Fareed Zakaria's Blog

April 11, 2012

The shape of a deal with Iran

[image error]By Fareed Zakaria,

The Obama administration’s Iran strategy has worked so far. Unprecedented pressure has forced Tehran to the negotiating table. It will take extraordinary diplomatic skills to reach a settlement in the talks this weekend among Iran and the “P5+1” — the United States, Britain, Russia, China, France and Germany. But there is too much pessimism in the air. A robust deal is possible if, as with any successful negotiation, both sides can come away with something.

What would a deal look like? The United States has long demanded that Iran stop all enrichment of uranium, a process that allows it to produce the fuel necessary for an atomic bomb. Iran has insisted it has the right to enrich for a peaceful nuclear program. Now, it seems a smart compromise might be reached.Washington has signaled that it will ask Iran to stop enriching uranium to 20 percent, the level from which fuel can be easily converted for military purposes. Iran has indicated that it might be willing to accept such a limit and would enrich up to only 3.5 or 5 percent. Then Iran could claim that it has preserved its right to enrichment.

Iran would still have a stockpile of uranium enriched to 20 percent, produced over the past two years, perhaps enough to make a nuclear bomb. Tehran has rejected Washington’s demands that this uranium be shipped abroad for safekeeping, saying it is needed for the production of medical isotopes. But Iran almost accepted a deal on this point in 2009 and proposed one in 2010 in which it would have shipped out low-enriched uranium. Statements from officials on both sides suggest that they might embrace elements of those proposals, which involved shipping away some of Iran’s uranium stockpile in return for completed fuel plates that are used in the process of making medical isotopes.

There have been reports that Washington will demand that Iran shut down its Fordo nuclear plant, where high-level enrichment takes place in a facility buried in a mountain near Qom. (Israeli Prime Minister Benjamin Netanyahu publicly demanded this last week.) Iran has refused, saying it has the right to position nuclear facilities wherever it wants as long as its program is peaceful. Washington should soften its stance on this issue as long as Iran accepts intrusive inspections so it can be independently confirmed that the program is peaceful.

The crucial point on which Iran should make deep concessions is comprehensive inspections. The 2011 International Atomic Energy Agency report lays out a series of indicators that Iran is pursuing a weapons program. The P5+1 should use that as a checklist of activities that Iran would commit to refraining from and insist that Iran allow the IAEA unfettered access to its sites until the agency is satisfied that any such military program has been shut down. Iran would have to receive some reward for accepting such unprecedented inspections, and the obvious option would be the relaxation of sanctions, step by step, as inspections proceed unimpeded.

For any deal to stick, it has to be accepted by two groups. There are reasons to think Iran’s hard-liners, led by Supreme Leader Ayatollah Ali Khamenei, might be amenable. Khamenei has consolidated power: He has beaten back the Green movement; accommodated one key rival, Ali Akbar Hashemi Rafsanjani; and sidelined another, President Mahmoud Ahmadinejad. Khamenei has also given himself room to make concessions on the nuclear program.

Consider this categorical statement he made in February: “The Iranian nation has never pursued and will never pursue nuclear weapons . . .because the Islamic Republic, logically, religiously and theoretically, considers the possession of nuclear weapons a grave sin and believes the proliferation of such weapons is senseless, destructive and dangerous.” Khamenei might well have been laying the ground to explain concessions to his audience at home.

The Obama administration’s strategy is to tell Iran: All we are asking is that you demonstrate this in concrete actions. That’s a smart way to frame its demands. But if Iran does make concessions, the United States would have to accept them and relax some sanctions. And this is where the second important group, Republicans in Washington, could be an obstacle. If they demagogue any deal, or refuse to reciprocate on sanctions, there will be no deal.

The administration has handled its allies, Russia, China, the United Nations and even Tehran with skill. To succeed, however, it has to tackle its most formidable foe, with whom it has not had much negotiating success: Republicans.

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Published on April 11, 2012 04:03

April 6, 2012

A Region at War with Its History

[image error]Democracy struggles to survive in the Middle East for old and economic reasons

By Fareed Zakaria

One year after it captured the world's imagination, the Arab Spring is looking less appealing by the week. The promise of a new birth of freedom in the Middle East has been followed by a much messier reality, particularly in Egypt, where there have been attacks on Christians, Western aid workers and women. And now, as Egypt's presidential election approaches, we see the rise of two candidates from Islamic parties, Khairat al-Shater and Hazem Salah Abu Ismail. The former is often described as a moderate, the latter as a radical. Much of what we're seeing might well be the tumult that accompanies the end of decades of tyranny and the rise of long-suppressed forces, but it raises the question, Why does it seem that democracy has such a hard time taking root in the Arab world?

As it happens, a Harvard economics professor, Eric Chaney, recently presented a rigorous paper that helps unravel that knot. Chaney asks why there is a "democracy deficit" in the Arab world and systematically tests various   hypotheses against the data. He notes that such majority-Muslim nations as Turkey, Indonesia, Albania, Bangladesh and Malaysia have functioning democratic systems, so the mere presence of Islam or Islamic culture cannot be to blame. He looks at oil-rich states and finds that some with vast energy reserves lack democracy (Saudi Arabia), but so do some without (Syria). He asks whether Arab culture is the culprit, but this does not provide much clarity. Chaney points out that many countries in the Arab neighborhood seem to share in the democracy ­deficit—Chad, Iran, Azerbaijan, Tajikistan, ­Uzbekistan—yet they are not Arab.

