Monthly Archives: October 2013

Torpedoing The Iran Nuclear Talks

Torpedoing the Iran Nuclear Talks

Dispatches From the Edge

Oct. 27, 2013

As the U.S. and its allies prepare for another round of negotiations with Iran over its nuclear program, powerful and wealthy opponents—from the halls of Congress to Middle East capitals—are maneuvering to torpedo them. At stake is the real possibility of a war with consequences infinitely greater than the 2003 invasion of Iraq.

When the U.S., Russia, China, France, Britain and Germany—the so-called “P5+1—sit down with Iran’s negotiators in Geneva on Nov. 7, those talks will be shadowed by an alliance of hawkish U.S. Congress members, an influential Israeli lobby, and a new regional alliance that upends traditional foes and friends in the Middle East.

The fact that the first round of talks on Oct.15 was hailed by Iran and the P5+1 as “positive” has energized opponents of the negotiations, who are moving to block any attempts at softening international sanctions against Teheran, while at the same time pressing for a military solution to the conflict.

Current international sanctions have halved the amount of oil Iran sells on the international market, blocked Teheran from international banking, and deeply damaged the Iranian economy. The worsening economic conditions are the backdrop for the recent election of pragmatist Hassan Rowhani as president of Iran. Hassan’s subsequent efforts to move away from the confrontational politics of former president Mahmoud Ahmadinejad appears a signal that Iran wants to peacefully resolve a crisis that has heightened tensions in the region and led to everything from the assassination of Iranian scientists to the world’s first cyber war.

The central issue is whether Iran is constructing a nuclear weapon in violation of the Nuclear Non-Proliferation Treaty (NPT), a charge Teheran denies. Iran is a NPT signatory and UN inspectors regularly monitor the country’s civilian power plants and nuclear facilities. Enhanced fuel is required for civilian power plants and medical research, but it is also          an essential ingredient in a nuclear weapon. Iran enhances some of its fuel to 20 percent. Bomb fuel must be 90 percent pure.

While no one claims Iran has a nuclear weapon, Teheran’s has been less than candid about all its activities and critics charge that Iran is preparing to build one. But the Iranians say that secrecy is necessary—four of their nuclear scientists were assassinated by Israeli agents, and their nuclear industry was severely damaged by a joint Israeli-US cyber attack.

The upcoming negotiations will try to find common ground, but there are actors in this drama whose agenda have less to do with nuclear weapons than the shifting balance of power in the Middle East. The coalition opposed to a peaceful resolution of the current crisis is a combination of traditional hawks and strange bedfellows.

On the U.S. side are the usual suspects.

There are the neo-conservatives who pressed so hard to invade Iraq, including former UN ambassador John Bolton, who recently called for Israel to attack Iran, former Pentagon analyst Matthew Kroenig, Gary Schmitt of the American Enterprise Institute, and historian Niall Ferguson.

They are joined by congressional hawks ranging from the traditional “we never saw a war we didn’t like” types—Republican Senator Lindsay Graham who plans to introduce a resolution authorizing the use of military force against Iran—to Democrats, like liberal Ron Wyden, co-sponsor of a bill that would urge the U.S. to aid Israel militarily if Tel Aviv attacked Teheran.

A similar cast of characters helped sink a 2010 Brazilian-Turkish peace initiative that would have sent Teheran’s enhanced fuel to a third country.

The American Israel Public Affairs Committee (AIPAC) is lobbying Congress in an effort to constrain the Obama administration’s negotiating options, and encouraging the Senate to pass a bill that would essentially prevent Iran from selling any of its oil. Many in the Congress have adopted the Israeli government’s demand that Iran dismantle much of its nuclear industry and agree to end all enhancement activities, two things Teheran will almost certainly refuse to do.

