Posts Tagged ‘Politics’


In this 1970 photo released by the Public Archive of Sao Paulo State, Dilma Rousseff is seen in a police photo. Rousseff, who is running for president in Brazil’s Oct. 3, 2010 elections, was a key player in an armed militant group that resisted Brazil’s 1964-85 military dictatorship, and was imprisoned and tortured for it. She is a cancer survivor and a former minister of energy and chief of staff to the current President Luiz Inacio Lula da Silva. (AP Photo/Public Archive of Sao Paulo State)




On Tomorrow’s Secret Meeting To Plot The End Of High Frequency Trading

The MasterFeeds: On Tomorrow’s Secret Meeting To Plot The End Of Hi…

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The MasterFeeds


Welcome to the Mania!
Submitted by Jeff Clark of Casey Research
With gold punching the $1,300 mark, thoughts of what a gold mania will be like crossed my mind. If we’re right about the future of precious metals, a gold rush of historic proportions lies ahead of us. Have you thought about how a mania might affect you? Not like this, you haven’t…

You log on to your brokerage account for the third time that day and see your precious metal portfolio has doubled from last week. Gold and silver stocks have been screaming upward for weeks. Everyone around you is panicking from runaway inflation and desperate to get their hands on any form of gold or silver. It’s exhilarating and frightening in the same breath. Welcome to the mania.

Daily gains of 20% in gold and silver producers become common, even expected. Valuations have been thrown out the window – this is no time for models and charts and analysis. It’s not greed; it’s survival. Get what you can, while you can. Investors clamor to buy any stock with the word “gold” in its title. Fear of being left behind is palpable.

The shares of junior exploration companies have gone ballistic. They double and triple in days, then double and triple again. Many have already risen ten-fold. You have several up 10,000%. No end is in sight. Your portfolio swells bigger every day. Your life is changing right in front of you at warp speed.

Every business program touts the latest hot gold or silver stock. It’s all they can talk about. Headlines blare anything about precious metals, no matter how trivial. Weekly news magazines and talk-radio hosts dispense free stock picks. CNBC and Bloomberg battle to be first with the latest news. Each tick in the price of gold and silver flashes on screen, and interruptions offering the latest prediction seem to happen every fifteen minutes. Breathy reporters yell above the noise on the trade floor about insane volume, and computers that can’t keep up. Entire programs are devoted to predicting the next winner. You watch to see if some of your stocks are named. You can’t help it.

The only thing growing faster than your portfolio is the number of new “gold experts.” It’s a bull market in bull.

You can feel the crazed mass psychology all around you. Your co-workers know you bought gold some time ago and pepper you with questions seemingly every hour, interrupting your work. They ask if you heard about the latest pick from Fox Business. They want to know where you buy gold, who has the best price, and, by the way, how do I know if my gold is real? They all look at you differently now. Women smile at you in the hallway. You worry someone may follow you home.

Your relatives once teased you but now hound you with questions at family get-togethers – what stocks do you own? What’s that gold newsletter telling you? Where can I keep my bullion? You don’t want to be the life of the party, but they force it – it’s all anyone wants to talk about. Your brother tells you he dumped his broker and is trading full-time. Another relative shoves his account statement in front of you and wants advice. You sense someone will ask for a loan. You don’t know what to tell people. The attention is discomforting, and you feel the urge to escape.

At first it was exciting, then breathtaking. Now it’s scary. You’re drowning in obscene profits but are becoming increasingly anxious about how long it can last. Worry replaces excitement. You don’t know if you should sell or hold on. Nobody knows what to do. But the next day, your portfolio screams higher and you feel overwhelmed once again.

You grab the local paper and read the town’s bullion shop had a break-in last night. They hired a security company and have posted several guards outside and inside the store. Premiums have skyrocketed, but lines still form every day. The proprietor hands out tickets when locals arrive: your number will be called when it’s your turn… the wait will be long… please have your order ready… yesterday we ran out of stock at 11am.

You begin to worry about the security of your own stash of bullion – those clever hiding spots don’t feel quite as secure as you first thought they’d be. Is the bank safe deposit box really secure? Shouldn’t they hire a security guard? Should I move some of it elsewhere? Is there anywhere truly safe? You find yourself checking gun prices online.

And it’s all happening because the dollar is crashing and inflation has scourged every part of life. You curse at those who said this couldn’t happen and mock past assurances from government. Cash is a hot potato, and spending it before it loses more purchasing power is a daily priority. Everyone is clamoring to get something that can’t lose value, but mostly gold and silver.

Your wife calls and says the $100 you gave her that morning isn’t enough to buy groceries for dinner. Prices change often on everything. She urges you to get some bread and milk before the stores raises the price again. You suddenly remember you’re low on gas and make plans to leave work early to beat others to the filling station. Restaurants and small businesses post prices on a chalkboard and update them throughout the day. Employers scramble to work out an “inflation adjustment” for salaries. 

On your way home, the radio broadcaster reports the government has convened an emergency summit of all heads of state. They’re working urgently on the problem, and all other agendas have been tabled. Outside experts have been called in. We’re going to solve this rampant flood of inflation for the American people, they say. In your gut you know there’s nothing they can do.

You change the channel and hear about the spike in arrests of U.S. citizens at the Canadian border. Scads of people are caught trying to sneak bullion and stock certificates out of the country – from airports to rail stations. Violence at borders has escalated, and stories of bloodshed are getting common. The White House ordered heightened security at all U.S. borders, with the media reporting it can take days to cross. Foreign governments offer meaningless help, others mock U.S. leaders for their shortsightedness. Their countries are suffering, too.

You think about the gains in your portfolio and wince at the taxes you’ll pay when you sell. Nothing has been indexed to inflation, so everyone has been pushed into higher tax brackets. Citizens are furious with government. Agencies have been swarmed with bitter taxpayers and revolting benefit recipients. One government office was set on fire. A riot erupted in Washington, D.C. last week and martial law was temporarily declared. It’s too dangerous to travel anywhere.

As crazy as things are, it’s hard not to smile. You’re in the middle of a mania. Your life has changed permanently. You’re part of the new rich. You can quit work, live off your investments. Your wife is ecstatic, and you both feel as if it’s your second honeymoon. Your kids are amazed and gaze at you with the same awe they did when they were children.

