The Forced Adoption Of Renewable Energy Has Been A Costly Mistake – We Should Subsidize Research And Not The Usage Of Current Technologies

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By Paolo von Schirach

June 19, 2012

WASHINGTON – Large investments in subsidized renewable energy for the most part make no econ0mic sense. And yet, they seemed to make a lot of sense only a few years ago. In 2008 oil was at a staggering $ 140 plus a barrel, thus prohibitively expensive. Al Gore had won the Nobel Prize and an Oscar for his warnings on man made climate change. The world seemed to be (mostly) of one mind. Human kind needed to stop, immediately, burning (super expensive and super dangerous) fossil fuels, while it was incumbent on all governments to push for the rapid adoption of renewable energy technologies.

Renewable energy was adopted

And so we did. May be the adoption of renewables was not as massive as some would have liked. But major steps were taken. Governments passed laws that forced utilities to purchase electricity made form renewable sources, even though the price was way higher than power produced from conventional sources. The conventional wisdom was that these fledgling industries needed to be nurtured. And in any event, the main goal was not to create viable businesses; but to save the planet from certain man made destruction.

Besides, the argument went, we were soon going to run out of most fossil fuels. Therefore there was also a longer term, but equally certain economic survival imperative.

The case for renewables faded

Well, fast forward to today and we are in entirely different world. The global warming “science”, whereby rising temperatures will destroy the planet, while the phenomenon is totally man made, for some reasons appears to be less cogent. Furthermore, additional studies indicate that, even if the main argument were true, heroic and immensely costly efforts aimed at reducing the consumption of carbon based fuels would have only negligible effects on the temperature of the earth surface.

On top of that, the United States is experiencing now a natural gas boom that reduced the price of gas to levels not seen in more than a decade. In this entirely new context, it is hard to justify the forced purchase of more expensive renewable energy.

Europe paid a huge price

The record shows that in Europe, where these policies of subsidizing renewable energy have gone on much longer and a much larger scale, the economic price paid for this fixation has been very steep. Investing in non competitive renewable energy is expensive. Capital has been sunk in costly enterprises that can come to life and survive only because of mandates. For instance, it is estimated that a major new system of off shore wind farms in the UK would cost about 140 billion pounds. The same energy could be produced via conventional means at 5% of the cost. Consider that.

Huge cost, no benefit

In the end, because of these mandates, consumers and the broader economy have to pay a higher price for electricity. All this translates into a substantial waste of capital that could be used more productively. For example, Germany, a rainy country, made huge investments in solar energy, an effort described by a utility executive to be as cost effective as establishing large scale pineapple farming in Alaska.

There you have it: waste of capital and overpriced energy that imposes an extra burden on the economy. And all this has been done in the name of an ideological fixation about the blessings of renewable energy that has become for some the equivalent of a religion.

We should side step economic concerns only if we had compelling evidence

Look, if we had indeed definitive and conclusive proof that a) global warming is both man made and catastrophic; and b) that stopping now to burn oil, coal and gas would quickly reverse it, then we could argue that this is not about economic choices but about planetary survival. But we are not there, it seems. The environmentalists’ zeal has been deflated. The science is not as compelling as it seemed to be.

The US natural gas revolution changed everything

In the meantime, at least here in the US, just in the last few years we realized that we have a true energy game changer: immense amounts of cheap natural gas that, among other things, has much lower emissions than coal. This means that we have a really inexpensive and much more benign fossil fuel for electricity generation and down the line also for transportation. (Much lower emissions than oil derived gasoline). Put all this together and you realize that renewable energy, at least as mainstream policy, is politically and economically dead. For sure there are and there will be niche markets in which renewable energy can be and is cost effective. But not everywhere, as we used to think.

Continue funding research

This of course does not mean that we stop researching new forms of energy. On the contrary, we should keep going, at full speed. At some point new technologies will be developed that will be truly cost effective. (And, yes, at some point we shall run out of fossil fuels). Who knows what scientists may come up with in the next 1o years.

But there is a huge distinction between subsidizing open ended energy research and subsidizing the adoption of current technologies that are still not economically viable. And this is what we have been doing.




In Chicago NATO Reaffirmed Its Role And The Willingness To Upgrade Its Forces – Very Nice, Except That It Is Not True, Given Shrinking Defense Budgets Across Europe

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By Paolo von Schirach

May 22, 2012

WASHINGTON – The big news out of the Chicago NATO Summit was the timetable for an Afghanistan exit. This “agreement” to get out with no victory and no real stability in the country is a sorry looking fig leaf aimed at covering a bad idea –a prolonged war– poorly designed and poorly executed. But there was more on the agenda. This (ghost of a once relevant) military alliance used the Chicago Summit as an opportunity to reaffirm its mission to protect all the member states with adequate military tools.

NATO Defense capabilities

To this end, NATO issued a Summit Declaration on Defense Capabilities: Toward NATO Forces 2020. All very nice, except that most of what is declared is at best wishful thinking, at worst willful lies. NATO is a walking ghost held together by the United States, with some help from Britain and France and bits and pieces contributed by Poland, The Netherlands and a few others. Germany is a bit of a mystery. In only when it suits her, witness its refusal to participate in the Libya mission last year.

The NATO macro picture is of a military alliance soon without armed forces. The US always did more. But now the ratio of contributions has shifted from 60% US and 40% Europe to 80% US and 20% Europe. And that 20% is not that good. If the Europeans were able to pool together their military procurement, then they could have more “bang for the buck”. Whereas, as things are done, the outcome is pitiful. But here are some excerpts from the Declaration issued in Chicago, with my notations.

European efforts

We recognise the importance of a stronger and more capable European defence and welcome the efforts of the European Union to strengthen its capacities to address common security challenges. These efforts are themselves an important contribution to the transatlantic link.

Notice the hint about a stronger and more capable European defense. All pie in the sky. These exhortations have been made for decades. The only thing we know is that European defense budget are significantly lower and headed down. Indeed, with Europe in bad economic shape, do not expect Greece, Italy and Spain, or even the UK, for that matter, to ramp up defense spending. The fact that this vacuous stuff is produced and reproduced every year in these NATO declarations, is not even funny any more. It is a tragedy when lies are dished out routinely and nobody objects.

Libyan success?

The strength of NATO has been Allies’ forces – their training, equipment, interoperability and experience – drawn together and directed by our integrated command structure. The success of our forces in Libya, Afghanistan, the Balkans and in fighting piracy is a vivid illustration that NATO remains unmatched in its ability to deploy and sustain military power to safeguard the security of our populations and to contribute to international peace and security.

Here is another whopper. Only a few weeks into the 2011 Libyan air campaign the small European air forces had run out of smart bombs, showing how ill equipped they were to fight even a minor war against Ghaddafi, a third rate enemy. Imagine if this had been a real war.

All the capabilities NATO needs are there. Really?

We have already made concrete progress since our last Summit in Lisbon and the adoption there of the new Strategic Concept in ensuring NATO has the capabilities it needs to defend our citizens, conduct crisis management operations, and foster cooperative security.

Really? Virtually no defense spending (at least in most NATO countries it is essentially meaningless) and we still get great capabilities? Genius at work here.

Streamlining the European defense industrial base

Maintaining a strong defence industry in Europe and making the fullest possible use of the potential of defence industrial cooperation across the Alliance remain an essential condition for delivering the capabilities needed for 2020 and beyond.

Yet another joke. Even when it really mattered, when Europe was under Soviet threat, defense industry cooperation was discussed and debated ad nauseam, with almost zero results. Now that cooperation is a less pressing issue these ritual invocations for polling resources mean really nothing.

Unity, of course

NATO’s greatest strength is its unity. Through 2020 and beyond, stimulated by the requirement to use defence resources in the most efficient way, we will deepen that unity to maintain and upgrade NATO’s military strength.

