Peter L. Berger's Blog, page 638

Seeing Putin for the Threat He Really Is

Air Force General Paul Selva, in his confirmation hearing on Tuesday to be vice-chair of the Joint Chiefs of Staff, became the latest military official to describe Russia as the greatest threat facing the United States. “Russia possesses the conventional and nuclear capability to be an existential threat to this nation should they choose to do so,” Selva told the Senate Armed Services Committee.

Last week, during his confirmation hearing to become chairman of the Joint Chiefs of Staff, Marine Corps General Joseph Dunford told lawmakers, “If you want to talk about a nation that could pose an existential threat to the United States, I’d have to point to Russia. And if you look at their behavior, it’s nothing short of alarming.” The day before that, the secretary of the U.S. Air Force, Deborah James, in an interview after a series of visits and meetings with US allies across Europe, said, “I do consider Russia to be the biggest threat.”Their view apparently is not shared by the non-military types in the Obama administration. Speaking through a spokesman, U.S. Secretary of State John Kerry publicly rejected their assessment of Russia last Friday. “Certainly we have disagreements with Russia and its activities within the region, but we don’t view it as an existential threat,” State Department spokesman Mark Toner said. White House spokesman Josh Earnest chimed in as well, noting that Dunford’s assessment reflected “his own view and doesn’t necessarily reflect the … consensus analysis of the president’s national security team.”Which side is right? Let’s look at the facts.Not since World War II has Europe faced a graver crisis as a result of Putin’s invasion of Ukraine, and should Russian aggression spread to a neighboring NATO Member State, the United States would be confronted for the first time with Article 5 implications and the possibility of war with Russia. The invasion of Ukraine was not a one-off either. Russian invaded Georgia in 2008, launched a cyber-attack against Estonia in 2007, has cut off energy and trade to neighbors numerous times, and threatened to come to the defense of ethnic Russians in nearby countries.Beyond its immediate neighborhood, Putin has provided vital military and diplomatic support for Syria’s Bashar al-Assad, making Russian complicit in the slaughter of more than 220,000 Syrians and the displacement of more than 7 million. In April, Putin reopened a deal that would deliver sophisticated S-300 missiles to Iran and has unhelpfully called for lifting the conventional arms embargo on Iran.Putin and other top Russian officials have been irresponsibly engaged in nuclear weapons saber-rattling against the West. As General Selva noted, Russia remains the one country with nuclear weapons capability that could cause massive damage to the U.S. Russian officials recently threatened Denmark if it allowed missile defense installations on its territory and repeatedly and dangerously buzz the territory of NATO member states and other countries with overflights (often with the plane’s transponders turned off) and submarines; an accident is bound to happen sooner or later.Making matters worse, the Putin regime’s greatest export is corruption—and to be clear we import it in the West. But Kremlin officials and their business cronies use our open systems to invest their ill-gotten gains in real estate, ownership stakes in corporations, and bribery. As the investigation and criminal charges brought in the recent FIFA scandal reveal, we have the means to go after this vulnerability in our own countries while sending a clear message to Moscow that such activity will not go unchallenged.Finally, Putin’s regime is kleptocratic and repressive on the one hand and insecure and paranoid on the other—a dangerous combination. It is engaged in the worst crackdown on human rights in many decades in Russia, which raises questions about why it needs to do so if Putin is so popular, as surveys claim. The regime attaches no value to human life. Perceived opponents of the regime are demonized, poisoned, even killed. Putin created a monster in Chechnya in Ramzan Kadyrov, whose dangerous reach extends well beyond the North Caucasus.Quite simply, global order is under assault from the Putin regime, challenging many of the principles for which we stand and, left unchallenged, will pose an even greater threat. And yet as reflected in Kerry’s and Earnest’s comments, as well as Kerry’s ill-advised trip to Sochi in May to meet with Putin, parts of the Obama administration, as well as many Europeans, either delude themselves into thinking Putin still is a man with whom we can do business or understate the gravity of the Putin challenge. President Obama has essentially contracted out responsibility for resolving the Russia crisis to the Europeans, and in particular German Chancellor Angela Merkel. This marks an abdication of American leadership that must be reversed.The President and his Secretary of State should listen to the military: we should stop seeing Putin as anything other than a paranoid, authoritarian leader who oversees one of the most corrupt regimes in the world; he is not going to change his stripes. Because our values and those of the Putin regime are so diametrically opposed, at the end of the day we share very few interests with Russia. Putin’s number one goal is to stay in power, and to justify his authoritarian ways he fabricates the notion that the United States, democracy, NATO, the European Union, and the West more broadly are threats to Russia’s survival.It is important to bear in mind that the West had no interest in picking a fight with Russia and turned to sanctions over Ukraine reluctantly and in response to major Russian aggression. But our misreading of the threat posed by Putin’s Russia over the years has been costly. It is time to listen to the military’s views and develop a coherent and clear strategy on how to deal with the threat Putin poses.