Then Chaney constructs a persuasive hypothesis based in ancient ­history—and modern economics. He notes that the democracy deficit today ­exists in lands that were conquered by Arab armies after the death in A.D. 632 of the Prophet Muhammad. Lands that the Arabs controlled in the 12th century remain economically stunted today. This correlation is not simply a coincidence. Scholars from Montesquieu to Bernard Lewis suggest that there was something in the political development of the Arab imperial system that seemed to poison the ground against economic pluralism. Arab imperial control tended to mean centralized political authority, weak civil society, a dependent merchant class and a large role for the state in the economy. Chaney documents the latter, showing that the government's share of GDP is 7% higher on average in countries that were conquered by Arab armies than in those that were not. He also finds that countries in the first group have fewer trade unions and less access to credit, features of a vibrant civil society.

There are less medieval factors. It has long been apparent that the dictatorships of the Middle East form close alliances with religious leaders to crowd out other leaders and groups. Coupled with a historically weak civil society, this has created a one-sided political system in which religious parties enjoy powerful advantages in ideology, organization and, perhaps most of all, lack of competition. Indonesia had religious parties just as Egypt does, but it also had powerful groups that were less religious, more moderate and entirely secular. All these groups competed for influence on an even footing, ­something that is not happening in the Arab world.

The real problem in a country like Egypt is that the military continues to keep power concentrated, undivided and unchecked. It maintains the central role in the economy. Even when it has liberalized control of the economy, it has done so to benefit a handful of cronies and friends. The chief challenge in the Arab world remains to create a vibrant civil society, which means political parties and also a strong, self-sustaining private sector. The term civil society was coined during the Scottish Enlightenment to describe the activities of private businesses, an independent force that existed between the government and the family. The Middle East today has strong families and strong governments, but everything in between is underdeveloped.

If the dysfunctions in the Arab world have ancient roots—going back over a thousand years!—this does not mean that the region is impervious to change. Chaney does not point to immutable factors such as culture or religion as the causes of the problem. History—and the habits it engendered—are democracy's biggest foes in the Arab world. If political structures and institutional design and its legacies are to blame, then as these change, things should improve. It is a prescription for the very long term, but at least it is a prescription. 



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Published on April 06, 2012 05:37

March 30, 2012

Natural gas, fueling an economic revolution

[image error]By Fareed Zakaria

No one could have predicted that oil prices would rise to todays levels. Saudi Arabias oil minister, Ali al-Naimi, says that they are irrationally high, pointing out that world demand is lower than the available supply and that Saudi oil inventories around the world are largely untapped. The "irrational" cause, of course, is fear of a war with Iran. But it would also have been unpredictable that a 47 percent hike in oil prices since November 2010 would not cause a major slowdown in the U.S. economy. One reason it hasnt might well be the rise of shale gas.

By now, the basic facts are well known. It was only a few years ago that most experts were warning of an imminent shortage of natural gas in the United States. But thanks to the efforts of a small private company, Mitchell Energy, combined with a horizontal drilling procedure called hydraulic fracking, it has become possible to extract vast quantities of natural gas from shale, which this country has in abundance.

As with so many stories of American ingenuity, Mitchell Energy had a little help. In the 1970s, the federal government initiated the Eastern Gas Shales Project and funded dozens of hydro-fracking demonstration projects. The Energy Department pioneered a technique known as massive hydraulic fracturing, a key step along the way. It subsidized Mitchell Energys first successful horizontal drilling in the North Texas Barnett Shale region in 1991. Between 1978 and 1992, the federal government spent $137 million to develop these technologies.

Whoever gets the credit, the effects are widespread. The United States now has, at current consumption rates, at least 75 years' worth of recoverable natural gas. More important, the United States has become the worlds low-cost producer of natural gas. That fact is already changing the future of U.S. manufacturing. Companies such as Dow Chemical and Westlake Chemical are finding that low U.S. energy costs can mitigate the lower cost of labor in Asia -- making it economical to keep and even build manufacturing facilities in the United States.

That might also help explain why high oil prices are not slowing down the U.S. economy as much as has been feared. Robert Hefner, a natural gas entrepreneur and author of "The Grand Energy Transition," points out that the cost of heating 65 million American homes by natural gas has fallen $20 billion annually.

The environmental concerns are well taken. But the best studies out now -- such as one by a committee that included the head of the Environmental Defense Fund -- suggest that fracking can be done in a safe and responsible manner. Many of the riskiest practices are employed by a small number of the lowest-cost producers, a situation that calls for sensible regulation. Larger companies would probably welcome a set of rules, because they would want to follow best practices to protect their reputation and brand.

