Peter L. Berger's Blog, page 502

Russia’s Lukoil Wants to Work with OPEC

Leonid Fedun, the vice president of the Russian state-owned oil company Lukoil said he would welcome production coordination with the oil cartel OPEC this week, if the Kremlin were to approve such a strategy. Reuters reports:

“In my opinion, if such a political decision is taken, Russia should jointly work with OPEC to cut supply to the market… It’s better to sell one barrel of oil at $50 than two barrels at $30,” Fedun told TASS news agency in an interview.

The Telegraph‘s Ambrose Evans-Pritchard hinted that something like this might be in the cards earlier this month, but even as Lukoil and the state-owned oil pipeline company Transneft float the idea that Russia might cut production in the near future, Moscow’s own energy outlook has it keeping production at current levels, which are close to post-Soviet records. The WSJ reports:

The Russian Energy Ministry forecasts that national oil production will remain at current levels through 2035. The International Energy Agency, a Paris-based monitor of energy trends, expects Russian oil output to stop growing this year. By 2020, Russian oil production could fall to 10.5 million barrels a day, the IEA said, and sink to 9 million barrels a day by 2040.

Still, OPEC would love to see Russia cut production, and the cartel’s Secretary-General, Abdalla El-Badri, said just this week that the global glut of crude “should be viewed as something OPEC and non-OPEC tackle together,” adding that “it is crucial that all major producers sit down to come up with a solution to this.” Russia hasn’t cooperated with coordinated production cuts in the past, but at this point, every petrostate on the planet would welcome it were one of their rival producers to reign in production, as low prices stress national budgets and put pressure on regimes.

But Lukoil won’t be the one making those production decisions for Russia—Putin will. And it’s hard to see the Russian President managing to come to some sort of agreement with OPEC when the cartel’s own members can’t trust one another enough to make any cuts of their own.

Hoping to Please Japan, Russia Censures DPRK

Russia’s response to North Korea’s nuclear test has been unusually harsh, and Samuel Ramani at the Diplomat suspects it might have something to do with Japan and South Korea:

Russia’s hawkish response to North Korean belligerence appears to have at least temporarily halted the trajectory towards more favorable Russia-DPRK relations, cemented by joint military drills, Russian President Vladimir Putin’s first-ever visit to the DPRK, and the declaration of a year of friendship between the two countries. Russia’s transformed North Korea policy in light of the hydrogen bomb crisis can be explained by two main factors. First, Russia wants to thaw relations with Japan to dilute its increased economic dependence on China. Second, Russia believes a mediation role in the Korean peninsula would greatly bolster its international status.

Over the past year, we’ve seen Japanese Prime Minister Shinzo Abe look to strengthen relations with Moscow. He’s pushed to solve the longstanding Kuril islands dispute (which dates back to the end of World War II), and last week, he expressed hope that the G7 might one day bring Russia back into the fold.

A Japan–Russia collaboration may make a lot of sense for both parties. Russia needs as many buyers for its oil as possible, and although it has increased exports to China lately, it doesn’t want to be completely tied to Beijing. This is a particularly important concern for Moscow given the EU’s efforts to find replacements for Gazprom. For Abe, anyone who might be worried about China is a potential partner. And, as we wrote earlier today, Moscow has good reason to be concerned about China’s encroachment into Russia’s backyard in Central Asia.Although it is a major threat to Washington’s friends in Europe, that is, Moscow may turn out to be a good partner for America’s friends in the East.

“The Power” is Disbanded in Algeria

The Algerian security service, the DRS, has been one of the most vicious in the world—and as of this weekend, it is no more. The North African country’s aging, infirm strongman President Abdelaziz Bouteflika—or someone speaking from behind the throne—appears to have disbanded the body, known locally as “le pouvir” (the power), as part of an opaque struggle over his succession.

John Schindler and Benjamin Weinthal had a timely piece in the most recent Weekly Standard setting the scene and the stakes for this move:

Since independence, the shadowy and feared military intelligence service, the Department of Intelligence and Security, or DRS, has been the backbone of the corrupt system—what the Algerians call le pouvoir (the power) that runs the country. But the hold of the DRS may be slipping. In September, the hidden hand of the Algerian state ousted the head of the intelligence service, General Mohamed Mediène, popularly known as Toufik. Mediène had run the DRS since 1990 and was the world’s longest serving intelligence boss, but nobody had seen him in public in years, and few pictures of him existed. A widened purge of generals and senior officers largely coincided with Mediène’s removal, including the arrest in August of the head of counterterrorism, General Abdelkader Ait-Ouarabi.

The DRS was deeply nasty, and nobody will mourn its demise. (Its tricks, as Schindler has written elsewhere, included inflaming the country’s Islamist revolt in the ’90s with false-flag massacres of civilians.) On the other hand, the DRS has had a lot to do with keeping the country together and (relatively) free from the tumult of the Arab Spring. Moreover, there’s no promise its successor will be nicer. What this points to above all is growing instability in one of the most important states in Northern Africa. Algeria’s deep ties to France, where many Algerians live, and its position between Libya, Tunisia, Morocco, and Mali, among other states, makes it a regional keystone: If it goes, much else may too.

Nor is internal palace drama all that the Algerians have to worry about. Algeria’s oil-based economy is in deep trouble, and there’s an emerging Berber nationalist movement in its Kabylie region that hasn’t gotten nearly enough attention. All of which makes Algeria just another place the West needs to worry about, as so many parts of the world grow messier and messier.

Resistance Mounts to Prison Reform

Momentum for prison reform, driven by a bipartisan coalition of civil rights oriented Democrats and small government Republicans, has been building for years. The issue of over-incarceration is in the public consciousness like never before, state prison populations are falling, and the Senate Judiciary Committee passed a bill overhauling federal sentencing with support from heavyweights on both sides of the aisle. But we are now seeing some signs that the “prison reform moment” may be on hold—or at least, that the dissenters will be more vocal than they were last year or the year before. Politico reports:

GOP tensions over a bill that would effectively loosen some mandatory minimum sentences spilled over during a party lunch last week, when Cotton (R-Ark.), the outspoken Senate freshman, lobbied his colleagues heavily against the legislation, according to people familiar with the closed-door conversation. The measure passed the Senate Judiciary Committee last fall with bipartisan support.

