Month: December 2010

The end is nigh…

Not really, but 2010 is coming to a close.  Never easy to look ahead a year, but let me give it a try.  It’ll make for a nice mea culpa post a year from now.  And if I cherry pick a bit maybe I’ll be able to claim clairvoyance!

  • Iran:  the biggest headache of the year to come.  If its nuclear program is not slowed or stopped, things are going to get tense.  Both Israel and the U.S. have preferred sanctions, covert action and diplomatic pressure to military action.  If no agreement is reached on enrichment, that might change by the end of 2011.  No Green Revolution, the clerics hang on, using the Revolutionary Guards to defend the revolution (duh).
  • Pakistan:  it isn’t getting better and it could well get worse.  The security forces don’t like the way the civilians aren’t handling things, and the civilians are in perpetual crisis.  Look for increased internal tension, but no Army takeover, and some success in American efforts to get more action against AQ and the Taliban inside Pakistan.  Judging from a report in the New York Times, we may not always be pleased with the methods the Pakistanis use.
  • North Korea:  no migraine, but pesky nonetheless, and South Korea is a lot less quiescent than it used to be.  Pretty good odds on some sort of military action during the year, but the South and the Americans will try to avoid the nightmare of a devastating artillery barrage against Seoul.
  • Afghanistan:  sure there will be military progress, enough to allow at least a minimal withdrawal from a handful of provinces by July.  But it is hard to see how Karzai becomes much more legitimate or effective.  There is a lot of heavy lifting to do before provincial government is improved, but by the end of the year we might see some serious progress in that direction, again in a handful of provinces.
  • Iraq:  no one expects much good of this government, which is large, unwieldy and fragmented.  But just for this reason, I expect Maliki to get away with continuing to govern more or less on his own, relying on different parts of his awkward coalition on different issues.  The big unknown:  can Baghdad settle, or finesse, the disputes over territory with Erbil (Kurdistan)?
  • Palestine/Israel (no meaning in the order–I try to alternate):  Palestine gets more recognitions, Israel builds more settlements, the Americans offer a detailed settlement, both sides resist but agree to go to high level talks where the Americans try to impose.  That fails and Israel continues in the direction of establishing a one-state solution with Arabs as second class citizens.  My secular Zionist ancestors turn in their graves.
  • Egypt:  trouble.  Succession plans founder as the legitimacy of the parliament is challenged in the streets and courts.  Mubarak hangs on, but the uncertainties grow.
  • Haiti:  Not clear whether the presidential runoff will be held January 16, but things are going to improve, at least until next summer’s hurricanes.  Just for that reason there will be more instability as Haitians begin to tussle over the improvements.
  • Al Qaeda:  the franchise model is working well, so no need to recentralize.  They will keep on trying for a score in the U.S. and will likely succeed at some, I hope non-spectacular, level.
  • Yemen/Somalia:  Yemen is on the brink and will likely go over it, if not in 2011 soon thereafter.  Somalia will start back from hell, with increasing stability in some regions and continuing conflict in others.
  • Sudan:  the independence referendum passes.  Khartoum and Juba reach enough of an agreement on outstanding issues to allow implementation in July, but border problems (including Abyei) and South/South violence grow into a real threat.  Darfur deteriorates as the rebels emulate the South and Khartoum takes its frustrations out on the poor souls.
  • Lebanon:  the Special Tribunal finally delivers its indictments.  Everyone yawns and stretches, having agreed to ignore them.
  • Syria:  Damascus finally realizes that it is time to reach an agreement with Israel.  The Israelis decide to go ahead with it, thus relieving pressure to stop settlements and deal seriously with the Palestinians.
  • Ivory Coast:  the French finally find the first class tickets for Gbagbo and his entourage, who go to some place that does not recognize the jurisdiction of the International Criminal Court (no, not the U.S.!).
  • Zimbabwe:  Mugabe is pressing for quick adoption of his new constitution and elections in 2011, catching the opposition off balance.  If he succeeds, the place continues to go to hell in a handbasket.  If he fails, it will still be some time before it heads in the other direction.
  • Balkans:  Bosnians still stuck on constitutional reform, but Kosovo gets a visa waiver from the EU despite ongoing investigations of organ trafficking.