The age of natural gas will have geopolitical consequences. Until now, oil has been traded on a global market, but natural gas has been local. Because it is difficult to transport gas, countries with abundant resources and good pipelines get to set the price. Russia is able to demand up to $17 per thousand cubic feet from neighbors such as Ukraine and nations in Europe. The United States can produce natural gas for $2.50 per thousand cubic feet, and it has the world's best and cheapest liquefying technology. Liquefied natural gas will create a single global market, and when long-term Russian contracts with Europe expire, Moscow will face a dramatic shortfall in revenue. We will move from a world in which a few countries -- Russia, Iran, Qatar, Saudi Arabia -- control the price and supply of natural gas to one in which this energy source is far more dispersed. (For now, Iran has access to none of the technology needed to capitalize on its resources.)

Oil is famously found in difficult, dysfunctional places -- and oil may be the cause of those problems. The new finds of shale gas are not in traditional resource states. The largest deposits appear to be in China, with sizable ones also in Argentina, Mexico, Poland, Canada and Australia. The geopolitical ramifications of these deposits are many, but some things are clear: It will be a blessing for Poland to have its own secure energy source and not have to depend on the vagaries of the Kremlin.

The rise of shale gas is shaping up to be the biggest shift in energy in generations. And its consequences -- economic and political -- are profoundly beneficial to the United States.
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Published on March 30, 2012 07:08

March 25, 2012

Incarceration Nation

[image error]The war on drugs has succeeded only in putting millions of Americans in jail 

By Fareed Zakaria

Televangelist Pat Robertson ­recently made a gaffe. A gaffe, as journalist Michael Kinsley defined it, occurs when a political figure accidentally tells the truth. Robertson's truth is that America's drug war has failed and that the country should legalize marijuana. This view goes against the deepest political, moral and religious positions Robertson has held for decades, so imagine the blinding evidence that he has had to confront—and that has been mounting for years—on this topic.

Robertson drew attention to one of the great scandals of American life. "Mass incarceration on a scale almost unexampled in human history is a fundamental fact of our country today," writes the New Yorker's Adam Gopnik. "Over all, there are now more people under 'correctional supervision' in America—more than 6 million—than were in the Gulag Archipelago under Stalin at its height."

Is this hyperbole? Here are the facts. The U.S. has 760 prisoners per 100,000 citizens. That's not just many more than in most other developed countries but seven to 10 times as many. Japan has 63 per 100,000, Germany has 90, France has 96, South Korea has 97, and ­Britain—with a rate among the ­highest—has 153. Even developing countries that are well known for their crime problems have a third of U.S. numbers. Mexico has 208 prisoners per 100,000 citizens, and Brazil has 242. As Robertson pointed out on his TV show, The 700 Club, "We here in America make up 5% of the world's population but we make up 25% of the [world's] jailed prisoners."

There is a temptation to look at this staggering difference in numbers and chalk it up to one more aspect of American exceptionalism. America is different, so the view goes, and it has always had a Wild West culture and a tough legal system. But the facts don't support the conventional wisdom. This wide gap between the U.S. and the rest of the world is relatively recent. In 1980 the U.S.'s prison population was about 150 per 100,000 adults. It has more than quadrupled since then. So something has happened in the past 30 years to push millions of Americans into prison.
That something, of course, is the war on drugs. Drug convictions went from 15 inmates per 100,000 adults in 1980 to 148 in 1996, an almost tenfold increase. More than half of America's federal inmates today are in prison on drug convictions. In 2009 alone, 1.66 million Americans were arrested on drug charges, more than were arrested on assault or larceny charges. And 4 of 5 of those arrests were simply for possession.

Over the past four decades, the U.S. has spent more than $1 trillion fighting the war on drugs. The results? In 2011 a global commission on drug policy issued a report signed by George Shultz, Secretary of State under Ronald Reagan; the ­archconservative Peruvian writer-politician Mario Vargas Llosa; former Fed Chairman Paul Volcker; and former Presidents of Brazil and Mexico Fernando Henrique Cardoso and Ernesto Zedillo. It begins, "The global war on drugs has failed ... Vast expenditures on criminalization and repressive measures directed at producers, traffickers and consumers of illegal drugs have clearly failed to effectively curtail supply or consumption." Its main recommendation is to "encourage experimentation by governments with models of legal regulation of drugs to undermine the power of organized crime and safeguard the health and security of their citizens."

Bipartisan forces have created the trend that we see. Conservatives and liberals love to sound tough on crime, and both sides agreed in the 1990s to a wide range of new federal infractions, many of them carrying mandatory sentences for time in state or federal prison. And as always in American politics, there is the money trail. Many state prisons are now run by private companies that have powerful lobbyists in state capitals. These firms can create jobs in places where steady work is rare; in many states, they have also helped create a conveyor belt of cash for prisons from treasuries to outlying counties.
Partly as a result, the money that states spend on prisons has risen at six times the rate of spending on higher education in the past 20 years. In 2011, California spent $9.6 billion on prisons vs. $5.7 billion on the UC system and state colleges. Since 1980, California has built one college campus and 21 prisons. A college student costs the state $8,667 per year; a prisoner costs it $45,006 a year.

The results are gruesome at every ­level. We are creating a vast prisoner under­class in this country at huge expense, increasingly unable to function in normal society, all in the name of a war we have already lost. If Pat Robertson can admit he was wrong, surely it is not too much to ask the same of America's political leaders. 



