A History of Foreign Policy Tussles

Joseph Bosco - January 27, 2015

"I have a gavel and I have a microphone." 

That seems to have been U.S. Rep. John Boehner's response to President Barack Obama's phone-and-pen approach to governance when the speaker invited Israeli Prime Minister Benjamin Netanyahu to address Congress next month. Netanyahu will present Israel's views on nuclear negotiations with Iran and on the growing threat of Islamist terrorism - issues on which a bipartisan Congress and the administration have widely divergent views.

The White House has complained that Boehner did not consult with the executive before taking a deep dive into sensitive international diplomacy, thereby breaching protocol and trespassing onto presidential prerogatives. Boehner denies that he is "putting a thumb in anyone's eye," but the speaker has expressed his annoyance at Obama's unilateral executive actions in both domestic and foreign policy - actions taken often in direct defiance of Congressional sentiment. Boehner criticized Obama's State of the Union speech as lacking seriousness regarding the threats from Iran and radical Islam.

Members of Congress from both parties see Obama's treatment of Congressional concerns as cavalier, and some may feel that turnabout is fair play. In any event, it is hardly the first time the legislative branch has responded vigorously to a foreign policy action it finds objectionable, especially when it perceives the executive as tossing aside the interests of a loyal American ally.

Michel Houellebecq's Soumission is the Soundtrack of Our Time

Jan Techau - January 27, 2015

Irony is the quintessential Western cultural achievement. If the West does not appreciate the importance of that defining character trait, it won't stand a chance.

It is not Michel Houellebecq's fault that his new novel Soumission ("Submission") was published in France on the same day that fanatic Islamist killers wiped out the editorial board of a satirical newspaper.

But the gruesome fate of Charlie Hebdo - and the heated (and often overheated) debate about Islamic fundamentalism and the terror it has bred in Europe and elsewhere-has become inextricably linked with Houellebecq's dystopian story of a near-future France in which the election of a Muslim president triggers the transformation of society away from its Western ideals.

In Europe, with its widespread sense of malaise over economic decline, unguided immigration, doubts about national identity, and war in the continent's periphery, the book has become the soundtrack of our time.

Radicals Cannot Be Lulled into Tolerance

Henry Ergas - January 26, 2015

THE French love the idea of France, Americans their country's shining ideal of liberty. Australians simply love their country as it is. And nothing is more integral to the achievement we celebrate on Australia Day than the easygoing tolerance of difference.

But tolerance was hardly on display at the demonstration Hizb ut-Tahrir organised last Friday night in Lakemba, which refused to condemn the attack on Charlie Hebdo. And though the organisation is on the fringe of Australia's Muslim community, its views, and those of other fundamentalists, find a broad and growing echo in the Islamic world.

Whether our model of pluralism can remain unchanged as religious hatred spreads, including into Australia's suburbs, is a problem that demands honest discussion. At the heart of that problem lies the fact that Islam finds it difficult to accept religious freedom and the freedom of expression that goes with it.

The UN's Universal Declaration of Human Rights defines religious freedom in terms of each person's ability to "change his religion or belief" and to manifest that religion or belief "in teaching, practice, worship or observance". But data from the Association of Religion Data Archives shows that while they endorse that declaration, severe restrictions on religious freedom are imposed in almost 80 per cent of Muslim-­majority countries with a population of two million or more, compared to 10 per cent of Christian-majority countries.

Syriza Promises an End to Humiliation

Spyros Economides - January 26, 2015

As had been widely predicted, the left-wing party Syriza has secured a victory in the Greek election. Having finished with just short of enough seats in parliament for a majority, leader Alexis Tsipras has agreed to form an anti-austerity coalition with the right-wing party Greek Independents.

Throughout the short campaign, it appeared the relative newcomer to Greek politics, led by the charismatic Tsipras, would win. Now it appears he has done so by a significant margin.

Speaking in the wake of the victory, Tsipras said the vote would end years of “destructive austerity, fear and authoritarianism” and that his country could now leave behind the “humiliation” it has suffered.

The last half of 2014, which became essentially a prolonged general election campaign, saw the Syriza leadership (especially Alexis Tsipras) toning down its extreme rhetoric. Instead of pushing for radical reform, it focused on promising simply to abandon austerity and challenge Greece’s external debt commitments.

Syriza to Form Greek Government

Derek Gatopoulos - January 26, 2015

ATHENS, Greece (AP) -- Greece's Syriza party gained the key backing needed to form a government Monday, creating a surprise alliance with a small right-wing party that signals possible confrontation over the country's bailout.