If the year turns out this way, it won’t be disastrous, just a bumpy downhill slide.  Hard to see it getting much better than that, but I could have made it much worse:

  • Iran:  weaponizes and deploys nukes.
  • Pakistan:  finally admits it can’t find two of its weapons, which have likely fallen into AQ hands.
  • North Korea:  goes bananas in response to some provocation, launches artillery barrage on Seoul.
  • Afghanistan:  spring Taliban offensive sweeps away Coalition-installed local institutions; Kandahar falls.
  • Iraq:  Kurds and Arabs fight, without a clear outcome.
  • Israel/Palestine:  Israel attacks Hizbollah in Lebanon, third intifada begins with Hamas suicide bombings inside Israel.
  • Egypt:  Muslim Brotherhood challenges Mubarak in the streets, prevents orderly succession process.
  • Haiti:  hurricanes, food riots, political strife, reconstruction blocked.
  • Al Qaeda:  big hit inside the U.S., thousands die.
  • Yemen/Somalia:  both go south, with AQ establishing itself firmly on both sides of the Bab al Mandab.
  • Sudan:  post-referendum negotiations fail, fighting on North/South border, chaos in Southern Sudan.
  • Lebanon:  Hizbollah reacts with violence to the Special Tribunal indictments, taking over large parts of Lebanon.  Hizbollah/Israel war wrecks havoc.
  • Syria:  succeeds in surreptitiously building nuclear facilities on commission from Iran, Israeli effort to destroy them fails.
  • Ivory Coast:  Gbagbo tries to hold on to office, imitating Mugabe’s successful effort.  Ouattara plays ball and accepts the prime ministry, pressured by internationals who don’t want to do what is necessary to airlift Gbagbo out of there.   A real opportunity to demonstrate the effectiveness of international solidarity is squandered.
  • Zimbabwe:  Mugabe succeeds, Tsvangirai is out, state in virtual collapse.
  • Balkans:  the EU unwisely begins implementing the acquis communitaire in Republika Srpska due to delays in formation of a national Bosnian government, investigations in Kosovo drag on and make progress towards the visa waiver and other EU goodies impossible.

There are of course other places where we might see bad things happen:  Venezuela, Burma, Nigeria, Kyrgyzstan, Saudi Arabia, Russia–but I’ll leave the imagining to you.

Happy New Year!

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Capture the rent!

A former Shell exec has been making news with a prediction of $5/gallon gasoline in 2012.  I don’t know if he is right about 2012, but I am sure he is right about $5. This is inevitable, given the finite resource and (we hope) economic growth over the next few years (not to mention inflation).

The question is this:  who will capture the “rent”?  Rent is the excess return over the cost of production, distribution, refining and normal profit (which in some parts of the world is more like $5/barrel, at a time when oil is selling on the world market at over $90/barrel).  As things stand today, most of the rent goes to non-U.S. oil producers abroad, where production costs are lower than in the now declining oil fields in the U.S.

At current prices, the U.S. is sending something more than $400 billion/year abroad to pay for oil imports, much of it ending up in the pockets of people we would not want to enrich if we thought about it:  Iran and Russia foremost, Venezuela secondmost.  Even if we don’t import oil directly from them, U.S. demand contributes to the market conditions that enable them to sell into the world market at $90/barrel a product that costs them far less.  Money and oil are fungible:  any significant decline in U.S. demand would affect the price worldwide and reduce the flow of rents to oil producers worldwide.

