True Globalization Must Rest On Shared Values

By Paolo von Schirach –

WASHINGTON – The globalization we know has been driven primarily by the explosion of new cross border business opportunities created by truly disruptive technological innovation. Almost overnight, broadband internet (enabled by a robust global network of fiber optic cables) created a new, zero-cost modality to communicate and share enormous amount of data across the globe.

Moving goods became easy

When it came to transporting physical goods, the standardization of shipping technologies –same containers, same container ships, same container handling facilities used by all trading nations– accompanied by super efficient IT systems for managing and tracking millions of items in real time, made all this possible. Add to the mix huge infrastructure modernization (new rail freight lines, new highways, new airports, new ports) in major new industrial countries like China and we see the contours of the enabling environment for globalization.

Complex international supply chains that in most cases optimized results while reducing costs came to life. Combined with the outsourcing of labor intensive production from the US, Europe and Japan to low labor cost countries, they further contributed to the optimization of production, higher profits for many corporations, and lower prices for millions of Western consumers.

Not just about technology

We know all that. But here is the problem. Globalization should not be only about the successful adoption of new technologies that greatly facilitate cross border economic activities. Globalized business activities should take place within a global environment in which all the players sincerely adhere to the same rules, inspired by the same shared values.

And here is the problem. We do not have a robust rules based global environment in which norms are clearly and genuinely embraced by all participants, and serious penalties are imposed on rules-breakers by an impartial authority.

The World Trade Organization, WTO, may constitute an embryo of such an authority; but it is not the real thing. The WTO does not even come near to having anything close to the investigative and enforcement powers of a national government overseeing domestic commerce norms.

China not playing by the rules

There is no point here in repeating the long litany of complaints against Chinese behavior when it comes to international trade and investments. But it is worth noting that, for whatever reasons, the Western Nations that created the basic architecture of a rules based free trade system, while fully aware of Chinese non-compliance, for decades gave China a pass.

May be it was just wishful-thinking. However, for some reasons, after China entered the WTO, (December 11, 2001), most Western leaders concluded that China had turned a page. The leaders in Beijing were essentially done with the old command economy. They were eager to shed its legacy, while embracing Western style free trade, with all its rules. While China might take its time to fully become “one of us”, many observers had concluded that it was just a matter of time.

It did not happen

Well, now there is a growing consensus that that benign assessment had been not just premature, but flat wrong. Yes, there might have been a time, especially during the 1990s, in which genuine reformists within China had tried to articulate a new agenda aimed at turning the country into something close to a free market economy.

However, the elevation to supreme and now absolute power of President Xi Jingpin in 2012 finally convinced even the most optimistic analysts that this benign transformation within China, which would include its genuine acceptance of the Western rules based system it entered in 2001, is simply not going to happen. On the contrary, the signals from Beijing are that China has the ambition to create a new China-centric world order in which regional powers and others would follow a Chinese inspired and led international trade system. If we take these plans seriously, then we realize that the problem is not that China wants to be a stronger competitor within the existing system. China wants to create a new and improved system fashioned according to Chinese principles and “sell” it to the world as a better alternative to what the West created over time, after the end of WWII.

Be that as it may, and whatever your take on grandiose Chinese mega-projects like Belt and Road, it is clear that most of our benign assumptions regarding a Chinese progressive and indeed, inevitable, “conversion” to free market capitalism were out of place.

What’s next?

This being the case, what’s next? What should come next in the West is a genuine effort, hopefully led by an enlightened American Government, aimed at strengthening ties, at all levels, among all the capitalistic democracies, (The EU, Canada, Japan Australia, New Zealand and South Korea should be on top of this list), and other countries clearly willing to work within a rules based, free market international order.

This should not be about some kind of “Cold War 2.0” with China. But it should be about being inspired by the principle that, at least in general, it is better to do business with countries that share your values.

By refocusing its efforts, at the same time the West would send a powerful yet very simple message to China. The world operates according to principles of fairness, compliance, reciprocity and transparency. If China were genuinely willing to play by these rules, then they are welcome. There would be no issues. But the burden is on Beijing to show, through actual performance over time, its genuine commitment to the rules based system it seemed to have embraced about 20 years ago when it joined the WTO. Until then, the Western approach to trade and investments with China should be inspired by utmost caution and prudence. Assuming that “they are just like us” is a bad starting point. They are not like us.

Western principles

In the Western world the assumption used to be that more widespread prosperity is the outcome of innovation and increased levels of economic activity. In turn, innovation, enterprise and trade are made possible by the existence of political and economic freedoms protected and upheld by freely elected governments via the enforcement of sensible rules aimed at protecting the integrity, fairness and transparency of all economic activities.

I strongly believe that it is about time to forcefully reaffirm these principles, both domestically and in all matters related to international trade and investments. And there is no better way to do so than by establishing win-win international trade agreements with like minded partners, based on fairness, true reciprocity and therefore mutual advantages.

Do business with like minded people

A few years ago (beginning in 2013), there was a great deal of talk of a major US-European Union Free Trade Agreement, known as The Transatlantic Trade and Investment Partnership (T-TIP) that would greatly incentivize economic, trade and investment relations between the two sides of the Atlantic. Here is how the website of USTR (United States Trade Representative) described it:

The Transatlantic Trade and Investment Partnership (T-TIP) is an ambitious, comprehensive, and high-standard trade and investment agreement being negotiated between the United States and the European Union (EU). T-TIP will help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services. This will help to promote U.S. international competitiveness, jobs and growth.

The U.S. and EU economies are two of the most modern, most developed, and most committed to high standards of consumer protection in the world.  T-TIP aims to bolster that already strong relationship in a way that will help boost economic growth and add to the more than 13 million American and EU jobs already supported by transatlantic trade and investment. T-TIP will be a cutting edge agreement aimed at providing greater compatibility and transparency in trade and investment regulation, while maintaining high levels of health, safety, and environmental protection. T-TIP presents an extraordinary opportunity to strengthen the bond between vital strategic and economic partners. [Bold added]

As you can see, the US Government at the time believed that this agreement would be extremely beneficial for both the US and the European Union. It also affirmed that enhanced economic ties would “strengthen the bond between vital strategic and economic partners.” Negotiations began during the Obama administration, but then it all fizzled after the elections of 2016, because of President Trump’s lack of interest in any new international trade agreements.

It is still possible to negotiate free trade with Europe

Well, assuming a relatively quick end to the current coronavirus global emergency, and a new US administration sincerely interested in both affirming and strengthening a rules based global commerce regime, a good place to start would be an ambitious plan to harmonize the myriad of rules that create de facto impediments to the free flow of goods –and especially services– between the US and the EU. If you consider that the US and the EU together represent the majority of world trade, the impact of a truly liberalized regime for trade and investments between these two giants would be revolutionary, with significant, world wide benefits.

Show the vitality of the Western world and its values

Western Europe and the United States are the two historic pillars of Western Civilization. While some believe that the West is well on its way to inevitable decline, there is no law of physics that establishes this.

An invigorated transatlantic trade and investment regime would act as a powerful tonic. It would open up new opportunities in the US and in Europe. It would strengthen ties among like minded societies. It would spur new joint ventures and mutually advantageous cross pollinations, while opening new avenues for cooperation at multiple levels.

But, more than anything else, a successful agreement that creates real value for all the stakeholders would show that like minded governments, inspired by the same or at least very similar values, can and will cooperate for the benefit of their societies.