Although the alliance between two ideologically opposed parties who share only their opposition to the bailout was a surprise, it nevertheless boosted stock markets across Europe that had fallen on news of the uncertain election results and fear of a second election. Stocks had fallen as much as 4 percent in Athens on Monday morning.

The right-wing Independent Greeks party said it would back Syriza leader Alexis Tsipras to be the next prime minister, after he fell just short of the majority needed to govern alone following Sunday's poll.

"From this moment, the country has a government. Independent Greeks give a vote of confidence to Prime Minister Alexis Tsipras," Independent Greeks leader Panos Kammenos said - without clarifying whether he would join a coalition with Tsipras or give support to a minority government.

The New Greece of Alexis Tsipras

Judy Dempsey - January 26, 2015

Alexis Tsipras promised voters an end to austerity and a new beginning for Greece. Will he deliver on that pledge?

Greece's prime minister designate, Alexis Tsipras, has delighted his voters, scared the German government, and rattled the markets. The charismatic leader of the left-wing Syriza party, who won 36.3 percent of the votes counted in Greece's general election on January 25, now has a gargantuan task ahead of him.

He has to deliver on the pledges he made to his voters when he promised an end to austerity. To do that, he has to persuade other eurozone members, notably Germany and Finland, to reduce Greece's public debt by a third. That debt stood at 175 percent of the country's gross domestic product in 2013.

Can Tsipras bring about the change he promised?

In Ukraine, a Major Rebel Offensive Looms

Mstyslav Chernov - January 23, 2015

DONETSK, Ukraine (AP) -- Signs emerged Friday pointing to a major offensive in eastern Ukraine by rebels fighting to break off from the rest of the country.

A rebel leader said they will continue to fight and won't join further peace talks - but left unclear whether they would respect this week's agreement to pull back heavy weapons from the front line.

NATO says it has indications that a major rebel offensive is coming, due to heavy weapons moving in from Russia as they have prior to previous rebel pushes. Meanwhile, the U.N. human rights agency says the overall death toll in the conflict has risen above 5,000 as fighting escalates.

Separatist leader Alexander Zakharchenko said rebel fighters will continue to fight for more territory, and are advancing in five directions to push back Ukrainian government forces to the limits of the eastern Donetsk region.

Argentina's Bad Bet

Jaime Daremblum - January 23, 2015

(AP photo)

They came with the cruelest of intentions. On the morning of July 18, 1994, terrorists parked a van packed with more than 600 pounds of explosives in front of a Jewish community center in central Buenos Aires, Argentina. When the van detonated, the community center collapsed. Eighty-five innocent civilians perished, and hundreds more were injured. The appalling attack came two years after another hideous bombing in Buenos Aires, when the Israeli embassy was blown up by a suicide bomber. That attack killed 29 people, including many children.

It was suspected at the time that Iran and its subsidiary terrorist organization Hezbollah were behind the carnage. Time bore that out. After a long investigation, in 2006 Argentina, in the words of Bloomberg Businessweek, "charged Iran and the Hezbollah group with organizing the bombing and issued eight arrest warrants, one of them for former President Ayatollah Ali Akbar Rafsanjani." Iran denied any involvement in the attacks, but "seven years later, [Argentine President Cristina] Fernandez [de Kirchner] said she signed a memorandum of understanding with the Iranians to set up a truth commission into the bombing."

But the "truth commission" appears to have been have been anything but - indeed, it is evident that the commission was designed essentially to exonerate the Iranians. Here's how the deal worked: As a result of the arrangement, the Iranian suspects would be taken off of Interpol's wanted list. Economically flailing Argentina, meanwhile, which has suffered gravely under Kirchner's gross mismanagement, would have access to Iranian oil, and would also be allowed to export grain and meat to Iran.

A Global Course in Basic Economics

Fabio Rafael Fiallo - January 22, 2015

We have of late received a real-life crash course in basic economics, with the lessons imparted at the highest levels of the global economy. We are all seeing the laws of supply and demand in action, with their manifold implications, and we are learning that it is impossible to circumvent those laws without paying a high price. Wherever we look, the attempts of the state to outsmart markets are showing their limits, and more often than not ending in utter fiasco.

Let us begin with a look at the free-falling oil market. Oil-producing countries would of course like to reverse the current trend. Some would curtail production to push prices up, but the rest have learned from experience that collective restrictions only benefit the countries that do not comply. Like it or not, intergovernmental decisions won't alter the factors underlying the fall in the price of oil. One key element is the global deceleration of economic growth, particularly in China, a large energy consumer. Add to this the entry of fracking into the oil game, notably in the United States - just one factor expanding the global supply of energy.