Cotton isn’t alone. Other Senate Republicans, including Sens. Jim Risch of Idaho and David Perdue of Georgia, also registered their strong opposition during the lunch, even as Sen. Mike Lee (R-Utah) vigorously defended the bill, which he helped negotiate. Risch stressed this message, according to one Republican source: Shouldn’t the GOP be a party of law and order?

The failure of the sentencing reform bill to sail through the Senate is partly a story about election year politics—as Michelle Cottle explained in the Atlantic, one reason the bill has yet to come to the floor is that New Hampshire Senator Kelly Ayotte is facing a tight re-election race in New Hampshire, a state with an acute opioid epidemic magnified in the media by its early presidential primary. But it also points to deeper trends: In particular, the rise of the Jacksonian wing of the Republican Party, and the retreat of the Jeffersonians. For a few years during the Obama presidency, it appeared that Jeffersonians like Rand Paul, who supported reining in the NSA, softening the criminal justice system, and scaling back the war on terror, represented the future of the GOP. But the Jeffersonian moment is over, and the nationalist Jacksonians have come roaring back. Crime, terror, immigration, and general law-and-order toughness is Andrew Jackson’s bread-and-butter. It’s no surprise that the Jacksonian revival would frustrate criminal justice reform efforts, at least temporarily.

At Via Meadia, we continue to believe that our nation incarcerates too many people, and that there are smart and cautious ways to move reduce the prison population, save money, and give people well-deserved second-chances without upsetting the relative peace that we have achieved since the crime wave began to decline in the 1990s. The bill being considered in the Senate seems like a good—if mostly symbolic—step in that direction. That said, there is a real risk of criminal justice reformers overreaching, and its healthy for them to face some intelligent opposition.

China Plays In Russia’s Backyard

With Kazakhstan expecting its first recession since 1998, the president has called for early parliamentary elections in the hopes that he can reaffirm the government’s mandate before things deteriorate too much. Kazakhstan is important to keep an eye on because, behind the domestic headlines, the country is fast becoming a battleground for a fight between Russia and China over who will have greater influence in Central Asia. Over the past decade, Kazakhstan has been exporting more and more oil to China, and the countries have also been cooperating rather closely on defense. As The Diplomat explains, China’s growing influence in Kazakhstan poses a threat to Russia:

Kazakhstan’s gradual pivot towards China is also linked to its broader desire to dilute Russia’s monopoly over the provision of its security. Northern Kazakhstan possesses a concentration of ethnic Russians and the 2014 Russian annexation of Crimea, which was partially justified by the need to protect Russian civilians, increased alarm among Kazakh policymakers about the possibility of a Russian military foray into this region.

Kazakhstan’s prominence as an oil supplier for China due to pipeline constructions that commenced in the mid-2000s has increased its profile as a competitor to Russia, which signed a $400 billion energy deal with China to counter Western sanctions. To redress Kazakhstan’s concerns that deepened economic integration with Russia resulting from EEU membership will compromise its sovereignty, Kazakhstan has welcomed China’s military assistance so it can be prepared in the event of a Russian intervention on its soil.

Not only is Kazakhstan looking to diversify its security relationships by reaching out to China, but the country is actually now in direct competition with Russia for oil contracts with Beijing. (Russia passed Saudi Arabia as the top supplier of crude to China last year). Russian President Vladimir Putin wants to keep the old Soviet states close—particularly those with large Russian populations.

As China pursues its One Belt One Road strategy and tries to create land ties that can help it circumvent the U.S.-dominated seas, Beijing will continue to try and strengthen relationships in Central Asia. Weak but resource-rich states like Kazakhstan are the perfect target: they need cash and security, and China needs resources. Moscow doesn’t really have the capabilities to push back.What’s happening in Kazakhstan is a leading indicator of Russia’s rather dim future: its ambition to play the role of a major power is far bigger than its ability to actually do so. Russia manages to cause trouble by preying on weak states—Syria, Ukraine, Georgia—but it ultimately cannot compete with the great powers. That doesn’t mean Putin will necessarily let Beijing pick off Soviet bloc states without a fight. In the coming years, we may see Central Asia get rather messy.

The Eight Great Powers of 2016: Iran Joins the Club

Overall, 2015 was a year in which most of the great powers saw their ability to control events beyond and sometimes within their boundaries decline. With the exception of Iran, which gained strength during the year thanks to its diplomatic successes and the consequences of Russian intervention in Syria, 2015 was a year in which policy missteps and rates of relative decline had more of an effect on the power rankings than actual achievements and successes. These movements were encouraged and underscored by the collapse of the commodities boom, which has exploded the narrative that U.S. hegemony will imminently be undone by the inexorably rising BRICS without providing clear guidance about what might come next. 

