the attack helicopters you can bet Russia will gift them to Iraq's military. Everything's been on hold while Iraq's new government crystallized; now that the government is legit, they can start honoring old contracts, including those with France and Germany -- and Russia.

It's all over but the shouting once reinforcements descend on Baghdad.

Pundita: But Zawahiri is crowing about the new plan! He said to send in the entire US military and al Qaeda would make dog food out them.

Michael Wright: So he's making a fool out of Pelosi. This is cause for worry? [Nancy Pelosi said recently that the war on terror is in Afghanistan.]

Pundita: Wait a minute; if Russian military advisors are going to descend on Iraq, what does that do to Russia's relations with Iran?

Michael Wright: Let's see -- Iran backs off in Iraq, Russia continues to block harsh penalties for Iran, which doesn't matter anyhow because the EU and China don't support being tough on Iran.

Pundita: Chaos rules.

Michael Wright: Expediency rules and actions tend to cancel out other actions on the diplomatic front in war. The best thing [Condoleezza] Rice ever said was, "One war at a time."

Pundita: She doesn't see Iraq as part of the war on terror.

Michael Wright: Yes she does; she reads intelligence reports. I'll rephrase: "One theater of war at a time."

Pundita: You don't think the US will bomb Iran this spring?

Michael Wright: If we allowed China to help Kimmy build a nuke, if we allowed France, Germany and Russia to help Iran build their nuke facilities, do you think we'll risk a shooting war with Iran over the issue of the Bomb? Have you considered the souring of relations between Syria and Iran, and between Qaeda and Iran? Qaeda is backing the Sunnis.

Pundita: My head is spinning from trying to keep the sides straight.

Michael Wright: Alliances are very fluid in war. Now what else is worrying you?

Pundita: The coalition between Venezuela and Iran.

Michael Wright: Thanks to Hugo Chavez, the world's Leftists are now in the position of defending a theocracy. Trust me when I tell you, this is not where any self-respecting Leftist wants to be.

Pundita: The Iranian oil bourse. I'm worried it's going to happen.

Michael Wright: That old chestnut! The bourse is supposed to be a futures market, which is against Sharia, so now it's war between Iran's technocrats and the theocrats. So what, if it does happen. It doesn't matter whether they trade in euros or rials or wombats; Iran's financial infrastructure is three clerks strapped to a treadmill.

If Iran wants to fight the US on the economics front, first they have to join us -- specifically, join the WTO. Before they can do that, they have to institute financial modernizations up to the yingyang. They can't do that, until they ditch the theocrats.

Pundita: So you're not worried about a petrocurrency war?

Michael Wright: Currency traders aren't nuts -- not the ones who trade for central banks. You were the one who said back in 1990 -- or was it 1979 -- that a basket of currencies for oil trades was on the way and overdue.

If the EU wants to take on the burden of being the world's reserve currency, which they can't do at this time, this will make US exports all the more attractive. There will be central bank interventions to prevent the dollar from going into a tailspin. So Chavez can plot and scheme all he wants; he can't take the US down through petrocurrency plays. What else is worrying you?

Pundita: I can't think of anything at the moment. Do you have any advice?

Michael Wright: Stop eating pepperoni pizza just before going to sleep.

1) Lukoil set to revive $4bn Saddam oil deal

This one's for the idiots at the US Department of State

I am having trouble with this post, on account of throwing things across the room every time I start writing, I am so upset with State. So what I'm going to do at this point is just republish two reports without my added comments, except to note:

> Yes, Russia's decision to renege on their promise to the US regarding the gas shipments is a terrible blow to US energy policy. However, the decision was not motivated by anti-US sentiment at the Kremlin, nor was it motivated by a desire to play the US against Europe. You will see this if you read -- not skim but read -- the second report.

> Get it straight: China is the Borg. From that viewpoint, you should be breaking out the champagne every time you see Russia making a move to strengthen their ties with the EU.

Got it? Don't make Pundita get down on her tummy and draw little stick figures in the effort to explain more clearly.