‘Baby Parts’ and the Abortion Stalemate

For the the last few days, Republicans have been trumpeting a recently-released undercover video showing a Planned Parenthood executive calmly discussing, over wine and a salad, techniques for aborting fetuses so that their organs can be harvested and provided to medical researchers. “I’d say a lot of people want liver,” the organization’s senior director for medical services, Deborah Nucatola, explains. “You’re kind of cognizant of where you put your graspers … we’ve been very good at getting the heart, lung, liver because we know that, I’m not gonna crush that part.”

Thus far, most of the controversy about the video has centered on whether Planned Parenthood violated federal or state laws by “selling baby parts,” with Republican officials including the Speaker of the House announcing investigations and hearings, and many on the left dismissing accusations of wrongdoing as absurd. But intelligent commentators from Rich Lowry on the pro-life right to Michelle Goldberg on the pro-choice left recognize that the legality of Planned Parenthood’s practices is a red herring. Based on the available evidence, it appears that the organization most likely did not run afoul of federal organ trafficking laws—but that doesn’t mean that the video is insignificant or even materially misleading, as many liberals seem to believe.To the contrary, the Nucatola video is a real opportunity for the pro-life side to move the needle on the abortion debate because it focuses attention on how extreme (by the standards of public opinion) the absolutist pro-choice position actually is.It is no secret that in the great majority of culture war theaters—from same-sex marriage to pre-marital sex to marijuana use—the forces of individualism and permissiveness are on the march. Abortion, however, stands out as “the great American exception“—the one issue where the long-running American trend toward ever-expanding personal autonomy seems not to apply. Americans’ views on abortion are muddled and ever-fluctuating, but they do not seem to be bending toward either the absolutist pro-choice or the absolutist pro-life side. Polls show a public cautiously in favor of early-term abortion rights, yet strongly opposed to late-term abortions absent extraordinary circumstances. Meanwhile, both major parties’ positions are, in the context of public opinion, extreme: many Republican politicians favor a blanket abortion ban, while most Democratic politicians oppose virtually all restrictions on the practice. As the New York Times’ David Leonhardt has said, “abortion is the relatively rare issue in which the cliché is true: public opinion does actually rest about midway between the parties’ platforms”—and is likely to stay there for the foreseeable future, absent some major new development.In this context—a public opinion in the murky middle and both major parties locked at the poles—the best strategy for culture warriors on both sides is to characterize their opponents’ position as extreme. That’s why, during the 2012 elections, the Democrats tried, quite successfully, to make an election issue out of Todd Akin, the Republican Congressional candidate who said that abortion should be illegal even in cases of rape because, “if it’s a legitimate rape, the female body has ways to try to shut that whole thing down.” The controversy drew attention to GOP opposition to rape exceptions, which is widespread among Republican politicians but very unusual among the general public.Polls show that, except in cases of rape, incest, or where the life of the mother is at risk, the overwhelming majority of the public believes that abortion should be limited to the first trimester, when abortions are generally either performed chemically or through “vacuum aspiration.” The forceps-crushing technique Nucatola describes, on the other hand, is generally used in abortions performed during or after the second trimester. Moreover, while most Americans consider abortion to be a morally serious matter, Nucatola’s carefree tone draws attention to the radicalism of the “abortion and demand and without apology” position of some pro-choice activists.In the stalemated abortion debate, the best way to nudge public opinion in one direction or another is to highlight the extremism of the other side. The Nucatola video might do just that.

Exiled Government Officials Return To Aden

Just a day after Houthi forces were driven out of Aden, members of Yemen’s exiled government are moving back in. Though President Hadi isn’t coming back just yet, he is sending a few of his senior officials to set up shop in the meantime. Reuters :

Senior members of Yemen’s exiled administration flew into Aden on Thursday to make preparations for the government’s return, an official said, three months after being pushed out by the armed Houthi group. […]

“(Exiled President) Abd-Rabbu Mansour Hadi delegated this group to return to Aden to work to prepare the security situation and ensure stability ahead of a revival of the institutions of state in Aden,” a local officials told Reuters after the group arrived by helicopter at a military air base.The delegation included the ministers of the interior and transport, a former interior minister, the intelligence chief and the deputy head of the house of representatives.