The country that fell the most in the power rankings was Germany; its failure to manage the deepening crises in the European Union did not just mean that the EU had another bad year. German leadership is also being called into question in a new way, and while no country is able to compete against Germany for the leading role in the EU, the danger is that German leadership will continue to falter in 2016 and that the EU will increasingly lack the ability to respond to its growing problems.The most dramatic development in 2015 was that Iran catapulted into the ranks of the great powers, expanding their number to eight. Iran and Saudi Arabia are now engaged in a zero sum, no holds barred struggle to control the Middle East and its massive oil reserves. Falling oil prices create problems for both powers, but the combination of religious hatred and geopolitical competition ensures that both countries will give this competition everything they’ve got. In the end, either one of the two will emerge as the clear winner with a secure place on the list of great powers, or a third country (Turkey? Russia? The United States?) will capitalize on their rivalry and exhaustion to impose an order on the Gulf.2015 was the year of grudge matches. Aside from India and the United States, the remaining great powers are struggling with each other. Russia tussles with Germany. The Saudis struggle with Iran. Japan confronts China. (India, of course, continues to face off against the second-tier power of Pakistan). In the coming year, these grudge matches, the effects of the commodities bust, and the China slowdown could be the big global stories to watch.Global Power Rankings for 20161. USAThe United States remains at the top of the power ranking as much because other powers are struggling as because of any real gains or successes on its part. 2015 brought plenty of foreign policy missteps, and on the domestic side, the continuing failure American policymakers to find workable solutions to the country’s troubling social and economic problems casts a shadow over the future. Yet the American economy remains dynamic and reliable, churning out new innovations faster than anywhere else and drawing investment from individuals, governments, and businesses around the world. The collapse in oil prices imperils American fracking companies, but the industry has kept fighting and the U.S. is poised to be a major energy exporter when prices eventually rise.The biggest drag on American power these days is probably the growing perception in the international community that Americans have lost the ability to find and select good presidents. Both Bush and Obama are widely seen as ineffective, and the state of the current presidential race is not inspiring much confidence. World leaders probably would prefer Clinton first, Jeb second—both at least are known quantities. Candidates like Trump, Sanders, and Cruz give foreigners the heebie jeebies; nobody quite understands where they are coming from, what they would do, or why Americans think they have the skills to lead the country. As foreigners begin to pay attention to Trump in particular, their worries are likely to grow, along with their belief that erratic leadership and a dysfunctional political system will cause the United States to underperform in international politics.In Asia, the United States continued to strengthen its alliances with Japan and India, and President Obama led Pacific countries to a landmark free trade agreement. But the U.S. struggled to respond to China’s aggression in the South China Sea, and has yet to come up with a comprehensive strategy to protect critical digital assets from Chinese hackers. Still, America’s Asia policy was relatively stable and productive compared to its’ Middle East policy, where U.S. power encountered substantial challenges from Russia. The conclusion of the nuclear deal with Iran has strained Washington’s relationships with the Sunni world and with Israel. Saudi Arabia has taken matters into its own hands, further exacerbating regional tensions. None of this bodes well for the American world order and the core strategy of suppressing competition between other great powers that has long been at its heart. The United States faces other challenges too: the American-supported order in Europe is increasingly fragile, and the United States seems to have allowed itself to become irrelevant to the complex and difficult process of supporting the EU. Although the EU is hardly perfect from the American standpoint, Washington still wants and needs it to succeed. It is likely that the next administration will have to spend more time and energy dealing with Berlin, Brussels, London, Paris, Warsaw, and Rome.And in America’s own backyard, trouble is stirring. Brazil is in economic and political turmoil, Argentina is struggling to regain its footing under a divided government, and the imploding socialist government in Venezuela is on the verge of possibly violent civil conflict or state failure. In the recent past, the United States has not had to worry much about the stability of regimes in Latin America. That may change this year.But as much as those hotspots pose challenges to the American order, they also underscore America’s place atop it. The commodities glut has not hurt the United States as much as it has hurt virtually everywhere else. Even with weak leaders, the American constitutional system remains stable and the economy is the envy of the other advanced countries. Compared to a very chaotic world, America’s prospects look reasonably good.2. ChinaThanks to Germany’s problems with crisis-torn Europe, China moved up in the power rankings last year even as the country lost its aura of economic invulnerability. 2015 was not a great year for China. Domestic growth was down, and China’s political influence took a hit. Governments and businesses in Africa, Asia, and Latin America are the paying the price of their heavy bet on continued rapid Chinese economic expansion. Furthermore, the world community no longer is sure that President Xi Jinping’s government can properly calibrate the transition from heavy industry to services and consumption. Global observers are beginning to speculate on how the world might look if China’s slowdown turns into a prolonged, Japan-style stagnation.Even as its economy slowed, China pursued its long term regional goals. It aggressively built out its artificial island outposts in the South China Sea and made a point of highlighting its growing naval capabilities. Additionally, China continued to strengthen trade alliances in Central Asia and the Middle East, as part of its “One Belt, One Road” strategy. The consequences haven’t always been what Beijing hoped; indeed, 2015 saw some significant setbacks for Beijing’s regional diplomacy. The victory of the historically pro-independence DPP in Taiwan’s elections early this year testified to the failure of the mainland’s effort to prop up the KMT. Japan and South Korea reached an agreement on the contentious and long-simmering “comfort women” dispute. Tokyo and Seoul only hug when they must, and it’s never good news for China when they do. As usual, North Korea was a problematic ally. DPRK provocations undermined Beijing’s attempts to pull South Korea away from Japan. The picture of a menacing, out-of-control North Korea, backed by a China that is either too weak to hold it in check or is using the DPRK for its own dark purposes, powerfully reinforces the messages of leaders like Japan’s Shinzo Abe and South Korea’s Park Geun-Hye. There were a few bright spots. The One Belt One Road strategy is paying dividends as China’s influence expands at Russia’s expense in Central Asia. The end of Iran sanctions opens the way for China to develop new economic and political links with a rising Middle East country even as the commodity crash reduces the cost of the raw materials China’s creaking industrial machine continues to require.Despite the much ballyhooed ‘pivot to Asia’, President Obama’s response to China’s island building spree has been low key. Given that, Xi doesn’t seem to feel any need to rein in the navy. On the contrary: Xi has sent clear signals that, despite and perhaps to compensate for the slowing economy, he intends on continuing to militarize islands and improve Chinese naval capacity wherever possible. 3. JapanDespite its lackluster economy, Japan had a good 2015 from a geopolitical point of view. Prime Minister Abe pushed through a remilitarization bill, and has worked hard to rally other countries in the region around his policy of opposition to China. The win by the pro-independence (and pro-Japan) DPP in Taiwan boosts Japan, and so does reconciliation with South Korea. Meanwhile, the Nork nuke tests strengthen hawks internally in Japan, making Abe’s job easier. As with North Korea, China’s aggression only helps Japan—for now. Every time Xi does something that worries Vietnam, South Korea, India, Malaysia, Indonesia or any other regional power, Abe gains.Economically, Japan’s long term prospects remain strong if uninspiring, and it has weathered the storm of China’s opposition reasonably well. Lots of advanced tech knowledge puts Japan in a strong position for the next century, as does a well-educated workforce. Japan faces its own blue model-like problems: inefficient bureaucracies, large, lumbering corporations and government agencies, and a system premised on manufacturing supremacy. Yet Japan may well maintain some of that manufacturing capacity, given that the industry’s future will involve sophisticated robotics, a Japanese specialty. Still, Japan needs to figure out how to return to sustained growth and it has to manage an aging population and low fertility rates—the same unique culture that gives Japan certain advantages also has some rather counterproductive elements.Japan continues to build relationships with other regional heavyweights. A Japan–India partnership continued to deepen with Tokyo offering assistance on both military and domestic infrastructure projects to Delhi. As in 2014, Japan leveraged its relationships with India and others to stare down Beijing—no small feat, and one that bodes well for its future. The world continues to underestimate Japan, but 2015 may have seen a turning point: whatever is happening to the demographics and to GDP, for now Japan is a rising power in Asia, and the most powerful prime minister the country has had in many years continues to steer a strong course. 