Enriching antagonists is not the only problem.  Protecting the sea lanes through which oil is transported is costly.  As things stand today, the costs are charged to the U.S. taxpayer in general, not to oil users. Colleagues estimate these costs are $10-20/barrel of U.S. consumption. I’d like to see those costs paid by those who use more of the oil, not by those of us who use less (I am writing in a 68 degree room, with two sweaters on).

The obvious way to do this is with an oil import fee.  That, however, turns out to be neither wise nor possible.  Not wise because it would protect U.S. producers and encourage domestic production.  Wouldn’t it be smarter, the price being equal, to use someone else’s first?  Not possible because the United States, in its wisdom, long ago “bound” the tariff on imported oil.  This means we agreed not to increase the tariff, which is very low.  If we impose an oil import fee, we would have to compensate others in the form of sharply reduced tariffs (and increased imports) for doing so.  If we refused, the World Trade Organization’s rules would allow others to retaliate by raising their tariffs.  Not a good way to go for a country in need of massively increasing its exports.

The better way is to charge fees on all oil use, or if you prefer for environmental reasons on all carbon use.  This would “capture the rent” to pay for the associated security, environmental and other costs (including road infrastructure) associated with the use of oil.

One argument against comes from the left:  poor people spend more of their incomes on oil and energy generally than rich people, so an oil or carbon tax is regressive.  This can be fixed, in part, by using some of the income from the tax to provide benefits to people with lower incomes.

Another argument against comes from the right:  we wouldn’t want to do anything to discourage exploration and production of oil.  I don’t see why not:  conserving a finite resource for future use sounds the right way to go to me.  But in any event much of the money we send abroad to pay for oil is ending up not in oil exploration and production but rather in Dubai real estate and other worthy causes.

Why is this subject not discussed more often?  Well, it is:  Tom Friedman raises it regularly in the New York Times, but there is absolutely no resonance in the body politic.  Gasoline taxes aren’t the third rail of American politics, they are the train.  No one wants to get hit by it.

Barack Obama is too smart not to know all that I have written above, but to my knowledge he has not breathed a word about gasoline taxes since becoming President.  I can only hope that in a second term he would break the spell and capture the rent, but I don’t know where he’ll find a Congress willing to go along.  Maybe a lame duck in 2014?

If he needs inspiration, he might turn to Iran’s President Ahmedinejad, who despite strong opposition is cutting oil subsidies sharply and allowing domestic product prices to rise (by a factor of 4) while compensating with payments to lower-income Iranians.  Of course he can do that because the increased prices put money directly into the Iranian government’s pocket, which is what oil taxes would do for the U.S. government. Is Ahmedinejad more courageous than Obama?

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The Iraqi nationalist Maliki is back

While the Wall Street Journal has awkwardly divided its interview with Iraqi Prime Minister Maliki into two pieces, one concerned with oil issues and one concerned with the departure of U.S. troops, together they make interesting reading.  We seem to be back to the pre-election, Iraqi nationalist, Maliki (as opposed to the far more sectarian one we saw during the campaign and immediately thereafter).

Maliki and me

On the one hand, the renewed Prime Minister insists all American troops will leave by the end of 2011 (except for a rather large defense cooperation group at the U.S. embassy, presumably with a contingent of contractors), as provided for in the Status of Forces Agreement (SOFA).  On the other, he is at pains to make clear that international oil companies are welcome in Iraq, no matter what coalition partner (and Iranian ally) Moqtada al Sadr says, and that Iraq is making plans for major expansion of oil exports and diversification of export routes.  In other words, this is an Iraq that can stand up to both Iran and the United States and pursue its own interests effectively.

What is far less clear is how Maliki intends to proceed on Iraq’s more pressing internal problems, especially the dispute with Kurdistan over its boundaries.  There is an indication in the part of the interview on the U.S. troop presence that Maliki thinks he can continue to slow roll the Kurdish insistence on the constitutionally mandated referendum.  But how will he handle the withdrawal of the U.S. troops, who play a vital buffer role between the Iraqi Army and the Kurdish peshmerga?  Substantially increased oil revenue would likely lubricate the situation–the Kurds have shown a good deal of willingness to delay so long as their 17 per cent of the revenue flows and grows.