Russia gives Germany a role as strategic partner
by Judy Dempsey
International Herald Tribune, October 12, 2006

BERLIN -- As both sides of the Atlantic compete for reliable energy sources, Russia appears to be playing off Europe against the United States by favoring Germany as its most important strategic partner and the main transit country for Russian gas to lucrative markets in Western Europe.

The goal of linking Europe's largest economy much more closely to Russia emerged clearly this week: Moscow shut American firms out of development of a major gas field and reneged on previous plans to send liquefied natural gas from that field to the United States, and President Vladimir Putin spelled out priorities to Russian and German political and business leaders in Dresden.

Returning to the city where he was a KGB agent from 1985 to 1990, Putin dwelled on the new North European Gas Pipeline that Russia and Germany are building under the Baltic Sea. Once in place, he said, Germany will gain a special role in Europe's energy market.

"This would mean that Germany is not only a consumer of natural gas but would make it a big European distributor of Russian gas," Putin said. "It would transform the energy face of Germany and strengthen its role in European energy matters."
Gazprom, Russia's state-owned gas monopoly, already supplies a third of Germany's energy and a quarter of all gas consumed in the European Union.

While West Germany started developing trade and energy contacts with the Soviet Union in the 1970s, the current big push by both countries to forge closer economic ties is thrusting well beyond traditional realms. At €25 billion, or $31.4 billion, German-Russian trade for the first six months of this year almost equaled that for all of 2005.

"Putin and Gazprom have a lot of cards in their hands," said Jonanthan Stern, director of research at the Oxford Institute for Energy Studies. "This is their time."

Two American oil companies, ConocoPhillips and Chevron, were dealt losing cards this week when Gazprom -- in line with earlier Russian moves to renege on deals giving Shell oil from fields it is developing in Sakhalin -- said it would exclude foreign companies from shares in the Shtokman gas field and instead develop the field alone.

Two European oil firms, Total of France and Norsk Hydro of Norway, had also hoped for a Shtokman deal. But the United States suffered the added blow of being denied liquefied natural gas supplies from the field once it is developed.

"Shtokman will be the resource base for Russian gas exports to Europe via the North European pipeline," said Alexei Miller, the Gazprom chairman. Foreign firms will participate only on specific technical contracts, he added. "This decision is an additional guarantee of the Russian gas supply to Europe, security in the long term, and proof that the European market is of dominating significance for Gazprom."

Stern said that this decision, announced on Monday just before Putin met Chancellor Angela Merkel in Dresden, marked a return to Russia's original plan. "Instead of sending gas to the U.S., it will now send the gas from Shtokman via the new pipeline to Europe," he said. "There is no doubt about it. Europe and Russia will become even more dependent, as Europe buys more gas from Russia and Russia depends on Europe as a reliable market."

Alexander Rahr, an analyst at the German Council for Foreign Relations in Berlin, said: "Russia is changing the rules of the game when it comes to energy."
The Kremlin is "squeezing foreign companies out of Shtokman," Rahr said. "Maybe Putin is playing off Europe against the U.S."

Certainly, European governments and companies are now keen to do business with Moscow - none more so than the 1,000 German companies who have already established offices in Russia.

Despite outcry over such events as the murder last weekend of the investigative Russian journalist, Anna Politkovskaya, Germany and Russia are forging a new strategic relationship.

A former physicist in East Germany, Merkel is keenly aware of human rights issues and critical of the weak rule of law in Putin's Russia.

In Dresden, however, she expressly favored a "partnership," based on a level playing field. "It is important for me to have realized that we are acting on the same business principles as the Russian government in this cooperation," Merkel said. Both sides, she added, were working out "a joint charter in which these principles will be enshrined."

The terms of this partnership, first raised by Merkel in Moscow last January, are taking shape. Gernot Erler, state secretary at the foreign ministry and a Russia expert, said that when Berlin takes over the rotating presidency of the European Union in January, it will seek support for a special free-trade zone between the 25-member bloc and Russia. The EU has rejected such zones in the past, saying they do not comply with WTO rules.