These joint developments substantially push down the demand for, and consequently the price of, oil - so much so that financial economist Anatole Kaletsky asserts that $50 for a barrel may well become a price ceiling rather than a floor.

The supremacy of market laws is manifest in Russia, too.

Japan, Europe, and the U.S.: Pushing for Trilateral Engagement

Joshua Walker - January 22, 2015

BRUSSELS - U.S. primacy in the post-war international order benefited from the strong support of allies in Asia and Europe. Alliances such as NATO and U.S.-Japan alliance have been critical to maintaining an international system based on economic openness and the rule of law. Similarly, new economic and commercial initiatives such as the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnerships (TTIP) can be expected to breathe new life into the United States' international presence and will hopefully raise U.S. stakes in both Europe and the Asia-Pacific.

These new initiatives come at a time when Russia's overt aggression in Ukraine and China's more subtle pressure in the South China Sea and beyond suggest a fraying of international norms. This is also a time of poignant reminders of how history remains present. Last month saw the commemoration of the anniversary of the Pearl Harbor attacks. As its Chinese and Korean neighbors like to remind them, Japan was once hijacked by a military industrial complex that demanded further conquest to maintain its empire. This year also marks the 70th anniversary of Japan's defeat in World War II.

After surrendering, Japan - partnering with the United States - reimagined itself as the world's first pacifist power, constitutionally is forbidden from waging war. The new challenges to the international order, along with the lessons learned from historical experience, require the United States to revitalize its strategic thinking for the years ahead.

Two kinds of policy initiatives can play a useful role. The first involves thinking through a variety of scenarios and simulating future crises. In Asia, these might include Korean reunification, an accident in the crucial Straits of Malacca, and a Himalayan border dispute. In December, a group of young strategists from the United States, Europe, and several Asian countries gathered in Tokyo under the auspices of The German Marshall Fund and Sasakawa Peace Foundation to game these scenarios.

The Crisis of Europe

George Friedman - January 21, 2015

Last week, I wrote about the crisis of Islamic radicalism and the problem of European nationalism. This week's events give me the opportunity to address the question of European nationalism again, this time from the standpoint of the European Union and the European Central Bank, using a term that only an economist could invent: "quantitative easing."

European media has been flooded for the past week with leaks about the European Central Bank's forthcoming plan to stimulate the faltering European economy by implementing quantitative easing. First carried by Der Spiegel and then picked up by other media, the story has not been denied by anyone at the bank nor any senior European official. We can therefore call this an official leak, because it lets everyone know what is coming before an official announcement is made later in the week.

The plan is an attempt to spur economic activity in Europe by increasing the amount of money available. It calls for governments to increase their borrowing for various projects designed to increase growth and decrease unemployment. Rather than selling the bonds on the open market, a move that would trigger a rise in interest rates, the bonds are sold to the central banks of eurozone member states, which have the ability to print new money. The money is then sent to the treasury. With more money flowing through the system, recessions driven by a lack of capital are relieved. This is why the measure is called quantitative easing.

The United States did this in 2008. In addition to government debt, the Federal Reserve also bought corporate debt. The hyperinflation that some had feared would result from the move never materialized, and the U.S. economy hit a 5 percent growth rate in the third quarter of last year. The Europeans chose not to pursue this route, and as a result, the European economy is, at best, languishing. Now the Europeans will begin such a program - several years after the Americans did - in the hopes of moving things forward again.

In France, Bigger Guns and Better Intel Against Terror

Sylvie Corbet & Nicolas Vaux-Montagny - January 21, 2015

PARIS (AP) -- France announced sweeping new measures to counter homegrown terrorism Wednesday, including giving security forces better weapons and protection, going on an intelligence agent hiring spree and creating a better database of anyone suspected of extremist links.

The measures detailed by Prime Minister Manuel Valls came as four men were handed preliminary charges of providing logistical support to one of the Paris terror attackers - the first charges issued for three days of mayhem that left 20 people dead, including three gunmen.

The new security measures include increased intelligence-gathering on jihadis and other radicals, in part by making it easier to tap phones. Valls said Internet providers and social networks "have a legal responsibility under French law" to comply with the new measures.

Some 2,600 counter-terrorism officers will be hired, 1,100 of them specifically for intelligence services. Anti-terror surveillance is needed for 3,000 people with ties to France - some at home, others abroad, the prime minister said.