You’re thankful you bought gold and silver before the mania, along with precious metal stocks. You daydream of where you might go, what you might buy. New options open up daily. You realize you’ll need to meet with your accountant, maybe hire a second one to protect your sudden wealth. You wonder what you’ll invest in next. You ponder what charities are worthwhile. Better meet with the attorney to redraft the will.

As night settles and your house quiets, you log on to your brokerage account one last time. Even though you’re ready for it, your mouth drops when you see your account balance. It is truly overwhelming. You think of others who own gold and silver stocks and wonder if any have sold yet. Has Doug Casey exited?

You stare at the blinking screen, hand on the mouse, the cursor hovering on the sell button…

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Pakistan and the U.S. Exit From Afghanistan

By George Friedman

Bob Woodward has released another book, this one on the debate over Afghanistan strategy in the Obama administration. As all his books do, the book has riveted Washington. It reveals that intense debate occurred over what course to take, that the president sought alternative strategies and that compromises were reached. But while knowing the details of these things is interesting, what would have been shocking is if they hadn’t taken place.
It is interesting to reflect on the institutional inevitability of these disagreements. The military is involved in a war. It is institutionally and emotionally committed to victory in the theater of combat. It will demand all available resources for executing the war under way. For a soldier who has bled in that war, questioning the importance of the war is obscene. A war must be fought relentlessly and with all available means.
But while the military’s top generals and senior civilian leadership are responsible for providing the president with sound, clearheaded advice on all military matters including the highest levels of grand strategy, they are ultimately responsible for the pursuit of military objectives to which the commander-in-chief directs them. Generals must think about how to win the war they are fighting. Presidents must think about whether the war is worth fighting. The president is responsible for America’s global posture. He must consider what an unlimited commitment to a particular conflict might mean in other regions of the world where forces would be unavailable.
A president must take a more dispassionate view than his generals. He must calculate not only whether victory is possible but also the value of the victory relative to the cost. Given the nature of the war in Afghanistan, U.S. President Barack Obama and Gen. David Petraeus — first the U.S. Central Command chief and now the top commander in Afghanistan — had to view it differently. This is unavoidable. This is natural. And only one of the two is ultimately in charge.