While enhancement is not specifically mentioned in the Non-Proliferation Treaty, Article IV of the document guarantees the right “to develop research, production and use of nuclear energy,” which treaty signers have long interpreted as the right to produce fuel for civilian nuclear power

The Israeli government and its American supporters demand an end to enhancement, a demand that would throw a monkey wrench into the negotiations. So far the Obama administration has remained silent on the issue, although back in 2009 then Senator, and now Secretary of State, John Kerry told the Financial Times that demanding Iran end enhancement was “ridiculous.”

U.S. opponents of any deal that is not an abject surrender by Teheran are the same old, same old, but not so in the Middle East, where a newly formed alliance is mobilizing to derail the nuclear talks: the Gulf monarchies, Egypt, and Israel.

The linchpin of this new alliance is Saudi Arabia and Israel, and their target is any rapprochement between Washington and Teheran. According to UPI, “secret meetings between Israeli and Arab intelligence chiefs” and other “senior officials” have been held in Jordan for several years. Their aim, according to Israeli Ambassador to the U.S. Michael Oren, is to destabilize the so-called “Shiite crescent,” the “strategic arc that extends from Teheran, to Damascus to Beirut.” The Shiite-dominated government of Iraq, currently under siege by Sunni extremists, is also in the cross hairs.

The new alliance cut its diplomatic teeth on the recent military coup in Egypt. According to investigative reporter Robert Perry, “While Saudi Arabia assured the coup regime a steady flow of money and oil, the Israelis went to work through their lobby in Washington to insure that President Barack Obama and Congress would not declare the coup a coup and thus trigger a cutoff of U.S. military aid.”

The Saudis are also stepping up their support for anti-government insurgents in Syria and fomenting sectarian trouble in Lebanon. If the alliance is successful it will cement a military-backed authoritarian regime in Egypt, set Lebanon, Syria, and Iraq aflame with sectarian warfare, and sabotage any agreement between the U.S. and Iran.

While the alliance between Saudi Arabia and Israel initially seems an odd one, in fact both countries have similar strategic goals. Both support the overthrow of the Assad regime, both want to weaken Shiite-based Hezbollah in Lebanon, both want to see the minority Iraqi Sunnis back in charge, and both view Iran as a threat.

The Saudis and their allies in the Gulf Cooperation Council—the United Arab Emirates, Kuwait, Oman, Bahrain, Qatar, and new members Jordan and Morocco—fear domestic unrest, and see the Arab Spring as a direct threat to their monarchal governments. While all these countries have militaries, they are mainly for quelling internal dissent. The last time the Saudis took the field, they got beat up by the rag-tag Houthi in northern Yemen.

The Gulf Cooperation Council may field inept armies, but they have lots of cash. And if it comes to muscle, who better to provide it than the Israelis, the most powerful and competent army in the region? While the U.S. seems to backing away from using force against Iran, the Netanyahu government has sharply escalated its anti-Iran rhetoric. Israel recently began a series of war games built around long distance bombing raids, the kind that would be required to attack Iran.

The Iranians appear to want a settlement, but not one that looks like capitulation. The Obama administration’s positive comments following the last round of talks suggest that Washington would like a way out as well. Key to this is ratcheting down some of the sanctions, but Congressional hawks are trying to poison the well by increasing sanctions and resisting any efforts to ease them.

A study late last year found that unless Washington and its allies ease sanctions, Iran is not likely to curb any of its nuclear programs. And this spring a bi-partisan panel of former U.S. officials and experts argued that sanctions are increasingly counterproductive.

Countering the anti-Iran alliance will not be easy, but Washington’s reluctance to start another war in the Middle East reflects anti-war sentiment at home. The hawks may want a war, but they will find little support for it among Americans. A CBS/New York Times poll found that Americans overwhelmingly support negotiations, are not eager for war, and are evenly split about coming to Tel Aviv’s aid in the advent of an Israeli attack.

AIPAC is influential, but it hardly represents all American Jews, who tend to support Israel, but not if it means a war with Iran. While AIPAC was trumpeting Netanyahu’s characterization of Rowhani as a “sheep in wolf’s clothing,” the liberal Jewish lobby J Street hailed him as a “potentially hopeful sign,” and opposes a military attack on Iran.