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Published on March 25, 2012 14:14

March 19, 2012

Health Insurance Is for Everyone

[image error]By Fareed Zakaria

Two years ago, Barack Obama signed into law the most comprehensive reform of American health care since Medicare. Most of its provisions haven't been implemented yet. But the debate about it rages on at every level. Twenty-six states have filed legal challenges to it. And this month the Supreme Court will hear arguments about its constitutionality.

The centerpiece of the case against Obamacare is the requirement that everyone buy some kind of health insurance or face stiff penalties--the so-called individual mandate. It is a way of moving toward universal coverage without a government-run or single-payer system. It might surprise Americans to learn that another advanced industrial country, one with a totally private health care system, made precisely the same choice nearly 20 years ago: Switzerland. The lessons from Switzerland and other countries can't resolve the constitutional issues, but they suggest the inevitability of some version of Obamacare.
Switzerland is not your typical European welfare-state society. It is extremely business-friendly and has always gone its own way, shunning the euro and charting its own course on health care. The country ranks higher than the U.S. on the Heritage Foundation's Index of Economic Freedom.

Twenty years ago, Switzerland had a system very similar to America's--private insurers, private providers--with very similar problems. People didn't buy insurance but ended up in emergency rooms, insurers screened out people with pre-existing conditions, and costs were rising fast. The country came to the conclusion that to make health care work, everyone had to buy insurance. So the Swiss passed an individual mandate and reformed their system along lines very similar to Obamacare. The reform law passed by referendum, narrowly. The result two decades later: quality of care remains very high, everyone has access, and costs have moderated. Switzerland spends 11% of its GDP on health care, compared with 17% in the U.S. Its 8 million people have health care that is not tied to their employers, they can choose among many plans, and they can switch plans every year. Overall satisfaction with the system is high.

When Taiwan--another country with a strong free-market economy--decided to create a new health care system in the mid-1990s, it studied every existing model. It too chose a model of universal access and universal insurance but decided against having several private insurers, as Switzerland and the U.S. do. Instead it created a single insurer, basically a version of Medicare. The result: universal access and high-quality care at stunningly low costs. Taiwan spends only 7% of its GDP on health care.

The most striking aspect of America's medical system remains how much of an outlier it is in the advanced industrial world. No other nation spends more than 12% of its total economy on health care. We do worse than most other countries on almost every measure of health outcomes: healthy-life expectancy, infant mortality and--crucially--patient satisfaction. Put simply, we have the most expensive, least efficient system of any rich country on the planet. Costs remain high on every level. Recently, the International Federation of Health Plans released a report comparing the prices in various countries of 23 medical services, from a routine checkup to an MRI to a dose of Lipitor. The U.S. had the highest costs in 22 of the 23 cases. An MRI costs $1,080 here; it costs $281 in France.

In 1963, Nobel Prize--winning economist Kenneth Arrow wrote an academic paper explaining why markets don't work well in health care. He argued that unlike with most goods and services, people don't know when they will need health care. And when they do need it--say, in the case of heart failure--the cost is often prohibitive. That means you need some kind of insurance or government-run system.

Now, we could decide as a society that it is O.K. for people who suddenly need health care to get it only if they can pay for it. The market would work just as it works for BMWs: anyone who can afford one can buy one. That would mean that the vast majority of Americans wouldn't be able to pay for a triple bypass or a hip replacement when they needed it. But every rich country in the world--and many not-so-rich ones--has decided that its people should have access to basic health care. Given that value, a pure free-market model simply cannot work.

The Swiss and Taiwanese found that if you're going to have an insurance model, you need a general one in which everyone is covered. Otherwise, healthy people don't buy insurance and sick ones get gamed out of it. Catastrophic insurance--covering trauma and serious illnesses--isn't a solution, because it's chronically ill patients, just 5% of the total, who account for 50% of American health care costs. That's why the Heritage Foundation, a conservative think tank, came up with the idea of an individual mandate in the 1980s, proposing that people buy health insurance in exactly the same way that people are required to buy car insurance. That's why Mitt Romney chose this model as a market-friendly system for Massachusetts when he was governor. And that's why Newt Gingrich praised the Massachusetts model as the most important step forward in health care in years. They have all changed their minds, but that is about politics, not economics.

The Obama health care plan is not perfect by any measure. It maintains the connection between employment and health care, which is massively inefficient and a huge burden on American business. While companies often talk about the need to reduce regulations to be competitive globally--which is true and important--they rarely talk about their single biggest handicap against global competitors. American companies have to pay tens of billions of dollars to provide health care for their employees and former employees, while their German, Canadian, Japanese and British counterparts pay next to nothing in health care costs in comparison.

The Obama bill expands access to 30 million Americans. That's good economics and also the right thing to do. But it does little in the way of controlling costs. Medicare's costs have stopped rising as fast as in the past. But for broader costs to decline, there is no alternative to having some kind of board that decides what is covered by insurance and what is not--as exists in every other advanced country. This has been demagogued as creating "death panels" when it is really the only sensible way to make the system work.