Yesterday we pointed out that although a victory in Aden for the Saudi-backed forces is certainly a blow to Houthi momentum, it turns out to be less than meets the eye. Aden, located in the Sunni-majority south, was always likely to be retaken, while the Houthis remain strong in the northwest, the home of the Shi’a-aligned Zaid sect. Yemen will likely continue to sink deeper into its stalemate.

For the Saudis, who have tapped into their shrinking oil wealth to fund their relentless bombing campaign against Houthi positions, the return of Hadi government officials to Aden may free up living space in a few of Riyadh’s guest houses—but it doesn’t solve their Yemen problem. The Houthis, along with their Iranian benefactors that the Saudis detest so much, remain empowered and on the Kingdom’s doorstep.Houthi forces will probably try to strike back in Aden or incite trouble across the Saudi border in ‘Asir province. But while these two sides continue to square off, al-Qaeda’s Yemen affiliate continues to grow in the east and a humanitarian crisis worsens throughout the country. Though the return of the Hadi government may be a reversal of previous positions, the facts on the ground remain mostly unchanged.

What If the Nuke Deal Doesn’t Change Everything?

In the wake of the Iran deal, supporters have hailed it with words like “historic” and “transformative”, while critics have portrayed it as an unacceptable cave, a strategic defeat. Both seem to agree that it’s a game-changer. But, while it’s important, what if it doesn’t shift regional dynamics as much as we thought? Waking up two days after, we see some signs that that might be the case.

In Iran, meet the new Ayatollah: same as the old Ayatollah. In a written statement released today, he hailed the deal as a “milestone”, but left the door open for hardliner criticism by saying that the deal must be studied carefully, adding that “some of the six states participating in the negotiations are not trustworthy at all.” Khamenei talking out of both sides of his mouth has been a feature throughout the negotiations. During the weekend, he’s expected to make a speech marking the end of Ramadan, which should make his position more clear. But those who expect words on a page to pin him down for good may well be mistaken.Furthermore, as TAI Editor Adam Garfinkle points out in a must-read piece today, the details of the deal may not even change the overall strategic dilemma the U.S. faces vis-a-vis Iran:

Even if the IAEA can catch the Iranians in a violation, or we can do so through what is euphemistically referred to as “national technical means”, and even if then we can get the P5+1 to agree to seek redress, the agreement has only a single gear for penalizing infractions: a sanctions snap-back. This means that a violation or a series of violations would have to be of major dimensions to warrant making the effort, and if the effort anyway failed to shove the Iranians back into compliance, two things would happen, both of them bad. The lesser bad consequence is the precedent that a failed effort would set. The very bad consequence is that if and when confronted, the Iranians have the option, according to the agreement, of simply walking out of the deal and daring us to snap back the sanctions regime.

[… I]f the Iranians can pocket the cumulative military value of their violations and still walk out of the agreement anytime they judge it to be propitious, then the claim that the deal buys us at least 15 years of calm, non-crisis strategic oxygen is completely bogus. In just five years or even less, we could easily be back in the stark position the President described yesterday: diplomacy or war.

Meanwhile, our allies and strategic rivals are behaving, and have been behaving, about as we’d expect, both before and after the deal. The New York Times today revealed that Vladmir Putin played a significant role in making sure that a (phased) end to the conventional weapons embargo on Iran made it into the final deal; Russia will almost certainly reap military contracts from this, and continue to cause problems for the U.S. by equipping Iran for its regional adventures. (The Grey Lady also separately ran a report on a trove of cables released by Wikileaks a few weeks back which show that Saudi Arabia is “obsessed” with Iran. Shocker! As most Middle East watchers and all of our readers surely know, Saudi Arabia has long been focused on its main strategic regional rival—what it sees as “the head of the snake.”)