Now, this is the best. Out of 28 members, only 9 participated in the 2011 Libya air campaign essentially led by France and Britain (with the US, as we were told, “leading from behind”). Germany did not participate. Sure enough many more are in Afghanistan. But most of them are not in combat zones, while many have provided token contribution of literally dozens troops. So much for “unity”. As for the pledge to “deepen and upgrade our strength”, how will they that? May be from now on defense contractors will accept Greek bonds as payment? Otherwise, I see no signs of increased defense spending. So much for “military strength”.

NATO had a function. Today it is a sorry affair rapidly turning into a farce. The old joke shared among insiders that “NATO” really stands for “No Action Talk Only“, is now becoming real.




Germany Reformed Labor Markets And Created A Pro-Growth Environment

WASHINGTON – In a WSJ op-ed piece, Europe’s Supply-Side Revolution, by Donald L. Luskin and Lorcan Roche Kelly of Trend Macrolytics, (February 17, 2012), make predictions about the future of Europe so bright and so positive that they frankly border on absurdity.

Germany’s example

As the writers put it, following Germany’s example, Europe is bravely starting its own supply side revolution. Italy and Spain will turn into business friendly, market oriented countries. The discipline of debt is driving Europe to closer political integration. If Europe’s countries could finally erase their political boundaries, their debt problems would also vanish. And so on.

Europe is stuck because there is no political will to reform

I must be looking at a different Europe. I see a Europe that is not necessarily doomed; but a Continent that is stuck, precisely because there is no political will to do most of the things that the authors consider either a done deal, or so absolutely necessary that they become inevitable. The implicit assumption in this article is that Europe has had its moment of reckoning. Now it is “do or die”. And Europe chose to live –and live bravely, at that.

No “moment of truth” in Europe, just muddling through

But this is a major fallacy. This notion that Europe had only two choices: disaster and doom or vigorous renaissance, and that it (wisely) chose renaissance is just wrong.

The idea that at this juncture all the Europeans, having just stared into the abyss of the debt crisis, have irrevocably decided to finally do the right thing, is just fanciful. By the way, I really wish that it were so. But there is zero evidence to justify this optimism. My sense is instead that many European countries –and this would include all of Southern Europe– will just muddle through, with enough wisdom to avoid complete disaster, but insufficient political courage to really start the serious reforms the authors assume to be just behind the corner.

Political union a distant dream

As for this irresistible drive towards political unification starting with fiscal union, again, I must be looking at a different Continent. Political union is nobly advocated as a goal by many well-meaning Europeans. But it is a very, very distant goal, without any agreed upon road map and clear set of mile stones.

Sure enough, the Europeans recently agreed in principle to harmonize their fiscal policies in order to avoid a repeat of the debt crisis. But this is no done deal. And nobody has the foggiest idea as to how this generic agreement will become binding and, after that, how it will be implemented and monitored.

Germany succeeded, others will follow?

The op-ed authors premise is that since Germany could see the light at the turn of the millennium and embarked in serious labor market reform through which it regained economic vibrancy, it follows that the rest of Europe will see the value of such a historic change and follow suit.

Well, that would be wonderful. But it would entail a dramatic change of politics, psychology, ethics and business practices that, while possible in principle, cannot be taken for granted only on the basis that it would be the smart thing to do.

In Italy Monti wants reforms, but the country will not follow

Getting into specifics, to say that Italy’s Mario Monti would like to liberalize and open the professions, introducing needed competition and that his heart is in the right place is not the same as saying that Italy is with him and that he will succeed. And, by the way, Monti’s government plans to reform the “Workers Statute” caused the ire of the unions who are absolutely not on board on the critical issue of flexible contracts and more labor mobility –one of the key preconditions to attract investments and generate new enterprise.

Technocrat with no political base

And the authors should also know that Monti is an economics professor and not a politician with an organized following. He did not win any elections. He has no popular mandate. Late last year he was appointed as “chief rescuer”, as a technocratic Prime Minister with the limited (and really unpleasant) job of extricating Italy from the pain of the debt crisis.

Monti came in as the trusted fire man with no political agenda of his own. He has done a good job regarding the stabilization of Italian debt. But, so far, he has done nothing to bring the national debt (now at 120% of GDP) down to the agreed Maastricht levels of 60% of GDP .

Besides, he has a limited mandate. Any serious reform aimed at making Italy a lot more like Germany would require broad and durable political agreement binding the left, the right and the powerful trade unions. Nothing like this ever happened in Italy. That does not make it impossible; but it makes it unlikely.

Corruption

And let me add that other factors do not inspire confidence. Italy has third world level scores regarding corruption, (according to Transparency International) and “easiness of doing business”, (according to the World Bank). Just days ago, Italy’s ”Corte dei Conti’, something like a General Accountability Office, issued a scathing report regarding corruption and lack of ethics throughout Italys’s public administration. According to the report, this creates an environment that discourages investments, enterprise and therefore new growth. (Italy is now in a recession).

Demographic crisis

Add to all this a serious, systemic demographic crisis. Italy has  one of the lowest fertility levels among developed countries, (1.38 children per woman). While the Italians stopped having children, there is the steady arrival of difficult to assimilate, poor and mostly illiterate immigrants from Africa.

Sure enough, all this can and, in fact should, change. But let’s not mix wishful thinking and reality. Monti may like to modernize Italy; but I am not sure that the country’s mood and long-term systemic trends support optimism about success.

If Southern Europe changed its values…

If the Southern Europeans –and that includes Italy, Spain, Portugal Greece and even France– really changed their values, their ethics and their business sense, this revolution envisaged by the op-ed piece authors would take place.

But this is the same as saying that if the Indians were more organized and less corrupt, and if they put together a credible national infrastructure master plan, all kinds of good things would happen to India.

By the same token, if Angola’s leaders were not corrupt, the vast oil and mineral riches of the country could do wonders to finance sustainable development, thereby lifting millions out of poverty.

And we could add that, if the Arab countries would finally understand that they should adopt modern, pro-growth economic policies, this would unleash new economic growth. And so on.

Good outlook for Northern Europe

Yes, Germany reformed labor markets years ago and we can safely assume that the countries of Northern Europe that have a stronger cultural affinity with Germany have already been positively influenced by this pro-business climate.

So we can expect Germany, The Netherlands, Austria, Sweden, Denmark and Finland, and may be a few others to do well. (I am not so sure about France, flirting with the idea of electing a Socialist President).

Southern Europe a different story

But I would not bet on these wise choices to be embraced by the rest of the EU members, whatever Britain may or may not do as the perennial dissenter among the 27 EU members.

Do not count on Southern Europe getting the medicine. And do not tell me that this going go down well in far less developed Romania, Bulgaria or Hungary.

Political union a distant dream

As for Europe finally becoming a federation, with one government, one army, and one foreign policy, this is not impossible; but it is so unlikely that it is indeed peculiar to read in this article that it is sort of a “done deal”, with only a few details to be ironed out.




The Greek Crisis Drags On – Europe Should Cancel Most Of Athens’ Debt – An Insolvent Country Cannot Pay Back A Crushing Debt And Have A Hope To Grow Again

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By Paolo von Schirach

February 5, 2012

WASHINGTON – What is most amazing about the Greek debt crisis is that more than two years into it, (it all started in the Fall of 2009), the European Union has not managed to take care of it. True enough, the Greeks bear full responsibility for getting themselves into this financial abyss and for being recalcitrant counterparts, largely incapable of understanding that the old ways of not working much, not paying taxes and still expecting public services and a good standard of living are gone. Still, it is inconceivable that the other 26 members of the European Union, a grouping of nations with a combined GDP larger than America’s, have been unable to resolve, once and for all, the troubles, deep as they are, of one of its middling to small members.

How big a hair cut?

