Washington, Riyadh, and the Strategic Importance of Yemen

Anthony Cordesman - March 27, 2015

Yemen is a growing reminder of just how important the strategic U.S. partnership with Saudi Arabia really is. It is one thing to talk about the war against ISIS, and quite another to realize that U.S. strategic interests require a broad level of stability in the Gulf and Arabian Peninsula and one that is dependent on Saudi Arabia as a key strategic partner.

Saudi Arabia has already taken an important lead in Yemen that will need U.S. support. Saudi Arabia and allies are now conducting air strikes in Yemen to try to halt the advance of a Houthi militia, with strong ties to Iran, which is attempting to end President Abd-Rabbu Mansour Hadi's efforts to relocate Yemen's elected government to Aden.

Saudi Arabia has formed a coalition of more than 10 countries try to protect the Hadi government. It has also taken the lead in getting the United Arab Emirates (UAE), Bahrain, Kuwait, and Qatar to sign a joint statement supporting Saudi Arabia's announcement of military action. Moreover, Reuters reports that Egypt, Jordan, and Sudan have said they have forces involved in the operation; that Sudan has pledged ground troops and warplanes; and that Pakistan is considering a Saudi request to send ground forces. Some reports say that Morocco will send combat aircraft as well.

The United States has already said it would give logistical and intelligence support, but the situation in Yemen may well come to require more than that, and some kind of U.S. combat support as well as U.S. diplomatic pressure on Iran. Once again, the United States is finding out that calling for strategic partnership is not a way of avoiding its role as a world power. One cannot establish partnerships without being a partner.

Moving Closer to a Joint Arab Military Force

Hamza Hendawi - March 27, 2015

SHARM EL-SHEIKH, Egypt (AP) -- Arab leaders meeting this weekend in this Egyptian Red Sea resort are moving closer than ever to creating a joint Arab military force, a sign of a new determination among Saudi Arabia, Egypt and their allies to intervene aggressively in regional hotspots, whether against Islamic militants or spreading Iranian power.

Creation of such a force has been a longtime goal that has eluded Arab nations in the 65 years since they signed a rarely used joint defense pact. And there remains reluctance among some countries, particularly allies of Iran like Syria and Iraq - a reflection of the divisions in the region.

Foreign ministers gathered in Sharm el-Sheikh ahead of the summit, which begins Saturday, agreed on a broad plan for the force. It came as Saudi Arabia and its allies opened a campaign of airstrikes in Yemen against Iranian-backed Shiite rebels who have taken over much of the country and forced its U.S.- and Gulf-backed president to flee abroad.

The Yemen campaign marked a major test of the new policy of intervention by the Gulf and Egypt. The brewing Yemen crisis - and Gulf fears that the rebels are a proxy for Iranian influence - have been one motivator in their move for a joint Arab force. But it also signaled that they are not going to wait for the Arab League, notorious for its delays and divisions, and will press ahead with their military coordination on multiple fronts.

The Islamic State's Backdoor Financing

Matthew Levitt - March 26, 2015

Policy Watch 2390

Governments and financial institutions have taken laudable steps to curtail ISIS financing, but the group is still netting many millions from banks and informal money remitters in areas under its control or just nearby.

Sometimes described as the world's richest terrorist group, the Islamic State of Iraq and al-Sham (ISIS or ISIL) has famously raised tremendous amounts of money through oil smuggling, extensive criminal enterprises, kidnapping for ransom, and other means. Targeting the group's finances has therefore become one of the anti-ISIS coalition's five primary lines of effort. On March 19-20, the United States, Saudi Arabia, and Italy co-chaired the inaugural meeting of the Counter-ISIL Finance Group in Rome. The first goal laid out in the group's action plan is to prevent the self-styled Islamic State from using "the international financial system, including unregulated money remitters." This a significant step in the right direction because ISIS has found multiple backdoors into that system despite impressive efforts to restrict it from transferring funds.