When listening to the debate about American health care, I find that many of the most fervent critics of government involvement argue almost entirely from abstract theoretical propositions about free markets. One can and should reason from principles. But one must also reason from reality, from facts on the ground. And the fact is that about 20 foreign countries provide health care for their citizens in some way or other. All of them--including free-market havens like Switzerland and Taiwan--have found that they need to use an insurance or government-sponsored model. All of them provide universal health care at much, much lower costs than we do and with better results.

Maybe there's a theoretical pure free-market model out there that would work. But in the world we know and live in, the task is not to abolish our system for a utopia that has never actually existed anywhere but rather to accept the messy, mixed-up reality that we have and try to improve it to allow people to have access to decent health care at an affordable price--something every other rich country in the world already does.


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Published on March 19, 2012 10:02

March 15, 2012

Deterring Iran is the best option

[image error]By Fareed Zakaria

When I was in college, in the early 1980s, I invited Ronald Reagan's defense secretary, Caspar Weinberger, to give a speech on campus. At the time, U.S.colleges were hotbeds of opposition to the Reagan administration, especially to its defense policies. Sure enough, as Weinberger began to speak, a series of students stood up and began to heckle. One after another, they rose and chanted a single line, "Deterrence is a lie!"
 
I am reminded of that turbulent meeting as I listen to the debates over Iran's nuclear ambitions because it highlights a strange role reversal in today's foreign policy discourse. It used to be the left that refused to accept the idea of deterrence — searching instead for options such as a nuclear freeze. And it used to be those on the right who would patiently explain the practical virtues of deterrence.
 
"About once every 25 years, a new generation discovers the horrors of the bomb and the paradoxes of deterrence, and begins looking for a way out. But there are only so many times that one can present the apocalypse ... so many beguiling alternatives to pursue and discard. Inevitably, the debate grinds to a halt pretty much where it began: affirming, while deploring, the necessity of relying on the balance of terror to preserve the peace." That was Charles Krauthammer, writing in the New Republic in 1984. "Deterrence, like old age, is intolerable, until one considers the alternative," he explained.
 
Yet today it is the right that has decided that deterrence is a lie. Krauthammer, the Heritage Foundation, the American Enterprise Institute and others denounce containment and deterrence and would lead us instead to a policy that culminates in a preventive war. It is the right's version of the nuclear freeze — a simple solution that actually doesn't solve anything. Strikes onIran would probably delay its program a few years while driving up domestic support for the government in Tehran and providing it with a much stronger rationale for pursuing nuclear weapons. Yet sophisticated conservatives insist that this route is preferable to deterrence.
 
Deterrence is a difficult concept to accept because it is counterintuitive: The prospect of destruction produces peace. And yet its record is remarkable. Great powers went to war with brutal regularity for hundreds of years. Then came nuclear weapons, and there has not been a war between great powers since 1945 — the longest period of peace between great powers in history. The United States and the Soviet Union had a more intense and far-reaching rivalry than almost any two great powers ever. Each thought the other wanted to destroy its way of life. And yet, this rivalry did not result in war. Both sides were deterred.
 
In 1989, Margaret Thatcher said in a toast to Mikhail Gorbachev, "Both our countries know from bitter experience that conventional weapons do not deter war in Europe, whereas nuclear weapons have done so for over 40 years. As a deterrent there is no substitute for them."
 
If deterrence doesn't work, then why are we not preparing preventive war against Russia, which still has a fearsome arsenal of intercontinental ballistic missiles? Or against Pakistan, home to a military-intelligence regime that has been implicated in more major acts of terrorism in the past 10 years than Iranhas in the past hundred? The argument that Iran would be deterred does not rest on its reasonableness but on the regime's desire to survive. "Rulers want to have a country that they can continue to rule," says Kenneth Waltz, one of the most distinguished theorists of international relations.
 
To gain credibility with his conservative critics and with the current Israeli government, President Obama has gone along with them, ruled out containment, insisted that he does not bluff and spoken of a "window" of opportunity for negotiations. This might prove a serious error: It boxes in theUnited States, limits Obama's options and forces him on a path that could push him into an unnecessary, preventive war.
 
Anguish over the prospect of an Iranian nuclear weapon is understandable. It would be better for Israel, the Middle East and the world if Tehran does not acquire such weapons. The U.S. effort, in collaboration with almost the entire international community, to prevent this from happening and to put tremendous pressure on Tehran, is the right policy. But were Tehran to persist, were its regime to accept the global isolation and crippling costs that would come from its decision, a robust policy of containment and deterrence would work toward Iran as it did against Stalin's Soviet Union, Mao's China, Kim Jong Il's North Korea and the Pakistani military.
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Published on March 15, 2012 09:58

March 9, 2012

Another War in the Middle East?

[image error]Why Israel and the U.S. must not launch a preventive strike against Iran

By Fareed Zakaria

President Obama has been trying to cool down the war fever that suddenly gripped Washington early this month. But Israeli Prime Minister Benjamin Netanyahu's visit and the flurry of statements surrounding it have created a dangerous dynamic. It is easy to see how things move toward war. It is difficult to see how they don't.