The Nature of Guerrilla Warfare
In thinking about Afghanistan, it is essential that we begin by thinking about the nature of guerrilla warfare against an occupying force. The guerrilla lives in the country. He isn’t going anywhere else, as he has nowhere to go. By contrast, the foreigner has a place to which he can return. This is the core weakness of the occupier and the strength of the guerrilla. The former can leave and in all likelihood, his nation will survive. The guerrilla can’t. And having alternatives undermines the foreigner’s will to fight regardless of the importance of the war to him.
The strategy of the guerrilla is to make the option to withdraw more attractive. In order to do this, his strategic goal is simply to survive and fight on whatever level he can. His patience is built into who he is and what he is fighting for. The occupier’s patience is calculated against the cost of the occupation and its opportunity costs, thus, while troops are committed in this country, what is happening elsewhere?
Tactically, the guerrilla survives by being elusive. He disperses in small groups. He operates in hostile terrain. He denies the enemy intelligence on his location and capabilities. He forms political alliances with civilians who provide him supplies and intelligence on the occupation forces and misleads the occupiers about his own location. The guerrilla uses this intelligence network to decline combat on the enemy’s terms and to strike the enemy when he is least prepared. The guerrilla’s goal is not to seize and hold ground but to survive, evade and strike, imposing casualties on the occupier. Above all, the guerrilla must never form a center of gravity that, if struck, would lead to his defeat. He thus actively avoids anything that could be construed as a decisive contact.
The occupation force is normally a more conventional army. Its strength is superior firepower, resources and organization. If it knows where the guerrilla is and can strike before the guerrilla can disperse, the occupying force will defeat the guerrilla. The occupier’s problems are that his intelligence is normally inferior to that of the guerrillas; the guerrillas rarely mass in ways that permit decisive combat and normally can disperse faster than the occupier can pinpoint and deploy forces against them; and the guerrillas’ superior tactical capabilities allow them to impose a constant low rate of casualties on the occupier. Indeed, the massive amount of resources the occupier requires and the inflexibility of a military institution not solely committed to the particular theater of operations can actually work against the occupier by creating logistical vulnerabilities susceptible to guerrilla attacks and difficulty adapting at a rate sufficient to keep pace with the guerrilla. The occupation force will always win engagements, but that is never the measure of victory. If the guerrillas operate by doctrine, defeats in unplanned engagements will not undermine their basic goal of survival. While the occupier is not winning decisively, even while suffering only some casualties, he is losing. While the guerrilla is not losing decisively, even if suffering significant casualties, he is winning. Since the guerrilla is not going anywhere, he can afford far higher casualties than the occupier, who ultimately has the alternative of withdrawal.
The asymmetry of this warfare favors the guerrilla. This is particularly true when the strategic value of the war to the occupier is ambiguous, where the occupier does not possess sufficient force and patience to systematically overwhelm the guerrillas, and where either political or military constraints prevent operations against sanctuaries. This is a truth as relevant to David’s insurgency against the Philistines as it is to the U.S. experience in Vietnam or the Russian occupation of Afghanistan.
There has long been a myth about the unwillingness of Americans to absorb casualties for very long in guerrilla wars. In reality, the United States fought in Vietnam for at least seven years (depending on when you count the start and stop) and has now fought in Afghanistan for nine years. The idea that Americans can’t endure the long war has no empirical basis. What the United States has difficulty with — along with imperial and colonial powers before it — is a war in which the ability to impose one’s will on the enemy through force of arms is lacking and when it is not clear that the failure of previous years to win the war will be solved in the years ahead.
Far more relevant than casualties to whether Americans continue a war is the question of the conflict’s strategic importance, for which the president is ultimately responsible. This divides into several parts. This first is whether the United States has the ability with available force to achieve its political goals through prosecuting the war (since all war is fought for some political goal, from regime change to policy shift) and whether the force the United States is willing to dedicate suffices to achieve these goals. To address this question in Afghanistan, we have to focus on the political goal.
The Evolution of the U.S. Political Goal in Afghanistan
Washington’s primary goal at the initiation of the conflict was to destroy or disrupt al Qaeda in Afghanistan to protect the U.S. homeland from follow-on attacks to 9/11. But if Afghanistan were completely pacified, the threat of Islamist-fueled transnational terrorism would remain at issue because it is no longer just an issue of a single organization — al Qaeda — but a series of fragmented groups conducting operations in Pakistan, IraqYemenNorth AfricaSomalia and elsewhere.
Today, al Qaeda is simply one manifestation of the threat of this transnational jihadist phenomenon. It is important to stop and consider al Qaeda — and the transnational jihadist phenomenon in general — in terms of guerrillas, and to think of the phenomenon as a guerrilla force in its own right operating by the very same rules on a global basis. Thus, where the Taliban apply guerrilla principles to Afghanistan, today’s transnational jihadist applies them to the Islamic world and beyond. The transnational jihadists are not leaving and are not giving up. Like the Taliban in Afghanistan, they will decline combat against larger American forces and strike vulnerable targets when they can.
There are certainly more players and more complexity to the global phenomenon than in a localized insurgency. Many governments across North Africa, the Middle East and South Asia have no interest in seeing these movements set up shop and stir up unrest in their territory. And al Qaeda’s devolution has seen frustrations as well as successes as it spreads. But the underlying principles of guerrilla warfare remain at issue. Whenever the Americans concentrate force in one area, al Qaeda disengages, disperses and regroups elsewhere and, perhaps more important, the ideology that underpins the phenomenon continues to exist. The threat will undoubtedly continue to evolve and face challenges, but in the end, it will continue to exist along the lines of the guerrilla acting against the United States.
There is another important way in which the global guerrilla analogy is apt. STRATFOR has long held that Islamist-fueled transnational terrorism does not represent a strategic, existential threat to the United States. While acts of transnational terrorism target civilians, they are not attacks — have not been and are not evolving into attacks — that endanger the territorial integrity of the United States or the way of life of the American people. They are dangerous and must be defended against, but transnational terrorism is and remains a tactical problem that for nearly a decade has been treated as if it were the pre-eminent strategic threat to the United States.
Nietzsche wrote that, “The most fundamental form of human stupidity is forgetting what we were trying to do in the first place.” The stated U.S. goal in Afghanistan was the destruction of al Qaeda. While al Qaeda as it existed in 2001 has certainly been disrupted and degraded, al Qaeda’s evolution and migration means that disrupting and degrading it — to say nothing of destroying it — can no longer be achieved by waging a war in Afghanistan. The guerrilla does not rely on a single piece of real estate (in this case Afghanistan) but rather on his ability to move seamlessly across terrain to evade decisive combat in any specific location. Islamist-fueled transnational terrorism is not centered on Afghanistan and does not need Afghanistan, so no matter how successful that war might be, it would make little difference in the larger fight against transnational jihadism.
Thus far, the United States has chosen to carry on fighting the war in Afghanistan. As al Qaeda has fled Afghanistan, the overall political goal for the United States in the country has evolved to include the creation of a democratic and uncorrupt Afghanistan. It is not clear that anyone knows how to do this, particularly given that most Afghans consider the ruling government of President Hamid Karzai — with which the United States is allied — as the heart of the corruption problem, and beyond Kabul most Afghans do not regard their way of making political and social arrangements to be corrupt.
Simply withdrawing from Afghanistan carries its own strategic and political costs, however. The strategic problem is that simply terminating the war after nine years would destabilize the Islamic world. The United States has managed to block al Qaeda’s goal of triggering a series of uprisings against existing regimes and replacing them with jihadist regimes. It did this by displaying a willingness to intervene where necessary. Of course, the idea that U.S. intervention destabilized the region raises the question of what regional stability would look like had it not intervened. The danger of withdrawal is that the network of relationships the United States created and imposed at the regime level could unravel if it withdrew. America would be seen as having lost the war, the prestige of radical Islamists and thereby the foundation of the ideology that underpins their movement would surge, and this could destabilize regimes and undermine American interests.
The political problem is domestic. Obama’s approval rating now stands at 42 percent. This is not unprecedented, but it means he is politically weak. One of the charges against him, fair or not, is that he is inherently anti-war by background and so not fully committed to the war effort. Where a Republican would face charges of being a warmonger, which would make withdrawal easier, Obama faces charges of being too soft. Since a president must maintain political support to be effective, withdrawal becomes even harder. Therefore, strategic analysis aside, the president is not going to order a complete withdrawal of all combat forces any time soon — the national (and international) political alignment won’t support such a step. At the same time, remaining in Afghanistan is unlikely to achieve any goal and leaves potential rivals like China andRussia freer rein.
The American Solution
The American solution, one that we suspect is already under way, is the Pakistanization of the war. By this, we do not mean extending the war into Pakistan but rather extending Pakistan into Afghanistan. The Taliban phenomenon has extended into Pakistan in ways that seriously complicate Pakistani efforts to regain their bearing in Afghanistan. It has created a major security problem for Islamabad, which, coupled with the severe deterioration of the country’s economy and now the floods, has weakened the Pakistanis’ ability to manage Afghanistan. In other words, the moment that the Pakistanis have been waiting for — American agreement and support for the Pakistanization of the war — has come at a time when the Pakistanis are not in an ideal position to capitalize on it.
In the past, the United States has endeavored to keep the Taliban in Afghanistan and the regime in Pakistan separate. (The Taliban movements in Afghanistan and Pakistan are not one and the same.) Washington has not succeeded in this regard, with the Pakistanis continuing to hedge their bets and maintain a relationship across the border. Still, U.S. opposition has been the single greatest impediment to Pakistan’s consolidation of the Taliban in Afghanistan, and abandoning this opposition leaves important avenues open for Islamabad.
The Pakistani relationship to the Taliban, which was a liability for the United States in the past, now becomes an advantage for Washington because it creates a trusted channel for meaningful communication with the Taliban. Logic suggests this channel is quite active now.
The Vietnam War ended with the Paris peace talks. Those formal talks were not where the real bargaining took place but rather where the results were ultimately confirmed. If talks are under way, a similar venue for the formal manifestation of the talks is needed — and Islamabad is as good a place as any.
Pakistan is an American ally which the United States needs, both to balance growing Chinese influence in and partnership with Pakistan, and to contain India. Pakistan needs the United States for the same reason. Meanwhile, the Taliban want to run Afghanistan. The United States has no strong national interest in how Afghanistan is run so long as it does not support and espouse transnational jihadism. But it needs its withdrawal to take place in a manner that strengthens its influence rather than weakens it, and Pakistan can provide the cover for turning a retreat into a negotiated settlement.
Pakistan has every reason to play this role. It needs the United States over the long term to balance against India. It must have a stable or relatively stable Afghanistan to secure its western frontier. It needs an end to U.S. forays into Pakistan that are destabilizing the regime. And playing this role would enhance Pakistan’s status in the Islamic world, something the United States could benefit from, too. We suspect that all sides are moving toward this end.
The United States isn’t going to defeat the Taliban. The original goal of the war is irrelevant, and the current goal is rather difficult to take seriously. Even a victory, whatever that would look like, would make little difference in the fight against transnational jihad, but a defeat could harm U.S. interests. Therefore, the United States needs a withdrawal that is not a defeat. Such a strategic shift is not without profound political complexity and difficulties. But the disparity between — and increasingly, the incompatibility of — the struggle with transnational terrorism and the war effort geographically rooted in Afghanistan is only becoming more apparent — even to the American public.