Erler also said the government wanted to help German and Russian companies swap stakes in a bid to encourage stability and mutual profit. "We are considering a program of intertwined companies," Erler said in Dresden. "We hope to develop a win-win situation based on mutual dependency."

For 30 years, there have been German political and business leaders anxious to pursue this strategy in hopes of bringing Russia closer to Europe.

"This has been one of our long term aims," said Klaus Mangold, chairman of the East Committee that actively promotes German business interests throughout the former Soviet bloc.

During the Cold War, such contacts were viewed with suspicion on both sides of the Atlantic by some who argued that this was giving in to Russia's attempts to weaken the NATO alliance.

But now, with Russia reaping cash from high energy prices, German officials and companies sense that Putin will start using the windfalls to diversify and modernize Russia's energy-dependent economy.

"Germany could hold the key," said Stern. "Germany has long experience in Russia."

Putin told business leaders on Wednesday in Munich: "One of the most important tasks of the Russian economy in the short term is its diversification, forging new fields of activity. Germany can be a special motor here for investment." He added without further explanation that these goals "don't meet with a positive attitude everywhere."

Mangold said afterwards that "the future outlook for German-Russian economic relations is excellent."

"Russia has the world's biggest reserves of natural resources," Mangold said. "It is also one of the world's fast- growing economies and is close to Germany geographically. I am confident that German firms will increase their commitment in the years ahead."

Now we turn to the Energy Charter, which received not one mention in the IHT report:

Gazprom’s Strategy

by Anders Åslund, Peterson Institute
Testimony before Hearing on EU Economic and Trade Relations with Russia, Committee on International Trade, European Parliament, Brussels
November 21, 2006

I am happy to fill in for a Gazprom representative to discuss Gazprom's strategy, but I must make clear that I do this as an independent analyst and not as a representative of Gazprom. Yet, I have chosen the Gazprom perspective to explain what this company is doing.

Gazprom is a peculiar corporate giant. It is a ministry that has become a corporation, and the fundamental question is to what extent it represents the state and business interests, respectively. The last Soviet Minister of Gas Industry Viktor Chernomyrdin formed Gazprom out of the Russian part of his ministry. It incorporated all the elements of the old ministry—production, transportation, distribution, sales, research, and even regulation. This corporation produces close to one-fifth of all natural gas in the world. Unlike oil production, which plummeted by almost half from 1987 to 1996, gas production held up well.

In the mid-1990s, a large minority share of Gazprom was privatized to managers and employees, but share sales were restricted. As a result, a considerable price differentiation evolved between domestic, restricted shares and the few internationally tradable shares. Another consequence was that all Gazprom shares were extremely cheap in relation to the purported asset values. Arguably, Gazprom remained a ministry until President Vladimir Putin changed the management in 2001.

Since 2001, the Gazprom management has been divided into three roughly equal groups. One group, led by CEO Alexei Miller, consists of young economists who worked with Miller and Putin in the mayor's office in St. Petersburg. A second group consists of KGB people from St. Petersburg, while old Gazprom hands form a third group. President Putin takes a very active interest in Gazprom's management, and its split into these three groups gives him great leeway to balance them.

My argument is that the main objective of Gazprom's new management is to boost the stock price. They have done so very successfully. The stock price has increased more than ten times in the last three years. Such a spectacular result cannot be accomplished without being focused on it, however large your assets happen to be. At present, Gazprom has a market capitalization of $250 billion, rendering it about the third most valuable company in the world. It is currently worth three times more than the most valuable German companies, Siemens and Eon.

pany's stock price [sic]. Initially, it focused on recovering assets that had been sold off cheaply to other companies by the old management, and it managed to recover most of them.

Another important step was to liberalize the stock trade so that domestic and international stocks could be traded freely. That was accomplished early this year, which greatly contributed to the stock's price rise.

While Gazprom's Western European customers have paid negotiated market prices all along, former Soviet republics have paid highly differentiated prices, which could only be explained by old political inclinations. In the last year, Gazprom has undertaken radical changes in this price structure. To judge from its dominant public statements, it aspires to eliminate all political discounts and more or less homogenize its prices of natural gas on the Russian border to about $150 per 1,000 cubic meters (mcm), which is currently the approximate netback price from Europe.