The issue at hand today is the inability to impose a dramatic loss to private holders of Greek debt. While everybody agrees that there must be a “hair cut”, the sticky issue is how big a hair cut. And this matter that is both financial and political drags on and on. And it is not that everything else is settled. The Greek economy, while benefiting from a variety of lines of credit, is on respirator, while it keeps shrinking, year after year. To get out of this horrible mess, the Greeks need not just some cash to stay afloat. They need some kind of credible pathway to new economic growth. And it is not clear that one has been delineated. Certainly not by the wobbly coalition supporting the recently installed technocratic government headed by Lucas Papademos, himself an economist and a former Central Banker. And the EU partners are not doing any better. They should recognize that the people of a virtually bankrupt country committed to more and more austerity have neither the resources nor the will to go back to work.

Why so difficult for a 15 trillion EU to deal with tiny Greece?

But let’s look at the actual dimension of the problem by considering the larger context. The EU of which Greece is still a proud member has a combined GDP of about 15 trillion dollars, just about the size of the USA. Sure enough the parallel ends here. The EU is not “A Country”. It is an arrangement among many countries. Their combined wealth, while the largest in the world, cannot be mobilized that easily. Still, in comparison, Greece has a GDP of only 300 billion dollars, smaller than Singapore, a tiny city state. And if we look at the EU leading countries, Germany, The United Kingdom and France have respectively the 6th, 9th and 10th largest GDP in the world. Greece is number 41 in the world rankings.

Is it really possible that the EU as an institution and within it its most formidable members, (the UK is not part of the Eurozone, but surely it must have an interest in its stability), have not yet managed to close a two year old problem affecting a relatively minor EU member? Well, yes, it is possible; because the EU has weak institutions, while its key members are not unanimous on anything.

Greece both insolvent and declining. The GM analogy

In the end the Europeans will have to recognize that Greece is an insolvent country trapped in an uncompetitive economy that simply cannot be re-energized while at the same time servicing a gigantic (even if now diluted) debt. As nobody wants to see a Greek bankruptcy, fearing that a disorderly solution would have unpredictable ripple effects, then what do you do? Well, you force all creditors to take a big hit, I mean a really big hit. Forgive me an analogy that may be questionable, but this is what the US Government did with General Motors. Sure enough, in 2009 Uncle Sam stepped in with big money, but the key point here is that a de facto bankruptcy allowed GM to get out of most of its pre-existing obligations, financial, contractual, with the unions, and so on. And so, with Washington’s critically important help, a leaner and unburdened new GM could come to life. And now it seems that a reborn GM will be quite capable to function without government crutches.

EU weakness worse than the Greek crisis

We need the GM equivalent for Greece. Right now, all creditors and most of all all key EU policy makers have to realize that Greece is both insolvent and declining. If bankruptcy is unacceptable because of its messy consequences, then the only hope is to give Greece a truly fresh start. And this means debt forgiveness, just like we used to do with messed up third world countries. No use demanding money that cannot be produced. The never ending negotiations between Greece and its private creditors unfortunately indicate that we are not yet at the point of a realistic political consensus on any of this.

At some point some deal will be struck, I suppose. But the way the never ending Greek Tragedy has been handled is an indication of Europe’s internal confusion and consequent lack of resolve. And this inherent EU weakness may be even worse than Greece’s problems. Europe revealed itself to be nothing more than a turbo-charged Chamber of Commerce, with no idea of how to deal with crises.




Mitt Romney At The Citadel Advocated US World Leadership – Nice Idea, Wrong Century – America Can Be Strong But It Can No Longer Lead A World With Many New Players – Old European Allies Are Weak

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By Paolo von Schirach

October 7, 2011

WASHINGTON – On Friday, October 7, Mitt Romney went to the Citadel, a famous military school in Charleston, South Carolina, to deliver an address focusing on foreign and security policies. I shall not analyze the content of the speech and the specific policy recommendations made by presidential aspirant Romney. I just want to observe that the premise, the foundation on which the whole construct is based is flawed, probably well intentioned, but deeply flawed.

America is exceptional

Former Governor Romney starts with the assumption that America is an exceptional country bound to lead the world. And for this reason this has to be an “American Century”. President Romney will see to that.I do agree that America is exceptional in its origin, based on democratic values and principles and not on nationality. I do agree that America developed like no other country. And I do agree that the mixture of free institutions and economic freedoms attracted talented people from all over the world who with their ingenuity made this country of immigrants great and unique. And I also agree that America, with all its flaws and mistakes, on balance has been a positive force in the world. America defeated totalitarian Fascism and Nazism. America stood in the way of Soviet expansionism. America protected Europe.

America can no longer be leader of a changed world

So, I am with Romney on all this. But I cannot agree with him about making this an “American Century”. Not because it is a bad idea. But because it is an unachievable idea, given the gigantic shift in the balance of power that has occurred in the last three decades: away from the West and all to the East. In other words, in relative terms, America no longer has the economic resources and the military might to be respected, to influence others and lead in the same way it did 50 or 60 years ago. But in his talk at the Citadel Romney omitted all this this and talked about America’s primacy as if this were 1945, the year in which America stood on the world scene not only victorious but also ultra rich and super powerful, with no other country, friend or foe, even a close match.

Leadership, in Romney’s words

Anyway, here is how Governor Romney put it speaking at the Citadel:

“But I am here today to tell you that I am guided by one overwhelming conviction and passion: This century must be an American Century. In an American Century, America has the strongest economy and the strongest military in the world. In an American Century, America leads the free world and the free world leads the entire world.

God did not create this country to be a nation of followers. America is not destined to be one of several equally balanced global powers. America must lead the world, or someone else will. Without American leadership, without clarity of American purpose and resolve, the world becomes a far more dangerous place, and liberty and prosperity would surely be among the first casualties.

Let me make this very clear. As President of the United States, I will devote myself to an American Century. And I will never, ever apologize for America.

Some may ask, “Why America? Why should America be any different than scores of other countries around the globe?”

I believe we are an exceptional country with a unique destiny and role in the world. Not exceptional, as the President has derisively said, in the way that the British think Great Britain is exceptional or the Greeks think Greece is exceptional. In Barack Obama’s profoundly mistaken view, there is nothing unique about the United States.

But we are exceptional because we are a nation founded on a precious idea that was birthed in the American Revolution, and propounded by our greatest statesmen, in our fundamental documents. We are a people who threw off the yoke of tyranny and established a government, in Abraham Lincoln’s words, “of the people, by the people, and for the people.”

We are a people who, in the language of our Declaration of Independence, hold certain truths to be self-evident: namely, that all men are endowed by their Creator with certain unalienable rights. It is our belief in the universality of these unalienable rights that leads us to our exceptional role on the world stage, that of a great champion of human dignity and human freedom”.

America’s mission?

So, there you have it, the “mission to lead the world” is in our DNA. In order to achieve it, we need the strongest economy and the stronger military. Well, technically speaking, we already have both. Even with the rise of China, America is still Number 1 economically. And the US has by far the largest military in the world.

However –and this is what Romney failed to observe– the context facing the next president in January 2013 is not even close to the context of the world after WWII. Our resources, while considerable, are insufficient for world leadership the way we knew it. Even if we assumed a total recovery from the nasty 2008 recession, a buoyant housing market and a finally balanced federal budget, and this is assuming really a lot, America’s standing in the world would and could not be what it was in 1945, 1960 or even 1970.

America is still powerful, but not as in the Cold War years

Simply stated, in 1945 and for most of the Cold War years America was by far the richest, most advanced, most innovative country on earth. Nobody came even close. In 1945 Europe was destroyed: defeated Germany was in ruins ands so was France. Britain was the sorry shadow of its Imperial past: exhausted, indebted, essentially finished as a world power. Japan was defeated, humiliated, demilitarised. And who else was around? Yes, the Soviets were a real menace. But they were contained. China was a poor peasant society held back by a Communist dictatorship that objectively prevented economic development for many decades. India after independence was immensely poor. Latin America had no bright spots. Africa was very poor and it was just beginning a decolonization process that led to weak and often corrupt indigenous rulers who certainly did not help economic development.