Lunch with the FT: Tony Blair

By Philip Stephens

Published: September 10 2010 18:54 | Last updated: September 10 2010 18:54

An illustration of Tony BlairI had hoped I might meet Tony Blair at one of London’s more bustling venues – mainly, I confess, because I wanted to measure the reaction of the throng. But the rules of Lunch with the FT leave the choice with the guest. So, after a certain amount of cloak and daggery, insisted upon by the police protection officers who still accompany him everywhere, I arrive at Blair’s local Italian, Locanda Locatelli.

It is one of those restaurants comfortable with celebrity. On a weekday lunchtime most tables seem to be occupied by business types but Madonna is said to be among the evening regulars. Our corner booth offers a panoramic view of polished wood, fabric wall coverings and soft leather banquettes. A head or two turns discreetly as Blair enters. No one is impolite enough to stare.

Britain’s former prime minister presents a conundrum. His memoir has invited torrents of invective from enemies (critics is much too soft a word) among metropolitan elites. Yet copies of A Journey are flying off the shelves as “real people” open their wallets to read Blair’s version of events. He did, after all, win three elections and put Britain back on the international stage. Then again, he also stood shoulder to shoulder with George W Bush in Iraq.

I am getting ahead of myself. The Michelin-starred Locanda Locatelli is around the corner from Blair’s central London home. Its proprietor-chef Giorgio Locatelli, I will discover, is an exquisite cook. But first I concentrate on my guest. Blue suit, white shirt and no tie (I had worn one for the occasion), he is visibly at ease. The slings and arrows of media outrage don’t seem to have left any scars. He has just cancelled a signing at a bookstore in London because of promised disruption by protesters. But he’s still getting all those clicks on Amazon.

It cannot feel very nice, though, to have people call you a war criminal? Blair doesn’t blink. “I’ve always had a, I mean truthfully, a better relationship with the country than with the media because the media divides into a left and right of a pretty traditional sort. And the left always regard me as not sufficiently left and the right hate me because I win. Or I won.”

The style of, and reaction to, the book mirrors the division of opinion between liberal intelligentsia and voters. It’s racy. In places, it badly mangles the English language; the colloquialisms sometimes slip into cringe-making confessionals. We really don’t need to know about that night of unbridled passion with his wife Cherie. The book is everything, in other words, that the chatterati don’t like about Blair.

Yet it carries the reader along. There is plenty about politics and policy – more than in many political memoirs. He is way ahead on some things – particularly on what progressive politicians have to do to adapt to change; and, to my mind, profoundly mistaken on others, as in his reading of the struggle against violent Islamism. But A Journey reads as a story, not a chore.

“I wanted to write it in a different way and I wanted to write it in a way that is more open.” It was time for someone to explain that politicians are also human beings. “One of the worst things happening in politics today is this assault on politicians when they get … they do something that’s wrong or people think it wrong, or whatever, and yet no one actually sees it from the other side.”

He warms to the theme. “If you’re not careful what happens is your political leaders have to be all sort of buttoned up; meanwhile they’re subject to a degree of intrusion that in times gone by was completely unknown. I think it’s therefore quite helpful … to understand that they are human beings and to understand things from their point of view.” That’s why he has now owned up to the inner fears that had often lain behind the apparently supreme confidence.

There is more to this than artifice dressed up as candour, or indeed the desire to speak directly to people over the head of a hostile media. He thinks he has something important to say about the tumultuous pace of change in the world, the west’s response to the rise of Asia, the future of centre-left politics.

“I want people to read me unmediated rather than mediated because I think if they read it they will at least understand what I’m trying to say and it’s very much a book that’s prospective in a sense, because a lot of what I’m saying … is about where are we now and where we need to be.”

As we talk I am nibbling on Parmesan-infused grissini and picking small pieces from a basket of freshly baked bread. Blair resists the temptation. He likes to keep in shape. I have long abandoned such fantasies. Meanly, I take private satisfaction that the price he pays for keeping his weight down is to look his age.

The antipasti arrive. Blair has the salad of broad beans, rocket and ewe cheese. I hesitate before opting for the green bean salad with potato and truffle. The truffle always tips it. Mine is scrumptious. His salad likewise, says Blair. The plates go back scraped clean to Locatelli’s kitchen. “Local Italian” no longer seems an apt description of the cuisine on offer here.

We are sticking to sparkling water – a cue to tease my guest. He has admitted that as prime minister he fretted that an habitual whisky or gin followed by a couple of glasses of wine (sometimes even half a bottle!) over dinner left him close to the edge of alcohol dependency.

Guffaws all round. “All my friends have been saying it was quite the most pathetic and sad admission they’d ever come across. John Reid’s [a former cabinet colleague] comment was the best. Did you hear that? He said, ‘Where I come from in Glasgow they give more than that to the budgie.’”

There are moments in the book when Blair sounds almost melancholic. Politics, he explains, is lived backwards. Leaders are at their most powerful when they are least practised. Time brings experience but it also drains political capital.