Domestically, plus ça change, too. A bipartisan majority of both Houses opposes the deal, but perhaps not enough to override a Presidential veto. Regardless of the merits, enough Democrats are likely to be swayed by both the pressure and the pork the White House is sure to ladle out—and perhaps even more profoundly by a sense that a vote to override would wreck a Democratic presidency.If all of this is true, it could also mean that those who look to the conclusion of this deal to reinvigorate President Obama’s foreign policy could also be mistaken. Abroad, the President could fail to find a real rapprochement with Iran and find himself trapped in a quasi-embrace necessary to promote the deal all while the region’s Sunnis continue to seethe. In terms of domestic politics, the question is probably whether or not this will be a new Panama Canal treaty. During the Carter Administration, the treaty giving the canal zone to Panama was ratified after a big fight, but it became a big political issue nevertheless. Not only was the GOP able to raise money on it, but many of the Senators who voted for it were defeated, and it contributed to Reagan’s election. Likewise, even an unsuccessful fight to defeat the deal could both signal and contribute to the President’s continuous bleeding on foreign policy matters.Several things about the deal really could still prove “historic” and “transformational.” Having kissed the frog, we could find, against all probability, that it turns into a prince—which is to say, the Iranian regime could moderate. (The probabilities of this happening are probably about the same as the fairy tale coming true.) Or, as Adam remarked on Tuesday, the regime could gravely miscalculate, crack down on modernizers too hard, and thus hasten its own demise. The U.S. Congress could reject the deal (Vegas odds are against it, but it is by no means impossible), setting us on the path to a quicker showdown with Iran in one form or another. Or the Saudis could detonate a test device (likely with a Pakistani signature) somewhere in the Empty Quarter—not immediately, but sooner rather than years later, and probably as a direct result of the deal.But for now, anyone who expected this deal to drastically and suddenly resolve the conundrums we face in the Middle East is liable to be disabused of that notion.

Russia Needs Ukraine, Too

Russia’s incursions into Ukraine and its seizure of Crimea threw a spotlight on Gazprom’s stranglehold on Europe’s gas market, and sent many policymakers into a tizzy worrying over how to reduce dependence on Russian supplies. For years Moscow has wielded its enormous oil and gas reserves as a geopolitical lever in Europe, and the tug-of-war over Ukraine seemed a perfect illustration of the strategic disadvantage Europe’s reliance produced.

But that energy weapon cuts both ways: Russia depends on Gazprom for a large part of its budget revenue, and Gazprom in turn relies on its European customers. It doesn’t take a logician to work out that the Kremlin has a strategic interest in keeping those gas flows flowing.Kiev and Moscow have been butting heads over the terms of their gas supply deal, haggling over the price at which Ukraine is buying its energy. Roughly a third of Europe’s Russian gas supplies transit Ukraine, which makes the looming threat of a shut-off to the eastern European country an issue of continental importance. For reasons stated above, Moscow doesn’t want to see European supplies disrupted if talks with Ukraine break down, so it’s actively working on pipeline alternatives. But as Reuters reports, Gazprom already has a mountain of sunk costs in the status quo:

Billions of euros will be needed to build and expand alternative routes, and the route of the existing pipeline means transit fees to Slovakia and Bulgaria will have to be paid by Gazprom even if Russia manages to bypass Ukraine by 2020.

Under the contracts with the two countries, which ship gas on to western and southern Europe respectively, Gazprom will have to pay Slovakia until 2028 and Bulgaria until 2030 regardless of whether they actually ship any gas through them.

There’s no small amount of irony in the fact that Gazprom will have to pay Slovakia and Bulgaria transit fees regardless of whether it actually ships the gas—a similar “take-or-pay” clause has frustrated its European customers who are accordingly on the hook for a certain amount of gas regardless of whether they end up consuming it.

In addition to the money Gazprom will owe its current pipeline providers, the company will also have to invest tens of billions of dollars into alternatives (these aren’t cheap projects). Putin has enjoyed wielding Russia’s energy weapon in Europe, but recently he’s learning that that’s a double-edged sword.

Philippines to Reopen Huge Old U.S. Naval Base

It’s a fixer upper, but the old U.S. Navy base at Subic bay in the Philippines used to be one of the largest U.S. naval bases in the world. Now, Manila is refurbishing and reopening it as part of a $20 billion military modernization project aimed at standing up to China. Because of its location and its deep water port, Subic Bay is a major strategic asset, one that will house, according to the plan, both high speed jets and littoral combat ships. The Guardian reports:

Defence undersecretary Pio Lorenzo Batino told Reuters the Philippine military signed an agreement in May with the zone’s operator, the Subic Bay Metropolitan Authority, to use parts of the installation under a renewable 15-year lease. It marks the first time the massive installation has functioned as a military base in 23 years. […]

Using Subic Bay would allow the Philippine air force and navy to respond more effectively to Chinese moves in the disputed South China Sea, security experts said. Subic Bay’s deep-water harbour lies on the western side of the main Philippine island of Luzon, opposite the South China Sea.“The value of Subic as a military base was proven by the Americans. Chinese defence planners know that,” said Rommel Banlaoi, a Philippine security expert.