Preempting International Harmony: The New British Tax on Overseas Profits

Joe Kennedy - January 21, 2015

The United Kingdom recently announced a new “diverted profits” tax on the profits of foreign companies operating in the United Kingdom. The government’s parliamentary majority will allow the government to implement the tax with few delays. Doing so would be a mistake, however. Although the new tax tries to address a real problem with the implementation of corporate taxes in the modern economy, a new international process led by the OECD already exists to deal with exactly this kind of issue. The effort recently issued a series of major reports and is scheduled to make final recommendations next year. The British government should delay implementation of its new tax so that it can act within a multilateral context designed to deal with the larger issues involved.

The issue of tax competition, like that of inversions, has become confused recently, with both legitimate and illegitimate activity getting thrown into the same category. Despite the unease of some countries, there is nothing illegitimate about a sovereign country lowering its corporate tax rate in order to attract foreign companies. It is immaterial whether in doing so they reduce the size of government within their economy or increase other revenues, such as consumption taxes, to compensate.

It is less legitimate for countries to set up rules that allow companies to source a large part of their profits in the country even though the firms’ activities in the country are minimal. But even without so-called tax havens, problems would exist. The complexity of corporate finance has created a serious problem for international tax officials. Companies are increasingly able to structure their legal and financial arrangements to avoid taxes by using strategies such as selling intellectual property rights, setting up new companies, and transferring financial instruments back and forth between related firms.

Even if tax officials could draft and enforce regulations detailed enough to address this problem, the connection between physical activity within a country and profits earned in that country is breaking down. Traditionally, corporate tax has been closely linked to a physical presence in the country. But technological change, including a growing share of commerce being conducted over the Internet has weakened, if not in some cases severed, this connection. For example, when most of a company’s value is accounted for by intellectual property, the transfer of that property has significant tax implications. Yet it can be almost impossible to accurately value the worth of this property when it is sold. Similarly, Internet companies are often able to deliver significant value to a nation’s consumers while having almost no physical presence in that country. If all of the data servers, programmers, warehouses, and telephone operators are in another country, then traditionally that would be where the profits are declared even if the company earned large revenues in other nations. 

Europe Has More to Fear than Fear Itself

Jan Techau - January 21, 2015

The main preoccupation that governs Europe today comes not from external threats but from domestic ill-being. It is, quite simply, old-fashioned economic fear.

The French foreign policy analyst Dominique Moïsi in 2009 came up with a new set of analytical categories to make sense of the post-9/11 world. In his book The Geopolitics of Emotion, he identified the three basic sentiments of hope, humiliation, and fear as the predominant drivers that shape the geopolitics of the three main regional power centers.

Asia, according to Moïsi, was full of hope for a better future and therefore brimming with aspiration and energy. The Arab world was driven mainly by a sense of humiliation and a culture of victimhood and underdevelopment.

To the West, Moïsi assigned fear as its main characteristic. Europe and North America looked at Asia's rise and at Arabia's radicalization with unease, as both of these regions signified the West's decline - Asia as the powerhouse of the future, the Arab world as the source of barely understood radical religious and terrorist threats. Yet the West, especially Europe, has even greater problems to face than a fear of external dangers.

A Golden Age for Special Ops

Nick Turse - January 21, 2015

In the dead of night, they swept in aboard V-22 Osprey tilt-rotor aircraft. Landing in a remote region of one of the most volatile countries on the planet, they raided a village and soon found themselves in a life-or-death firefight. It was the second time in two weeks that elite U.S. Navy SEALs had attempted to rescue American photojournalist Luke Somers. And it was the second time they failed.

On December 6, 2014, approximately 36 of America's top commandos, heavily armed, operating with intelligence from satellites, drones, and high-tech eavesdropping, outfitted with night vision goggles, and backed up by elite Yemeni troops, went toe-to-toe with about six militants from al-Qaeda in the Arabian Peninsula. When it was over, Somers was dead, along with Pierre Korkie, a South African teacher due to be set free the next day. Eight civilians were also killed by the commandos, according to local reports. Most of the militants escaped.

That blood-soaked episode was, depending on your vantage point, an ignominious end to a year that saw U.S. Special Operations forces deployed at near record levels, or an inauspicious beginning to a new year already on track to reach similar heights, if not exceed them.

During the fiscal year that ended on September 30, 2014, U.S. Special Operations forces (SOF) deployed to 133 countries -- roughly 70% of the nations on the planet -- according to Lieutenant Colonel Robert Bockholt, a public affairs officer with U.S. Special Operations Command (SOCOM). This capped a three-year span in which the country's most elite forces were active in more than 150 different countries around the world, conducting missions ranging from kill/capture night raids to training exercises. And this year could be a record-breaker. Only a day before the failed raid that ended Luke Somers life -- just 66 days into fiscal 2015 -- America's most elite troops had already set foot in 105 nations, approximately 80% of 2014's total.