In this global context, America, Soviet nuclear threat notwithstanding, had no match.

Other countries have become stronger, Soviet threat disappeared

And this is what has changed for good. It is not that we have become weaker, although this in part true. The fact is that others have become stronger. And they do not eagerly await and expect American leadership, because America has little to offer. America is no longer the logical ally against security threats that are far less clear and obvious. In a new context, without the Soviet Union as an obvious existential threat, in which dangers, like terrorism, are less clear, other countries are far less eager to accept American leadership.

This is no reason for a new American leader to give up. Of course America should be vibrant and strong. But America cannot have the reach and the influence that it used to have. Precisely because America won the Cold War, there are fewer reasons for allies to go along with Washington.

Leading NATO?

The clearest example is the NATO Alliance, once the fundamental pillar of US security polices. Today NATO is a joke. The European NATO Allies, with a few exceptions, do not spend any real money on defense. And why not? Because the Soviet Union is long gone. There is no more Warsaw Pact. The Red Army is no longer a couple of days away from the Rhine. America is still the leader of NATO. But a mostly defenseless NATO is useless. President Romney would like to revamp it? Well, good luck.

Leading against Iran?

And what about Iran? Even in this case, as its nuclear arms threat is not clear and immediate, good luck in creating a credible NATO based coalition that would send a clear message to Tehran that they better abandon all nuclear ambitions, or else. The Europeans have no intention to go to war with Iran on this, even if a nuclear Iran may threaten them. You can bet that the Europeans will continue to “negotiate” with Iran for ever. And it would take a much stronger America, even stronger than the one Romney imagines, to go to war alone with Iran on the nuclear issue, given all the obvious consequences on oil flows and potential world economic catastrophe in case of serious, prolonged disruptions caused by a conflict in that Region. So, even in this case, America cannot lead.

America should be strong, but not the world leader it used to be

In the final analysis, America can and should be strong, (provided we fix the economy and federal finances). And, as such, it will be a formidable player. But even an economically restored America can no longer lead a much changed multi polar world that no longer instinctively looks at Washington for clues about what to do next. Governor Romney should take note of this and tone down the world leadership aspirations. His heart may be in a good place. But a changed world no longer fits the program.




Departing Secretary of Defense Robert Gates To Europeans in NATO: Shape Up, Commit Real Forces to Missions, Such as Libya, Or US Will Abandon This Alliance

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By Paolo von Schirach

June 10, 2011

WASHINGTON– NATO is evolving into a two tier arrangement in which some members show commitment, while most of the others talk a lot and engage in semi-irrelevant activities. The conduct of the Libya operation shows this. If this continues, forget about America’s future support to NATO. This is the gist of departing Pentagon Chief Robert Gates’ farewell speech, delivered in Brussels to America’s strongest “European Allies”. Blunt and brutal it is; but he is retiring and thus somewhat uninterested in diplomatic tact.

Doubts about Europe always there

If we step back, even when NATO used to be a serious affair as the defense mechanism aimed at deterring Soviet expansionism, many questioned the depth of Europe’s committment to it. Many Americans policy makers believed that NATO was mostly a US unilateral US defense guarantee to Europe via the American “nuclear umbrella”. The Europeans did not have to worry too much about their own defense, the critics argued, because Uncle Sam was essentially doing it for them. Indeed, even in the darkest days of the Cold War, the Europeans spent some on defense but not too much.

After the end of the Cold War no more serious defense spending

But if getting Europe to do more when there was a real danger was difficult, after the Warsaw Pact disappeared, the Soviet Union imploded and Germany was reunified, forget about it. In the 1990s, Europe really relaxed. Defense budgets were slashed, as the general perception was that without the Soviet Union to scare Europe there was nothing else to worry about. And in a sense the Europeans were right. The NATO Alliance had been created most fundamentally to protect Europe from Moscow. With the end of the Soviet Union, arguably Europe’s most pressing security concerns were over.

Other “out of area” crises

Except that other problems kept popping up. Certainly they had nothing to do with a threat from the East. But they were and are real concerns. There was Bosnia, and then Kosovo. As of 2001 there is Afghanistan, and now Libya. As Secretary Gates pointed out, all these contingencies have shown that the European members of NATO have minimal capabilities and even less will to act. Even when they have declared that action has to take place, the European members of NATO, in general rich to middle income countries quite capable of acquiring whatever may be needed, are militarily unprepared and disorganized. And, of course, some do not show up at all.

Gates: shape up or this will be the end

In his final speech to the Europeans, Gates bluntly told them that, if their behavior continues as is, this will be the end of NATO. He argued that it is impossible to assume open ended US political support for Allies who are essentially incapable or unwilling to do even the bare minimum for the common defense.

NATO somewhat unserious even in tough times, now a talking shop

Having watched the steady deterioration of NATO for the past 20 years, I fully agree. Even in the more glorious past, the inside jokes were that “NATO” means really “Not At The Office”, or “No Action Talk Only”. The “European Pillar” of NATO was nicknamed the “European Pillow”, soft and cuddly just as they are, and so on. Now the best that I can think is that NATO will either die or be transformed into something like the British Commonwealth, a nice “alumni group” that meets and hold Games and does not do much else.

Gates’ scathing assessment

Robert Gates used his last appearance before retiring as an opportunity to re-ignite Europe’s commitment. But he knows that this is just for the record, so that he will be able to say, a few years from now “I tried. I told them. But they would not listen”. And this is some of what he actually said:

“If current trends in the decline of European defence capabilities are not halted and reversed, future US political leaders – those for whom the cold war was not the formative experience that it was for me – may not consider the return on America’s investment in NATO worth the cost.”

And then there were scathing comments about the inability to conduct sustained military operations against Libya, a rather modest opponent.

“The mightiest military alliance in history is only 11 weeks into an operation against a poorly armed regime in a sparsely populated country. Yet many allies are beginning to run short of munitions, requiring the US, once more, to make up the difference.”

Besides, while the Alliance had unanimously decided to get engaged in Libya –all 28 of NATO members– not many showed up. Indeed in Libya, of all the Allies, Gates noted,

“Less than half have participated, and fewer than a third have been willing to participate in the strike mission … Many of those allies sitting on the sidelines do so not because they do not want to participate, but simply because they can’t. The military capabilities simply aren’t there.”

(This sad show reminds me of an old anti-regime joke during Mussolini’s militaristic dictatorship: “Armiamoci e …. Partite”, “Let’s All Take Up Arms, And….You Go”).

Many Allies can and should do more

In a previous occasion, Gates had noted that, with the US providing much of the overall logistical support, only France, the UK, Norway, Denmark, Belgium, Italy and Canada have committed assets to the air campaign against Gaddafi. Counting the US, that is a total of 8 countries –out of 28 NATO members.

Gates had singled out Germany, Poland, The Netherlands, Spain and Turkey as Allies who would have capabilities but are unwilling to participate. And, in this case, the enemy is only Gaddafi, a bizarre gangster with third rate armed forces, rather than major armed forces.

In the end, I believe that Gates is correct. Hard to believe that the US will continue to maintain a commitment to a NATO Alliance in which most of the Allies do almost nothing. Sad but true.




Standard & Poor’s Downgraded US Outlook – America in Decline Accepts “Negative” as “The New Normal”

[the-subtitle ]

by Paolo von Schirach

April 20, 2011

WASHINGTON– The US sovereign debt outlook was just downgraded from “stable” to “negative” by Standard & Poor’s; but this downgrading has been dismissed by the White House as a non event. It has been explained away as an (inappropriate) political judgement by the credit rating group on the difficulties encountered by Democrats and Republicans about reaching an agreement on spending, taxes and raising the debt limit. The White House point is that these “political issues” have nothing to do with the fundamentals driving US fiscal problems. So we are told that what politicians in charge of fiscal policy do or do not do on spending and revenue apparently does not have any impact on national accounts).