The Philippines is pressing its case against China in court, but that’s unlikely to constrain the country even if the court sides against Beijing. Manila knows that ultimately it’s a weak power in its region and is therefore working outside the courtroom to change the calculus. Before this news, the most it had done recently was reinforce the rusted out shell of a beached ship that’s served as a remote outpost in the Spratlys. The Subic base project is in a league of its own.

The big question that might be on the minds of Beijing’s strategists is whether the U.S. will be able to use the base as well. Washington and Manila signed a defense deal in 2014 that would allow U.S. forces to use Philippine bases on a rotating basis. However, the deal’s constitutionality was challenged, and the issue hangs in the balance as a Philippine court adjudicates. If the agreement makes it through the legal gauntlet, the American and Philippine militaries both get access to a key base across from the South China Sea. From Beijing’s perspective, that’s just the kind of thing that might change a strategic calculus about one’s military advantage.

The Real Debate

The debate has begun. Criticism of the Iran deal has begun to rise, and it has done so along the lines anticipated. Some stand back and focus on the bigger picture: U.S. government blessing of Iran’s status as a nuclear threshold state, and what that means for the region both in the near-term and going forward. Others, concluding that avoiding that posture could not have been attained once Iran had mastered the fuel cycle, are focused mainly on the verification package and other, lesser details.

