Topic: Foreign Policy and National Security

Iran’s Economy, With and Without a P5+1 Agreement

The haggling between Iran and the so-called P5+1—the permanent members of the United Nations Security Council, plus Germany—is scheduled to come to a close on Monday, November 24th. The two parties each want different things. One thing that Iran would like is the removal of the economic sanctions imposed on it by the United States and its allies.

After decades of wrongheaded economic policies, Iran’s economy is in terrible shape. The authoritative Economic Freedom of the World: 2014 Annual Report puts Iran near the bottom of the barrel: 147th out of the 152 countries ranked. And the “World Misery Index Scores” rank Iran as the fourth most miserable economy in the world. In addition to economic mismanagement, economic sanctions and now-plunging oil prices are dragging Iran’s structurally distorted economy down. So, it’s no surprise that Iran would like one of the weights (read: sanctions) on its economy lifted.

Just how important would the removal of sanctions be? To answer that question, we use the Institute of International Finance’s detailed macroeconomic framework. The results of our analysis are shown in the table and charts below the jump.

Is the Obama Administration Losing Its Collective Mind over the Islamic State?

The president has added ground forces to the battle in Iraq and the military has suggested introducing thousands more. His officials reportedly have decided to focus on overthrowing Syrian President Bashar al-Assad in the name of fighting the Islamic State.

The U.S. has been back at war in the Middle East for more than two months. The results?

The administration’s vast coalition of 60 nations is mostly a PR stunt. The Arab states have done little in the air and nothing afoot. Most flagrantly AWOL is Turkey.

Nor has the administration’s scattershot bombing campaign had much effect. By one count U.S. strikes have killed 464 Islamic State personnel. However, the estimated number of ISIL fighters trebled to as many as 30,000 just a couple weeks into Obama’s war.

Moderate Syrian rebels favored by the administration have been routed in that country’s north. Many fighters defected or fled while abandoning their heavy weapons provided by Washington.

The Free Syrian Army, the biggest Western-oriented insurgent group, also is losing fighters, largely to al-Nusra. Yet, explained former U.S. ambassador Robert Ford:  some Syrians “are burning American flags because they think we are helping the regime instead of helping them.” Residents of Raqaa, the ISIL stronghold bombed by American forces, blame Washington for higher food and fuel prices.

Iraq’s Shiite majority has formed a new government—handing the Interior Ministry to a hardline Shia faction responsible for past atrocities against Sunni civilians. Moreover, last week reports emerged that the Islamic State and al-Nusra Front agreed to stop battling each other and even to fight together.

U.S. Should Talk to North Korea, Whoever Is in Charge

Power is like quicksilver.  It often slips through the fingers of those attempting to grasp it.  Who is in power in North Korea?  Maybe 31-year-old Kim Jong-un.  Maybe not.

The Democratic People’s Republic of Korea’s Kim disappeared from public view for 40 days.  On his return Pyongyang only released undated still photos.

There’ve been no untoward troop movements or party conclaves in the North, though some other signs seemed conflicting.  Whoever reigns, there is little reason to hope for nuclear disarmament. 

To the contrary, the North appears to be increasing production of fissile material, moving ahead on ICBM development, and upgrading rocket launch facilities.  Even a seemingly secure Kim, the “Great Successor” whose father concocted the North’s “military first” policy, would hesitate challenging the armed services by trading away its most important weapon. 

Yet there are signs of change elsewhere.  The economy appears to be growing, with more consumer goods evident, especially in Pyongyang. 

Moreover, Pyongyang appears to be adjusting diplomatic strategies yet again.  The North released the three Americans it held, apparently without receiving anything in return. 

North Korea’s UN ambassador, So Se-pyong, indicated that the North was ready to return to the six-Party nuclear talks.  In early October Pyongyang sent a high-ranking delegation to Seoul for the Asian Games, which proposed further talks, though the latter later foundered. 

Nothing suggests that the regime is close to collapse. 

In this situation there is little to recommend the administration’s continuing policy of isolating the North.  In August North Korea’s deputy UN representative, Ri Tong-il, complained that “No country in the world has been living like the DPRK under serious threats to its existence, sovereignty, survival.” 

Of course, the North’s leaders are practiced cynics and their claims cannot be taken at face value.  But even paranoids have enemies, it is said, and North Korea is surrounded by wealthier and more powerful adversaries. 

A more pacific U.S. approach might not change the Kim regime’s calculus.  However, it’s hard to imagine a less threatening DPRK without changing America’s approach.