Not to worry, America

And the S&P move came in the wake of a critical International Monetary Fund, (IMF), report in which the US has been chastised for not acting promptly in order to rebalance its federal debt. Meanwhile, now it takes 1.43 dollars to buy a Euro; last year it took 1.30. So the US dollar continues to slide.

But the message from the White House? Hey, not to worry, America. The sun is shining. The US, as always, is strong and invincible. What S&P and the IMF are worried about are just minor squabbles and they will be resolved in no time, as they always are. Besides, who would ever doubt the creditworthiness of the US? After all, America is still by far the largest economy in the world.

Dangerous indirect message: debt is fine

This way to “explain” and essentially dismiss a significant grade change from “stable” to “negative”, signaling S&P’s diminished confidence in America’s ability to take care of a chronic and deteriorating fiscal crisis is another bizarre exercise in denial. (“No, I swear to you, I do not have a drinking problem. The bottle in my closet? Not mine, really”). And this denial, while politically expedient for an incumbent president Barack Obama who just embarked in his 2012 re-election campaign, reinforces the popular feeling that, more or less, things are under control.

So, here we are in the worst fiscal predicament since WWII. Our national debt outlook has just been downgraded to “negative” and we are told that all is well. Politics aside, the perverse result of all this is to convince America that high deficits and unprecedented public debt are actually fine. The implicit, insidious message is that Banana Republic finances are the “new normal” for the US.

The issue is not today’s solvency

True enough, nobody is questioning America’s solvency today. But the world is looking at a progressively deteriorating US fiscal picture, with unprecedented levels of deficits, (now 10.6% of GDP, an astounding record), and parallel national debt increases, with the national economy doing at best so-so. And, in all this, no consensus on any new policy, let alone the right policy. So: high deficit, projected explosion of entitlement programs costs, (due to the retirement of the baby boomers), and political paralysis in Washington. And S&P taking notice of the above is “political interference”?

At some point, a risk premium

At some point, although nobody knows when, assuming no substantive policy changes, the world will start questioning America’s future solvency. This will not happen all of a sudden. It will be an incremental process. Most likely, in the future, creditors will start asking for an interest rate premium as an inducement to keep buying US Treasuries. And that will be the start.

Progressive decline

But the point here is not to indulge in doomsday prognostications about a US financial catastrophe that may never happen as “an event”. Indeed, it is not foreordained that the US will go down in flames in one big epic economic disaster after which all of America will wake up destitute. It hardly ever happens this way.

The most likely route is progressive decline. Look at other countries that declined. Spain declined. France declined. Yet, they did not disappear from the face of the earth. They are there. But smaller, less relevant and relatively poorer. Likewise, Great Britain was the great world power of the XIX Century. Today it is a vastly diminished nation. But Great Britain did not sink into the North Atlantic. You can still visit London. But the UK is there as a severely downsized power, with fewer resources and a lot less leverage and influence.

Japan

And Japan? Well, similar story. After its roaring 1980s, Japan imploded. And now it coasts along, still important; but diminished. Aside from the recent terrible earthquake-tsunami tragedy, the country carries on. But it carries on with an enormous national debt overhang patiently carried by an aging, mostly risk averse, population. Bright future ahead for Japan? What do you think?

Nations get used to decline

But the real lesson to be taken from these historic examples is that decline, unlike a sudden crisis, is hardly ever understood as it is happening. And this is because it is usually incremental and so governments and people get used to it. The aberration progressively becomes normal.

Argentina had its default

And even if we look at countries that have had to face sudden financial earthquakes, this is not “the end”. Look at Argentina. It went to hell; but it came back, sort of. It had a massive public debt default. And guess what. It recovered. Sure enough, given the size of the wreckage, lots of people were hurt, badly. But the country did not disintegrate. There was no civil war. The Argentina default is no longer talked about. It is history. That said, the massive default left scars. Indeed, while the US should worry about keeping its coveted AAA credit rating, Argentina has to make do with its puny B. Financial disasters do have consequences. (And in America’s case a much milder lowering from AAA to AA would already be a disaster).

America getting used to decline

So, the real problem for America is not that “we are facing the end”. The real problem is that in this land of congenital optimism, where it used to be axiomatic to state that “tomorrow will be better than today”, we are progressively becoming comfortable with a –permanent, I would argue– diminution of our overall condition. With the complicity of national leaders, negative developments are explained away or ignored, while bad polices do not stir any outrage within American society.

The “new normal” for America

In America, the new normal is:

–A Federal Government severely in debt, year after year, not because of the stimulus plan or the TARP banking rescue measures, but because of built-in, structural increases in entitlement programs for which there is no revenue.

–For America to have a federal deficit that is 10.6% of GDP, while in France it is 7%, in Canada it is 5.5%, in Australia it is 4.6% and in Germany it is 3.3% .

–A crazy health care system driven by “fee for services”, with doctors routinely over prescribing anything, confident that the insured patient will not object to “more of everything”.

–No public outcry about the above sky rocketing health care costs that have no match in any other developed country. No policy maker saying that this is an anomaly that needs to be corrected.

–The US Congress routinely failing to approve a budget for the next fiscal year by the due date of September 30.

–A cumbersome, incomprehensible, federal tax code, with loopholes, shelters and exemptions designed to favor those with enough resources to game the system to their advantage. And just navigating the code costs billions of dollars every year.

–One of the highest corporate tax rates in the world. Maybe it is alright for large multinationals that can circumvent it; but bad for small companies, and bad for economic growth.

–An obesity epidemic that will condemn millions of Americans to be chronically ill in their maturity and old age, adding hundreds of billions to our health care costs.

–To have an unresolved illegal immigration issue whereby 12 to 14 million peope live in America with no status.

–A woefully inadequate public education system that condemns generations of young people to be marginalized, as they lack not only skills and knowledge but often basic literacy.

–National teachers unions claiming that things are fine and that any attempt to change the status quo is part of a mean spirited anti-union plot.

–No serious energy policy in a country dependent on (more and more expensive) imported oil for 60% of its consumption.

–Air traffic controllers asleep on the job and pilots landing unassisted.

–Major airlines outsourcing airplane maintenance to contractors who cut corners, do not do their inspections and use non certified parts.

–For president Obama to announce grand plans for a future network of fast rail connections in America without any serious money to fund it.

–To sell to the public the corn ethanol program, in truth just a disguised agricultural subsidy to corn growers, as a major achievement in renewable energy policy.

With the old American mind set, none of this would be tolerated

If America had retained its old public policy standards, none of this would be acceptable. But today it is, indeed, “the new normal“. Whatever the Washington loud Republicans-Democrats partisan fights, The Nation as a whole tuned ”the debates” out, while it progressively accepted that mediocrity, the consequence of all these and other policies, is alright for the US.

Sub standard is the new standard

As a result, in America, now, sub-standard is the new standard. Being heavily in debt is perfectly fine; while losing ground in the competitiveness race because we are not innovating is also an innocuous development, not deserving further discussion.

If it were not so, then there would be waves of national outrage that would translate into a dramatic change in political leadership and the unveiling of a new course.

Tea Party did not grow into a serious force

While only last year the Tea Party Movement was thought to be the signal of a major turning point, now I am not so sure. Ask the Tea Party members what they are prepared to do to re-balance the national books and you get very disappointing answers, usually focusing on eliminating outrageous but financially negligible programs. Tell the Tea Party people that we have to cut down all the entitlement programs for middle class seniors and see what applause you get. The fact is that they do not know and nobody told them that the problem in Washington is much, much bigger than “fraud, waste and abuse”.

The euphemisms of the “new normal

The truth is that the national leadership managed to create a consensus whereby the bidf mess we are in is gently toned down. For every problem there is a euphemism that will take the bite out of it. A “crisis” is renamed a “challenge”, a “failure” will be your “achievement gap”; a horrible “debt” will be a “revenue shortage”. And “illegal aliens” are now “undocumented workers”.