Given the enormous amount of technical issues involved, this goal of a Transatlantic Free Trade Area may be very difficult to reach. But it is doable. The benefits, on both sides of the Atlantic, will be immense. And this agreement would be a powerful example of values-driven globalization.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Sciencand International Relations at Bay Atlantic University, also in Washington, DC.




US Response to Coronavirus Dictated by Panic, Not Policy

By Paolo von Schirach –

WASHINGTON – Nobody is prescient. No one could have foreseen the timing and the extent of the coronavirus pandemic explosion which originated in China and then from there spread all over the world. However, as I noted elsewhere, the US was especially vulnerable, because it was utterly unprepared to meet any public health emergency.

No systems, no plans

Amazing but true, America had no “pandemic early warning system” in place so that a timely alarm could be sounded, nor did America have any meaningful public health “rapid reaction force” in place that could have been activated after the alarm had been sounded, in order to deploy all the necessary medical equipment and other materials where mostly needed, while ordering and enforcing the necessary contagion prevention measures, (immediate widespread testing, quarantines, social distancing, and lock downs).

True, eventually some of these measures were ordered and implemented here in the US. But, lacking anything even resembling a master plan, all this was done very late, and in a horribly inefficient, fragmented fashion, in a climate of confusion, disorientation and –at times– sheer panic.

Panic led to an extreme response

And the panic created by a disease with no cure and catastrophic predictions about millions of dead Americans, unless we closed everything down, led to the fateful decision to shut the country down, with full knowledge of the incredible damage to the economy that this decision would imply, including a slew of bankruptcies, and tens of millions of suddenly unemployed workers.

Let me make this clear. It did not have to be this way. We closed America down because, at the time, with no deployable countermeasures available and a deadly disease spreading rapidly, there seemed to be no other viable choice, if the main goal was to save American lives.

And, again, there was no other practical choice because the US had no deployable countermeasures, no contagion mitigation systems that could be activated. Here is the sad truth. When coronavirus arrived, America was literally a sitting duck, completely unprepared and therefore defenseless.

Amazingly, this means that America, the world’s leading economic power, leader in medical research and information technology, had not thought that a pandemic could occur here, and therefore had done essentially nothing to prepare for it. As a result, when coronavirus hit, the US had no workable tools to slow down the advancing pandemic, except for quarantines and lockdowns — public health countermeasures first deployed in Europe in the Middle Ages, at a time in which public officials literally had no other remedies.

Taiwan, South Korea and Germany had systems

In contrast, other governments over time had developed pandemic preparedness plans, and they activated them –immediately, as soon as news of the pandemic originating in Wuhan, China spread.

In Taiwan the government had a system in place (created in the aftermath of the SARS pandemic in 2003) that was immediately set into action when the Taipei government realized that something bad was happening in China, back in December 2019.

In South Korea, almost overnight, the government deployed a robust virus containment strategy based on massive testing and subsequent isolation of all positive individuals.

In Germany, a national and regional network of testing facilities sprang into action, almost immediately. As a result, Germany, to date, has by far the lowest number of fatalities per unit of population compared to the rest of Europe.

Because they had robust and tested “damage limitation strategies”, these countries had tools to limit contagion. Their number of fatalities is quite low, despite no cure and no vaccine. Which is to say that, unlike the US, other governments had thought about the possibility of a pandemic and had therefore funded and put in place policies and countermeasures that helped them contain the damage. If they could do this, so could we. The fact that we did not is a huge stain on America, the country that is supposedly ahead of everyone in innovation, science and high tech.

Early warning system would have contained the pandemic

Let me be clear. A US early warning system would not –I repeat, would not– have prevented this virus for which there is no cure from reaching the US and infecting people. However, a sophisticated early warning system, (which includes the ability to learn as early as possible about an unfolding epidemic anywhere in the world, and then quickly track and isolate positive individuals in order to prevent or at least slow down contagion), combined with prepositioned stockpiles of medical emergency material, (masks, protective gear, ventilators, field hospitals easily deployable by the military in high incidence localities), most certainly would have slowed down this pandemic, while reducing its spread and scope. Which is to say that, if America had had a robust pandemic plan in place, we could have avoided shutting down almost the entire economy, while probably saving thousands of lives, even in the absence of a cure or vaccine.

Millions of victims?

As we had none of the rapid reaction tools in place, overtaken by panic, federal and state policy-makers concluded that the only choice before them was between condemning literally millions of Americans to a certain death caused by an advancing coronavirus, or closing down almost the entire US economy in order to slow down contagions, this way preventing a horrible human tragedy. And so, lacking any plausible alternatives, Washington and most of the 50 States decided to literally close down the biggest economic power on Earth.

What is terribly wrong with this scenario is that this “either we kill people, or we kill the economy” choice could have been avoided by having a tried and tested contagion prevention national plan in place that would have worked like a very powerful shock absorber. This is what Taiwan, South Korea and Germany, among others, did –rather successfully.

Of course, as I said above, even if America had been properly organized to react to this pandemic, there would have been some contagion, many deaths, huge economic damage and enormous dislocation resulting in a recession. Hence the need for the US Government to intervene with emergency funds. But, for sure, both the economic dislocation and the emergency interventions would not have been on this scale, (almost three trillion dollars!), because the damage, while still very substantial, would have been far more limited.

Are we going to learn from this disaster?

I really hope we learnt our lessons here; even if at the cost of more than 50,000 lives, and counting; and close to three trillion dollars in emergency aid to corporations and individuals, and counting. I hope that by now our elected leaders have realized that the US cannot afford to have essentially no workable rapid reaction system in place when it comes to low probability but extremely high risk public health occurrences.

Of course, it will cost money to set up and maintain the necessary early warning and rapid reaction infrastructure, trained workforce and chain of command.

But this strategic investment will be only a fraction of the close to three trillion dollars we have already spent so far, not to mention the fact that early detection will give us the ability to save thousands of lives by preventing out of control contagion via timely quarantines and other targeted isolation measures.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Sciencand International Relations at Bay Atlantic University, also in Washington, DC.




US Must Have a Plan To Face Future Health Crises

By Paolo von Schirach –

WASHINGTON – Here is the hard truth. America had no plan designed for national health emergencies that could be activated as soon as policy-makers realized the threat of coronavirus. There was almost nothing in place. There was no “early warning system” that would sound the alarm. There was no structure, no prepositioned equipment that could be deployed to crisis points. No well oiled chain of command.

No plan

In a word, there was no comprehensive, tried and tested plan that would integrate public health monitoring, data gathering. There were no models to assess the possible economic impact of public health countermeasures. Furthermore, there were no stockpiles of emergency materials, and no proven and tested logistics system to be activated in order to deliver such material to crisis areas. Sadly, whatever has been done so far, it is all about “make it up as you go”.

It did not have to be this way. By now we know that Taiwan, for instance, reacted promptly and effectively to the very same crisis, because they had a robust plan in place. The plan was generated after the big scare caused by SARS, another respiratory illness that originated from China back in 2003. If Taiwan could create a plan, so could we. There is no excuse for having essentially almost nothing in place.

Rely on what the doctors say

In this catastrophic leadership void, by default, policy-makers sought the counsel and advice of the subject matter experts: i.e. the top national medical authorities. And the medical experts did the best they could on the basis of the extremely limited knowledge they had about this coronavirus.

Confronted with a rapidly expanding global epidemic caused by an unknown pathogen for which there is no treatment or vaccine, the medical authorities, after having minimized the extent of the public health threat, eventually gave what they thought was the best prudent advice.