These prices are set to rise significantly in the next year. European countries pay much higher prices, but they include large transportation costs in pipelines and substantial taxes. This offensive has led to a number of incidents that appear political, notably aggressive tactics against Ukraine, Moldova, and Georgia, but Gazprom has been approximately as aggressive against supposed friends such as Belarus and Armenia [emphasis mine]. While politics undoubtedly played a role in these dramas, and bluster over prices was standard, the overarching impression is that Gazprom raises the prices relatively fast to a plausible market level.

The next key task to enhance Gazprom's profitability and thus stock price is to raise the domestic Russian gas price. At present, the wholesale price for gas, without taxes is some $42 per mcm. The current government policy is to let the gas price rise by 15 percent next year. After a couple of postponements, the Russian government was to discuss its price policy for gas on November 22.

Three important constituencies are arguing for a partial deregulation of the domestic gas market, namely Gazprom itself, Minister of Industry and Energy Viktor Khristenko, and the Unified Energy System, which despairs at the shortage of gas in Russia.

The minimum solution is that the domestic price rise accelerates, so that it reaches $90 per mcm in 2010. But I do not think it will take that long. Russia may experience a shortage of natural gas as early as this winter, and the domestic price is just too low. The Russian discussion over the domestic gas price is the key drama to watch today.

Meanwhile, Gazprom has invested little in the development of new major findings of gas. One reason is that these fields are very expensive to develop, and if the domestic price is Gazprom's marginal price, it is not worth doing so. Another reason is that Gazprom's current main objective is to raise the domestic gas price, which is most easily done if a real shortage of gas erupts. Therefore, the European Union has a common interest with Gazprom in the domestic Russian gas price going up, because such a price hike will help safeguard Europe's supply of natural gas. In addition, it will contribute to energy saving in Russia and thus lessen emission of greenhouse gases.

Naturally, Gazprom wants to maintain and if possible extend its monopoly over gas pipeline transportation. It wants to take over trunk pipelines in other countries, and it works hard on doing so. Gazprom and thus Russia are dead against the European Energy Charter and its Transit Protocol, because it will reduce Gazprom's monopoly powers. In this regard, Gazprom and the European Union have contradictory interests. For years, the European Union has demanded that Russia ratify the Energy Charter, but Russia will never do so.

The Energy Charter was negotiated in 1991, before Russia's new energy interests had been formed. The United States and Canada never even signed the charter because of legal concerns, and Norway had other legal concerns, which made it not ratify the charter. The only sensible EU approach would be to renegotiate the Energy Charter so that at least Europe's main producer countries, Russia and Norway, can join it. An Energy Charter that only the consumers approve of cannot be of much significance, and Europe needs a common trade framework for energy, notably natural gas.

At present, Gazprom has only two outlets to its markets outside of the former Soviet Union, the pipeline through Ukraine, which accounts for 80 percent of Russia's gas exports to Europe, and the pipeline through Belarus and Poland, which takes care of the remaining 20 percent. To Gazprom this cannot be a satisfactory situation. Therefore, it has chosen the Baltic pipeline directly from Russia to Germany through the Baltic Sea. From a market economy perspective, a multitude of transportation options seems desirable.

More troublesome is the Russian ambition to block the construction of a Transcaspian gas pipeline from Central Asia to Europe. Such a pipeline would greatly enhance Europe's energy security and should be a key EU interest.

Other aspects of Gazprom's activities are even less attractive. Gazprom is picking up various assets within Russia quite cheaply because of its combination of monopoly power over pipelines, pricing and exports and state regulation. Small independent gas producers have been squeezed out and forced to sell their assets cheaply to Gazprom. In East Siberia, TNK-BP, half-owned by BP, is being hindered to develop the giant Kovykta gas field in East Siberia. In the Sakhalin II project, Shell Royal Dutch is under pressure to renegotiate its Product-Sharing Agreement, presumably being forced to give a large share of its investment to Gazprom.