WALLING OFF BANKS IN ISIS-CONTROLLED AREAS

China's Fragile Evolution

John Minnich - March 25, 2015

Last week, China's anti-corruption campaign took a significant turn, though a largely overlooked one. The Supreme People's Court released a statement accusing former Politburo Standing Committee member Zhou Yongkang, the highest-ranked official thus far implicated in China's ongoing anti-corruption campaign, of having "trampled the law, damaged unity within the Communist Party, and conducted non-organizational political activities." In Chinese bureaucratic speak, this was only a few steps shy of confirming earlier rumors that Zhou and his former political ally and one-time rising political star from Chongqing, Bo Xilai, had plotted a coup to pre-empt or repeal the political ascension of Chinese President and Party General Secretary Xi Jinping. Thus, the court's statement marks a radical departure from the hitherto depoliticized official language of the anti-corruption campaign.

Of course, it has long been clear that the Xi administration's anti-corruption campaign is far more than just a fight against graft - it is also a political purge designed to tighten the new leadership's control over Party, government and military apparatuses. But up to now, official language on the anti-corruption campaign has been couched in terms of fighting graft and abuse of power "for personal gain." So far as we are aware, very few if any official statements have alluded to "political activities" by suspects - and certainly none concerning high-profile figures like Zhou, whose position at the top of the country's energy industry and domestic security apparatus made him one of the most powerful Chinese politicians of the 2000s. Whatever the court's precise intent, that it chose language even hinting at a coup by Bo and Zhou is extraordinary.

If we accept that the use of a phrase like "non-organizational political activities" is significant, then we have to ask what the decision to use that phrase at this time may signify. To our minds, two possible interpretations stand out. First, it could mark a nascent shift in the way Chinese authorities frame the anti-corruption campaign and imply that going forward the campaign will become more overtly political. Second, it could signal that Xi and his allies, confident of having fully eliminated any threat posed by Zhou and his associates, are acknowledging an end to one phase of the anti-corruption campaign - the elimination of competing factions - and are now embarking on the further consolidation of authority and control over the far reaches of the bureaucracy.

If the former interpretation is correct, the anti-corruption campaign is about to get more brutal and potentially more destabilizing, as it moves from a relatively focused purge and general cleansing of the Party to a full-on assault against those who have the strength to challenge Xi's nascent authoritarianism. According to the latter hypothesis, with the would-be challengers routed and acknowledged as anti-Party plotters, and with political power firmly centralized under Xi and his allies, China's leaders can now put politics aside and move on to the more difficult and important task of building a government ready to manage the profound social and political disruptions that will almost certainly accompany China's economic slowdown.

Greece and the Politics of Arrears

Robert Kahn - March 25, 2015


Greece is running out of money. Greek Prime Minister Alexis Tsipras's meeting this week with German Chancellor Angela Merkel has taken some of the toxicity out of the conversation for now, but cannot mask Greece's current collision course with its creditors. Committed to a platform on which it was elected but that it cannot pay for, and with additional EU/ECB financing conditioned on reform, the Greek government is likely to run out of money in April (if not before). If past emerging market crises are any guide, the decisions that it will then confront about who to pay and who not to - the politics of arrears - will present a critical challenge to the government and likely define the future path of the crisis.

Most analysts continue to argue that a deal that allows Greece to muddle through and avoid an exit from the eurozone ("Grexit") is the most likely outcome. This argument is usually based on the assessment that there is a deal to be had, that Prime Minister Tsipras is a realistic leader that can over time navigate his coalition to a course that balances democratic accountability and a return to growth with the reforms needed to continue to receive assistance, and that both sides have too much to lose from a messy exit.

All this may be true, but the political timeline over which this scenario plays out is measured in months, while the economic timeline is measured in days. The Greek government is now moving to prepare a more detailed set of reforms (including fiscal reform, privatization, social security and labor measures), based on the February 20 Eurogroup agreement, in hope of securing the approval in coming days from eurozone finance ministers. Any agreement reached will require approval by the Greek and foreign parliaments. Interim meetings can at best provide momentum to negotiations that justify short-term financing - most likely in small amounts and conditional on progress - while these negotiations proceed. That means that Greece will soon, perhaps as early as next week, begin to run arrears.