4. Germany2015 wasn’t a good year for Germany. Yes, Merkel managed to hold the EU together and stave off a Grexit. But her “moral vision” on refugees turned out to be short-sighted and impracticable. And now she faces a real possibility of a Brexit, and the Schengen Agreement may not last out the year.It is getting harder to hold Europe together, and Germany may not always have the will or the resources for the task. Italy is openly opposed to the German roadmap for Europe; Poland has turned Eurosceptic; the British are preparing for a vote on their exit. Geopolitically, Germany is locked in a fight with Russia over the future of Europe. Germany wants a law-bound, bureaucratic and steady Europe that moves towards an ever-closer union in a close transatlantic alliance. Russia wants something more like the classic European state system of great power competition, and would like to reinsert itself into the heart of European politics.In one sense, the contest is over whose vision melts the fastest. Will immigration, nationalism, bitterness over the euro debacle and continuing corruption in much of the union erode Germany’s ability to push the union down the old, familiar path? Or will Russia’s economic weakness spawn the kind of domestic dissent that forces Putin to focus his resources inward or forces him from power altogether? Both scenarios are plausible, but timing remains obscure.The gloom should not be overdone. Europe will continue to be a major power for the foreseeable future, and no country is able to replace Germany as Europe’s leader. But the international environment is getting more difficult, and Germany will struggle to chart a workable course.5. RussiaRussia’s economy is about the size of Italy’s, far less diversified, and collapsing under the weight of falling oil prices. Yet thanks to Putin’s bombastic machinations, Moscow wields outsize influence in global affairs. By filling the vacuum in Syria and keeping his thumb on Ukraine, Putin ensures Russia’s seat at the table of great powers.Russia has other important advantages, of course: most of the countries which border it are powerless and pose Moscow no threat, Putin’s government has a virtual monopoly on power at home, and, of course, a large nuclear arsenal makes Russia one of the small group of powers capable of destroying the world. In 2015, analysts were surprised by Russia’s military conventional prowess. The weapons the Kremlin put on display in Syria demonstrated that Russia’s military is no slouch—hardly the Soviet-era dinosaur many expected. This should not be overestimated; the Russian military suffers most of the problems that afflict the country’s institutions. Nevertheless, in Syria Moscow has demonstrated an ability to project power that has not been seen since the Cold War.A great deal of Russia’s present strength comes from the way Putin has exploited the power vacuum in the Middle East and in Eastern Europe. In a time of cautious Western leaders, Putin is daring and a risk taker. In the long-run, his strategy may well backfire. Russia’s economy can’t withstand low oil prices indefinitely, and economic pain will cause more unrest in the country. China’s New Silk Road strategy would essentially displace Russia as the predominant power in much of Central Asia; it is not clear that Russia has an effective strategy for resisting China’s westward drive. Similarly, Russia faces a grave threat from Sunni jihadis. In Chechnya, Ingushetia and Dagestan in the turbulent Caucasus, simmering discontent with Russian rule is promoting the radicalization of youth. Russia’s intervention in Syria and its cooperation with Shia Iran have also attracted the ire of militant Sunnis. It’s easy for westerners to list Russia’s problems and conclude that we don’t need a real Russia policy; we just need to kick back in our recliners as we watch the inexorable laws of history crush the Putin regime. But if 2015 taught one lesson about Russia, it’s that the West shouldn’t underestimate Putin’s ability and willingness to create a lot of chaos. Regime survival is a better guide to understanding Putin’s foreign policy than Russian nationalist fervor; if Putin thinks an aggressive and dramatic foreign policy props him up at home, he will look for more opportunities like the seizure of the Crimea and the intervention in Syria.6. IndiaIndia has been the ‘country of the future’ almost as long as Brazil has. Between the country’s democratic government, the high quality of India’s cyber capabilities, the dynamic performance of some of its leading corporations, and the presence of the second-largest English-speaking population in the world, there are lots of reasons to be optimistic about India’s long-term prospects. With China’s economy slowing down, Prime Minister Modi has made no secret of his hopes that India can fill the void and attract investment which is being pulled not only from China, but also from the emerging markets built to feed it. The commodities bust is good for India in other ways: India uses a lot of energy, and imports a lot of raw materials. From 10,000 feet, it all looks good. The problem is that little else has changed in India to make it more hospitable for foreign investors. Modi’s most ambitious economic reforms remain stalled in India’s Parliament. Corruption remains high, taxes and regulations confusing and often restrictive, and legal barriers to foreign investment are still firmly in place.As usual, much of India’s geopolitical energy is spent on Pakistan and threats from Islamist militants in the northern states who most Indians believe are funded by Pakistan. After Modi visited Pakistan in the final days of 2015, four gunmen attacked an Indian airbase on the first day of 2016, erasing any hopes that the relationship between these two longtime enemies would improve. In the longer term, there is a question as to whether India’s Muslims will remain largely free of the jihadi madness and whether the militance of Hindu nationalists will call forth a radical response from India’s 150 million Muslims.Despite its internal problems and the question of Pakistan, India played a bigger role in Asia’s Game of Thrones and on the global stage in 2015 and looks likely to continue to do so this year. Last year saw a raft of agreements for infrastructural and military cooperation with Tokyo and already this year, India announced plans to help Vietnam with a satellite operation. New Delhi also solicited bids from a number of European arms manufacturers in 2015; it’s hoping to make some big military upgrades. Meanwhile, India has been drawing attention from Russia and will benefit from the opening of Iran—in addition to India’s need for oil, there’s a long history of Persia–India trade relations. So even if India does not fill in for China economically in 2016, it is set to play a more decisive role in geopolitics than it has since the collapse of the Mughal empire.7. Saudi Arabia/IranThe biggest change in the list of great powers this year is the arrival of a newcomer: Iran, the most powerful Shia country in the world. With its allies in Iraq, Syria, and Lebanon, Iran had a claim to the title of preeminent power in the Middle East even before the developments of 2015. But as long as Tehran remained isolated by sanctions, its reach and capabilities were limited. The nuclear deal orchestrated by Washington allowed Iran more geopolitical reach: the unfrozen funds alone amount to 20–25% of Iran’s 2014 GDP according to some estimates, and lifting the international sanctions regime will boost the economy even more.Western inaction in Syria has also been a major boon for Tehran—keeping Iran’s client Assad in power and leaving the road through Damascus to Beirut clear so that Tehran can supply its friends in Hezbollah. Throw in Iran’s growing influence in Iraq, and it’s clear that the balance of sectarian power has been shifting in favor of Shias lately.Saudi Arabia, which had an economy about 40% larger than Iran’s before sanctions were lifted, has been furiously pumping oil in an effort to keep prices low and Iran’s economy depressed. The Saudis are putting everything they have into the competition, but the Iranians are circling the wagons and empowering their own hardliners—many of whom are bitter about the Iran Deal.The Saudis are arming rebels in Syria while Iran arms rebels in Saudi-allied Yemen. Sectarian lines are hardening elsewhere too, pulling Sudan over to the Sunni side and leading the Turks and Qataris to make friendly noises toward Saudi Arabia—their old rival. The empowerment of Iran has created some strange bedfellows, with Israel now leaning toward the Sunni camp. How this will all shake out is anyone’s guess, but it certainly won’t involve Sunnis and Shias making up and agreeing to put their differences aside anytime soon.The competition between Saudi Arabia and Iran is also likely to keep oil prices low. The Saudis can’t afford depressed prices forever, but they have the resources to keep pumping for some time and have demonstrated that they’re willing to make deep sacrifices if doing so will hurt Iran. Yet the more cash Riyadh burns through propping up Iran, the more unstable Saudi Arabia’s political situation could become. The Saudis have historically been ultra-cautious in the world of foreign policy, and the shift to a more active stance is testing their institutional capabilities and political will. If Iranian hardliners push Riyadh to take further risks that would in turn destabilize the region even more.Saudi Arabia and Iran may not be the greatest of the Great Powers, but the grudge match between them, with its consequences for oil prices and stability in the Middle East, looks set to generate more headlines (and headaches) than any other geopolitical story in 2016. Ultimately, the number of great powers will fall back to seven; the Middle East can only support one significant global player. Both Iran and Saudi Arabia right now seem absolutely determined to prevail, and compromise between them seems unlikely. The prize is considerable; should either side achieve a decisive victory and become dominant across the Middle East, the victorious country would be a formidable global force.