He would have stayed on as prime minister had Gordon Brown, his chancellor and bitter rival, not forced the timing of his departure. Yet he bridles at the idea that he is now a lost soul. “That’s true … I do say [I would have stayed] because I have the confidence to say it – without actually spending my life desperately troubled I’m not still there.” So he has gotten over not being prime minister? Yes. “I really don’t miss it. The only time I missed it was during the global financial crisis.” Ah yes, that would have been a moment for him to stride the world stage again. As it was, Brown got quite a lot of credit.

But, he says, “I’m happy to go out there doing the things I’m doing … I’m fascinated by the Middle East peace process and I want to work on it. And my faith foundation is now operating in 15 different countries, I’ve got the Africa governance initiative, that’s operating in three African countries.” Then, of course, there are the speeches, the advisory work for a bank and the consultancy contracts for Tony Blair Associates.

Once during the lunch I think I off-balance him. I remind him that Peter Mandelson, a co-conspirator in the modernisation of his party, had once observed that New Labour was “intensely relaxed” about people becoming “filthy rich”. So how does Blair feel about living in private jets? Hasn’t he been seduced by the bling?

This evokes a pained frown. Most of his time, he protests, is spent on unpaid work – the role of Middle East envoy that a few days earlier had taken him to Barack Obama’s White House, his faith foundation, the work on governance in Africa and the rest. The speeches and the consultancy pay the bills for the pro bono.

“I would have been happy to carry on with being prime minister; I’ve been in public service for 25 years. I would have been happy taking the European job and going on a European salary … I’d be happy to go back to a public service job one day but if I don’t I’ve got the ability to make money, and I make it, and I provide for my family and I can do the things that I believe in doing.” The proceeds of the book – something upwards of £4m – have been pledged to a military charity helping the casualties of Iraq and Afghanistan.

Stuffy people like me are troubled by the idea of former prime ministers trading off their political careers. But Blair has a point. The flip-side of political leaders getting younger is that they retire in their prime. Can we really insist that fit fifty-somethings disappear into retirement or accept a cap on their earnings?

In any event, I don’t think the money is the motivation. What Blair really wants is to remain at the centre of things; to be a player. Wealth is an adjunct.

By now, we are finishing our main courses. I have opted for the day’s special – a sublime ravioli filled with spinach and ricotta. Blair nods approvingly at his char-grilled squid with chilli and garlic. Trying to trip him up reminds me why he was so good. When he was prime minister I used to see quite a lot of him. Before each encounter I would tell myself that this time I would not be bamboozled. Maddeningly, 20 minutes into the conversation, I would be thinking “Well, maybe he’s right after all.”

Blair told visitors to Downing Street what they wanted to hear – sometimes, as he admits in the book – bending the truth to that aim. I remember a colleague remarking that he “always believed what he said at the moment he said it”. So, you could add, did the visitors.

His gift, though, is about more than charm and the emotional intuition of a natural communicator. The big thing about Blair is that he knows how to frame an argument. Most politicians get lost in the foothills of tactics. He has a strategic brain – a view of the world – and the self-belief to follow it through.

The self-belief bit, of course, turned out to be his weakness as well as his strength. I would like to say that when the conversation turned to Iraq, I succeeded in pushing Blair up against a wall until he repented. I didn’t. Partly because I was ambivalent about the war at the time – I always thought getting rid of Saddam Hussein was rather a good thing. And partly because I deprecate the implicit assumption of many of the anti-war crowd that the world would be such a great place if Iraq and Iran were still fighting themselves to a standstill.

In any event he has heard the charges too many times to change his answers now: “We acted on the information that we had at the time; we also acted with a certain sense of urgency after September 11. I think people forget that.”

Yes, of course, he regrets the loss and damaged lives of the war but he is not going to say he regrets the decision to go to war. “We used to have a policy of supporting Saddam, to be a brake on Iran, and look what happened: it didn’t work, in the same way we actually armed some of the Mujahaddin in order to take on the Russians – it didn’t work, let’s learn the lesson.”

You could say Iraq tested to destruction his doctrine of liberal interventionism. On the other hand, are we to conclude that everything will be hunky-dory if only we leave the tyrants alone?

We opt for coffee rather than dessert, but it comes with a small selection of home-made sorbets and petit fours. This time I consider my waistline and stick, like Blair, with the sorbet.

Time is passing. Blair’s account of his titanic struggle with Gordon Brown grabbed even more headlines than Iraq. Some consider his description of his former colleague to be overly harsh; others wonder why he admits that, as prime minister, he did not feel strong enough to sack him.

The only point he makes now is that the struggle was more about the direction of the New Labour government than about who should be prime minister. “I think you need to make it clear there was a policy disagreement. People used to write this whole relationship up as if it was just a personal spat about a job – it wasn’t for me at all,” he says.

Our chef stands by the front desk as we leave. It’s my first lunch with a politician for a long time where the food has left a real impression. Usually it gets in the way.

Back in the office I pick up The New York Times to read the columnist Maureen Dowd’s take on the memoir. It seems I had been lunching with a delusional maniac. The thought occurs that perhaps I should have carted him off to Guantánamo. That’s the thing, though, about Blair. He awakens in many liberals the unhinged rage that Barack Obama draws from America’s Tea Party crowd. What to do, though, about all those people who are buying – even enjoying – his book?

Philip Stephens is the FT’s chief political commentator

…………………………………………..

Locanda Locatelli

8 Seymour Street, London W1

Contribution to charity £1

Bottle sparkling water £3.50

Broad beans, rocket and ewe cheese salad £9.50

Green bean salad, potato and black truffle £16.50

Char-grilled squid, chilli and garlic £28

Ravioli with ricotta and spinach £12.50

Espresso x 2 £5

An assortment of sorbets and petit fours (on the house)

Total (including optional service) £90

…………………………………………..

How successful has Blair been as Middle East envoy?

Of the many jobs and functions that Tony Blair has taken on since leaving 10 Downing Street, only one has provided the former British leader with any kind of international clout: his role as Middle East envoy, writes Tobias Buck.