And that could come in part from diplomatic dialogue.  Washington should offer to establish low-key diplomatic relations, perhaps a consulate. 

Such a shift would be even more effective if coupled with policy changes that would be in America’s interest in any case.  Sanctions haven’t changed the DPRK and should be loosened.

Moreover, Washington should bring home its troops.  The U.S. conventional presence is long outmoded:  the South has around 40 times the GDP and twice the population of the DPRK.

Washington then could invite the North’s authorities to reciprocate.  If Pyongyang failed to act, which would surprise no one, Washington would be no worse off. 

It also would be more difficult for Beijing to excuse North Korean misbehavior.  Moreover, a troop withdrawal would eliminate the prospect that Korea unification would result in U.S. troops on China’s border, a Chinese nightmare which discourages Beijing from cooperating with Washington.

Even a more responsive North Korea is unlikely to be a particularly friendly actor.  Nevertheless, there is more hope for internal improvements in human rights and external talks over the issue if the international environment is less threatening for Pyongyang.  America’s earlier refusal to talk to the PRC gained nothing, while the famed Nixon opening helped create an atmosphere more conducive to post-Mao reforms.

Someday North Korea will pass away.  As I wrote in National Interest online:  “Until then the country is likely to remain a mysterious challenge, unsettling an entire region.  Washington’s best approach would be to extricate itself from confrontation and pursue dialogue, while leaving South Korea and Japan free to develop their separate policies.” 

Every strategy toward the DPRK so far seems to have failed.  Anything adopted is likely to be only a second best.  However, today even second best would be a major step forward.  It’s time for Washington to try something different.

U.S. Actions Alienate China and Foster Chinese-Russian Cooperation

Two countries that have the capacity to cause serious headaches for the United States are Russia and China.  Yet Washington is committing a cardinal sin in foreign policy: getting on bad terms simultaneously with those two major powers.  As I discuss in a recent article at China-U.S. Focus, that approach is especially unfortunate because Beijing has boundary disputes and an array of historical grievances against Russia.  In addition, China is now uneasy about the precedents being set by the Kremlin’s support of secessionists in Crimea and eastern Ukraine.  Those concerns and would normally cause Chinese officials to be wary about close cooperation with Russia.  But because Washington’s own relations with China have become frosty, the Obama administration may be forfeiting an opportunity to keep Moscow and Beijing from developing a common policy directed against the United States.

Two high-priority Chinese foreign policy objectives are now in conflict.  Beijing does not want to encourage the increasing popularity of secession in the international system.  The breakup of the Soviet Union, the violent fragmentation of Yugoslavia, the emergence of South Sudan, and the increasing likelihood of an independent Kurdistan arising from the wreckage of Iraq and Syria, all confirm a powerful trend.  Russia’s actions in Georgia in 2008 (supporting the breakaway regions of Abkhazia and South Ossetia) and now in Ukraine have given that trend a major boost, much to Beijing’s dismay.  Chinese leaders fret about separatist sentiments in Tibet and Xinjiang, as well as Taiwan’s continuing de facto independence.  From Beijing’s perspective, Moscow’s embrace of secessionist movements in neighboring states is most unhelpfu

However, the Chinese government is reluctant to join the West’s campaign of coercion against Moscow.  Not only is Russia an important partner of China’s in the Shanghai Cooperation Organization, the two countries have significant mutual economic and security interests throughout Central Asia and the Middle East.  The multi-billion dollar energy deal that the two governments recently signed underscores yet another aspect of the growing bilateral ties.

When Liberty Knocked Down the Berlin Wall

It’s easy to be pessimistic about the future of liberty.  Yet sometimes freedom advances with extraordinary speed.  Like 25 years ago in Europe.

As 1989 dawned communism had ruled what was the Russian Empire reborn for seven decades.  The system failed to fulfill its promise of human liberation, but survived with the backing of secret police, gulags, and the Red Army.

Then in an instant it all was swept away.  On November 9, 1989, the Berlin Wall was open.  One of the most dramatic symbols of human tyranny was gone. 

Tens of thousands of East Germans were imprisoned for “Republikflucht,” or attempting to flee the East German paradise.  Some 1000 people died trying to escape East Germany, about 200 from Berlin.

As 1989 dawned there was obvious unrest in what Ronald Reagan had called the Evil Empire.  Hope was rising, but no one could forget that previous popular demands for freedom always had been crushed by Soviet tanks. 