No outrage

Sure enough some cry out. By they are dismissed as fringes, colorful crackpots, material for sensational cable TV shows, or amiable old uncles who always complain but are really OK people, just like Erskine Bowles and Alan Simpson.

Bowles-Simpson and “The Moment of Truth”

Senior statesmen Bowles and Simpson, co-chairs of the “debt commission” created by president Obama, in December 2010 presented their serious Report –aptly titled “The Moment of Truth”– on what to do about US chronic fiscal imbalances. In an unadorned way, they plainly stated that there is a need to take immediate action on systemic imbalances, now, before it is too late. They presented to president Obama a reasonable menu of recommended policies, supported by a (small) majority of the commission members. A debatable menu, if you want, but doable.

Moment came and went, president Obama ignored it

Well, what happened to “The Moment of Truth”? Nothing. The two senior statesmen got a polite hearing, a good dosage of media attention and probing questions in some serious fora. But the president of the United States –he is the one who actually created the “debt commission” that issued the Report– vaguely nodded and did absolutely nothing. In other words, the US president used the “bully pulpit” to say nothing about the issue of deteriorating US public accounts, after his commission made recommendations for swift action.

And, with this inaction, the public got the unspoken presidential hint: “These are just a few old guys venting steam. Yes, we may have a problem on debt and revenue, but nothing we cannot handle, trust me”.

Paul ”Path to Prosperity” dismissed as “unserious”

Then a month ago came Congressman Paul Ryan and his Republican House Budget Committe proposal titled “The Path to Prosperity” for next Fiscal Year. This plan contains radical reform ideas for Medicare and Medicaid, (more radical than Bowles-Simpson), aimed at seriously transforming the US system providing health care assistance to the poor and the elderly. A radical plan, no doubt, with controversial ideas in it; but not a crazy plan.

This could have been material for debate on fiscal policies. But no; no debate. The president, afraid that he may concede the fiscal reform ground to the Republicans, counterattacked. He dismissed Ryan’s the plan as “unserious” and thus unfit for discussion, while demonizing the Republican proponents as cold hearted cynics who want to balance the national accounts on the back of the elderly, the sick and the poor, while doling out more goodies to the super rich. A balanced and fair characterization, what do you think? And so, instead of the beginning of a debate, we had another exercise in posturing, while the public is fundamentally disengaged because none of this looks serious.

General public tuned out, and no appetite for any reforms

Indeed, in the midst of all this political theatre, the real “news” is that the general public does not want to do much of anything regarding real spending cuts. Opinion polls indicate that Americans do not like the Republican deep cuts bitter medicine; but they do not like much the milder cure proposed by president Obama either. And nobody as yet managed to convince America that we are facing a serious problem.

Translation: middle America is not in this conversation, such as it is. The general public is yet to be persuaded that we have a problem with runaway public spending, most of it due to skyrocketing medical costs. Again, lacking consistent national leadership via a clear message from credible policy makers, the American anomaly of forever growing debt is now “the new normal” and most people are not clamoring for corrective action. With no consensus on a credible new policy approach, very few believe that there is a real problem out there. Americans continue to believe that we can have the welfare state more or less as is, while it is alright to pile up debt as the means to finance it.

In the “new normal” fiscal recklessness is fine

In the end, the worrisome conclusion is that –not consciously but rather unwittingly and by default– we have created a new conformism, whereby chronic fiscal recklessness is fine, while national underachievement and eventually decline is normal. The famous historian Arnold Toynbee is often quoted for having written that civilizations are not murdered; rather, they commit suicide. Meaning that “the end” is a self-inflicted wound. And this may be America’s eventual fate.

Toynbee: a sign of decline is uncritical uniformity

But Toynbee also gave us hints about signs of incipient decline: ”Civilizations in decline are consistently characterized by a tendency towards standardization and uniformity“. And this describes America today. The new intellectual uniformity is uncritical acceptance that the current mediocrity is the new standard for America.

Whatever happened to the “can-do” Frontier Spirit of the scrappy pioneers?




NATO in Libya Timid, Almost Unserious – Gaddafi Takes Notice, and so Will Others

[the-subtitle ]

by Paolo von Schirach

April 15, 2011

WASHINGTON– Welcome to the 2011 NATO-led Libya intervention, a fresh example of how a low budget, low participation, low enthusiasm war can lead to a stalemate (or worse) between the largest military alliance in the world –NATO– and Colonel Gaddafi, a third rate North African dictator. As the limited, air campaign only, intervention drags on inconclusively, the latest nugget is that NATO Supreme Allied Commander Europe, (SACEUR), US Admiral James Stavridis, recently begged NATO members to supply at least 8 more combat aircraft, so that the combined NATO air power can have a bit more punch against Gaddafi’s forces. And NATO Secretary General Anders Fogh Rasmussen also stated earlier that alliance commanders need more “high-precision” aircraft; but he has not received any firm pledges from NATO governments.

8 planes for Libya, anybody?

Please note: Admiral Stavridis did not say he needs 80 planes. He said he wants 8, and apparently he is having trouble getting any. And he and his political counter part Secretary General Rasmussen are not asking Moldova. They are asking an alliance of 28 nations, among them 4 of the G -7 members, that is to say some of the wealthiest countries in the world.

The fact that NATO top brass is down to openly begging for a truly modest contribution, while even those who are participating in the air campaign operate according to all sorts of self-imposed restrictions stemming from national rules of engagement, tells a worrisome story.

Bad signs

NATO is not just lukewarm about the Libya conflict. These are signs that the Alliance, (admittedly created on April 4 1949 for an altogether different purpose), is turning into an empty shell. The point is simple: in case of war, either you are in or you are out. If you are in, you throw in all you’ve got. NATO instead decided to get in, but timidly and not with a united front. Germany is out. A few others contribute just a little bit. This is not the way to go war.

NATO did not have to intervene

A NATO Intervention was neither mandatory nor inevitable. NATO could have decided that violence against civilians in Libya, while regrettable, does not touch the alliance core interests, and so NATO would stay out of this emerging internal conflict. Individual members states, (such as France and Britain), could have taken a different course, acting individually, with no alliance involvement.

But instead NATO proclaimed its readiness and its willingness; and then it proceeded with minimum effort and, with the exception of France and Britain, modest contributions. This is unserious and it conveys weakness, not just to Gaddafi, but to the whole world.

NATO: “No Action Talk Only”

Even in the bad old days of the Cold War, when mighty Red Army tanks were parked in East Germany, the alliance inside jokes were that “NATO” stands for “Not At The Office“, or “No Action Talk Only“. Well, the old jokes certainly apply now. The once great military alliance these days has some meaning only when the United States, by far the most powerful member, is in the lead, thus masking the political timidity and operational shortcomings of the lesser members.

Getting to be another British Commonwealth?

As we know, in the case of Libya, the US (in its wisdom) decided to make just a strong cameo appearance at the beginning of the first act. Now, America is still doing stuff, but it is not using much muscle. Which is to say that, without the US in the lead, NATO is showing promise to become something akin to the British Commonwealth, a fairly innocous talking shop, good for ceremonies and nice speeches, otherwise devoid of much substance. Unless we shall see a dramatic surge of enthusiasm and NATO members coming forward with assets and serious will to fight, this is pretty much it.

If I were Gaddafi, while I would worry about the long term viability of my regime, I would not be terrified about what may happen to me in the next few months. NATO is not going to come and get me.

Juppe: open recriminations

And, regarding its impact on prestige and credibility, this mix of halfhearted promises and retreats is coming out in the open with public accusations and recriminations. Indeed, after complaints from the Benghazi rebels about the ineffectiveness of fewer NATO strikes than they expected, we saw French Foreign Minister Alain Juppe rebuking NATO for its timidity. (He also asked the US to recommit war planes to the mission. But Washington declined).