Qadoura Mousa, Tony Blair and Silvan Shalom
Blair with Jenin governor Qadoura Mousa, left, and Israeli vice prime minister Silvan Shalom, 2009

Blair was appointed representative of the Middle East Quartet – the US, the United Nations, the European Union and Russia – almost immediately on leaving office in 2007. The post meant returning to a region where he is remembered, above all, for his role in the deeply unpopular invasion of Iraq in 2003. At the time, a number of analysts and diplomats cautioned that this association made him an improbable figure to advance peace between Israel and its Arab neighbours. That concern was gradually dispelled once Blair set up his office in Jerusalem’s famous American Colony Hotel. He made an early impression on his Israeli and Palestinian interlocutors, who noted both his dedication and easy-going charm (a rare commodity in Middle Eastern political circles).

More importantly, it soon became clear that Blair had not arrived with the intention of remaking the Middle East. He was, in fact, never supposed to play the role of peacemaker: his Quartet mandate spells out clearly that his primary task is to help improve the governance of the Palestinian territories and boost the Palestinian economy. According to his advisers, this was the mandate Blair himself wanted, believing that economic growth and good governance were a crucial – and previously overlooked – part of the strategy to end decades of bloody conflict.

What it means in practice is that Blair has been engaged above all in unglamorous aspects of Middle East politics: persuading Israel to lift a checkpoint in the West Bank; getting the Israeli army to approve the shipment of sewage pipes to the Gaza Strip; or calling on Gulf sheikhs to increase their funding for the Palestinian Authority.

There is no doubt that both the Palestinian economy and the quality of Palestinian governance have improved drastically since Blair entered the arena. However, many observers say most of the credit for the recent upswing goes to Salam Fayyad, the US-educated economist who serves as Palestinian prime minister. Blair has certainly contributed, in his role as a facilitator and mediator between the two sides, to the economic and political improvements in the West Bank but it is not easy to quantify how influential his actions have been.

“It is hard to say,” replied one senior adviser to the Palestinian Authority when asked about Blair’s contribution. “Many people work on many issues, but every word helps. Blair has tried his best to be successful but it is not always easy.”

Tobias Buck is the FT’s Jerusalem bureau chief

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America’s public servants are now its masters

By Mort Zuckerman

Published: September 9 2010 22:49 | Last updated: September 9 2010 22:49

There really are two Americas, but they are not captured by the standard class warfare speeches that dramatise the gulf between the rich and the poor. Of the new divisions, one is the gap between employed and unemployed that President Barack Obama seeks to close with yet another $50bn stimulus programme. Another is between workers in the private and public sectors. No guesses which are the more protected. A recent study by the Mayo Research Institute found that “private-sector workers were nearly three times more likely to be jobless than public-sector workers”.

Political tension is bound to grow when jobs disappear faster in the private than the public sector, just as compensation in the former is squeezed more. There was a time when government work offered lower salaries than comparable jobs in the private sector, a difference for which the public sector compensated by providing more security and better benefits. No longer. These days, government employees are better off in almost every area: pay, benefits, time off and security, on top of working fewer hours. Public workers have become a privileged class – an elite who live better than their private-sector counterparts. Public servants have become the public’s masters.

Take federal employees. For nine years in a row, they have been awarded bigger average pay and benefit increases than private-sector workers. In 2008, the average wage for 1.9m federal civilian workers was more than $79,000, against an average of about $50,000 for the nation’s 108m private-sector workers, measured in full-time equivalents. Ninety per cent of government employees receive lifetime pension benefits versus 18 per cent of private employees. Public service employees continue to gain annual salary increases; they retire earlier with instant, guaranteed benefits paid for with the taxes of those very same private-sector workers.

More troubling still is the inherent political corruption. Elected officials tend to be accommodating when confronted by powerful constituencies such as the public service unions that agitate for plush benefits and often provide (or deny) a steady flow of cash to election campaign funds. Their successors will have to cope with the inherited debt burden – and ultimately the nation’s taxpayers are stuck with the bill.

As Governor Arnold Schwarzenegger has pointed out, spending on retirement benefits for California’s state employees is growing at three times the rate of state revenues, now exceeding $6bn annually and growing at the rate of 15 per cent a year. In other states, however, the politics of public pensions appear to be changing. In Michigan, Governor Jennifer Granholm, a Democrat, recently enacted a teacher pension reform that should save about $3bn over 10 years by increasing the amount workers must contribute. Illinois raised its retirement age for newly hired public workers from as low as 55 to 67. Chris Christie, the Republican governor of New Jersey, decided that even if it took bruising clashes with public worker unions, public service compensation reform was essential for the fiscal health of the state. His stance surprised many, but it made him a national figure.

There is no quick fix to deal with the billions in unfunded liabilities. Public service employees are almost impossible to fire, except after a long process and only for the most grievous offences. What is more, the courts have ruled in many states that pension increases granted by elected bodies are vested benefits that must be paid no matter what, precluding politicians from going back and changing past agreements.

The only fair solution is to take the politicians out of the equation and have fully independent commissions in charge, fixing the scale of salaries and benefits for public-service workers and establishing an affordable second retirement tier for new employees. More reasonable retirement ages should be in order, such as 65 for general employees and 55 for public safety employees. This would take nothing away from the existing benefits of current employees.

A fundamental rethinking of the public workforce is necessary. Americans cannot maintain their essential faith in government if there are two Americas, in which the private sector subsidises the disproportionate benefits of this new public sector elite.

The writer is editor in chief of US News & World Report and chairman and co-founder of Boston Properties

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An excellent intelligence assessment from Stratfor. 


I completely agree: If the world – and notably the Middle Eastern countries – wants to contain Iran, this is the way to go forward.




Rethinking American Options on Iran http://www.stratfor.com/weekly/20100830_rethinking_american_options_iran

August 31, 2010 | 0856 GMT

By George Friedman

 Public discussion of potential attacks on Iran’s nuclear development sites is surging again. This has happened before. On several occasions, leaks about potential airstrikes have created an atmosphere of impending war. These leaks normally coincided with diplomatic initiatives and were designed to intimidate the Iranians and facilitate a settlement favorable to the United States and Israel. These initiatives have failed in the past. It is therefore reasonable to associate the current avalanche of reports with the imposition of sanctions and view it as an attempt to increase the pressure on Iran and either force a policy shift or take advantage of divisions within the regime.