How did we get here? Tax revenue collapsed in the run up to the election, and has contracted further in the uncertainty that has followed. Further, in recent weeks, the parliament has approved a number of anti-poverty measures and a payment plan for tax debtors, generating domestic support but taking policy further away from the previously approved program. It is unclear whether more controversial, but necessary reforms could win approval. As a result, even the reduced government primary surplus of 1.5 percent of GDP looks out of reach on current policies. This is not to criticize the government for seeking to keep its election promises, but rather to stress the large and growing gulf between its plans and what European creditors are willing to support. Unsurprisingly, bank deposits have begun to flow out of the system in the past week (reportedly as much as 350-400 million euros on some days), exacerbating liquidity problems.

France Cracks Open Doomed Plane's Black Box

Lori Hinnant - March 25, 2015

SEYNE-LES-ALPES, France (AP) -- French investigators cracked open the badly damaged black box of a German jetliner on Wednesday and sealed off the rugged Alpine crash site where 150 people died when their plane slammed into a mountain.

The cockpit voice recorder was being mined by investigators for clues into what sent the Germanwings Airbus 320 into a mid-flight dive Tuesday after pilots lost radio contact over the southern French Alps during a routine flight from Barcelona to Duesseldorf.

Helicopters surveying the scattered debris lifted off at daybreak, and crews traveled slowly over land to the remote crash site through fresh snow and rain, threading their way to the craggy ravine. Bereaved families and the French, German and Spanish leaders were expected later Wednesday.

"The black box is damaged and must be reconstituted in the coming hours in order to be useable," French Interior Minister Bernard Cazeneuve told RTL radio.

Pondering a Chinese Breakdown

Nadege Rolland - March 24, 2015


David Shambaugh's opinion piece in the Wall Street Journal proclaiming that the 'endgame of Chinese communist rule has now begun' has mostly stirred scepticism and criticism from the community of China watchers. Some have questioned the author's personal motivations; others have criticised his arguments or dismissed his conclusions. Judging from the insulting personal attacks on Shambaugh from two major English-language Chinese media outlets, his essay also touched a raw nerve in China.

Shambaugh is not an obscure commentator on China's politics, but a sound, respected expert and a perspicacious analyst of China's domestic and international developments. His book China's Communist Party: Atrophy and Adaptation, completed in 2007, did a groundbreaking job in showing how the Party was evolving and adapting to 'legitimize, reinstitutionalize and save itself'. Shambaugh's recent op-ed is not about a 'volte face' or 'flip-flopping'. Rather, it reflects a growing concern about China's overall direction because of the challenges the world's second-biggest economy is facing, and the way the Party appears to be responding to them.

Roderick MacFarquhar, another highly respected scholar, raised similar concerns in an interview with the New York Times' Sinosphere blog last January. MacFarquhar mentioned the erosion of ideology and the anti-corruption campaign as being major risks for the Chinese regime. There is, he said, a 'danger for the party collapsing as it did in Russia, or danger of a leadership coalition against Xi Jinping'.

It takes a certain audacity to toy with the idea of a coming Chinese crack-up, knowing perfectly well that collapsist or doom-laden prophecies can easily be brushed away as being sensationalist or even irrational. But when it comes from seasoned China watchers such as Shambaugh and MacFarquhar, one would be wise to listen carefully.

Kerry's Assad Accommodation

Tony Badran - March 24, 2015

On the fourth anniversary of the Syrian uprising, Secretary of State John Kerry reminded everyone-in case anyone still harbored doubts-that the Obama administration had no intention of removing Syria's dictator, Bashar al-Assad, from power. "[W]e have to negotiate in the end" with Assad, Kerry said. His choice of words elicited a harsh denunciation from US allies such as France and Turkey, and from the Saudi-owned press, all of whom reminded the Americans of the need for Assad to go.

The State Department, along with some commentators, rushed to walk back Kerry's statement, dismissing any notion that it represented a shift in US policy. "Our policy has not changed-there is no future for a brutal dictator like Assad in Syria," State Department deputy spokeswoman Marie Harf said afterwards.

But, spokeswoman Jen Psaki explained, the US has always favored a political settlement of the Syria conflict, a policy which necessitated negotiations with the regime. The Secretary of State, therefore, simply spoke in shorthand, referring to the regime as "Assad." His slip of the tongue aside, Kerry was reiterating an unwavering US policy.