The pressure is building on Iran, but there are no serious discussions of negotiated outcomes. Israel has been ever more explicit in saying it may launch an attack by summer. Obama has amped up his threats of military strikes too, limiting his room to maneuver. And Republican presidential candidates will instantly denounce any negotiated solution—no matter how comprehensive the inspections it requires—as a sellout.

So either Iran suddenly and completely surrenders—and when have countries done that under foreign pressure?—or Israel will strike. And the Israeli government knows that the window presented by the U.S. political season is closing. If it were to strike between now and November, it would be assured of unqualified support from Washington. After November, the American response becomes less predictable. The clock is ticking.

Before we set out on a path to another Middle East war, let's remember some facts. First, Iran does not have nuclear weapons. And the evidence is ambiguous as to whether it has decided to make them. The U.S. intelligence community has twice concluded that there is no evidence that Iran has made a decision to build a nuclear weapon. London's International Institute for Strategic Studies released a report in February that concurred. On the other hand, the International Atomic Energy Agency recently suggested that Iran could be working on some military aspects of a program.

What if Iran does manage to develop a couple of crude nukes in several years? Obama says a nuclear Iran would set off an arms race in the Middle East. But a nuclear North Korea has not led the two countries directly threatened by its weapons—South Korea and Japan—to go nuclear. Saudi Arabia and Egypt did not go nuclear in response to Israel's developing a large and robust arsenal of nuclear weapons. After all, Egypt has gone to war with Israel three times. By contrast, it has not been in a conflict with Iran. Were the U.S. to provide security guarantees to Iran's neighbors, as Hillary Clinton has proposed, it is highly unlikely that any of them would go nuclear.

Obama has explained that a nuclear Iran would be a problem like India and Pakistan with their nuclear weapons. But India and Pakistan went to war three times in 30 years before they had nuclear weapons. Since they went nuclear, they have been restrained and have not fought a war in 40 years. That case shows the stabilizing, not destabilizing, effects of deterrence. If Israel genuinely believes that deterrence doesn't work in the Middle East, why does it have a large nuclear arsenal if not to deter its enemies?

Iran's weapons could fall into the hands of terrorists, says the President. But would a country that has labored for decades to pursue a nuclear program and suffered huge sanctions and costs to do so then turn around and give the fruits of its efforts to a gang of militants? This kind of reasoning is part of the view that the Iranians are mad, messianic people bent on committing mass suicide. When General Martin Dempsey explained on my CNN program last month that he viewed Iran as a "rational actor," he drew howls of protest.

Dempsey was making a good point. A rational actor is not necessarily a reasonable actor or one who has the same goals or values that you or I do. A rational actor is someone who is concerned about his survival. Compared with radical revolutionary regimes like Mao's China—which spoke of sacrificing half of China's population in a nuclear war to promote global communism—the Iranian regime has been rational and calculating in its actions. In an essay in the Washington Monthly, former senior U.S. intelligence official Paul Pillar writes, "More than three decades of history demonstrate that the Islamic Republic's rulers, like most rulers elsewhere, are overwhelmingly concerned with preserving their regime and their power—in this life, not some future one."

In fact, the entire punitive strategy against Iran is premised on the notion that Iran is calculating the costs of these pressures and will change its policies as a result. The question right now is not whether Iran can be rational but whether the U.S. and Israel can carefully evaluate the consequences of a preventive war—inside Iran and beyond—and weigh them against its limited and temporary benefits

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Published on March 09, 2012 13:56

February 29, 2012

Fantasy and reality in Afghanistan

[image error]By Fareed Zakaria

The controversy over the desecration of copies of the Koran in Afghanistan and the murder of Americans that followed is, on one level, one moment in a long war. But it also highlights the difficult and ultimately unsustainable aspect of America's Afghan policy. President Obama wants to draw down troops, but his strategy remains to transition power and authority to an Afghan national army and police force as well as to the government in Kabul, which would run the country and its economy. This is a fantasy. We must recognize that and pursue a more realistic alternative.

The United States tends to enter wars in developing countries with a simple idea — modernize the country, and you will solve the national security problem. An articulation of that American approach came from none other than Newt Gingrich during a 2010 speech at the American Enterprise Institute. We are failing in Afghanistan, Gingrich argued, because "we have not flooded the country with highways, we haven't guaranteed that every Afghan has a cellphone, we haven't undertaken the logical steps towards fundamentally modernizing their society, we haven't developed a program to help farmers get off of growing drugs."

Now, assuming that every Afghan got a cellphone and could travel on great highways, here is what would not change: The Afghan national government does not have the support of a large segment of its population, the Pashtuns. The national army is regarded as an army of Tajiks, Uzbeks and Hazaras — the old Northern Alliance that battled the Pashtuns throughout the 1990s.

And, simply put, Afghanistan's economy cannot support a large national government with a huge army. (The budget for Afghan security forces is around $12 billion. That is eight times the amount of the government's annual revenue.)
As America has discovered in countless places over the past five decades, there are problems with the nation-building approach.

First, it is extremely difficult to modernize a country in a few years.

Second, even if this were possible, the fundamental characteristics of that society — ethnicity, religion, and national and geopolitical orientation — would persist.