Europe Commits to U.S. Shale Gas

America is now exporting our glut of shale gas, and despite some shaky market conditions we’re finding European buyers keen on importing these new LNG supplies. The WSJ reports:

On a gross basis, [European imports of American LNG] don’t make much sense. One key European gas price, known as NBP, was Monday trading at about $4.25 per million British thermal units. Buyers of LNG must generally pay about 115% of the U.S. natural gas price, about $2.10 per million BTU. Then there is $2.5-$3.0 in tolling costs to the LNG plant and perhaps $2 in shipping, fuel and regasification costs. That implies a total cost toward $7, a clear loss.

But, argues one gas executive, U.S. shipments will still come. Buyers have committed to pay liquefaction facilities their tolling charge, making that a sunk cost. Shipping and regasification is generally booked and paid for in advance. The only real variable costs are U.S. gas prices and fuel costs, about $3 per million BTU.

The past 18 months or so have proven how difficult it is to predict the future of oil or natural gas markets. Crude was trading well above $100 per barrel in June of 2014, and today it struggles to stay above $31. Natural gas is different, in that it’s a less liquid commodity (no pun intended) and its contracts have historically been linked with oil prices. But as more and more LNG supplies come online around the world, buyers will have more supply options than they had in the past, when overland pipeline routes were there only option. As a result, natural gas will be increasingly sold based on spot prices, rather than oil price linkages, and likely won’t come with the decade long contracts that were once the norm.

Europe is an excellent example of this, as it looks to move away from long-term take-or-pay contracts with Russia’s Gazprom. European gas prices are cheap today, so much so that the price imperative for liquifying, shipping, and regassifying U.S. shale gas is looking like less of an attractive proposition than it once was. But many European buyers have already committed to paying that premium for a steady energy supply that doesn’t come with the kinds of strings Russia likes to attach.And even if Europe doesn’t start guzzling U.S. LNG overnight, Moscow now knows that its leverage over Europe has been significantly weakened: if it chooses to cut off supplies (as it’s done to Ukraine twice in recent years) or jack up prices, well, the continent has another option just across the Atlantic.

Noose Tightens in Nigeria

Facing a brutal insurgency from Boko Haram, rampant corruption and an oil price crash that has devastated the country’s main export, Nigeria’s economy is up against its most serious crisis in a generation. There is not much that can be done, given the entrenched and interlocking nature of Nigeria’s problems, but both Nigerian and foreign investors don’t have a lot of confidence in the policy mix the government is trying. The currency, the naira, is in free fall; that matters to Nigerians because the country has huge import needs—including the need in this oil rich country to import refined fuel. As the Financial Times reports:

Tight currency controls introduced by the central bank last year to conserve foreign reserves have left everyone scrambling for dollars, driving the naira’s value down still further.

“Dollars are not circulating and the naira is worthless,” said Abdu, a black-market money trader, manning his post near a tourist hotel in Lagos and holding a large plastic sack of 500 and 1,000 naira notes. “What I used to buy for 10 naira costs me 200. I want the dollar to go down but it keeps climbing.”