If the government really wanted to stop this epidemic –they counseled– then it had to order a nationwide, drastic quarantine regime covering as many people as possible. This is only known remedy to stop or slow down contagion. In other words: “Shut down the US economy for…as long as it takes”.

If you want to stop contagion, this is reasonable and prudent public health advice. Except that the medical authorities did not even try to balance the public health advantages of “social distancing” against the colossal economic damage caused by shutting down almost the entire country.

Worst case scenarios fueled panic

At the same time, the same medical authorities, trying to play it safe, gave prognostications about contagion and fatalities based on worst case scenarios. Until not too long ago, they were talking about possibly millions of Americans dead as a result of coronavirus. Imagine that. Millions of Americans would die because of a new disease for which there is no cure.

While we were treated with scary scenarios of millions of dead Americans, the news media wittingly or unwittingly fanned the flames of a growing national panic. The 24/7 news was all about the relentless growth of the pandemic. It was all about semi-desperate doctors and nurses working impossible long shifts in overcrowded hospitals facing a tsunami of severely ill patients, while lacking even basic protective gear for their staff. Not to mention lack of beds and critical equipment, while suppliers struggled to meet unprecedented demand.

Country in chaos

So, the general impression was that America was in chaos. We were confronted with a never-happened-before historic calamity that might kill millions, while we had nothing to fight it, except for quarantines, a physical isolation remedy first deployed by the Republic of Venice during the Plague of 1347.

From the standpoint of policy-makers, if almost certain death for millions is the end game unless we quarantine America, then even the most drastic jobs-killing measures seemed sensible. Thinking about how to save the economy when everybody around you may be positive and soon enough intubated, with tens of thousands ending up dead, seemed stupid.

Catching our breath

Now, a few months into this crisis, we are beginning to catch our breath. National and state authorities, after having thrown trillions of dollars to corporations and individuals in an effort to salvage a shuttered US economy, are at least beginning to look at how we can safely reopen, in increments, our semi-comatose 20 trillion dollar economy. At the same time, based on various accounts, there is reasonable hope that some kind of treatment and, down the line a vaccine, will “soon” become available.

We must have a plan

It did not have to go this way. As the case of Taiwan demonstrates, even without a cure or a vaccine, it could have been possible to plan for such an epidemic, this way minimizing confusion and frictions, and possibly saving many lives.

During the Cold War, when nuclear war was a distinct possibility, US Presidents relied on the ultra-secret SIOP, or Single Integrated Operational Plan. Good or bad as they were, periodically updated SIOPS tried to created a comprehensive scenario that would capture “everything” in case of a possible all out nuclear conflict; so that the Commander in Chief would have the opportunity to see “the whole picture” before making critical decisions most likely leading to unprecedented destruction and millions of lives lost.

On a similar note, after the first oil shock of 1973-74, the US and other oil consumer countries created the International Energy Agency, IEA. The IEA would serve as an information-sharing clearing house linking oil importers and as an energy policy coordination body, in case another major supply disruption would take place at any time in the future.

Furthermore, the US decided to create a massive Strategic Petroleum Reserve, (SPR) essentially a huge stockpile of crude oil that could be released into the US economy in case of a sudden crude oil shortage caused by war or other occurrences. The IEA and the SPR could not prevent another oil supply disruption. But they would mitigate the impact of any supply cuts.

Public health is national security

Well, it’s time for America to develop the public health equivalent of an IEA, SPR, and nuclear war SIOPs. I am not suggesting that the goal here is to gain the capacity to predict, prevent and quickly defeat any possible public health emergency. That is impossible.

However, just as we did with the horrible nuclear war scenarios, or the possibility of devastating oil supply cuts, as a nation, as a minimum we must have reliable early warning systems that will alert policy-makers when something unusual happens anywhere in the world on the public health front. And we should have the “data fusion centers” that will help all the experts and policy-makers, so that they will know what is actually going on in “real time”. With the advantage of timely intelligence, then public officials would be able to properly direct prepositioned equipment to the proper locations, while immediately ordering the appropriate contagion limitation countermeasures.

Balancing public health and economic survival

Furthermore, America needs to have comprehensive plans envisaging different scenarios when it comes to balancing public health countermeasures and the economic impact of such countermeasures. Elected leaders need to be able to see the implications and consequences of difficult decisions.

Elected leaders are the policy-makers in charge

Policy-makers relying on various inputs are the ultimate decision-makers. It makes no sense for elected leaders to say: “We do not know much about this, therefore we shall follow the advice of the medical experts”. Medical experts are not elected policy-makers. Of course, their input is essential. But they are not economists or public administration experts. They see a critical piece of this troublesome reality. But not the whole picture.

Indeed, at what point does the remedy –shutting everything down in order to prevent contagion– becomes worse than the disease in terms of destruction of businesses and employment? Policy-makers should do their best to save lives. But they should be able to assess the danger of killing the national economy against the worthy humanitarian goal of saving lives.

This is why policy-makers need real time data that will help build credible scenarios. All this should be part of a comprehensive, periodically updated plan.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Sciencand International Relations at Bay Atlantic University, also in Washington, DC.




How Can We Prepare For The Next Pandemic?

By Paolo von Schirach

WASHINGTON – Belatedly, all countries, including the most advanced, decided to adopt quarantines and “social distancing” as the only effective methods to slow down and hopefully stop the coronavirus contagion.

Better than doing nothing

While this is way better than doing nothing, it is somewhat disheartening that today –in the year 2020– the only contagion prevention tool in our tool box is the quarantine — a contagion prevention measure first employed as official public health policy by the Republic of Venice in 1347, during the Black Plague.

Quarantines are old remedies

Indeed, the English term “quarantine“, comes from the Venetian “quarantena“, a slight modification from the Italian “quarantina” which simply means “forty days“. At the time, Venice was already a major international port. In today’s terms, we would call the thriving maritime republic a Global Commerce Hub.

Venice depended entirely on commerce. It could not stop it, because it was the source of its gigantic wealth. But the Venetians did not want to be killed by epidemics brought in by sailors either. Therefore, the Venetian government during the 1347 Plague epidemic instituted the policy of isolating arriving ships and crews for forty days, (“the quarantine”), because they had realized that sailors and traders coming from foreign lands carried deadly diseases.

Dedicated hospitals

Well, guess what, quarantines worked, at least to some extent. Indeed, the Venetian example was soon adopted by other major port cities in the Mediterranean and beyond. The Venetians also were first in creating ad hoc health facilities for those who carried infectious diseases. Passengers coming from places known to have infections were forced to move to the island of Santa Maria di Nazareth, known as “Nazarethum”, that soon became known as “Lazzaretto”, or “Lazareth”. Besides, the Venetians created high level magistrates, called Public Health Procurators, whose job was the enforcement of the public health measures on which the very survival of the Republic depended.

Prevent diseases from crossing land borders

Later on, The Habsburg Empire created a massive system of military garrisons and fortifications along its long border with the Ottoman Empire. This system included dedicated spaces in the border areas whose main purpose was to quarantine anybody crossing into the Austrian Empire. The quarantine rules were clear and inflexible. Breaking them resulted in summary execution.

We had nothing

Well, fast forward to the present coronavirus epidemic, and we immediately realize that we are –belatedly and often half-heartedly– picking up the same anti-contagion tools first developed several hundreds years ago by the Venetians… simply because….we have nothing else!