In Iraq, the United States believed it had an opportunity to remake the country into a model pro-Western democracy. It went in with grand ambitions and an unlimited budget. Today, Iraq has become a Shiite-dominated state that has systematically excluded Sunnis, driven out almost all of its Christians, and tilted its foreign policy toward Iran and Syria. The Kurds have effectively seceded, creating their own one-party statelets in the north. Iraq is much, much better off than it was under Saddam Hussein's rule, but the country has developed along the lines of its history, ethnicity and geopolitics — not American ideological hopes.

We need to come to terms with Afghanistan's realities rather than attempting to impose our fantasies on it. That means recognizing that the Afghan government will not magically become effective and legitimate — no matter how many cellphones we buy or power lines we install. Because they represent many Pashtuns, the Taliban will inevitably hold some sway in southern and eastern Afghanistan. More crucially, we will not be able to stop Pakistan's government from maintaining sanctuaries for Taliban militants. And no guerrilla movement that has had a set of sanctuaries — let alone the active help of a powerful military like Pakistan's — has ever been eliminated.

Accepting reality in Afghanistan would not leave America without options. Even with a smaller troop presence, we can pursue robust counterterrorism operations. We will be able to prevent the Taliban from again taking over the country. The north and east — populated by Tajiks, Uzbeks and Hazaras — will stay staunchly opposed to the Taliban. We should support those groups and, more crucially, ally with the neighboring countries that support them. The natural, and historic, allies of the Northern Alliance are India, Iran and Russia; they have permanent interests that will keep them involved in the region. We should try to align our strategy with those countries' strategies (obviously, the alignment will be tacit with Iran).

The United States could, of course, maintain its current approach, which is to bet on the success of not one but two large nation-building projects. We have to create an effective national government in Kabul that is loved and respected by all Afghans, whatever their ethnicity, and expand the Afghan economy so that a large national army and police force are sustainable for the long term. To succeed, we would also have to alter Pakistan's character to create a civilian-dominated state that could shift the strategic orientation of the Islamabad government so that it shuts down the Taliban sanctuaries and starts fighting the very groups it has created and supported for at least three decades. Does anyone really think this will happen?
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Published on February 29, 2012 20:52

February 24, 2012

The Savior of Europe

[image error]Mario Draghi just bought his continent—and the rest of the world—some breathing room

By Fareed Zakaria

Europe has been rescued. No, I'm not talking about the deal over Greek debt that was much in the news recently. The real rescue of Europe is being managed quietly, away from the headlines, by a low-key Italian, Mario Draghi, the new head of the European Central Bank (ECB). Over the past two months, Draghi has put the ECB to work, and the results show the power of central banks and the importance of using it effectively.

Don't start cheering yet. I'm not suggesting that Europe has solved its problems. Despite the recent deal, Greece will not be able to pay back its loans and will face another restructuring, which is a fancy word for default. Portugal might face a similar fate. But now such defaults will not trigger a systemwide panic. There will be no Lehman Brothers–type financial collapse in Europe.

Why? There is a famous scene in the movie It's a Wonderful Life: after the Crash of 1929, people run to the bank to pull their money out, and the Bailey Building & Loan just doesn't have enough cash. Thanks to Draghi, Europe's banks will have access to plenty of cash.

On Dec. 21, the ECB offered to lend Europe's banks as much money as they wanted for three years at the astonishingly low interest rate of 1%. "In effect, he printed about $600 billion in a day and changed the game," Sebastian Mallaby, a scholar at the Council on Foreign Relations, says of Draghi. Then Draghi suggested that he might do it again, possibly at a larger scale. "To put this in perspective, Europe and the IMF labored for almost a year to put together a rescue fund of about $500 billion. Draghi may end up creating one three times the size in two months," says Mallaby. And he could do more. There is no theoretical limit to a central bank's balance sheet.

The market has noticed. European stocks had their best January in nearly 15 years. Bank shares are up 20%. The rates at which governments borrow money have fallen. Investor sentiment is more bullish than it has been in months. Draghi has not fixed Europe's longer-term problems of high debts and low competitiveness. But he has bought crucial time for Europe's leaders to make structural changes to their countries' economies and move toward growth. The ECB's activism is not a new model for what a central bank can do. Here in the U.S., the Federal Reserve did the same thing—four years ago. For its actions, the Fed is under withering criticism from many on the right and left. Newt Gingrich has called Ben Bernanke the most "dangerous" chairman in the Fed's history, Rick Perry practically accused him of treason, and even moderate Mitt Romney has criticized him and announced that he would not re appoint him when his term expires in 2014.

This is dangerous demagoguery. Bernanke is the single individual responsible for preventing the financial crash of 2008 from turning into something much worse. Discussions of the Fed's role can get veryesoteric, filled with concepts like fiat money and new monetarism. Let me try some common sense and a history lesson.