3 leaders engaged in public relations

And this political disarray probably justified the extraordinary measure of mobilizing the top policy makers in a morale boosting, public relations effort. President Barack Obama, French president Nicolas Sarkozy and British Prime Minister David Cameron wrote a joint op-ed piece in which they tried to defend this convoluted mess. They jointly claim that all is fine. The UN mandate is only about defending civilians, and this is what they are doing. (Trying to do, with mixed results, would be closer to the truth).

Gaddafi has to go? How do you make him go?

More substantively, they also state that, no matter what is happening on the battlefield, it is impossible to envisage a post-conflict Libya with Gaddafi still in power. So, the end game is still the same: “Gaddafi has to go“. This joint restatement of the larger strategic objective is good. But what is not at all good is that, so far, with a modest NATO commitment to the war effort, this may take months, or even more. In other words, now as before there is a mismatch between strong words and puny means. And the op-ed piece by the three leaders did not indicate how this problem will be resolved.

Arm the rebels

For this whole thing to regain credibility, NATO should intensify its air strikes against Gaddafi’s forces, even though now this has become a lot more difficult, as the Libyan army is dispersed and intermingled with civilians, thus complicating targeting.

But, most importantly, NATO needs to support, directly or indirectly, all credible efforts aimed at training and arming the Benghazi Libyans. If Gaddafi has to go, and NATO troops are not going to go after him, then give tools to the only ones who would like to do this. But there is resistance to arming the rebels. The objection is that arming the Benghazi Libyans is dangerous, as there may some al Qaeda followers or other anti-western groups among them.

Objections make little sense now

But the objection is peculiar, at this stage. If this is indeed the case, if the Benghazi rebels are an unsavory bunch, then NATO should have stayed out of the whole thing from the very beginning. Whereas NATO got in. And now it wants to deny aid to the rebels? In the end, some aid will go to Benghazi. It would appear that Qatar is working on this, and some NATO countries may work through Qatar. Be that as it may, it is very late in the game. Arming and training the rebels would help hasten the end of this conflict.

President Obama: a little bit in but not all the way

As for president Barack Obama, his idea of getting in to deliver the initial strong (but not decisive) punch and then back off, was not wise. After the beginning of the operation, Obama stated that, “Going forward, the lead in enforcing the no-fly zone and protecting civilians on the ground will transition to our allies and partners, and I am fully confident that our coalition will keep the pressure on Qaddafi’s remaining forces“.

Well, his confidence was a bit exaggerated. Pressure not so strong. Gaddafi’s forces still have punch.

If Libya operation sours, America will be tainted

Beyond this, the larger point is that, once America is in any conflict, politically “it is in all the way”. Having invested its word and national prestige, America’s credibility is tied to the eventual outcome, no matter how deeply the US was involved. In war you cannot be “just a little bit pregnant”. If this NATO operation goes south, America’s prestige will be tainted, as the US is the leading member of this military alliance.

If Obama chose this course of action so that he could at the same time show resolve and bow to the anti-intervention wing of the Democratic party, this way trying to make everybody happy, I am not sure that this will work, politically and militarily.

In the meantime, will NATO SACEUR Stavridis get his additional 8 aircraft for Libya? What do you think?




Obama Speech, London Conference – Still No Clear Strategy for Libya

[the-subtitle ]

by Paolo von Schirach

March 29, 2011

WASHINGTON– On March 28, president Barack Obama used the august podium of the National Defense University, (NDU), at Fort Lesley J. McNair in Washington, DC to explain to America what his administration is up to in Libya. The speech was comprehensive and it probably succeeded in reassuring the people that the US was pushed into this engagement by serious humanitarian reasons; and that Washington, while strongly supportive of the efforts underway, wants other allies to be in the lead.

But the president also said that, while Gaddafi needs to go, it is not the purpose of this military operation to make this happen. Really? And I always thought that military means were used to secure political ends. Well, in this special case, we have military ops used only for humanitarian purposes that have nothing to do, apparently, with broader political ends. And so it is. This is US policy.

US policy now clear?

Most commentators applauded the speech saying that it made everything clear. Sorry, I am still confused, as I still do not see a strategy aimed at bringing this conflict to a quick end, with the pro-democracy Libyans, yes those who we are rescuing, ending on top. In most conflicts the end happens when one side (hopefully the good guys) wins and the other side loses. President Obama indicated that he is hopeful about Gaddafi’s eventual demise. But this will be as a result of the combined pressures of the embargo, economic sanctions and total international isolation; and not because of current military actions that are only humanitarian. And this also explains that, while we are shooting, this is not a “war”.

So, we have military ops, but only in pursuit of non political goals. Maybe. But it looks conceptually murky. Besides, if the end game –Gaddafi gone– has to wait until the sanctions will really bite, this may take a long, long time. But the summary from the president is this: ”We want Gaddafi gone. And this is non negotiable. Now we are shooting at him; but the purpose of the shooting is to make him back off, not to crush him. (And all this while we know and he knows that we have enough fire power to pulverize most of his equipment”).

The London Libya Conference

The president’s speech was followed by a big London gathering on Libya, with more than 40 countries represented, convened by British Prime Minister David Cameron on March 29. This was supposed to be and in some measure was an opportunity for the international community to re-emphasize its determination to save the Libyans.

All well and good. The humanitarian disaster that might have occurred, had Gaddafi’s troops really conquered Benghazi, has been averted. The NATO plus others aircraft provided for the no fly zone are now the de facto rebels air force. The military mission clearly includes smashing Gaddafi’s armour, artillery, transport and supply lines. This is good. And the substantial hits suffered by Gaddafi’s forces have emboldened the Benghazi Rebels who started a counter offensive, regaining some of their lost ground in the East.

All is well for the Benghazi Libyans?

So, all is well? Not really. If you are rooting for the Benghazi Libyans, now represented by an “Interim National Council”, while you have reasons to cheer, you also realize that nobody, either in Washington or London, announced a convincing coalition strategy, (NATO, non NATO Europeans and some Arabs), aimed at bringing this conflict to an end. We all know that beyond the humanitarian crisis happily avoided, there is an insurrection underway. While much has been hinted about providing support, no clear decision to openly aid the rebels was made. In fact, as British Foreign Secretary William Hague stated, the issue of directly aiding the rebels did not come up.

No diplomatic recognition for the Interim National Council

And, even worse, after all this outpouring of support, we are not even at the point of formally recognizing the Benghazi based “Interim National Council” as the legitimate provisional Libyan Government. Only France and Qatar have done so. And in London there were about 40 countries represented that did not follow this lead.

The US has finally decided to send a diplomat, the former Deputy Chief of Mission in its Tripoli Embassy, as envoy to Benghazi. But this is only for talks and the action implies no recognition. And yet, imagine the political impact of the 40 countries represented in London unanimously recognizing the Interim National Council as the legitimate representative of the Libyan people. This would have been politically very significant and it would have boosted the rebels morale. But it did not happen.

Do we have a clear policy?

So, if we take all this together, president Obama reiterated on March 28 at NDU that Gaddafi has got go. So, that has not changed. But he also indicated that making him go is not the purpose of the military operations currently underway. So, coalition, (now NATO), aircraft are enforcing the no fly zone while smashing Libyan tanks, but they are not really aiding the rebels, nor is any of this “kinetic action“, (Pentagonise for combat), to be construed as part of the ultimate effort to defeat Gaddafi or to make him go. Got that?

This is the price we pay to cobble together a coalition

I can ascribe these conceptual contortions and half truths as the price to be paid when you have to keep together a multilateral effort. But this means that a multilateral consensus can be forged and may survive only if we define a very narrow, limited objective –helping civilians– without saying anything as to how this conflict may be brought to an end. Humanitarian intervention is an emergency measure, it is not a policy. And, as such, it is not sustainable.

Help the Benghazi rebels now

And yet, all know that the issue, if we could only wish away all the political constraints accepted to broaden consensus, is quite simple. The Benghazi Libyans, whatever their ideological and political mix, are the people who are fighting Gaddafi. If we are serious, they should be supported, massively, with whatever may be reasonable at this time.