Businesses that cannot source dollars for imports because of restrictions put in place last year are laying off workers. So are banks.[..]

The chief concern among the local business community and foreign investors is the president’s endorsement of central bank governor Godwin Emefiele’s widely criticised currency and foreign exchange management policies.These are aligned with the president’s broader aims for the economy, namely cutting imports and tightly controlling official forex flows. The official band, adopted almost a year ago, remains at 197 to 199 per dollar.But the de facto dual currency system suggests that devaluation is inevitable, according to economists and investors.

As we have written before, Nigeria is in many ways a condominium of tribes, religions, and cultural groups, many large enough to be their own countries elsewhere in the world, that has historically been kept together first by outside rule and then by oil wealth. As the economy falters, friction between the Muslim North and Christian South (not to mention Biafra) increases; conversely, as the economy falters, there is less funding for the central government to keep the country together—for instance, by repressing the Boko Haram insurgency in the north. Under these circumstances, an economic policy that exacerbates the problem is bad news.

Reagan as History

 

Reagan: The Life

H.W. BrandsDoubleday, 2015, 816 pp., $35

Ronald Reagan’s role as one of the luminaries of the 20th century was secured by his success in putting policies in place that shaped the new millennium. Born on February 6, 1911, he died at the age of 93 on June 5, 2004. Between those historical bookends, Ronald Reagan would become a radio announcer, actor, president of the Screen Actors Guild, Governor of the most populous state in the Union, fortieth President of the United States, and, finally, a champion by example for bringing national attention to Alzheimer’s disease. After switching political parties in 1962, Reagan became the most effective spokesperson for political conservatism in 20th-century America. Since his passing, most Republican seekers of the Oval Office pay homage to Reagan by claiming to be his—and only his—heir.

Who was Ronald Reagan, and how did he accomplish so much? In Reagan: The Life, H.W. Brands takes on this assignment by chronicling the varied aspects of the life of a man often described as an enigma. William E. Pemberton begins Exit with Honor: The Life and Presidency of Ronald Reagan by quoting John Updike’s Rabbit at Rest: “Reagan . . . had that distant dream; the powerful thing about him as President was that you never knew how much he knew, nothing or everything, he was like God that way, you had to do a lot of it yourself.”Deciphering the enigmatic Ronald Reagan is difficult because of the prodigious written record surrounding him. Presidents such as Thomas Jefferson and Abraham Lincoln, Theodore Roosevelt and John Kennedy, Jimmy Carter and George H.W. Bush kept diaries, were prolific letter writers, and authored many speeches and other writings. Along with other scholars, my co-authors and I have established that Reagan, too, was a prolific author of letters, speeches, radio commentaries, and a wide variety of political tracts. 1 What distinguishes him from his predecessors and successors, however, is that his personal writings are joined by the voluminous paper trail he produced in real time and at a rapid rate during his 16 years of state and Federal government service. Combining these personal and official documents, including records created during his six political campaigns, yields many millions of pages that reveal the man and his policies. Moreover, the U.S. system of declassifying documents (a characteristic of a mature democracy) and growing social pressure for increased transparency have made these documents available to the public as expeditiously as possible.H.W. Brands is the first scholar to write a major Reagan biography that captures the arc of Reagan’s life from childhood to his post-presidential years. This impressive work could have been undertaken only by a scholar who is deeply knowledgeable about American history. Yet Brands did not grapple in a complete way with the extensive Reagan paper trail. Reagan: The Life does not appear to be based on many of the recently declassified national-security documents of the Reagan era. While it makes use of the private papers of some of Reagan’s cabinet members, the papers of other cabinet members and close advisers in Sacramento and Washington are not cited. It is difficult to know if Brands used the voluminous secondary literature on Reagan written by former aides, journalists, and scholars because he only cites what he quotes, and his book otherwise lacks a bibliography. In his section on sources, Brands refers to the importance of Reagan, In His Own Hand and Reagan, A Life in Letters, my co-edited books of Reagan’s writings; Reagan’s two biographies; his presidential diaries, edited by Douglas Brinkley; and two of Lou Cannon’s books on Reagan, among other works. Brands cites these volumes and the memoirs of Reagan’s closest advisers throughout his book.Reagan, In His Own Hand drew enormous attention when it was published because it revealed that, after being a two-term California Governor and as he pondered his presidential bids in 1976 and 1980, Reagan wrote hundreds of commentaries for his nationally syndicated radio program, in which he addressed most major policy issues of the day.Brands writes that “few of his radio speeches [throughout his political career] survive in audio form.” It should be noted, however, that in 2001, the same year that Reagan, In His Own Hand was published, Reagan, In His Own Voice, also was published. This audio book contains several CDs of Reagan’s original radio broadcasts with commentary and additional contributions by Annelise Anderson, Martin Anderson, and me. Commentary also was provided by Nancy Reagan, Richard V. Allen, Judge William Clark, Michael Deaver, Peter Hannaford, Edwin Meese III, Harry O’Connor, the producer of Reagan’s radio commentaries, and George P. Shultz.Brands’s major contribution is his synthetic analysis of the trajectory of Reagan’s life. Most of his historical narrative is accurate, but because of the longevity of Reagan’s political relevancy, certain episodes are not included in this book of nearly a thousand pages. As the first author to put Reagan’s entire life into biographical form, Brands reminds readers about how much material there is to cover. He adds to the literature by vividly recounting many of the episodes in Reagan’s life that, with the passage of time, often seem remote, especially to younger readers. This is particularly true of his compelling chapters on Reagan’s early years and his post-presidential activities.The complicated nature of some of the stories, though, reveals that Brands has selected facts and situations to fit his narrative, and the story thus told is incomplete—sometimes glaringly so.For example, Brands writes that:

To Baker as chief of staff fell the initiative in determining whether to invoke the Twenty-Fifth Amendment, which provides for a transfer of authority to the vice president in case of presidential incapacity.  By the time he had sufficient facts to make a reasoned decision, the doctors had stabilized Reagan.  The only question was whether his sedation during surgery would constitute sufficient incapacity to warrant invoking the amendment.  He decided it did not.