The fear that a central bank could cause inflation by printing money is justified—except these days. Inflation in rich countries is caused largely by rising wages. How can that happen at a time when unemployment is sky-high? New autoworkers in Michigan are making $14 an hour, less than half the union rate of a few years ago. Youth unemployment in Spain is about 50%. Under these circumstances, wages of Western workers are far more likely to fall than rise.
In an essay for the Financial Times, Mallaby provides a highly intelligent history lesson. After the Japanese tsunami, the Bank of Japan (the country's central bank) printed trillions of yen to stabilize the economy—and it worked. Mallaby contrasts that with the aftermath of the San Francisco earthquake of 1906, a much smaller natural disaster but one that took place in an America that did not have a central bank. Within a year, GDP collapsed, the stock market declined by 50%, and unemployment almost tripled, to 8%. This was not an anomaly. In the recessions of 1873 and 1893, the economy went into free fall while unemployment rose to more than 10% for years—five years in the case of the 1890s. (By comparison, U.S. unemployment hovered close to 10% for three months in the current crisis.)

Modern economies have benefited greatly from having lenders of last resort that act wisely in a crisis. We should discuss how they should use this power. It will take special skill to withdraw, carefully, the cash that all the world's central banks have put into the system in the past few years. But had they not done it in the first place, we would all be discussing a different problem—how to get out of a global Great Depression.
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Published on February 24, 2012 18:32

February 15, 2012

How history lessons could deter Iranian aggression

[image error]By Fareed Zakaria

We are hearing a new concept these days in discussions about Iran — the zone of immunity. The idea, often explained by Ehud Barak, Israel's defense minister, is that soon Iran will have enough nuclear capability that Israel would not be able to inflict a crippling blow to its program.

In fact, while the specifics are fresh, this is not a new strategic concept at all. Nations have often believed that they face a closing window to act, and almost always such thinking has led to disaster. The most famous example, of course, was Germany's decision to start what became World War I. The German General Staff believed that Russia — its archenemy — was rearming on a scale that would soon nullify Germany's superior military strength. The Germans believed that within two years — by 1916 — Russia would have a significant, and perhaps unbeatable, strategic ­advantage.

As a result, when turmoil began in the Balkans in June 1914, Germany decided to act while it had the advantage. To stop Russia from entering a "zone of immunity," Germany invaded France (Russia's main ally) and Belgium, which forced British entry into the war, thus setting in motion a two-front European war that lasted four years and resulted in more than 37 million casualties.

Now, I am not suggesting that an Israeli attack on Iran would have anything close to these consequences. But I am suggesting that it is profoundly shortsighted to base a major decision — to go to war — on narrow technical considerations like windows of vulnerability. Many in Washington in March 2003 insisted that we could not wait for nuclear inspectors to keep at their work in Iraq because we faced a closing window — the weather was going to get too hot by June and July to send in U.S. forces. As a result, we rushed into a badly planned military invasion and occupation in which soldiers had to endure combat in Iraq for nine long and very hot years.

Israeli officials explain that we Americans cannot understand their fears, that Iran is an existential threat to them. But in fact we can understand because we have gone through a very similar experience ourselves. After World War II, as the Soviet Union approached a nuclear capability, the United States was seized by a panic that lasted for years. Everything that Israel says about Iran now, we said about the Soviet Union. We saw it as a radical, revolutionary regime, opposed to every value we held dear, determined to overthrow the governments of the Western world in order to establish global communism. We saw Moscow as irrational, aggressive and utterly unconcerned with human life. After all, Joseph Stalin had just sacrificed a mind-boggling 26 million Soviet lives in his country's struggle against Nazi Germany.

Just as Israel is openly considering preemptive strikes against Iran, many in the West urged such strikes against Moscow in the late 1940s. The calls came not just from hawks but even from lifelong pacifists such as the public intellectual Bertrand Russell.

To get a sense of the mood of the times, consider this entry from the Nov. 29, 1948, diary of Harold Nicolson, one of the coolest and most sober British diplomats of his generation: "[I]t is probably true that Russia is preparing for the final battle for world mastery and that once she has enough bombs she will destroy Western Europe, occupy Asia, and have a final death struggle with America. If that happens and we are wiped out over here, the survivors in New Zealand may say that we were mad not to have prevented this. . . . There is a chance that the danger may pass and peace can be secured with peace. I admit it is a frail chance, not one in ninety."

In a speech at the Boston Navy Yard in August 1950, Navy Secretary Francis Matthews argued that, in being "an initiator of a war of aggression," the United States "would become the first aggressors for peace."

In the end, however, the global revolutionaries in Moscow, the mad autocrats in Pyongyang and the terrorist-supporting military in Pakistan have all been deterred by mutual fears of destruction. While the Iranian regime is often called crazy, it has done much less to merit the term than did a regime such as Mao's China. Over the past decade, there have been thousands of suicide bombings by Saudis, Egyptians, Lebanese, Palestinians and Pakistanis, but not been a single suicide attack by an Iranian. Is the Iranian regime — even if it got one crude device in a few years — likely to launch the first?

"Israel is finally confronting the sort of choices the United States and Great Britain confronted more than six decades ago," says Gideon Rose, the editor of Foreign Affairs. "Hopefully it, too, will come to recognize that absolute security is impossible to achieve in the nuclear age, and that if its enemies' nuclear programs cannot be delayed or disrupted, deterrence is less disastrous than preventive war."



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Published on February 15, 2012 17:08

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