The new Middle East alliance has alienated Turkey, which still plays a pivotal, if somewhat diminished, role in the region. If the U.S. were to reach out to Russia, and try to pull Turkey into the process, that tripartite grouping would constitute a counterbalance to the monarchies and Israel, and move the region away from the growing power of the sectarian groups and the looming danger of yet another war.

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Letter From Sofia: Old Tanks and Modern Mayhem

Letter From Sofia: Old Tanks & Modern Mayhem

Dispatches From The edge

Oct. 15, 2013

Sofia, Bulgaria

The military museum in this sprawling capitol city consists of a tiny building and a huge outdoor display of weapons that look as if they had been wheeled in fresh from the battlefields and parked, higgledy piggledy: mountain howitzers that shelled Turks in 1912 rub hubs with Cold War era Russian artillery.  MIGs, dusty and weather beaten, crowd a sinister looking Luna-M “Frog” tactical nuclear missile.  Two old enemies, a sleek German Mark IV Panzer and its dumpy, but more lethal adversary, a Russian T-34, squat shoulder to shoulder.

Poor Bulgaria. The Russians won’t be back, but once again the Germans are headed their way, only this time armed with nothing more than a change of currency and the policies of austerity that go along with it. The devastation those will inflict, however, is likely to be considerable.

Bulgaria is preparing to jettison its own, the lev, and adopt the Euro, the currency of the European Union (EU), although the country has dragged its heels about actually making the switch. With good reason. Currency control is a practical and commonsense way for countries to deal with interest rates, debt, and inflation, as well as to stimulate economic activity. The U.S. Federal Reserve constantly manipulates the dollar to accomplish these goals.

But the Euro is controlled by the European Central Bank based in Frankfort, Germany. Because Germany has the biggest economy in the EU, and is at the center of a “core” of wealthy nations that also use the Euro—France, Austria, and the Netherlands—Berlin largely calls the shots. That has translated into a tight-fisted control of the money supply, an aversion to economic stimulation, and years of enforced austerity for countries trying to recover from the 2007 economic crisis sparked by the U.S..

The result, according to Martin Wolf of the Financial Times, is that in addition to Mercedes and BMWs, Germany “exports bankruptcy and unemployment.”

Hardest hit by these policies are the “distressed six”: Greece, Ireland, Italy, Portugal, Spain and Cyprus, where draconian austerity policies have created soaring unemployment, devastating social services cutbacks, and widespread misery.

Led by German Chancellor Angela Merkel and Conservative British Prime Minister David Cameron—Britain retains its own currency, but has been an enthusiastic supporter of Germany, and has applied austerity to its own economy—the strategy has been an unmitigated disaster.

While supporters of this “slash and cut” approach to reviving the European economy claim their policies are a success—German Finance Minister Wolfgang Schauble says the world should “rejoice” at recent economic figures, and British Chancellor of the Exchequer George Osborne crows that critics of the strategy have been proven wrong—figures show a very different picture.

The overall EU jobless rate is 12 percent, although that figure is misleading because it varies so much by country, region, and cohort. Unemployment is 12 percent in Italy, 13.8 percent in Ireland, 16.5 percent in Portugal, 26.3 percent in Spain, and 27.9 percent in Greece. And even these figures make the jobless rate look sunnier than it is. Unemployment among Greek youth is 60 percent, and areas of southern Spain post numbers in excess of 70 percent. Indeed, an entire generation of young people across the continent is being cut out of the economic pie.

“It is true that unemployment figures have improved in recent times, but it is equally true that unemployment is at such a high level that any marginal improvement is irrelevant,” an Madrid-based economist for Exane BNP Paribas told the Financial Times. “Many people are no longer actively looking for jobs and long term unemployment already affects more than 50 percent of the total unemployed population.”