To be sure, the deliberations about the Twenty-Fifth Amendment following the shooting of President Reagan included Baker, whose role in the Reagan presidency is sometimes not fully appreciated. However, Richard V. Allen, Alexander Haig, Edwin Meese III, Michael Deaver, Caspar Weinberger, and many others took part in deliberations about the constitutional line of succession in case the president was seriously incapacitated, to whom National Command Authority power devolved in a presidential crisis, as well as the whereabouts of the nuclear football after Reagan arrived at the hospital. Most of these dynamics are not explored.2

But it almost has to be this way in a single-volume biography. Nevertheless, Reagan: The Life holds together because it contributes to the revisionist argument that Reagan’s ideas were indeed his own and often drove policy even when he was not in control of the incessant politicking among his aides. This is not a new argument. Annelise Anderson and Martin Anderson joined me in making this case in five books of Reagan’s writings. Others such as Steven Hayward, Paul Kengor, and Craig Shirley have also extensively researched President Reagan’s rise to power and his White House years and have come to similar conclusions. The collective impact of the burgeoning scholarship on Reagan is that the revised assessment of the man and his presidency is now widely accepted. Few today would disagree with the view that Reagan wrote, defined, and owned his policies. He alone was the principal author of the Reagan revolution. Paul Kengor’s meticulous research reveals that the numerous national security decision directives of the Reagan years not only had the president’s deep intellectual imprint on them but also outlined an unprecedented Cold War strategy to take down the Soviet political system and make possible political pluralism for people living under communism.3Brands finds his challenge in the daunting task of showing in sharp detail how much of what Reagan believed and wrote about in his early years influenced the policies of his presidency. For example, in writing about President Reagan’s decision to undertake the Strategic Defense Initiative, which became known for better or for worse as “Star Wars,” Brands states that “the idea had been percolating in Reagan’s mind for years.” In the chapter on the Ford-Reagan battle for the Republican presidential nomination in 1976, Brands reports that President Ford invited the Governor he had defeated at the Kansas City convention to join him on stage for the celebration. Describing the scene that night, he writes: “Reagan’s supporters demanded a speech from their man; his remarks caused their hearts to flutter anew and some to consider demanding a recount.” Yet he omits Reagan’s urgent message to the delegates: “We live in a world in which the great powers have aimed and poised at each other horrible missiles of destruction, nuclear weapons that can in a matter of minutes arrive at each other’s country and destroy virtually the civilized world.”In his remarks at the 1976 Republican National Convention, Reagan then spoke about a letter he had been asked to write for a time capsule: “And suddenly it dawned on me; those who would read this letter a hundred years from now will know whether those missiles were fired. They will know whether we meet our challenge.”The Governor’s brief remarks prefigured his missile-defense policies as President.In a commentary Reagan wrote for his nationally syndicated radio program in the spring of 1977, he remarked that the Soviets “apparently are engaged in a crash program to develop an effective anti-ballistic missile system.” Signed by President Richard Nixon and Soviet General Secretary Leonid Brezhnev in May 1972, the Anti-Ballistic Missile Treaty placed restrictions on the number of missile sites the two superpowers could construct, and a 1974 protocol enjoined further restrictions. Reagan told his radio listeners: “You’ll remember we bargained away our right to have such a weapon for the protection of our cities. That was one of the contributions of détente.”4In a letter written in the wake of his November 13, 1979 announcement that he would seek the Republican presidential nomination, Reagan stated that the campaign was not the time for “real specifics” on policy, but he said, “I am making my position perfectly clear in regard to the need for our country to be number one in defensive capability.”5 Months earlier, Reagan learned first-hand about the vulnerability of US missiles when he visited the North American Aerospace Defense Command with Doug Morrow, a movie producer, and Martin Anderson, a long-time adviser.6Brands makes reference to many radio commentaries and letters throughout the book, but he does not present this type of evidence on Reagan’s pre-presidential ruminations on missile defense. This information is essential, however, if one is to understand how and why President Reagan undertook a policy of missile defense in 1983. The reality is that there is simply too much to tell for a book that seeks to address the full range of Reagan’s life.Another matter from 1983, which stands in seeming contrast to defense, was not covered by Brands but is essential to connecting the ideas and policies that constituted Reagan’s grand strategy. In addition to his other accomplishments, Reagan was a human rights President.The plight of two Pentecostal families in Moscow was the subject of a radio commentary Reagan taped on October 2, 1979. A year earlier, the Siberian Seven, as they became known, darted past guards at the U.S. Embassy in Moscow in pursuit of exit visas so that they could practice their religion in a free society. In March 1983, President Reagan gave his “evil empire” speech, in which he derided Soviet communism as an historical anachronism, and his speech on missile defense. In the background, President Reagan and Secretary of State George Shultz quietly negotiated the release of the Pentecostals. This was accomplished through a deal in which the President promised Soviet leaders that he would not crow about it. By the summer of 1983, the Pentecostals were allowed to leave the Soviet Union for the West. Reflecting on the matter in his memoir, Reagan wrote, “In the overall scheme of U.S.-Soviet relations, allowing a handful of Christian believers to leave the Soviet Union was a small event. But in the context of the times I thought it was a hope-giving development, the first time the Soviets responded to us with a deed instead of words.”7The President also worked tirelessly for the release of Soviet Jews, and he was successful. He had advocated for some of them, including Ida Nudel, in a radio commentary on November 30, 1976. As President, Reagan he continued to campaign on her behalf. In the fall of 1987, Nudel was granted an exit visa. She has credited President Reagan and Secretary Shultz for helping her realize her long journey toward freedom.8On two far ends of the policy spectrum, defense and human rights, Reagan had a unifying way of assessing what was at stake. For him, the challenge was to defend and preserve freedom, which he saw as the moral basis of his foreign policy. One cannot understand why the release of the Pentecostals, as Secretary of State George P. Shultz has written, “was the first successful negotiation with the Soviets in the Reagan Administration” without realizing how the President’s pre-White House thinking and writing influenced presidential policy.9Nor can one have real insight into how Reagan governed without understanding how he campaigned. Brands writes about Reagan’s gubernatorial and presidential campaigns but does not cite some of the most important literature on these subjects. There is virtually no mention of some of the key political actors in California and beyond who helped make Reagan’s political career possible. Books on Reagan’s gubernatorial and presidential campaigns by Matthew Dallek, Peter Hannaford, Thomas C. Reed, Craig Shirley, F. Clifton White, and the volume I co-wrote with Serhiy Kudelia, Bruce Bueno de Mesquita, and Condoleezza Rice are important secondary sources. They portray the political advocacy of a long list of unsung heroes, like Reed, who helped create the machinery for Reagan’s political rise, especially in California during the 1960s.10In describing the speech Reagan gave on behalf of Barry Goldwater’s presidential campaign on October 27, 1964, Brands clearly understands how the future President began to distinguish himself from other conservatives and craft a message that broadened his coalition while staying true to the political principles he embraced. But here again he breezes over some of the transformational moments in Reagan’s gubernatorial campaigns (1966 and 1970) and presidential campaigns (1968, 1976, 1980, and 1984).One such moment occurred shortly before Governor Jimmy Carter was sworn in as President. In a January 15, 1977 speech in Washington, Reagan boldly proposed rethinking the Republican brand. He declared that “the New Republican Party I envision is still going to be the party of Lincoln and that means we are going to have to come to grips with what I consider to be a major failing of the party: its failure to attract the majority of black voters.” The former California Governor called upon his Republican colleagues to join him in assuring black Americans of their commitment to “treating all Americans as individuals and not as stereotypes.” He added that we need to “create a situation in which no black vote can be taken for granted.”11In that pivotal speech, Reagan also talked about bringing the social conservatives in the Democratic Party into a coalition with the economic conservatives in the Republican Party. This was not exactly a new idea; others, like William Rusher, had made this case. But Reagan was the politician who saw a pathway forward. His 1980 campaign was all about building this coalition by emphasizing shared values on the economy and defense. Investigating these aspects of Reagan’s political maneuvering in the years he was planning to run could yield a key to his enigmatic character.These are just a few of the Reagan stories that Brands could have told with deeper historical analysis. The challenge in writing about Reagan is that fundamental elements of his character can be missed if essential facts and events are omitted. Brands has done serious work that tells important truths about Ronald Reagan to new generations as well as to those who were adults during the Reagan presidency. In writing about the negotiations between and Reagan and his Soviet counterparts, Brands reminds us of the persistence of nuclear and other geopolitical dilemmas. But there is much more to be done; no one can do justice to a genuine enigma in a single book, even a very long one.