If this Iraqi nationalist Maliki is back to stay, Washington should be content.  So far at least, the Sadrists have been kept out of the security ministries, Allawi’s Sunni allies got a good slice of the government (and may get more), and the Kurds are in but unable to call the shots.  Maliki is a clever operator and may well be able to continue to govern relatively unimpeded, finding the support he needs from different configurations of his unwieldy grand coalition, depending on the issue.  This is the high wire act Maliki’s staff told me last June he could perform better than anyone else, not leaning too far towards the Americans or too far towards the Iranians.  It’s a good spectator sport for those who like their politics both subtle and risky.

No I wasn't scolding him, just asking if he would take one more question. He did.
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Does God cause Nigerian violence?

The press will portray yesterday’s violence in the Nigerian town of Jos, following on Christmas eve bombings,  as inter-religious, between Christians and Muslims. And some of the main battle lines are certainly drawn along that divide.

But the driving factors lie far from religion: political status, property rights and power distribution are the underlying causes.  As my former US Institute of Peace colleague David Smock puts it:

The principal sources of this conflict are competition for resources and political power rather than theological differences.

The most important of the underlying issues seems to arise from the distinction between “indigenous” people and “settlers.”  As Chris Kwaja and Darren Kew explain:

This distinction becomes a major legal problem because Nigerian law allows local governments to determine their own qualifications for residency, and local administrators across the country typically make this determination based on ethnic heritage and historic control of the land.

Consequently, many Nigerians are considered “residents” of local governments in ethnic homelands from where their grandparents or great-grandparents may have migrated and where they themselves may never have even visited. These same Nigerians may be denied residency in the very neighborhoods where they were born. Without certificates of residency, individuals face a host of problems in voting, gaining political office, accessing certain types of employment or public services, and even buying land.

The largely Muslim Hausa have generally been regarded as non-indigenous “settlers” in Plateau State, of which Jos is the capital, no matter how long they have lived there.  But in Jos North, where the Hausa control the local government, they treat non-Hausa as settlers.

These are problems considerably more mundane, and in a sense soluble, than at least some theocratic issues. While there are Nigerians committed to resolving them, resources have been lacking, and the justifiably admired Imam and Pastor need support (the video clip about them

here is only 10 minutes, despite what the label says).  Unless the underlying issues are dealt with, Nigeria’s fault lines, which are not limited to Plateau State or Christian/Muslim tensions, will widen, with catastrophic consequences in a country that supplies about 2.3 million barrels of oil per day to the world market (including 8% of U.S. imports) and has the largest population in Africa (over 152 million).

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Christmas presents from Muslim friends

There is something cooking–maybe something good–involving Turkey, Pakistan and Afghanistan.  The Muslim Santa Claus yesterday delivered Karzai welcoming the idea of the Taliban opening an office in Turkey and Turkey announcing a military exercise involving Pakistan and Afghanistan scheduled for April.  These were outcomes of the fifth AfTuPak (my coinage, I think) meeting since 2007, when Turkey’s hyperactive non-secular government (I hesitate to call it Islamist because of the implications to non-Turkish ears, even if that too would be accurate) undertook to help improve relations between Kabul and Islamabad.

This comes on top of revival (admittedly for the umpteenth time) of the TAPI pipeline proposal involving Turkmenistan, Afghanistan, Pakistan and India, a proposal still far from realization but a clear sign of rapprochement among the countries involved.