Sadly, Western medicine has been blindsided by its own great successes. We defeated TB, smallpox, polio, and more. We have developed vaccines and treatments. We have antibiotics and what not. Therefore, somewhat superficially, we believed that we had won the infectious diseases war. Nothing more to worry about.

Bill Gates’ warnings

Strong warnings, such as the one articulated by Bill Gates in 2015 after the Ebola crisis in West Africa, were ignored. Gates did say –loud and clear– that Ebola was a Red Flag. A major pandemic coming to the US was a distinct possibility. And he did also say that we needed to prepare by creating early warning systems and well coordinates response mechanisms (including stockpiles of medical equipment) and the teams to manage them. He also suggested that the response mechanisms had to include a prominent role for the military.

Yes, Bill Gates did say all this, back in 2015.

Well, nobody paid any attention. Look, if we had listened to Gates and others who also warned about possible pandemics we could not have avoided this coronavirus pandemic, simply because, to date, we have no proven cure and no vaccine.

However, we could have dealt with this massive emergency in a smarter and much more efficient way, most likely saving many lives that have been lost simply because we were caught off guard. We know now that we had no system to quickly detect coronavirus virus carriers, so that they could be promptly isolated.

Taiwan has a system

The case of Taiwan’s public health early warning system proves this point. Taiwan learnt its painful lesson from a previous major public health scare. In the aftermath of SARS in 2003, (another deadly respiratory disease originating from China), Taiwan created a sophisticated early detection system, with dedicated professionals supervising it.

As soon as the Taiwanese authorities realized that something abnormal was happening in Mainland China at the end of 2019, they activated all their systems. Well, it may not be perfect; but Taiwan managed to quickly identify all or most coronavirus infected people, so that they could be promptly isolated, before they could spread the virus. But Taiwan could do all this only because it could activate a robust medical response mechanism it had spent years to create.

Guess what: prevention works!

US was unprepared

Here in the US, the list of what we did not have and of the systems that we could not activate simply because they did not exist is depressingly long. I really hope that this gigantic public health and now economic disaster, partly due to nature and partly due to our complete lack of any meaningful preparedness, will teach us a lesson.

We need reliable early warning

To begin with, the US and the World need much more sophisticated early warning systems. Theoretically, this should be the mission of the World Health Organization, WHO. But the record shows that the WHO is just another lumbering international bureaucracy, rarely ahead of the curve when something major happens. With all the talent in IT, superfast Supercomputers, Artificial Intelligence and indeed medical science that we have across the globe, setting up better early warning and crisis management systems is just a matter of will and coordination. We have the tools. Let’s organize them in a productive fashion.

New York City is under resourced?

Along similar lines, governments should create stockpiles of medical tools and related distribution systems that could be quickly mobilized in an emergency. It is a disgrace that New York City, the World’s financial capital, did not have the emergency facilities that could be quickly set up, along with all the medical devices necessary to deal with a sudden epidemic.

Emergency facilities are now springing up almost everywhere in the US. And this is good. This activism proves that America is resilient. However, we can no longer afford to be good only at reacting. We must learn to be proactive.

Yes, investing billions of dollars in facilities and supplies that may or may not be called into action sounds like a waste of money. And yet, if we look at the colossal economic damage caused by the need to shut everything down in order to stop contagion, all of a sudden, investing even a few hundreds billions in preventative measures looks truly cost-effective.

Those governments that lack the economic means to set emergency stockpiles should be connected to a global network that would immediately spring into action and deliver medical assistance where needed.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC.




US Oil and Gas Sector Hit Hard By Virus, Price War

By Paolo von Schirach –

WASHINGTON – Sadly, coronavirus is here in America. All the restrictions announced and feared on most economic activities have created huge disruptions and panic. The entire travel, entertainment and restaurant industries are comatose. Airlines bookings literally collapsed. And now, with most economic activities frozen, there is widespread fear that this may be just the beginning of a massive health and economic crisis –with no timeline.

Even worse for the oil sector

Well, if things are looking ugly for the broader US economy, they are simply disastrous for the US fossil fuel industry, oil in particular. The global economic slowdown began in January when China literally closed down half of its economy. The consequent drop in oil demand from China depressed already low oil prices.

Very low oil prices mean that many low margin small and medium sized US oil companies will go bankrupt. And this is because their extracting costs are far higher than in Saudi Arabia or Russia. Many of them could barely stay alive with oil at $ 50 per barrel. But when crude prices went down from $ 60 to $ 30 the picture looked bleak. And now, with the new development of a price war between Russia and Saudi Arabia, expect oil (now at around $ 25) to go down to $ 20 per barrel, or even lower. What started as a crisis for the US energy sector in January, just turned into a nightmare.

The incredible impact of the US energy renaissance

Taking a broad view, there is no question that the US energy boom triggered by the 10 year old domestic “fracking revolution” is one of the brightest spots in the US economy. Thanks to fracking, in the space of almost nothing, America, assumed to have only small and rapidly declining reserves in both oil and gas, came back with a gigantic roar; all thanks to its ability to exploit vast amounts of oil and gas until recently deemed to be unrecoverable, due to the prohibitive cost of extraction.

Well, thanks to the revolutionary fracking technologies, unrecoverable oil and gas became recoverable. In just a few years, a large number of small and medium energy companies (Exxon Mobil and Chevron, among others came later) made the US into the world’s largest natural gas producer, and now the biggest oil producer. It is hard to overestimate the positive impact of all this.

New jobs and energy security

Just think about it. Nowadays, we have billions of dollars invested at home, in this dynamic domestic energy sector, instead of being sent out to buy OPEC oil. We also accomplished the creation of “Hemispheric Energy Security”.

To be clear, America is not totally energy independent. However, if you combine this staggering increase in domestic energy production with Canadian and Mexican imports, you realize that nowadays most of the energy Americans use every day originates from the Western Hemisphere. This is a huge net plus in terms of improved US energy security and therefore national security.

Problem: high cost

The big fly in the ointment in all this was and is that shale oil extraction is a high cost, low margin business. And this is a big problem. Indeed, mostly on account of a mature, abundantly supplied global energy market, crude prices are now historically low, while many if not most US players in this shale oil sector are over leveraged, while they do not make much money by selling oil at such low prices.

In fact, some do not make any money at all. Given relatively high operating costs, low oil prices and large debt burdens, the sheer survival of many American small and medium energy companies was highly questionable before the crisis of 2020 began. For these reasons, the energy sector was not very attractive to average investors. Indeed, even in the context of a very robust stock market in 2019, oil stocks were the worst performers.

Energy companies must be profitable

Yes, it is great to celebrate this astonishing American energy renaissance. However, this is a capitalistic economy. Eventually, you have to be profitable to stay in business. Of course, cost cutting and consolidation were happening in this rather fragmented industry, well before this most recent oil price collapse. And the sector proved to be much, much more resilient than what many critics had argued. Initially thought to be viable only with oil at $ 60 per barrel or above, many companies can still make money with oil at $ 50 or $ 40. However, some cannot.

The impact of the crisis in China

And then January 2020 came along, with the explosion of the coronavirus epidemic in China. This led to the freezing of the Chinese economy, and the consequent collapse of (already low) oil prices due to drastic demand cuts by its biggest customer. This was bad news for all oil producers and exporters; but really horrible news for the shale oil sector in the US that depends on relatively high crude prices (at least $ 50 per barrel on average) to stay profitable.