In 1989 Hungary led the way.  Plans were made for multiparty elections.  The Communist Party dissolved.  When the new leadership tore down Hungary’s wall with the West the Iron Curtain had a huge hole.

Poland’s communist regime made a deal with a revived Solidarity Union and held free elections.  The liberal tide rose in Czechoslovakia, sweeping away the hardline leadership installed to squelch the Prague Spring of 1968.

The East German regime remained tough.  Frustrated East Germans began escaping through Hungary, with its open border. 

Protests spread, causing the communist leadership to temporize.  On November 4 a million people gathered in East Berlin. 

On November 9 visibly struggling Politburo member Guenter Schabowski declared that East Germans would be free to travel to the West “immediately.”  Border guards desperately sought guidance as tens of thousands of people gathered demanding to be let through. Just before midnight the security forces stood aside. 

The GOP vs. The BCA

The Congressional Budget Office estimates that the costs of the Pentagon’s current plans will total nearly $3.8 trillion over the next seven years, $308 billion more than is permitted by the 2011 Budget Control Act (BCA).

That $3.8 trillion represents the Pentagon’s base budget, not the entirety of federal spending on national security. It does not include, for example, nuclear weapons spending in the Department of Energy; nor the Departments of Homeland Security and Veterans Affairs; nor overseas operations in Afghanistan, and the campaign against ISIS in Iraq and Syria. But I digress.

If spending exceeds the BCA caps, CBO observes, the Pentagon will be forced to “make sharp additional cuts to the size of its forces, curtail the development and purchase of weapons, reduce the extent of its operations and training, or implement some combination of those three actions.”

A more likely scenario, however, is that the new Republican-controlled Congress will adjust or eliminate the BCA spending caps. According to The Daily Beast, Sen. John McCain’s “first order of business as chairman of the Senate Armed Services Committee will be to end the budget rule known as sequestration, which requires the U.S. military to cut its budget across the board.”

If McCain succeeds, military spending advocates can be expected to push through dramatic increases in the Pentagon’s budget. Indeed, if House Budget Committee Chairman Rep. Paul Ryan’s FY15 budget is any indication, the Pentagon would receive over the next seven years nearly $100 billion more than it has requested.

How would Republicans pay for such increases? Many would prefer to find the money by cutting non-defense discretionary spending, or by reforming entitlement programs. But it’s difficult to envision Democrats agreeing to such proposals, especially if the Pentagon is the primary beneficiary. Others, including Sen. Lindsey Graham, are open to the idea of raising tax revenue by closing loopholes and eliminating deductions. But most Republicans remain allergic to tax increases, and they are likely to confront a bipartisan coalition of outside groups that has adamantly opposed past efforts to circumvent the BCA in order to fund higher Pentagon budgets. The easiest path is, as usual, debt. Thus, expect another Ryan-Murray style “cave-in” that puts additional Pentagon spending on the country’s credit card.

Despite all that talk during the mid-term election campaigns of President Obama’s reckless deficits, Washington’s willingness to spend the people’s money – including money the people don’t yet have – is a bipartisan affliction.

The only hope, it seems, is to stick to the current spending caps, imperfect though they may be. The BCA caps are not the wisest way to curb military spending, but they are all we have.  

Congress Should Tell President Barack Obama No to War against the Islamic State

President Barack Obama finally is obeying the law. He wants Congress to authorize military action against the Islamic State. 

Congress should respond as it was prepared to do when the president requested permission last year to bomb Syria: Capitol Hill should say no.

Candidate Barack Obama stated: “The president does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.”  But three years ago, President Obama took America into war against Libya.  Three months ago, he initiated hostilities in Iraq against the Islamic State. Both without a congressional vote.

Most recently, administration officials claimed authority under the Authorization for Use of Military Force against al-Qaeda adopted in the aftermath of September 11.  But the Islamic State is not al-Qaeda and ISIL’s leaders did not help organize the attacks on the twin towers and the Pentagon. 

The president obviously changed his mind after his party was defeated in the off-year elections.  At least he now is following the Constitution. 

The Founders gave most military powers to Congress: raising and funding the military, writing the rules of war, issuing letters of marquee, and ratifying treaties. Moreover, Article I, Section 8 (11) states: “Congress shall have the power … to declare war.” 

The early Americans feared a president and war like today.  The Founders particularly opposed a system which subjected the nation’s peace to the whims of one man, accountable to no one.

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