So far, I have discussed Gazprom in business terms, but politics remain important. One example is President Putin's recent decision that Gazprom build one or two gas pipelines to China rather than building a liquefied natural gas plant designed for exports to the United States. The bluster in negotiations with the former Soviet republic does have many political overtones.

Recommendations for EU Policy on Gazprom
The ultimate question today is of course what the European Union should care about with regard to Gazprom. I would make three suggestions:

It makes no sense for the European Union to continue insisting that Russia ratify the Energy Charter when it is all too obvious that Russia will never do so. Instead, the European Union should open a renegotiation of the Energy Charter. The European Union needs to insist on its fundamental demands, a liberalization of the Russian (an European) gas market, free and nondiscriminatory access to pipeline systems throughout Europe, including Russia, commitments to uninterrupted supplies, and mutually equal conditions for investment in the energy sector.

But the European Union also needs to acknowledge justified Russian demand to reach a balanced and mutually beneficial agreement that can be ratified by consumers and producers alike. If Gazprom is to be allowed to buy downstream gas assets in EU countries, the European Union must demand the corresponding right to buy upstream gas assets in Russia, and vice versa.

The most serious conflict in Russia's negotiations with the European Union about its WTO accession was Russia's domestic price of natural gas. This was settled on conditions favorable to Russia, when the European Union signed its bilateral protocol with Russia, a milestone that was reached in May 2004. Russia has complied with that agreement, but international gas prices have risen further. Producers of mineral fertilizers around the world are now complaining anew that the Russian domestic gas price is too low [emphasis mine].

The European Union had better to return to the issue of the domestic Russia prices of natural gas in the multilateral part of the negotiations on Russia's WTO accession. The United States is likely to do so, and when Gazprom itself lobbies for higher domestic gas prices in Russia the chances of success are considerable. This price question has also bearing on Europe's energy security, the prospects for investments in Russia's gas production, and the transparency of the gas sector.

Finally, the European Union has an interest in multiple supply lines of energy to Europe. Therefore, the European Union should strongly support the construction of a Transcaspian gas pipeline from Central Asia to Europe outside of Russia's control.

Weevils plot to gridlock foreign policy initiatives across the entire planet

On the eve of the President's Address to the Nation, Pundita thought it would be a good idea to prepare her readers for what's ahead on the foreign policy front. But first a few asides:

Fame is a harsh master, particularly when one counts a thin-skinned laboratory rat among one's loyal readers. Pundita has had to fall back on creativity when delivering insults -- having struck rat, donkey, weasel, wolf, vulture, and even snake from her arsenal; this, in the effort to avoid reading hate mail written with truly atrocious spelling. In this post I will experiment with using "weevil" as an invective, and hope that flies under Rugby's radar.

Now I will attempt to head off the Society for Short Words: No, I can't substitute "teamwork" for "multilateralism" because a team has a leader. The whole point of the multilateralism doctrine is that no country should lead the others.

And a few words to the Organization for Clear Thinking: Yes Pundita understands that the concept of "multipolarity" tends to undercut the concept of "poles." But those most responsible for promoting the term "multipolarity" as the defining reason for multilateralism do not have clear thinking as their goal. Their goal is bringing about gridlock in foreign relations across the globe.

Now who would want to do such a thing? The weevils among us. Who are the weevils? No, it's not Jacques Chirac and his crowd. And it's not Noam Chomsky and his crowd. Today's Leftists and the wonks connected with the Chirac School are now simply dupes for the weevils.

The weevils work for the biggest bucks transnational corporations and are charged with burrowing through foreign and domestic government legislation and WTO rulings that hamper their company's global business plans.

Weevils have a simple operating philosophy: No government, let alone a coalition of governments, is capable of running the world with any semblance of sense. In their view, the most that can be done is to keep things down to dull roar, so that businesspeople can go about their business. How to hamstring foreign relations policies across the international board? Instigate gridlock on a global scale.