Figures also show that EU growth rates are essentially dead in the water, which means that it will be years before there is any real fall in the jobless rate. EU gross domestic product is 3 percent below pre-crisis levels and those figures go sharply south for the distressed six: down 7.5 percent for Spain, 7.6 percent for Portugal, 8.4 percent for Ireland, 8.8 percent for Italy, and 23.4 percent for Greece.

It is true that growth in Britain is up 2.2 percent, but that figure is over three years and remains 3.3 percent below pre-crisis levels. Moreover, the Office of Budget Responsibility projected back in 2010 that the economy would expand by 8.2 percent by 2013. Economists Oscar Jorda and Alan Taylor of the University of California at Davis estimate that austerity probably knocked about 3 percent off of the British growth rate.

The EU is turning into a house divided. A wealthy core that keep their economies on an even keel and unemployment rates relatively low—Austria and Germany have the lowest jobless rates in the EU at 5.2 and 5.3 percent, respectively—while the south and the periphery turn into low wage, high unemployment labor reservoirs. If “core” workers grumble at stagnant wages and reduced benefits, there are always Spaniards, Italians, Greeks and Portuguese willing to take their places.

What the distressed countries really need is a serious stimulus program to jump-start their economies by putting people back to work. But that is not something they are likely to get, especially given the outcome of the recent German elections, where Merkel’s Christian Democrats and her allies in the Bavarian Christian Social Union retained power. Merkel told a rally in Berlin, “Our European course will not change,”

and the Greek newspaper Ta Nea glumly called it a victory for the “Queen of austerity.”

In reality, the German election was less a vote for more austerity than a reflection of domestic concerns about stability. And, in any case, Merkel’s opponents actually won the election. Merkel and her allies control 311 seats in the Parliament, but the Greens, Social Democratic Party and Left Party won 329 seats. While the Greens and Social Democrats have acquiesced to some austerity policies, they are not as hard line as Merkel. If the Greens and the SDP could overcome their hostility to the Left Party—which took 64 seats, one more than the Greens—the center-left could form a government that could potentially alter the economic chemistry of the EU.

In the meantime, Bulgaria awaits its fate with an odd combination of clear sightedness and illusion.

Surveys show that most people think the Euro will cut their living standards and have a negative impact on the economy. Bulgaria is already in difficult straits, partly because when it joined the EU it lost its biggest customer, Russia, partly because it is small, and partly because it still suffers from a post-communist hangover. It is the poorest country in the EU.

Like many former communist bloc countries, when Bulgaria broke loose from the domination of Soviet Union in 1990, it went on a privatization tear that ended up largely gutting its industrial and agricultural base. It is now trying to claw back by reviving agriculture and building up the tourist industry.

But tourism is volatile, and Bulgaria appears to have over expanded, much as Spain did. The Black Sea coast south of Burgas is lined with high rises and gated communities, but many of them are dark when the sun goes down. There is a distinct feel of a real estate bubble.

The illusion is that Bulgarians support EU membership because they think it means the Union will bail them out of any future trouble, as it did Greece, Spain, Portugal and Ireland. In fact, the Union did not bail out any of those countries; it rescued failed banks and financial institutions that had recklessly gambled away their assets on real estate speculations. These “loans” also required huge cutbacks in social services and massive layoffs of public workers.

When the bubble popped, it was taxpayers in those countries who ended up picking up the bill, including those incurred by “core” French, German, Dutch, Austrian and British banks.

In the coming war over “stimulus vs austerity” Bulgaria is unlikely to play a pivotal role, though conquerors have underestimated her in the past. The question is, will the country resign itself to second tier status in the EU, or will Bulgarians join with increasing numbers of Greeks, Spaniards and Portuguese who are saying “enough”?

A good start toward turning things around would be to take up a call by Greece’s Syriza Party for a European debt summit similar to the 1953 London Debt Agreement, That pact allowed Germany to recover from World War II by cutting its debt by 50 percent and spreading payments out over 30 years.

The Mark IVs Panzers are museum pieces. These days the power to wreak destruction doesn’t depend on commanding armored divisions. All one needs to overrun Europe now are currency control, banks and obsequious politicians.

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