Somewhere in the bowels of the State Department someone may be grumbling about all this, calling it a pipedream, as American diplomats (and intel analysts) tend to do about anything not conceived in Washington.  But surely Clinton, Gates and Obama understand that this kind of effort among Afghanistan and its neighbors can have positive repercussions.  If it works, someone can discover that it all really was invented in DC (maybe even Holbrooke’s last legacy).  Anything that gives Afghanistan and its neighbors, most especially Pakistan, a common stake in peace has got to be rated a plus.

David Petraeus is sounding a lot happier about Pakistan’s cooperation these days.  Some of this will just be salving old wounds, but maybe, just maybe, there was something more going on while we were all enjoying the holiday yesterday.

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The world is slowing down again

The world is slowing down again, after the sprint from Thanksgiving.  This time I’m sure it’s not just me:  no cars on the way downtown today, even though there were traffic jams on the Beltway.  I hope it helps the economy.

Here is my quick assessment of where things stand as we head into Christmas/New Year:

  • Sudan:  independence referendum is on track for January 9-15.  People (read “people in the know, more or less, whom I’ve talked to”) seem confident the North will accept the results.  Still no agreement on Abyei, which could be lost to the South, or on the many post-referendum issues (oil, citizenship, debt, border demarcation, etc.), which will be negotiated in the six-month transition period.
  • Iraq:  Maliki met the 30-day deadline by presenting his ministers to parliament Tuesday, with some temporary placeholders in important national security slots.  No one but me seems happy with the motley crew, but now let’s see if they can govern effectively.
  • Afghanistan:  President Karzai objects to the September parliamentary election results, which returned fewer of his favorites than he would like, but has agreed that parliament will meet January 20.  We’ll see.  The Obama Administration strategy review was little more than a sham–we’re in this war until 2014, when VP Biden says we’re out come hell or high water.
  • Palestine/Israel: no more hang up on the settlement freeze, which Washington abandoned.  Both parties are pursuing their “Best Alternative To a Negotiated Agreement”:  Israel is building, Palestine has received a spate of recognitions.
  • Koreas:  After indulging in an artillery barrage against a South Korean island, North Korea has turned down the volume, but there is no real progress on the issues.
  • Iran:  Ahmedinejad fired his foreign minister and brought in the MIT-educated atomic energy chief, who knows his stuff.  Sanctions are biting and the regime is abolishing subsidies to cope.  Americans and Europeans hope rising gasoline prices will generate popular pressure on the regime.  Little sign of that so far.  Next P5+1 meeting in late January.
  • Lebanon: bracing for the Special Tribunal verdict (still!), with Tehran backing Hizbollah in denouncing the whole process.
  • Egypt: voted in unfree and unfair elections that won’t even do much good for President Mubarak.
  • Balkans:  Kosovo elections marred by ballot stuffing, causing reruns in some municipalities January 9.  A Swiss opponent of Kosovo independence accused Prime Minister Thaci of heinous crimes.  Montenegrin PM Djukanovic resigned, Croatia arrested its own former PM, Bosnia is having trouble forming a government.  Mladic of course still at large.
  • Burma:  Aung San Suu Kyi still moving cautiously.  I guess when you’ve been under house arrest that long a bit of caution is in order.

The earth was spinning pretty fast for President Obama until today.  He got a big new stimulus package (in the guise of tax cuts), repeal of Don’t Ask Don’t Tell (if you don’t know what that is, don’t ask and I won’t tell), ratification of New START (that’s when you have too many nuclear weapons and need an agreement with Russia to allow you to get rid of some while giving in to upgrading others), food safety regulation, and health benefits as well as compensation for the 9/11 rescue and cleanup crews.  Former New York City Mayor Giuliani, probably frightened they would hand the $4.2 billion bill to him, was notably off in Paris promoting an Iranian group that has made its way onto the U.S. government list of terrorist organizations.

The president lost two battles:  a few of the rich get to keep a lot of money even though the government needs it more than they do, and kids brought illegally to the U.S. through no fault of their own don’t get to stay just because they want to go to college or serve in the armed forces.  I guess you can tell whose side I’m on.

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