The weevils are an inevitable byproduct of globalization. If American readers stop and think about it, the gridlock strategy has long been in effect in the US for keeping Congress on a leash. If you're an American running big business here, the best way to block a lot of government interference is to bring about gridlock in Congress by giving money in equal measure to both sides of an issue.

The weevils have transferred that tactic to a strategy for keeping the world's governments on a leash. They've hit on the concept of multilateralism, which is in essence just a strategy. Of course, all governments try to get as many other governments on board for a foreign relations initiative. However, the weevils promote an actual doctrine of multilateralism -- a philosophy of foreign relations, if you will.

Before discussing the philosophy, is there anything terribly wrong with the basic weevil viewpoint? After all, it's true that historically governments screw up many foreign policy initiatives, which leads to a bigger mess than the one targeted for solution. So why not find a way to get everything done by committee, which guarantees gridlock?

In a perfect world, the weevils have a sound point, but consider just a few of the failures of the multilateralism doctrine: the ongoing genocide in Darfur, the failed Six Party Talks involving North Korea; the failure of the EU3 to rein in Iran's clandestine nuclear weapons program, the collapse of the Doha Round, and ineffectiveness of the UN Security Council.

This is not a perfect world, and when megabucks transnational corporations get into deep trouble they run to their government to get them out of the jam. Ayn Rand was right: at the end of the maze of compromises always stands a thug in a cheap leather coat holding a gun on you.

Yet the weevils see multilateralism as a guiding philosophy of foreign relations and what's more, as the only moral philosophy for the modern era. This, despite the ruthless amorality of the multilateralism doctrine, which the Chirac School promoted.

Weevil Multilateralism doctrine, shall we call it in order to distinguish it from mere strategy, wraps itself in a cloak of morality on the theory that all good comes from bowing to the inevitable -- whatever the inevitable might be.

In this case, multipolarity is seen as the inevitable course of world affairs: the singular unchallenged power of the United States ("unipolarity") gives way to rising powers such as the European Union, Russia, China, India, Brazil, and from regional blocs in Asia and Latin America. So the locus of power will be multipolar, goes the argument.

Therefore, argue the Weevils, the only way to preserve order in a multipolar world is for the world's hyperpower (that's the United States) to do everything on the world stage by international committee and without a committee chair. That's an oversimplification or the bald truth, depending on how steeped you are in diplo-think. But it's in the ballpark.

I add that the Weevils are very serious. Some have gone so far as to brand the United States as evil for not re-embracing multilateralism, despite its failures. Multilateralist doctrine was practiced by the Bush 41 and Clinton governments. Yet it has been thoroughly discredited in the post 911 era.

How do the Weevils justify the failures? They argue that America was not practicing true multilateralism during the 1990s; we actually practiced hegemony. We just pretended to be multilateral; ergo, Americans brought 9/11 on themselves and inflicted all present-day evils on the world.

If you think I am making up any of this argument, you just wait until the next G8 summit and the runup to the US presidential election campaign.

Now how can you distinguish a weevil from a garden variety businessperson? Ask him whether he'd rather be stuck on a desert island with Osama bin Laden or President George W. Bush. If he tells you he'd rather kill himself than make that choice, ask him for his thoughts on multilateralism.

The idea underpinning the modern multilateralist doctrine, as promoted by the Chirac School, is that a country's global trade is the only objective criterion for admitting a government to decision-making on issues impacting the globe.

There is no greater enemy of the human rights movement, genuine democracy, and human progress than that idea. Yet the idea is pushed as the only way to avert wars over energy resources and water rights and save the world from onrushing chaos. There are many persuasive people pushing the idea and while relatively few are actual weevils, they are perfect dupes for the weevils.

As to what you can do to bring the weevils up short -- you can ask them whether they'd like to see their children indoctrinated by Osama bin Laden. The choice is not between Bush's Preemption Doctrine and world peace. The choice is between slavery and the freedoms that made globalized business possible.

You can also study the essay by the Belmont Club writer that inspired the Pundita blog, and which I re-read whenever I feel overwhelmed by the fight. More than any other analysis I've come across, Pro and Contra defines the real battlefield of foreign policy ideas in this century.