Health care, communications equipment and armaments

Start with meaningful, tangible amounts of humanitarian aid. Resupply the Eastern Libyan hospitals now treating thousands of wounded. Provide whatever logistics and communication infrastructure, (GPS, cell phones, sim cards), may be useful. Help the rebels set up their own TV and radio stations, so that they can broadcast their message to the country. And then look at their military needs. A disciplined, well organized army is not improvised in a couple of weeks. But something helpful can be done. We all agree that Gaddafi’s army, while superior, is not a formidable force. If we keep bombing his logistics and supply lines, it will have less to fight with against beefed up opponents.

Worst scenario is a stalemate

The worst scenario here is a stalemate. We help the rebels survive but we do not give them the military help they need to win. So, Gaddafi may not be able to regain the whole country; but he is relatively secure in the West, as the rebels are too weak to defeat him. And in all this you expect the West under NATO to continue to enforce the no fly zone –indefinitely? The idea that Gaddafi will soon fall because of the pressure of the embargo and the sanctions does not sound realistic. This may happen. But it may be months or even years from now.

Policy-makers know what needs to be done

Again, this may be the best that a coalition based, multilateral initiative can provide: some good, but not the entire solution. Be that as it may, president Obama, president Sarkozy and Prime Minister Cameron and all the others know that the coalition effort underway should aim at ending the conflict sooner. A long, inconclusive stalemate will translate in partners peeling off and in postponing more and more the desired outcome of a more democratic Libya.




US and Libya, a Matter of Leadership

[the-subtitle ]

By Paolo von Schirach

March 19, 2011

WASHINGTON – Where is America’s leadership in this Libya operation –in it, so far: France, Great Britain, The US, Canada and Italy– with the bizarre name of “Odyssey Dawn”? (Who the hell came up with that)? America is “in”, no question about that; but it is not leading and it wants the whole world to know it, by proclaiming that, beyond the cruise missiles attacks targeting Libyan air defenses and probably command and control nodes, in a matter of days rather that weeks, it will take a back seat, letting others (wbo?) conduct most military operations.

Confusion about US role

The way it has been presented, this whole thing of US role, going back to the incewption of the uprisng in Lybia in February, is quite confusing. It has given observers the impression that America was and is uncertain about what to do about Gaddafi and the Benghazi based rebellion and how much it intends to do. In principle there would have been nothing wrong if president Obama would have said, from the very beginning of this crisis, that the US, while supportive and politically in full agreement with those who want to help the Benghazi Libyans, has its hands full in Afghanistan and therefore is only too happy to defer to Paris, London and whoever else. “As we deal with an ongoing, complicated conflict in Afghanistan, you take care of Gaddafi”. Nothing wrong with an upfront division of labor among like minded allies. Except it did not happen this way.

The world waited for the US to lead

In a sense, the world, and certainly the major European allies, were deferring to the US at the beginning of the Libyan uprising. Let America set the stage and provide leadership. But president Obama, by dithering on next steps, after having repeatedly declared that Colonel Gaddafi lost his legitimacy and thus has to leave his job, kept everybody guessing as to what America would do to physically dislodge him from power. And this is not good for US international standing and credibility.

Last minute March 17 UN vote

In the end, there was the UN March 17 vote, with the US clearly on board, followed by the beginning of military operations with obvious US active participation. But let us not forget that the UN vote came only at the very last minute, when the situation in Libya was desperate and Benghazi was about to be taken over. And UN action started as a French-British, not US, draft Resolution.

Only about protecting civilians?

After the vote, president Obama stressed that US military participation is limited, thta it is about protecting civilians, and that it will be mostly in a support capacity, as opposed to leading the charge. No connection made publicly between the initially declared political goal of getting rid of Gaddafi, (I hope this is still on the table), and the use of military power against him by either the president, Secretary of State Clinton or anybody else. (And I still thought that the purpose of war is to bend political will and obtain political objectives. If we really have to believe the letter of the UN Resolution, the only goal here is to protect Libyan civilians. Yes, we do that. And then what happens? We go home with a chastised Gaddafi still in power?)

Is it possible to keep a low profile?

This is all political, of course. There is a deliberate effort to minimise the US role, to say that the engagement will be small and temporary. But if this is political, frankly I fail to see the benefits. Just like you cannot be “a little bit pregnant”, the US cannot be “a little bit in a conflict”. If America is out, then it is “out”, completely. But if it is “in”, given its well known military resources and historic presence in the region, as a matter of public perception, it is “in” all the way. True or not true it does not matter.

Better to go in all the way

Therefore America, once it decided to participate, might as well throw all it has got at the enemy in order to cripple Gaddafi; this way making the conflict short. Inflict a major blow to Gaddafi and provide strong reinforcements to the Benghazi Libyans. After suffering a crushing hit, it would be surprising to see a spirited response by Gaddafi’s decimated forces, except the die hard who know that they have no place to go, once their leader is out of the picture. Now, this –a decisive, short intervention– would matter politically.

Winning this one cannot be that hard

In all this, given America’s low profile and an as yet to be defined “coalition of the willing”, (beyond its French and British core), the major good news regarding the beginning of military operations against Gaddafi on march 19 is that the enemy is only Muammar Gaddafi.

But what is the goal?

Indeed, whatever the degree of coordination among the countries so far participating, the mission should not be that hard. Except that we do not know what the “real” mission is, at least not based on what is officially on record. Weeks ago, the loud proclamations, starting in Washington, were that Gaddafi needed to go, for he is a failed leader who shoots his own people. Not much of a need to substantiate this charge. But then, condemnations notwithstanding, nobody did anything.

Then, when it became obvious that Gaddafi was actually winning against the Benghazi rebels, there has been the March 17 UN vote. Except that the language of Resolution 1973/2011, while broadly authorising the use of force, says that the purpose of such force is to protect civilians. It says nothing about “regime change” –which is precisely what was openly advocated beforehand in Washington and elsewhere.

Do we still have regime change on the agenda?

So, here we have quite a bit of confusion regarding what the real purpose of UN sanctioned military operations now underway should be. Unless we cynically agree that it does not matter and that the point of a UN vote was only to get a formal green light. With that done, thereafter is catch as catch can, as the Security Council Resolution provided a sufficiently vague cover under which we can do almost anything.

A “coalition of the willing” is in charge

Be that as it may, in Libya we see the emergence of another “coalition of the willing”. But it is an improvised affair, with more countries probably joining in; but only as individual participants, because regional groups are not in. The European Union, EU, has really no real mandate nor dedicated defense structures. The member states, all 27 of them, meet and talk. But essentially they EU as an institution is powerless. So, take the EU out of the picture.

Will NATO have a role?

Then there is the 28 member strong NATO Alliance. (There is major overlap between EU members and European members of NATO). Well, this is a different story, at least in principle. In NATO you have an integrated military command structure and systems in place. Except that there does not seem to be a NATO-wide consensus on what to do about Libya.

NATO’s Secretary General Anders Fogh Rasmussen said last week that NATO was ready to go, as long as there was need, regional support and a UN Security Council vote that would authorise action. Well, now we’ve got all the above.

Yet, NATO as an Alliance does not seem to be all that eager to engage. Just to mention one key missing element, Germany, by far the most important European country and a key NATO member, abstained in the UN Security Council vote on March 17. Not exactly what you would call a ringing endorsement. So, NATO eventually may decide to act as an institution. But this may probably amount to giving a nod to what is already happening: a few NATO countries are engaged in the operation in Libya anyway. Others may at best provide logistical support.

The real issue is America’s role

But the real issue is America, as world leader and as leading NATO member. President Obama says he wants to do as little as possible, hoping that keeping a relatively low profile will avoid political damage. I indicated above that if this is the objective, I am not sure that it will work.

May be I am just sentimental; but, when America decides to enter the fray, I prefer to see it in front.