My first instinct is to dismiss the war talk as simply another round of psychological warfare against Iran, this time originating with Israel. Most of the reports indicate that Israel is on the verge of attacking Iran. From a psychological-warfare standpoint, this sets up the good-cop/bad-cop routine. The Israelis play the mad dog barely restrained by the more sober Americans, who urge the Iranians through intermediaries to make concessions and head off a war. As I said, we have been here before several times, and this hasn’t worked.

The worst sin of intelligence is complacency, the belief that simply because something has happened (or has not happened) several times before it is not going to happen this time. But each episode must be considered carefully in its own light and preconceptions from previous episodes must be banished. Indeed, the previous episodes might well have been intended to lull the Iranians into complacency themselves. Paradoxically, the very existence of another round of war talk could be intended to convince the Iranians that war is distant while covert war preparations take place. An attack may be in the offing, but the public displays neither confirm nor deny that possibility.

The Evolving Iranian Assessment
STRATFOR has gone through three phases in its evaluation of the possibility of war. The first, which was in place until July 2009, held that while Iran was working toward a nuclear weapon, its progress could not be judged by its accumulation of enriched uranium. While that would give you an underground explosion, the creation of a weapon required sophisticated technologies for ruggedizing and miniaturizing the device, along with a very reliable delivery system. In our view, Iran might be nearing a testable device but it was far from a deliverable weapon <http://www.stratfor.com/analysis/nuclear_weapons_devices_and_deliverable_warheads?fn=1317026187> . Therefore, we dismissed war talk and argued that there was no meaningful pressure for an attack on Iran.

We modified this view somewhat in July 2009, after the Iranian elections and the demonstrations. While we dismissed the significance of the demonstrations, we noted close collaboration developing between Russia and Iran. That meant there could be no effective sanctions against Iran, so stalling for time in order for sanctions to work had no value. Therefore, the possibility of a strike increased.

But then Russian support stalled as well, and we turned back to our analysis, adding to it an evaluation of potential Iranian responses to any air attack. We noted three potential counters: activating Shiite militant groups (most notably Hezbollah), creating chaos in Iraq and blocking the Strait of Hormuz <http://www.stratfor.com/analysis/20091004_iran_and_strait_hormuz_part_1_strategy_deterrence?fn=1717026185> , through which 45 percent of global oil exports travel. Of the three Iranian counters, the last was the real “nuclear option.” Interfering with the supply of oil from the Persian Gulf would raise oil prices stunningly and would certainly abort the tepid global economic recovery. Iran would have the option of plunging the world into a global recession or worse.

There has been debate over whether Iran would choose to do the latter or whether the U.S. Navy could rapidly clear mines <http://www.stratfor.com/analysis/20091006_iran_and_strait_hormuz_part_3_psychology_naval_mines?fn=3417026171> . It is hard to imagine how an Iranian government could survive air attacks without countering them in some way. It is also a painful lesson of history that the confidence of any military force cannot be a guide to its performance. At the very least, there is a possibility that the Iranians could block the Strait of Hormuz, and that means the possibility of devastating global economic consequences. That is a massive risk for the United States to take, against an unknown probability of successful Iranian action. In our mind, it was not a risk that the United States could take, especially when added to the other Iranian counters. Therefore, we did not think the United States would strike.

Certainly, we did not believe that the Israelis would strike Iran alone. First, the Israelis are much less likely to succeed than the Americans would be, given the size of their force and their distance from Iran (not to mention the fact that they would have to traverse either Turkish, Iraqi or Saudi airspace). More important, Israel lacks the ability to mitigate any consequences. Any Israeli attack would have to be coordinated with the United States so that the United States could alert and deploy its counter-mine, anti-submarine and missile-suppression assets. For Israel to act without giving the United States time to mitigate the Hormuz option would put Israel in the position of triggering a global economic crisis. The political consequences of that would not be manageable by Israel. Therefore, we found an Israeli strike against Iran without U.S. involvement difficult to imagine.

The Current Evaluation
Our current view is that the accumulation of enough enriched uranium to build a weapon does not mean that the Iranians are anywhere close to having a weapon. Moreover, the risks inherent in an airstrike on its nuclear facilities outstrip the benefits (and even that assumes that the entire nuclear industry is destroyed in one fell swoop — an unsure outcome at best). It also assumes the absence of other necessary technologies. Assumptions of U.S. prowess against mines might be faulty, and so, too, could my assumption about weapon development. The calculus becomes murky, and one would expect all governments involved to be waffling.

There is, of course, a massive additional issue. Apart from the direct actions that Iran might make, there is the fact that the destruction of its nuclear capability would not solve the underlying strategic challenge that Iran poses. It has the largest military force in the Persian Gulf, absent the United States. The United States is in the process of withdrawing from Iraq, which would further diminish the ability of the United States to contain Iran. Therefore, a surgical strike on Iran’s nuclear capability combined with the continuing withdrawal of U.S. forces from Iraq would create a profound strategic crisis in the Persian Gulf.

The country most concerned about Iran is not Israel, but Saudi Arabia. The Saudis recall the result of the last strategic imbalance in the region, when Iraq, following its armistice with Iran, proceeded to invade Kuwait, opening the possibility that its next intention was to seize the northeastern oil fields of Saudi Arabia. In that case, the United States intervened. Given that the United States is now withdrawing from Iraq, intervention following withdrawal would be politically difficult unless the threat to the United States was clear. More important, the Iranians might not give the Saudis the present Saddam Hussein gave them by seizing Kuwait and then halting. They might continue. They certainly have the military capacity to try.

In a real sense, the Iranians would not have to execute such a military operation in order to gain the benefits. The simple imbalance of forces would compel the Saudis and others in the Persian Gulf to seek a political accommodation with the Iranians. Strategic domination of the Persian Gulf does not necessarily require military occupation — as the Americans have abundantly demonstrated over the past 40 years. It merely requires the ability to carry out those operations.

The Saudis, therefore, have been far quieter — and far more urgent — than the Israelis in asking the United States to do something about the Iranians. The Saudis certainly do not want the United States to leave Iraq. They want the Americans there as a blocking force protecting Saudi Arabia but not positioned on Saudi soil. They obviously are not happy about Iran’s nuclear efforts, but the Saudis see the conventional and nuclear threat as a single entity. The collapse of the Iran-Iraq balance of power has left the Arabian Peninsula in a precarious position.