Saudi Russia price war

Well, if this were not bad enough, on the heels of the China problem came an unexpected price war between the two main world exporters: Saudi Arabia and Russia. They would not continue their cooperation based on agreed upon production cuts aimed at supporting global oil prices. In fact, with no deal, they decided to turn all the taps on, this way flooding an already over supplied oil market, with a consequent additional price drop.

Well, if oil at $ 40 per barrel was very bad news for many US shale oil producers, you can imagine the impact of oil at $ 25 per barrel, or lower. This is an unmitigated disaster, in the context of a suddenly deteriorated US and world economy.

If this oil price slump lasts much longer, you can expect many bankruptcies, and tens of thousands of American oil workers out of a job, with negative cascading effects on the hundreds of suppliers and vendors that depend heavily on vibrant energy companies buying pipes, drilling equipment, valves, pumps, and what not. Expect collapsed demand for all these oil services, parts and components companies. And, as a sad consequence of all this, expect additional misery and negative ripple effects on so many local economies that had done very well on account of the money brought in by the oil business.

Price war cannot last much longer

The only hope in all this is that this price war cannot last very long because it is unsustainable for both Saudi Arabia and Russia. Indeed, while both countries’ oil industries can still make money even at these extraordinarily low oil prices, both governments cannot afford this.

Russia based its spending plans on oil at $ 50 per barrel. Saudi Arabia needs oil at $ 80 to finance its rather ambitious economic diversification agenda. Here is the thing. Revenue generated by foreign oil sales is almost all these two countries got. Russia may be somewhat better placed, but is not in a great position.

US shale sector will take time to recover

Yes, for a while at least, both countries can dip into their dollar reserves to finance the cash shortfall caused by drastically reduced oil revenues. But not indefinitely. In all this, the US shale oil sector is getting hit pretty hard, because its operating costs are much higher than current oil prices.

No way that companies that need oil to be at $ 40 per barrel just to stay alive can keep going much longer with crude hovering around $ 20. In the end, the US shale sector will survive. But only after undergoing painful bankruptcies and consolidations after which only the fittest will make it.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC.




U.S. Surrender In Afghanistan

By Paolo von Schirach – 

WASHINGTON – The historic news is buried in short articles inside major newspapers. If you did not pay attention, you probably would not even notice that the American war in Afghanistan –the longest American war– is finally coming to an (unhappy) end. America is negotiating its departure from Afghanistan. A draft deal sketching a timeline for US troops withdrawal and subsequent Afghan Government-Taliban negotiations has been hammered by US Envoy Zalmay Khalilzad and the Taliban.

Good news? Not really. This is a U.S. withdrawal following defeat, not victory. Let’s be clear. America has not come to this point after negotiations from a position of strength with a badly bruised, demoralized Taliban. America negotiated an exit from a war that it could not win against a relentless enemy. Make no mistake, whatever the wording of the final agreement, in essence this is a U.S. surrender.

Inglorious
end

Indeed, it
is clear to all observers that America is negotiating with the Taliban from a
position of extreme weakness. The other side, the Taliban, is winning on the
ground, and we simply cannot take this nightmare of daily attacks followed by
feeble and ineffective Afghan responses anymore.

Sadly, this is the inglorious end to a terribly ill-advised October 2001 U.S. invasion of Afghanistan, followed by an ill-conceived military occupation, and an even worse economic development strategy concocted under the assumption (bordering on lunacy) that America and its NATO Allies had the resources, the will and the skills to transform an extremely backward, war-torn Afghanistan into an at least passable modern, working democracy.  

A
bad idea

Sadly,
this negotiation with the Taliban is the end of the American poorly planned and
poorly executed adventure in Afghanistan. The occupation of Afghanistan was and
is a bad idea doggedly pursued for almost 20 years by national leaders who
should have known better; or who at least, after a few years of failures, could
have paused and thought the whole thing over again.

Foreign
policy mistakes unfortunately happen. But Afghanistan is much worse. This is
about hatching a completely unrealistic plan and then clinging to its mistaken
assumptions and failed policies, year after year, in the vain hope that
–maybe—someday things will improve, without any evidence whatsoever that the
situation on the ground was getting any better.

It
all started after 9/11

Let’s go
back to the beginning of this sad story, and that is 9/11. After it became
clear that this major terror attack against the US homeland had been directed
by Osama bin Laden, the founder of al Qaeda who had found sanctuary in
Afghanistan, the Bush administration decided “to
go get him”.
However, Washington almost immediately decided
also on a much more ambitious agenda. Indeed, the Bush administration decided
that it had to punish not just the al Qaeda leadership, but also its Afghan
willing hosts, that is the Taliban government.

Therefore
the more narrowly focused “punitive
expedition against Osama and al Qaeda”
almost immediately morphed
into “regime change”
for Afghanistan. This rather grandiose objective was in fact an act of
vainglorious superficiality. In so doing, Washington, while trying to get Osama
who was hiding somewhere in the mountains of Afghanistan, (without any success,
by the way!), at the same time declared to the world that it needed to “fix” Afghanistan once
and for all, so that in the future this sorry country would become a
responsible, modern democracy, and no longer the friendly home of terrorists.

Insane
policy

In
principle, this may sound sensible: “Clean
up the place and engage in a bottom up make-over”
so that in the
future Afghanistan will not be used as a base for Islamic terrorists. In practice, anybody
with a brain at the time would have been able to see that this –“fixing Afghanistan”–
was a next to impossible task, at least within any reasonable time frame.

Anybody
with an even scant knowledge of decades of failure in trying to promote
sustainable development in Africa and other underdeveloped regions of the world
through large amounts of outside assistance could have pointed out that this
was mission impossible.

Indeed, if promoting development in Africa is extremely challenging even under “normal” circumstances, it should have been clear to all top decision-makers in Washington that engaging in a development effort in an extremely poor, and completely ruined post-conflict Afghanistan would take extraordinary resources, and many, many decades.

A
dauntingly tall agenda, by the way, even assuming peace and a cooperative
society willing to buy into this rapid modernization strategy hatched and
dished out by outside experts.

Impossible
goals

Again, everybody knew or should have known that at the end of 2001 Afghanistan was an incredibly backward, tribal country that lacked almost all the underpinnings necessary to even start moving on a development agenda. And the basic underpinnings would include: some meaningful productive activities, (no, poppy cultivation and heroin should not be on this list), at least some basic infrastructure, a modicum of electricity generation capacity and transmission lines, at least some reasonably modern health care facilities, some functioning schools, a somewhat educated middle class, and a reasonably competent government and public administration.

Sadly, at the end of 2001 Afghanistan had almost none of these prerequisites. On top of that, the country was exhausted. it had suffered for years under a communist dictatorship, then it had to endure the Soviet invasion which was followed by a bloody war against the Soviets, and then civil strife, followed by the truly medieval Taliban regime.

A
record of failure

Anyway, in
the end the whole US-led Afghanistan enterprise that began at the end of 2001
failed –miserably. This is well documented. A key feature of this systemic
failure is that, to this day, the US government has no idea of what happened to
billions of dollars targeted for development in Afghanistan. The money simply
vanished.

The biggest failure was and is in the strong resurgence of the Taliban and the utter inability of the US-trained and equipped Afghan military and police to even hold their ground –let alone go after the Taliban insurgents and defeat them.