But it is false to suggest that the goal posts of the administration's policy haven't moved. The foundations of the current policy were established by the 2012 Geneva Communique, which called for the US and Russia to convene representatives of the Syrian opposition with representatives from the regime so that they could negotiate a settlement with each other. Moreover, at the time, the administration patted itself on the back for finding a way to exclude Assad from this process. It explained that the composition of a transitional authority had to be mutually agreed by the regime and the opposition. Assad would play no role, because the opposition would never allow it.

The European Union's Dying Days

Dirk Schumer - March 24, 2015

This article was originally published in Die Welt

BERLIN - Greece vs. Germany: What a drama! Any Hollywood screenwriter would delight at the brutality of this particular marriage. One launching accusations of fraud and theft, the other responding with calls for World War II debt repayment and reparations. Flags and depictions of the German chancellor have been burned. Cruel jokes circulating about the indebted south, with visiting politicians from the north requiring added police security.

How is this all going to end?

Unfortunately, this is not fodder for a fictional screenplay but a political reality in Europe since 2008. It seems that while this aggressive marital drama plays out, its protagonists are unaware of just how much damage has been done to the foundation of the European Union. Is all that's left of Europe the rubble of the past?

The War in Mexico

Rebecca Gordon - March 24, 2015

They behead people by the hundreds. They heap headless, handless bodies along roadsides as warnings to those who would resist their power. They have penetrated the local, state, and national governments and control entire sections of the country. They provide employment and services to an impoverished public, which distrusts their actual government with its bitter record of corruption, repression, and torture. They seduce young people from several countries, including the United States, into their murderous activities.

Is this a description of the heinous practices of the Islamic State (IS) in Iraq and Syria? It could be, but as a matter of fact it's not. These particular thugs exist a lot closer to home. They are part of the multi-billion-dollar industry known as the drug cartels of Mexico. Like the Islamic State, the cartels' power has increased as the result of disastrous policies born in the U.S.A.

There are other parallels between IS and groups like Mexico's Zetas and its Sinaloa cartel. Just as the U.S. wars in Afghanistan, Iraq, and Libya fertilized the field for IS, another U.S. war, the so-called War on Drugs, opened new horizons for the drug cartels. Just as Washington has worked hand-in-hand with and also behind the backs of corrupt rulers in Central Asia, the Middle East, and North Africa, so it has done with the Mexican government. Both kinds of war have resulted in blowback -- violent consequences felt in our own cities, whether at the finish line of the Boston Marathon or in communities of color across the country.

In Mexico, the U.S. military is directly involved in the War on Drugs. In this country, that "war" has provided the pretext for the militarization of local police forces and increased routine surveillance of ordinary people going about their ordinary lives.

Germany Reviews Its Foreign Policy

Jan Techau - March 21, 2015

The German foreign minister has launched a valuable review of his country's foreign policy. The project should lead to a new culture of strategic thinking in Germany.

In the think tank business, we tend to be slightly obsessed with review processes. Think tankers will always defend the value of a long, all-encompassing strategy process at the end of which stands a document that will provide clarity, guidance, and answers to the complex challenges ahead.

When such a review is conducted by Germany, the attention for this kind of process goes beyond the think tank class. Eyebrows are also raised in diplomatic circles, across the EU institutions, and in the international media. Berlin's fundamental orientations and beliefs are too relevant for everyone - including for many powers outside the Old World - to be ignored.

On March 16 at Carnegie Europe in Brussels, German Foreign Minister Frank-Walter Steinmeier presented the findings of Review 2014, a year-long assessment of German foreign policy he had conducted inside and outside the German Foreign Office. The process sought to find out what the new demands on Berlin's diplomacy were, how Germans looked at those demands, and what the Foreign Office could do to deal better with the country's new international role.

Justice Is Changing in Britain

Ellie Cumbo - March 21, 2015


The British justice system is not only the parent of its American counterpart; from habeas corpus to the right to a fair trial, it has yielded many of the ideas that are now seen as foundational to the rule of law in the rest of the democratic world.