The former school of criticism cannot be appeased or persuaded by details over terms, whether concerning verification or anything else. It is the basic tradeoff in the deal they cannot abide, which some are not shy to characterize as appeasement. The latter probably can be persuaded, at least in principle, and at least to the extent that concerns over verification are honestly put forth and are not a cover for other motives. But both schools of criticism have at least this in common: Anyone who believes the deal deserves the thumbs down in Congress is obligated to specify an alternative policy. Clearly, if the deal goes down, the interim accord will lapse as well, and the Iranian program will be sprung into a world of zero negotiated constraints. If that alternative involves coercion, whether sustained economic warfare or direct military action, then one must engage the calculus of such an approach to the fullest, and make oneself mercilessly self-aware of the risks and uncertainties involved. They are not trivial, and they must not be shunted aside via the pyrotechnics of cognitive dissonance.On the other hand, they must not be exaggerated either by those who support the deal, who are no less prone to cognitive dissonance distortions than anyone else. The President, the rest of the Administration, and its sundry supporters are waxing ecstatic over the deal and are defending it with vigor. They have already specified the null set of alternatives: It’s this or war, they claim. The President said as much yesterday. The competitive spinning is already so intense that it is causing more dizziness than real debate.The President said plenty yesterday, and there is no point in rehearsing it in detail here. But there is a point in specifying that he undoubtedly believes what he said. In other words, he may be mistaken, but he is not lying. It is important to the higher claims we as Americans make to be citizens of a civil republic that this be understood clearly. The Bush haters still refuse to distinguish between mistakes and lies over the Iraqi WMD stockpiles affair of 2002-03, which defines them as either moral illiterates or partisan fanatics, or possibly both. The Obama haters will probably display an equal and opposite version of the same. It is dismaying, but it is what it is. True patriots should want to make what “it is” as small as possible in the coming days and weeks. Certainly that should be the guiding principle once the debate alights in the House and Senate.I confess perhaps too much about chronologies when I say that all of this reminds me of the summer and autumn of 1979. Then, too, a Democratic Administration put an arms control “big” deal on the table. Then, too, opposition split into broad and narrow schools, while supporters made claims about no better or viable alternatives being available. Then, too, one heard shouts of “appeasement” and retorts about warmongering, and a whole host of less abstract exaggerations followed dutifully in train. Then, too, the opposition was capable of tactical shrewdness: The SALT II Treaty should be amended by the Senate, or sent back to the table for selective renegotiation, or at the very least its dangerous flaws should be compensated for through hikes in the defense budget and other outside-the-four-corners means of redress.I fully expect all of these tactical variations to make themselves known over the Iran deal in coming weeks. These kinds of discussions bear a certain perduring logic, after all. The proper nouns change, as do the personalities; but the underlying elements of political contention seem to endure, almost as though the players are tethered to their scripts as they strut across the stage. I can still see Scoop Jackson’s face, as though it were just yesterday, as he strategized in the Russell Senate Office Building about how to maneuver Secretary of State Cyrus Vance into admitting during SASC hearings that the “no new types” and the encryption aspects of the text were self-negating when seen together. My guess is that other Senatorial faces are looking sort of familiar in that scene right now.How would I advise a Senator to vote on the Iran deal? Dear reader, this is the wrong question. It is, I dare say, an inappropriate question. It is the duty of a staff member or an informal adviser to an elected official in a democracy to explain, if asked, what the implications are of this or that course of action. That goes for Senate staff relative to Senators, and it goes for Cabinet officials relative to the President. It is irresponsible in a genuine democracy for a Senator or a President to ask an unelected aide what he should do, and it is improper for an aide to offer such advice unbidden.That said, were I an elected official, I would vote “no.” I would do so partly because I sympathize with the broader critique of the deal, but also because I do believe that the President is mistaken about his claims for the deal at the level of the verification arrangements and what it means concerning the hypothetical abeyance of conflict. Let me briefly explain how I (and others) come to this conclusion after having finally digested all 159 pages of the EU version of the text (something I had not done and could not have done when I wrote my first take on all of this on Tuesday morning.)First, the monitoring provisions the IAEA will be permitted to use in Iranian facilities fall well short of what it is technically capable of doing. A July 6 New York Times feature co-authored by David Sanger and William Broad lays out these capabilities. When one compares the potential with what in fact will be permitted, one can only be dismayed at what the P5+1 negotiators let get away from them.Second, as several observers have pointed out, Rob Satloff perhaps first and most effectively, the agreement allows the Iranians up to 24 days to fend off an IAEA demand inspection. That is plenty of time to hide or clean up after most kinds of violations. Moreover, one has to assume the possibility that the Russians will act as mole for Iran inside the P5+1 consensus machine, as they did on behalf of Iraq back in another time. So, for both reasons, catching the Iranians cheating will not be easy, and one has to assume based on past behavior that the Iranians will cheat if they think they can get away with it for long enough as to constitute a de facto fait accompli.It gets worse. Even if the IAEA can catch the Iranians in a violation, or we can do so through what is euphemistically referred to as “national technical means”, and even if then we can get the P5+1 to agree to seek redress, the agreement has only a single gear for penalizing infractions: a sanctions snap-back. This means that a violation or a series of violations would have to be of major dimensions to warrant making the effort, and if the effort anyway failed to shove the Iranians back into compliance, two things would happen, both of them bad. The lesser bad consequence is the precedent that a failed effort would set. The very bad consequence is that if and when confronted, the Iranians have the option, according to the agreement, of simply walking out of the deal and daring us to snap back the sanctions regime.Let us understand clearly what this really means. Suppose the Iranians cheat here, there, and perhaps everywhere for several years, but at less-than-critical