King Abdullah of Saudi Arabia did an interesting thing a few weeks ago. He visited Lebanon personally and in the company of the president of Syria. The Syrian and Saudi regimes are not normally friendly, given different ideologies, Syria’s close relationship with Iran and their divergent interests in Lebanon. But there they were together, meeting with the Lebanese government and giving not very subtle warnings to Hezbollah <http://www.stratfor.com/analysis/20100827_lebanon_syrias_plan_preempt_iran_and_hezbollah?fn=8617026155> . Saudi influence and money and the threat of Iran jeopardizing the Saudi regime by excessive adventurism seems to have created an anti-Hezbollah dynamic in Lebanon. Hezbollah is suddenly finding many of its supposed allies cooperating with some of its certain enemies. The threat of a Hezbollah response to an airstrike on Iran seems to be mitigated somewhat.

Eliminating Iranian Leverage In Hormuz
I said that there were three counters. One was Hezbollah, which is the least potent of the three from the American perspective. The other two are Iraq and Hormuz. If the Iraqis were able to form a government that boxed in pro-Iranian factions in a manner similar to how Hezbollah is being tentatively contained, then the second Iranian counter would be weakened. That would “just” leave the major issue — Hormuz.

The problem with Hormuz is that the United States cannot tolerate any risk there. The only way to control that risk is to destroy Iranian naval capability before airstrikes on nuclear targets take place. Since many of the Iranian mine layers would be small boats, this would mean an extensive air campaign and special operations forces raids against Iranian ports designed to destroy anything that could lay mines, along with any and all potential mine-storage facilities, anti-ship missile emplacements, submarines and aircraft. Put simply, any piece of infrastructure within a few miles of any port would need to be eliminated. The risk to Hormuz cannot be eliminated after the attack on nuclear sites. It must be eliminated before an attack on the nuclear sites. And the damage must be overwhelming.

There are two benefits to this strategy. First, the nuclear facilities aren’t going anywhere. It is the facilities that are producing the enriched uranium and other parts of the weapon that must be destroyed more than any uranium that has already been enriched. And the vast bulk of those facilities will remain where they are even if there is an attack on Iran’s maritime capabilities. Key personnel would undoubtedly escape, but considering that within minutes of the first American strike anywhere in Iran a mass evacuation of key scientists would be under way anyway, there is little appreciable difference between a first strike against nuclear sites and a first strike against maritime targets. (U.S. air assets are good, but even the United States cannot strike 100-plus targets simultaneously.)

Second, the counter-nuclear strategy wouldn’t deal with the more fundamental problem of Iran’s conventional military power. This opening gambit would necessarily attack Iran’s command-and-control, air-defense and offensive air capabilities as well as maritime capabilities. This would sequence with an attack on the nuclear capabilities and could be extended into a prolonged air campaign targeting Iran’s ground forces.

The United States is very good at gaining command of the air and attacking conventional military capabilities (see Yugoslavia in 1999). Its strategic air capability is massive and, unlike most of the U.S. military, underutilized. The United States also has substantial air forces deployed around Iran, along with special operations forces teams trained in penetration, evasion and targeting, and satellite surveillance. Far from the less-than-rewarding task of counterinsurgency in Afghanistan, going after Iran would be the kind of war the United States excels at fighting. No conventional land invasion, no boots-on-the-ground occupation, just a very thorough bombing campaign. If regime change happens as a consequence, great, but that is not the primary goal. Defanging the Iranian state is.

It is also the only type of operation that could destroy the nuclear capabilities (and then some) while preventing an Iranian response. It would devastate Iran’s conventional military forces, eliminating the near-term threat to the Arabian Peninsula. Such an attack, properly executed, would be the worst-case scenario for Iran and, in my view, the only way an extended air campaign against nuclear facilities could be safely executed.

Just as Iran’s domination of the Persian Gulf rests on its ability to conduct military operations, not on its actually conducting the operations, the reverse is also true. It is the capacity and apparent will to conduct broadened military operations against Iran that can shape Iranian calculations and decision-making. So long as the only threat is to Iran’s nuclear facilities, its conventional forces remain intact and its counter options remain viable, Iran will not shift its strategy. Once its counter options are shut down and its conventional forces are put at risk, Iran must draw up another calculus.

In this scenario, Israel is a marginal player. The United States is the only significant actor, and it might not strike Iran simply over the nuclear issue. That’s not a major U.S. problem. But the continuing withdrawal from Iraq and Iran’s conventional forces are very much an American problem. Destroying Iran’s nuclear capability is merely an added benefit.

Given the Saudi intervention in Lebanese politics, this scenario now requires a radical change in Iraq, one in which a government would be quickly formed and Iranian influence quickly curtailed. Interestingly, we have heard recent comments by administration officials asserting that Iranian influence has, in fact, been dramatically reduced. At present, such a reduction is not obvious to us, but the first step of shifting perceptions tends to be propaganda. If such a reduction became real, then the two lesser Iranian counter moves would be blocked and the U.S. offensive option would become more viable.

Internal Tension in Tehran
At this point, we would expect to see the Iranians recalculating their position, with some of the clerical leadership using the shifting sands of Lebanon against Iranian President Mahmoud Ahmadinejad. Indeed, there have been many indications of internal stress, not between the mythical democratic masses and the elite, but within the elite itself. This past weekend the Iranian speaker of the house attacked Ahmadinejad’s handling of special emissaries. For what purpose we don’t yet know, but the internal tension is growing.

The Iranians are not concerned about the sanctions. The destruction of their nuclear capacity would, from their point of view, be a pity. But the destruction of large amounts of their conventional forces would threaten not only their goals in the wider Islamic world but also their stability at home. That would be unacceptable and would require a shift in their general strategy.

From the Iranian point of view — and from ours — Washington’s intentions are opaque. But when we consider the Obama administration’s stated need to withdraw from Iraq, Saudi pressure on the United States not to withdraw while Iran remains a threat, Saudi moves against Hezbollah to split Syria from Iran and Israeli pressure on the United States to deal with nuclear weapons, the pieces for a new American strategy are emerging from the mist. Certainly the Iranians appear to be nervous. And the threat of a new strategy might just be enough to move the Iranians off dead center. If they don’t, logic would dictate the consideration of a broader treatment of the military problem posed by Iran.

Rethinking American Options on Iran  is republished with permission of STRATFOR.”





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