Right now, the Kabul government is unable to guarantee even a modicum of security almost anywhere in the country. Up to the signing of the recent preliminary agreement and semi-ceasefire that should lead to the finalization of the final peace agreement, The Taliban could hit almost any city, including well defended targets in Kabul itself.

On top of that, in the last few years, other extremists and terror groups have found fertile ground in Afghanistan. On a daily basis, there are attacks, bombs, suicide missions, and what not. And this is happening after 19 years of American and NATO military assistance to the Afghan Government, combined with gigantic development packages aimed at building a modern government, and eventually new prosperity.

The
negotiations with the Taliban

I guess this is why the Trump administration FINALLY decided to cut America’s losses and get the residual US troops home. The fig leaf here are the almost concluded bilateral “peace negotiations” with the Taliban. Through this charade hosted by Qatar, Washington would like to convey to the world that this is no “cut and run”. On the contrary, Washington will implement an orderly and careful incremental drawdown of US forces –but only if and when the Taliban will meet certain non-negotiable conditions.

The public message is: “This is no unilateral withdrawal. We are negotiating an honorable and sound peace agreement. We Americans shall make sure that the interests of the Afghan people are protected. We shall also make sure that the new (and still fragile) Afghan democratic institutions will be safeguarded and will continue to define the country long after the last American soldier has departed”.

Of course,
this is pure fiction.

Whatever they may say now, the Taliban leaders deep down do not believe in either democracy or power sharing. The notion of a well-functioning future coalition government featuring the current (extremely fractured, by the way) Afghan leadership and the Taliban –all working together for the benefit of the Afghan people– is ridiculous. Which is to say that these US-Taliban negotiations are only about saving face. Whatever you may want to call this process, in essence this is an American surrender. America failed –in a spectacular way– and now we are finally leaving an impossible situation that cost US taxpayers hundreds of billions, not to mention the dead and the wounded U.S. troops. No more good money after bad.

What
do we make of all this?

So, what do we make of this absurd tragedy?

Sadly, the only plausible conclusion is that in the highly charged, emotional days after 9/11 our national leaders literally lost their minds. There is no doubt that the terror attack America suffered on September 11, 2001 was unprecedented in scale and loss of American lives.

But 9/11
was not the end of the world. The notion that America, in order to prevent
future attacks and be safe, had to “redo
Afghanistan”
was megalomaniac, vainglorious and stupid. Going after
the bad guys, the masterminds of 9/11, was absolutely justified. But the notion
that creating a new country in Afghanistan was necessary in order to guarantee
future US security was fatally flawed.

And,
by the way, let’s not forget: even the more focused mission of capturing or
killing the al Qaeda senior leadership responsible for 9/11 FAILED, TOTALLY.
The US forces were there, on the ground in Afghanistan. Osama and his cohorts
were on the run. And still we failed to capture Osama, for more than a decade.

That said,
the Afghanistan operation was the beginning of the “War on Terror”, an ill-defined, grandiose
strategy that created what was ultimately an unreachable goal: identifying,
pursuing and neutralizing all terror organizations around the world.

“War
on Terror” does not mean anything

Terrorism is not“a place” you can attack and conquer or a clearly identifiable enemy located in one place. Terrorism is a modus operandi that can be and is adopted by several small groups, or even isolated individuals all over the world. Terrorism is about dramatic violent actions that will gain a great deal of publicity. It can spring almost anywhere, without any notice.

If you call this fight “a war”, how do you “win” this war? How can you ensure that all the bad guys, and the would-be bad guys, have been apprehended or killed? This is impossible. You can and should do your best to monitor and infiltrate terror cells. You should prevent possible acts of terror, and go after the bad guys when something bad tragically happened.

But this is mostly about doing your best to manage an elusive threat using intelligence services and special forces. You cannot “win” this conflict once and for all; just as police forces, even the best ones, cannot inflict a final defeat on all criminals and all criminal activities.

There are more than 7 and half billion people on this planet. Even if the smallest fraction of this large world population engages in terror plots, you still have a terror problem. And yet this open-ended, grandiose goal –Fighting and Winning the War on Terror— became the fundamental pillar of U.S. foreign policy under President George W. Bush. America was committed to fight this Global War on Terror to the very end, and we would not rest until the last terrorist had been killed or apprehended. This was and is an impractical, in fact fatuous goal.

No doubt,
terrorism is serious business, to be treated seriously. And this is why we have
sophisticated intelligence services and trained Special Forces. But terrorism
is not an existential threat that justifies making it into our number one
national security priority, engaging in a global war in which the entire world,
by the way, had to actively participate in order to show that they are with us.

Wrong
policies continued under Obama

But here is the thing. The stupidity of this Bush administration policy did not disappear when President Bush left office. What is bizarre and unexplainable is that, even though George W. Bush left the stage in January 2009, and no one talked about his War on Terror anymore, the failed Afghanistan project that was an integral part of the initial War on Terror strategy kept going, and going.

Indeed, President Obama declared that the war in Afghanistan was the “good war” of necessity that had to be fought, as opposed to the “bad war” in Iraq that was discretionary and ill-advised. And so Obama, the Nobel Peace Prize winner, kept going and going in Afghanistan even though, based on years of failures, he and his national security team should have known better.

After all, they were not bound to justify and continue on the basis of a flawed commitment created by the previous Republican administration. And it took Trump, the president elected with the open pledge to end all the stupid “endless wars” started and continued by his predecessors, more than two years to finally come to grips with the need to end this madness.

Taking
stock

So, here is the balance sheet. It took more than 18 years to finally recognize a colossal foreign and security policy mistake. How could America be so wrong for such a long time without any serious debate on this record of failure followed by more failure? How could this happen?

I am not entirely sure. Still, as a minimum we need to recognize that there is a nefarious inertia, combined with mental laziness, enveloping the upper layers of the analytical and decision-making centers of this nation.

Alright, we can allow for mistakes. But bad policy judgment and errors could explain only the beginning of the problem. However, after a few years, how can we explain and justify that Washington, despite a solid record of failure in Afghanistan, kept going and going, year after year, without anybody in a position of power and responsibility pausing and asking the most elementary question: “Is this really working as intended?”

American policy-makers lost the ability to reflect

In Afghanistan, America started something big and expensive with all the wrong assumptions regarding the size and scope of the undertaking and without a realistic time frame to achieve the stated goals.

Here is my
conclusion. As a nation, notwithstanding hundreds of billions of dollars spent
every year on intelligence gathering, scenario planning, and war games, not to
mention the largest defense budget in the world, we seem to have lost even a
modicum of self-reflection ability.

An outside observer looking into this mess might find this record of systemic failure by the leaders of the most advanced country on Earth, and the attendant epic waste of resources stemming from totally misguided policies, quite funny.

But it is in fact tragic. In the end, finally getting out of an untenable situation in Afghanistan is a good thing. But I am not sure that America’s leaders learnt any enduring lessons.

 




The EU Will Not Create Its Own Armed Forces

By Paolo von Schirach

WASHINGTON – French president Emmanuel Macron said it right. In his speech at the Munich Security Conference he argued that “We need a European strategy that renews us and turn us into a strategic political power.” Indeed, there is no reason why Europe should not be a world power.

The EU has a lot of assets

The European Union has a significant size, a large population, (512 million), and the second largest economy in the world, ($ 18 trillion), just a bit behind he US, if we add the GDP of all its member states.

Long gone are the dark days of the beginning of the Cold War, when a destroyed Europe had to rely on American protection, delivered via NATO, to guarantee its own security, vis-a-vis a menacing Russia.