1See in particular, Kiron K. Skinner, Annelise Anderson, and Martin Anderson, eds., Reagan, In His Own Hand: The Writings of Ronald Reagan That Reveal His Revolutionary Vision for America (Free Press, 2001); Kiron K. Skinner, Annelise Anderson, and Martin Anderson, eds., Reagan: A Life in Letters (Free Press, 2003); and Ronald Reagan (edited by Douglas Brinkley), The Reagan Diaries (HarperCollins, 2007).

2The dramatic first-hand account of the White House deliberations in the wake of the shooting of President Reagan is found in Richard V. Allen, “The Day Reagan Was Shot,” the Atlantic, February 4, 2011.3Paul Kengor, The Crusader: Ronald Reagan and the Fall of Communism (HarperPerennial, 2007).4Skinner, Anderson, and Anderson, eds., Reagan, In His Own Hand, p. 119.5Skinner, Anderson, and Anderson, eds., Reagan: A Life in Letters, p. 231.6 Martin Anderson, Revolution (Harcourt Brace Jovanovich, 1988), pp. 80–4.7Ronald Reagan, An American Life (Simon and Schuster, 1990), pp. 572–3.8George P. Shultz, Turmoil and Triumph: My Years as Secretary of State (Charles Scribner’s Sons, 1993), p. 990.9Shultz, Turmoil and Triumph: My Years as Secretary of State, p. 171.10See Thomas C. Reed, The Reagan Enigma: 1964-1980 (Figueroa Press, 2014).11Parts of Ronald Reagan’s January 15, 1977 speech in Washington, DC, are quoted in Kiron K. Skinner, Serhiy Kudelia, Bruce Bueno de Mesquita, and Condoleezza Rice, Strategy of Campaigning: Lessons from Ronald Reagan and Boris Yeltsin (The University of Michigan Press, 2007), pp. 133–4. For the entire speech, see Ronald Reagan Subject Collection, Box 3, Folder RR Speeches—1977, Hoover Institution Archives, Stanford, California.

The End of Broken Windows?

Regular readers know that we think New York City’s economy and quality of life would be well-served by the elimination of superfluous regulations—but this, via Bloomberg News, is not what we had in mind:

Urinating and drinking in public would no longer be treated as crimes under a package of bills New York’s City Council will consider to ease enforcement of quality-of-life offenses that lawmakers say clog the courts and have been disproportionately enforced against minorities.

The council scheduled a Jan. 25 hearing on the proposed laws, which are supported by Council Speaker Melissa Mark-Viverito, a majority of her 50 colleagues and Police Commissioner Bill Bratton. The proposal would remove the possibility of permanent criminal records for public urination and violating park rules, mostly treating them as civil offenses, along with public drinking, littering and excessive noise.

Perhaps the City Council should be thinking about making it easier for New Yorkers to start a business before it makes it easier for them to do their business on the street.

Silliness aside, there are real risks involved with the kind of policy change the Council is considering, especially in a year when many cities around the country have seen a spike in violent crime rates. If enacted, the measures would amount to a partial rollback of “broken windows” policy, which is the idea that police departments should aggressively enforce “quality-of-life offenses,” like public urination, on the grounds that public disorder foments more serious criminal activity. There is, however, evidence that these policies have worked over the past quarter-century.The New York Times editorial board supports the measures because they could “ease the burden of overpolicing in communities of color.” Maybe—but police reformers shouldn’t get ahead of themselves. Broken windows policies made America’s cities much more livable, and probably had a substantial impact on crime rates. If crime rates aren’t falling—or at least stable—the demand for “overpolicing” could come back with a vengeance.