levels, before we finally get up the moxie to confront them. Suppose the cheating involves more R&D on IR-6 or IR-8 centrifuges than is allowed, and not turning over the fissile material that work produces. Or suppose they take mothballed centrifuges out of storage and ship them to an unmonitored facility for reinstallation. Note that the agreement makes no reference to SWUs (separation work units), only to the number of centrifuges—which seems unfortunate. Suppose we confront them over such transgressions and they walk out of the agreement. That would validate the military utility of all the cheating that has gone before. Suppose the walkout happens in year five of the agreement, timed to coincide with the lifting of the arms embargo. Do I really need to spell this out further?Never mind for now that a sanctions snap back could not re-freeze $150 billion in assets and, worse, would not apply to “grandfathered” deals signed between the implementation date and the hypothetical walk-out date. The point is not really about money. It is that if the Iranians can pocket the cumulative military value of their violations and still walk out of the agreement anytime they judge it to be propitious, then the claim that the deal buys us at least 15 years of calm, non-crisis strategic oxygen is completely bogus. In just five years or even less, we could easily be back in the stark position the President described yesterday: diplomacy or war.Now, worst of all, this being the case—and this will dawn on American officials sooner or later—who is really deterred by the verification provisions? As time passes, we will very likely be deterred more than the Iranians. We will justifiably fear to push accusations of militarily-significant cheating because it would probably crash the deal and put us right back where we started, except with the Iranians richer and much further along in their program. How will that look to the world? One can already hear the echoes of the Ayatollah Khomeini at a tender moment in the history of the bilateral relationship: “The Americans cannot do a damned thing.”The Iranians will certainly know this, and likely feel reasonably free to cheat as a result. Now what kind of verification package is it that, in practice, deters us more than it deters them?Critics have pointed to other supposed flaws in the agreement as well. Some don’t like the fact that the conventional arms embargo business got dragged into the deal. I don’t like it either, but I don’t worry about it much. As long as we can keep NATO allies from selling the Iranians weapons, they would be stuck with Russian and Chinese stuff. Some of that stuff, like the advanced versions of the S-300 air defense system, is strategically significant, but we had that problem to face prospectively deal or no deal. The rest of the stuff one can imagine the Iranians buying is not impressive. We can handle it if need be.Some don’t like the whole business contained in Annex III, where the P5+1 promise to help Iran with a whole host of technical and other issues. This creates an optic to U.S. allies in the region, some claim, that persuades them that we are indeed selling them down the river with neither paddle nor bait pail. And that, reasonably inferred, will only impel them to proliferate or seek other forms of self-help, setting the stage for a nuclear conflagration down the road.The point is taken, but they probably would feel that way with or without Annex III. Moreover, it may have been necessary in the course of negotiations to promise these things in order to secure other constraints on the Iranian program deemed more important. Until we see the detailed negotiating record (if we ever do see it), it will remain hard to render such judgments.But promises are anyway mere contingencies. We can do these helpful things if we think they are in our interests, which can include flooding Iran with intel collectors as well as insidious Western cultural and business influences; and we can prevaricate and procrastinate over these promises to build leverage if we think that is in our interest. So to me this issue is a little like the “Backfire bomber” line of talk in 1979—pulse quickening but ultimately of only marginal importance.Besides, as I have tried briefly to show, the problems with the whole monitoring/verification scheme are so serious that no other complaints need to be piled on. They are killer flaws in and off themselves.I must now hold myself to the standard I laid down at the outset: If “no”, then what?It is many years now that I have been saying and writing that this problem would come down to either being willing to live with Iran as a nuclear-armed state or using coercion of one kind or another to prevent it. The former, as I have argued many times, is too dangerous; but we may end up a decade and so hence having to deal with a nuclear-proliferated Middle East anyway, which is most unfortunate but not hopeless. In the meantime, yes, the least bad option is to prevent an Iranian breakout by any means necessary.That in turn boils down to three generic approaches that are not necessarily mutually exclusive. One is to seek regime change via internal disruption, taking advantage in particular of Iran’s character as a multiethnic state. It may be too, as I have suggested before, that the sudden opening of the Iranian economy will alone be enough to accomplish this despite the best efforts of the mullahs to smother the prospect in its cradle. The second is to engage in various forms of economic warfare (blockades, cyber-attacks and more) designed to bring the economy and perhaps the regime to its knees. The third is to bomb the program, perhaps with the “spice” of special-forces operations tossed in.This is not the place to detail these three approaches. Suffice it to say that the first approach is uncertain, not without an array of risks, and perhaps unlikely to work on a timetable relevant to the problem. It is not clear that the U.S. government has the kind of intelligence assets necessary to do this successfully in any event. The second approach could be more powerful than most observers credit; it is unwise to say anything more about this in public. The third approach need not destroy the entire program to set it back a significant distance. It is a red herring to define the kinetic problem to mean destroying pretty much everything; the weakest or most critical few links in the value-added chain would suffice, and the U.S. military is quite capable of doing this. And of course, once having accepted the diplomatic onus of using force, doing it a second or third time as might be necessary would carry less additional cost. I would consider approach one, start with approach two, and remain open to approach three.Does this make me a warmonger? I don’t think so, anymore than a cancer operation makes a surgeon a butcher. I don’t relish the thought; I abhor it. And if the United States does in due course use force to prevent an Iranian nuclear weapons arsenal from coming into being, it can afford to wait a while in a studied posture of Micawberism, hoping that something turns up to save the day. I certainly would not have the U.S. government resort to force within the next 17 months. After what this Administration and this President have done, it’s hard to imagine that they could really put their heart into it.