The dark days of the Cold war are over

In 1949, the year NATO was created, Germany was a vanquished and semi-destroyed country. It had lost its eastern provinces, (to Poland), and the Soviet Zone of Occupation had morphed into a separate, and hostile, Communist State under Soviet control. The rest of Europe was also heavily damaged by WWII and fairly poor. Europe needed the security protection that could be provided only by a strong and confident America.

70 years later, we have a completely different scenario. First of all, the Soviet threat vanished with the implosion of the Soviet Union at the end of 1991. Germany was reunified, and is now the fourth largest world economic power. The rest of Europe has also grown significantly.

There is no European core

So, what’s preventing an economically strong EU from playing a much bigger role on the world stage? Very simple. the European Union has no political core, no clear identity. It is not a federal state with an established identity and a clearly defined national interest for whose protection armed forces have been created and sophisticated diplomacy is used on a daily basis.

The European Union is an unprecedented experiment linking sovereign states that have agreed to surrender some sovereignty to supranational, EU institutions that operate according to rules defined by a complex web of intra-European treaties.

Hard to say what the “European Union” really is. It is certainly much more than a Free Trade Area. But, for sure, it is not a state. Nor is there any agreed upon road map, plan, agreement or anything else that binds members states to create a European Federation at any time.

Macron’s suggestions will go nowhere

This should be enough for anybody to conclude that Macron’s exhortations, while justified in principle, will go absolutely nowhere. Lacking the glue of shared identity and shared destiny, complex associations agreements among sovereign states are just not enough to create a new, major power that will play a significant role on the world scene.

Size, population, GDP and overall development are important prerequisites, of course. And Europe arguably has all of them. But Europe is not a state. There is no democratically elected, centralized, federal European government representing the European people, with the clear and undisputed mandate to define the national interest, while allocating the necessary economic resources to create the armed forces, (along with the command structure), necessary to protect it.

Talk but no actions

Therefore, expect some talk about Macron’s idea of a more assertive Europe. But not much more than that. Sure enough, Macron’s concerns will be addressed in some measure by creating ad hoc committees gathering EU policy-makers, elder statesmen, and military leaders. These committees can and will meet, discuss, propose, and what not. But there is no way that this Europe, as currently configured, will be able to create a sizable EU defense budget, and then field modern, credible armed forces operating under a European Command.

While diminished, NATO is still there

So, is Europe defenseless? Not really.

Europe can still rely, or at least most Europeans hope this, on good old, US-led, NATO. Yes, after all these years, NATO is still there. While most American troops are gone, there are still thousands of U.S. soldiers in Europe, and there is still an impressive infrastructure of old and tested joint NATO commands, regular NATO meetings, NATO military exercises, and an established practice of discussing most Western security issues within the framework of the Alliance.

Of course, the major problem is that NATO, today just like 70 years ago, is mostly a US unilateral security guarantee to Europe. Everybody knows this. Today many question the continuing need for this old Alliance, decades after the end of the Soviet threat that justified its creation. But the truth is that inertia dominates.

NATO is there, so let us keep it, even though there are good reasons to questions its purpose and viability, considering the much reduced defense budgets (and therefore military capabilities) of all its European members.

European defense without NATO

What Macron proposes for the EU is something like a Europe-only NATO, without the US and Canada. Again, nothing wrong with that. A relatively prosperous Europe could and should finally be autonomous and self-sufficient on fundamental security issues.

There is no Europe

Except that there is no Europe, if by “Europe” we mean a strong state, with a legitimate European Government in charge of fundamental issues, including defense and foreign affairs.

Indeed, it is hard to believe that this European Union, with its unelected leaders running armies of bureaucrats, can have the authority and the credibility to raise expensive armies and organize defense strategies under a unified EU Command.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC.




Raising The Temperature In The Middle East

By Paolo von Schirach –

WASHINGTON – After the unexpected airstrike that killed IRGC General Qassem Soleimani, right outside the Baghdad airport, analysts began speculating what Trump’s end game may be. In other words, is this just an ill-conceived, spur of the moment decision? Or is this targeted assassination of the master mind of all the Iran-led irregular forces operating with impunity in the Middle East part of a carefully orchestrated US “plan”?

Recalculations about America’s will are in order

I have no idea. However, I would say that this brazen attack that eliminated the most significant and most revered leader of Iran’s international mischief will probably cause some rethinking on the part of those who have come to believe that America is a hesitant giant, essentially impotent when targeted by non state actors.

Well, not so impotent, it turns out. I would speculate that Soleimani was killed in some measure because he got used to traveling from Iranian fiefdom to Iranian fiefdom, (Lebanon, Syria, Iraq, Yemen), without too much concern about his own safety. In other words, being at the head of a victorious and unchallenged unconventional military force, made Soleimani arrogant. It made him believe that he was invincible, that he could safely move around almost anywhere in the region.

Here is the thing. Going forward, the accepted narrative of a rather passive and impotent America, incapable of reacting to stealthy attacks that do not leave clear footprints, no longer applies. Not just Iran, but all America’s enemies should take all this into account.

Making things worse in the Middle East?

Sure enough, this sensational killing caused all sorts of speculations regarding possible reverberations on the volatile Middle East, already torn by conflicts and insurrections. Trump has been accused by Joe Biden, would be Democratic nominee for the presidency, of having thrown a stick of dynamite into a powder keg, or something like that.

Sure, this American action raises the temperature in the region. But the most feared consequence of a major Middle East crisis, sky rocketing oil prices, will not happen. As Holman W. Jenkins noted in a recent piece in The Wall Street Journal, the unrelated American fracking revolution, by substantially increasing US oil production, completely transformed global oil markets.

There is plenty of oil

In other words, today the world should not be overly concerned with any disruption of the flow of oil passing through the Strait of Hormuz. The difference between 10 0r 15 years ago and today is that America –until not long ago a major oil importer– is now the largest oil producer in the world. Yes, the US produces more oil than Saudi Arabia or Russia. While America still imports oil, it buys most of it from Canada, not from the Persian Gulf.

This fantastic increase of America’s oil production has had and will have significant geopolitical consequences. A very big one is to have down graded the strategic importance of the Middle East as an oil producing region, and therefore the possible negative impact of Iranian actions targeting Middle Eastern oil facilities on the world economy.

Nothing happened after Iran attack Saudi oil facilities

If you recall, a few months ago, the Iranians launched a surprise attack against major Saudi oil installations, knocking down with one shot about 50% of Saudi Arabia’s oil output. Well, what happened? Not much. Yes, oil prices went up, for a few days. But then, when the analysts were reassured that there was plenty of extra supply in global energy markets, oil prices went down again.

I am not suggesting that the Middle East has become irrelevant, far from it. What I am suggesting is that Iranian threats and possible attacks against oil are not as dangerous as they used to be in an era of tight supplies and enormous needs for imported oil on the part of the United States.

Iran is not the winning champion

Yes, after the stinging loss of Soleimani, its revered military leader, we should be prepared for something really nasty coming out of Iran. But let us not forget that Iran is not Stalin’s Soviet Union, or Nazi Germany at the height of its power.

Iran is an impoverished police state, stricken by US economic sanctions. It is a country in which an increasingly recalcitarting population, notwithstanding the obvious threats of imprisonment, torture or death, still engage in spontaneous protests against the high cost of food and other basic necessities. While we should not underestimate its resourcefulness, today’s Iran is not exactly an unbeatable champion.