But since the United Kingdom's last general election, in 2010, British justice has undergone some of the most profound structural changes in its thousand-year history. And unsurprisingly, not everyone is happy about it. In fact, the government's record on this area has been so divisive that the entire future direction of the crime and justice landscape in the United Kingdom may well be up for grabs in 2015.

The current coalition of the Conservative and the Liberal Democrat parties entered power after 13 years of a Labour administration known both for its belief in a strong central state, and its willingness to back it up with new legislation. And these were perhaps nowhere more evident than in that government's approach to crime and justice. Reflecting at least the first half of his anthemic pledge to be "tough on crime; tough on the causes of crime," the 10 years of Tony Blair's premiership saw the creation of as many as 3,000 new criminal offenses in British law.

By contrast, however, the David Cameron-led coalition government combines the state-shrinking instincts of the Conservatives with the longstanding enthusiasm of Britain's third party, the Liberal Democrats, for devolution to local government, where they have historically had a more realistic chance of holding power. In crime and justice policy, this radical shift is most strongly seen in the creation of directly elected local police commissioners throughout England and Wales, with the exception of London.

Why the Oil Price Is Really Collapsing

Michael Klare - March 20, 2015

Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States; the decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that's not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil's production-maximizing business model.

Until last fall, when the price decline gathered momentum, the oil giants were operating at full throttle, pumping out more petroleum every day. They did so, of course, in part to profit from the high prices. For most of the previous six years, Brent crude, the international benchmark for crude oil, had been selling at $100 or higher. But Big Oil was also operating according to a business model that assumed an ever-increasing demand for its products, however costly they might be to produce and refine. This meant that no fossil fuel reserves, no potential source of supply -- no matter how remote or hard to reach, how far offshore or deeply buried, how encased in rock -- was deemed untouchable in the mad scramble to increase output and profits.

In recent years, this output-maximizing strategy had, in turn, generated historic wealth for the giant oil companies. Exxon, the largest U.S.-based oil firm, earned an eye-popping $32.6 billion in 2013 alone, more than any other American company except for Apple. Chevron, the second biggest oil firm, posted earnings of $21.4 billion that same year. State-owned companies like Saudi Aramco and Russia's Rosneft also reaped mammoth profits.

How things have changed in a matter of mere months. With demand stagnant and excess production the story of the moment, the very strategy that had generated record-breaking profits has suddenly become hopelessly dysfunctional.

Analysis: Why Israel Chose Netanyahu

Dan Perry - March 19, 2015


JERUSALEM (AP) -- It's a mystery to many: Benjamin Netanyahu's campaign gained steam when he ruled out the creation of a Palestinian state, and he seems determined to continue settling occupied land with Jews.

So why would Israelis again back policies that promise friction of all kinds - and will dramatically dilute the Jewish character of their hard-won state by making it eventually inseparable from the millions of Palestinians in the West Bank?

The answer lies in the details of a conundrum so complicated that the dynamics of democracy seem hardly able to contain it. Tellingly, perhaps, the campaign did not even focus on the grand strategic issue that is now presented as having been decided: Instead the opposition pledged to address bread-and-butter issues, like the high cost of living.

The outcome may be different under circumstances that force the Palestinian issue to the table. If international boycott initiatives start exacting an economic price on a country that appreciates its high standard of living, or if the Europeans who are Israel's top trading partners take off the gloves. Or if the Palestinians rebel, creating a major security headache, or the United States steps in with peace proposals backed by muscle.

The Virtual Significance of Boko Haram's Pledge to ISIS

Terje Ostebo - March 19, 2015

The Nigerian Islamist group Boko Haram’s recent pledge of allegiance to ISIS has generated a wave of speculation about its significance.

ISIS’s response was to release an audio tape purporting to welcome the pledge. In the rest of the world one dominant view is that ISIS and the jihadi front is spreading and becoming more organized, which, in turn, has spurred the US government to consider expanding its military actions to include ISIS affiliates.

There are, however, good reasons not to read too much into the Boko Haram pledge. It is probable that it will have little or no real practical significance, beyond the initial public relations bump.

Boko Haram under pressure

The pledge of allegiance (Arabic: bayat) by Boko Haram’s leader Abubakar Shekau on March 7 was made in an audio-message, in which the organization expresses its support for ISIS.