Big Trouble in Big China

After the stock rout, the economic situation in China has a lot of the world’s smartest investors worried, according to Bloomberg:

Hedge fund manager Paul Singer said that China’s debt-fueled stock market crash may have larger implications than the U.S. subprime mortgage crisis, echoing warnings from fellow billionaire money managers Bill Ackman and Jeffrey Gundlach.

“This is way bigger than subprime,” Singer, founder of hedge fund Elliott Management, said at the CNBC Institutional Investor Delivering Alpha Conference in New York in response to a question about China’s crash potentially affecting other markets.

China’s economy is built on an export-oriented model that prioritizes investment in factories for export, as well as in infrastructure that supplies the factories and gets the exports to the ports. The model worked brilliantly for many years, but the law of diminishing returns is setting in. As China has gotten larger, its economy has a harder and harder time growing faster than the rest of the world and other countries are challenging China for low-cost manufacturing. Many Chinese industries now struggle with overcapacity—too many factories were built—and the country is struggling to keep costs down even as workers demand cleaner air and water, better wages, better schools.

Chinese authorities have for their part, for a combination of reasons, tried to keep the economy growing. Besides putting more and more money into infrastructure projects that offer less and less payoff, China has relied on its credit system to support state-owned enterprises. One result has been a string of bubbles—in factories, in commercial and residential real estate, and, most recently, in the stock market. Two things are worrying about the stock market bubble and the government’s efforts to keep it inflated. First and foremost, it is a sign that Chinese policy is still wedded to a pro-bubble policy, and that the government doesn’t really know how to shift the economy to a new and different basis without massive side effects. Officials appear to see no choice but to continue on a course that is probably unsustainable. Second, the difficulty they’ve had in stopping the stock rout, and the extreme measures they’ve had to take, points to the possibility that China is coming closer to the point where the government won’t be able to prop the bloated system up anymore.Any kind of major economic meltdown in China would have huge consequences—political as well as economic—around the world. Developing countries that depend on commodity exports would be hammered. From OPEC to South Africa to Argentina, Australia, and Brazil, countries that have prospered by selling commodities to feed China’s endless appetite will face lower prices and slack demand. The deflationary pressures in Western economies would intensify, and price competition in manufacturing would intensify as Chinese factories sell off goods at any price to try to survive.No doubt there are hedge funds out there that think they can time this. We don’t claim that kind of crystal ball. But the signs that the Great China Bubble may be bursting have more and more of the smart money worried. That is something that policymakers as well as portfolio managers need to be thinking about, hard.

Take a Road Trip on Shale This Summer

If you’ve been putting off a trip, now may be the time to finally hit the road. Gas prices this summer are at their lowest levels since the aftermath of the financial crisis. This season’s average price should be just $2.67 per gallon, nearly a full $1 lower than last summer’s. The EIA expects U.S. drivers will take advantage:

Travel and gasoline consumption are expected to be higher this summer compared to levels in 2014. Motor gasoline consumption is expected to increase by 194,000 barrels per day (b/d), up 2.1% from last summer, reflecting higher real disposable income, substantially lower retail motor gasoline prices, and higher employment and consumer confidence.

Driving this summer (as measured by vehicle miles traveled) is expected to be 2.2% higher than last summer, the largest year-over-year summer increase in 11 years. The increase in highway travel is not just a response to the drop in gasoline prices. Real disposable income is projected to be 3.6% higher than last summer, the largest year-over-year increase in nine years. Nonfarm employment is projected to rise 2.1%, the largest such increase since 2000.

Shale deserves much of the credit for the cheapest summer gas prices we’ve seen in years. New American oil supplies have contributed to a global oversupply and the resulting price plunge, which is now in turn being reflected in lower totals at the pump.

While most Americans will welcome the opportunity to fill up their tanks for less, greens won’t be happy to see our citizenry hitting the roads in greater numbers. Neither will they cheer surging SUV sales, another ripple effect of lower oil prices. For them, though, there’s a lesson here: economic motivations are much stronger than appeals to green ideals. Americans will be driving more this summer not out of some deep hatred for Gaia, but rather because it’s recently become a more cost-effective way for people to improve the quality of their lives.

Uber Summons Higher Power in Europe

After months of bellyaching and backlash against Uber across Europe, the ride-sharing company is taking its fight to the top. The FT:

Germany’s ban on an Uber service faces a probe by the European Commission, as the US ride-hailing company called on Brussels to help in its fight with national regulators on the continent.[…]

Increasingly, the company has pinned its hopes on regulation from Brussels, rather than engaging in a protracted struggle with individual regulators across the EU’s 28 countries. […]

Uber said: “We’re a digital intermediary yet transportation laws dating back to the ’50s are being applied in Germany. Such outdated regulations are being used to protect established players from competition, rather than benefit many more people.”

Uber’s move to appeal to the European Commission may foreshadow what’s in store for the company in its own backyard. Though the California Labor Commission ruled that Uber drivers are not independent contractors—as the company and many of its drivers believe—but employees, another classification hearing is set to be held in the Federal District Court of Northern California starting on August 6.

In Europe and the U.S., complaints about Uber and its peer companies often hinge on regulatory frameworks that are both outmoded and, inasmuch as good regulations aim to create efficiencies, ineffectual. Shifts in the labor market, spawned by technological innovation and changes in consumer preferences that result from those innovations, are real and should be met with corresponding shifts in policy. As the national spotlight focuses on the sharing economy and we await the ruling in California, policymakers and presidential hopefuls should allow for nuance in their positions.