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC




War With Iran?

By Paolo von Schirach

WASHINGTON – The killing of General Qassem Soleimani, the legendary head of the Iranian al Quds force, is a game changer in America’s creeping hostilities with Iran. I wrote recently http://schirachreport.com/2020/01/02/iraq-is-lost/ that unless the US wants to engage in a conflict over Iraq, this poor, war-torn country is lost to us, on account of the solid Iranian grip on it. Large pro-Iranian Iraqi Shia military forces and pro-Iran Iraqi political parties make it almost impossible –short of an all out war– to dislodge the Iranians from what is now their vassal state.

Iraq is still lost

The killing of Soleimani changes nothing in this regard. If anything, it will lead to a formal request on the part of the Iraqis that all US forces currently in Iraq, supposedly to guard against any possible ISIL come back, leave immediately. I am not quite sure how this major political crisis with Iraq can be handled by Washington so that it will have a smooth end. Highly unlikely. Forget about working with any Iraqi government on anything at all.

Escalation with Iran

Regarding Iran, with this sensational assassination of the leader of all Iranian terror forces, now Washington has escalated the conflict with Tehran. The loss of Soleimani, a cult figure in Iran, stings badly. Iran will have to do “something” in response to this humiliation, possibly something very big. And this will inevitably cause a US retaliation.

Prior to the killing of Soleimani, notwithstanding countless Iranian provocations, President Trump repeatedly indicated that the US does not want “war” with Iran. But as of now, with this assassination of a key Revolutionary Guard leader, arguably the US is at war with Iran. An undeclared war; but war nonetheless.

Is Washington ready?

And this presents significant challenges for Washington. America is not very good at fighting unconventional conflicts in which our wily adversaries engage in asymmetric warfare. We are rarely proactive, hitting our opponents before they hit us, this way putting them on the defensive.

We are usually waiting for the next hit, whenever our adversary chooses to strike, and then do our best to retaliate. Which means that the other side, the bad guys, always retain the initiative.

The killing of Soleimani represents a major change. For sure the Iranians did not expect this, as they are used to moving around in contested territories with impunity. Does this mean that the US has now taken the initiative? Is America planning more strikes? Not clear at this early stage.

Big question

While the situation is still quite fluid, if we try to piece what we know together, here is the big question. “Is President Trump, in this critical 2020 election year, willing to engage in an undeclared war of attrition with Iran which will inevitably entail more terror attacks, possible disruption of oil flows in the Strait of Hormuz, strikes against Israel, and a lot more?”

Can Trump convince America that he has a good plan?

In other words, is America ready to absorb the blows that will inevitably come from Iran and its proxies, and forcefully retaliate in kind, whatever it takes, for as long as it takes? Furthermore, can the Trump administration present a credible “plan” that includes a clear path to something looking like “victory” against Iran?

Until yesterday, the plan was to exert maximum pressure against Tehran via economic sanctions, hoping that the significant pain inflicted by the sanctions would convince the Iranians to come back to the negotiating table and agree to whatever Washington demands.

Now it is different. After this assassination of a key Iranian military leader, forget about negotiating anything with Tehran. This being the case –open ended hostilities with Iran– if we continue with this tough stand against the Ayatollah’s regime, how is US public opinion going to react to all this? Will this escalation with Iran help Trump get reelected?

Paolo von Schirach is the Editor of the Schirach Report He is also the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC




Iraq Is Lost

By Paolo von Schirach

WASHINGTON – Let’s not kid ourselves, Iraq is lost. Yes, totally lost. The events of the last few days make this crystal clear. We know that US forces retaliated against attacks by Kataib Hezbollah on military installations in Iraq in which there are some American troops and contractors. These frequent attacks against Americans have been directed by pro-Iranian militias, such as Kataib Hezbollah, trained and armed by Iran that are now part of the Iraqi armed forces. Furthermore, pro-Iranian Shiite political parties are in the Iraqi parliament and support the coalition government.

Assault against the US Embassy in Baghdad

Right after the US forceful retaliation (after attacks against US forces) that killed several members of the pro-Iranian militias, an Iraqi umbrella organization of pro-Iranian groups, called the Popular Mobilization Forces, organized an attack against the US Embassy in Baghdad.

This was done ostensibly to protest against the killing of members of the Iraqi forces by the wicked Americans. While the well-organized assault against the US compound was underway, the Iraqi military, according to international law responsible for guaranteeing the safety of all diplomatic facilities in the country, stood by and did nothing.

Along with this open display of anti-American sentiment, the same pro-Iranian groups now strongly demand the expulsion of all foreign (read American) military forces from Iraq. To make this even worse, Ayatollah Sistani, the most revered senior religious authority for all Iraqi Shia, added his powerful voice to the chorus of anti-American condemnations.

Iraq is controlled by pro-Iranian forces

So, this is the picture. The net result of the US March 2003 invasion of Iraq that ended up costing us a fortune, not to mention thousands of dead soldiers and tens of thousands injured, some of them horribly, is that now, at the beginning of 2020, it is quite clear that Iran controls Iraq. May be not totally, but almost.

The US, the supposedly friendly military power that ostensibly freed the Shia majority from the tyranny of Saddam Hussein and his Sunni minority government, is viewed by most pro-Iranian Iraqi Shia as a hostile occupying force. And this is so because, after the US 2003 invasion, over time Iran managed to increase its influence within the Shia majority, so that today Tehran controls large Iraqi militias, and Iraqi Shia political parties heavily represented in Parliament.

This is not fixable

Let’s be real. In Iraq America has been defeated by a clever opponent. This is not fixable. We are outnumbered and outclassed in a country where most people do not like us. Short of a welcome but unlikely collapse of the wicked regime of the Ayatollahs and the Revolutionary Guard in Tehran, something that would cause the collapse of all Iranian efforts aimed at controlling the Region, there is no way that the US can win this fight.

In Iraq, we have almost no real allies. The only groups that are still sympathetic towards Washington are the Kurds in the north and some Sunni factions in the North West that clearly do not like the prospect of being dominated by Iran-backed Shias. But they are not going to coalesce in order to wage a bloody fight aimed at kicking Iran out of Iraq. This is impossible.

Can anything be salvaged?

So, there you have it. While this may be a bit oversimplified, the net result of the brilliant Washington plan hatched by President George W. Bush in early 2003 to engineer “regime change” in Baghdad with the goal of creating democracy in an Arab state is to have turned Iraq –at the time clearly an enemy of Iran– into a subsidiary of Tehran.

I have no idea as to what, if anything at all, may be salvageable at this stage. I suspect almost nothing, since Iraq’s politics and most of its military forces are dominated by our Iranian enemies.

The killing by a US airstrike at the Baghdad Airport of General Qassem Soleimani, the almost legendary head of the elite Iranian Quds force, is symbolically important; but it does not change the overall balance of forces in Iraq.

Of course, Soleimani will be immediately replaced, and the Iran-led anti-American campaign, in Iraq and everywhere else in the Middle East, if anything, will be intensified as a way to avenge this loss.

Unless President Trump just decided to have another Middle East War, with massive deployments of US forces in Iraq with the purpose of engaging and destroying all pro-Iranian militias, the killing of a major Iranian military leader will not change the overall picture –a picture that does not favor the US.

And, in case of a US escalation, we can rest assured that Iranian forces and their proxies will do their best to hit US targets and US allies anywhere they can. This will not be just about Iraq.