Monday, July 20, 2015

Persian Tilt

“On the nuclear issue, the United States and European colonialist countries gathered and applied their entire efforts to bring the Islamic Republic to its knees but they could not and they will not.”
—Iran’s Ayatollah Ali Khamenei, November 25 on his website

“Iran is going to receive a sure path to nuclear weapons. Many of the restrictions that were supposed to prevent it from getting there will be lifted.”
—Israeli Prime Minister Benjamin Netanyahu on July 13, as quoted by The Washington Post

“It does not give me pause that Mr. Assad or others in Tehran may be trying to spin the deal in a way that they think is favorable to what their constituencies want to hear. That’s what politicians do.”
—President Obama, answering a question from ABC News’s Jonathan Karl on July 15

Opponents of the arms deal with Iran—including, apparently, the entire Republican Party—have pretty much been dug in against it since long before it became public and any of us knew for sure exactly what was in it. Other people have had no trouble accepting President Obama’s formulation that the choice came down to one between signing a piece of paper or going to war—and they prefer not to go to war.

The fact is that, ultimately, the question of war and peace will not be determined by diplomatic talks or by a piece of paper—which is, after all, in this case not even a formal treaty—but by evolving facts on the ground. When you spend a lot of time listening to politicians and reporters, it is easy to start thinking that diplomacy somehow forms reality. But it’s actually the other way around. Diplomacy has always been a way to formalize facts already on the ground. Yes, diplomats can reduce or avert bloodshed but mainly when that bloodshed would have been unnecessary or pointless, e.g. when one side has no reasonable chance to win a military conflict.

There seems to a popular idea out there that the mere act of talking can avoid conflict, that deep-rooted differences can be overcome by pure power of persuasion or being reasonable. Unfortunately, it is difficult or impossible to find any examples of that actually happening. If, for example, the U.S. and the Soviet Union managed not to destroy each other and the rest of the planet during a half-century of the Cold War, it was not because of the rhetorical prowess of the arms negotiators. It was because the two sides’ arsenals were equivalent enough that neither side could perceive any advantage in engaging in a war. The contribution of the diplomats was essentially to avoid a miscalculation by the other side.

The negotiation with Iran was very different than the U.S.-Soviet situation. The goal was not to balance nuclear arsenals but to prevent one of the sides from building one. Did the U.S. and its partners succeed? Well, only in the short term. The agreement actually concedes Iran’s right to acquire a nuclear weapon after a ten-year waiting period. But more importantly, there is no precedent for a country absolutely determined to get a nuclear weapon not to get one sooner or later. And there is no reason to expect things to be any different with Iran. After all, the whole negotiation exercise has pretty much followed the same approach that was used with North Korea.

President Obama repeatedly framed the talks with Iran as the only alternative to military action. Only time will tell if armed conflict was actually avoided by the talks. Let us hope that it was. But it was dishonest to assert that there was no other approach to the problem, short of war.

It is hard not to think that the best route for preventing Iran from going nuclear was to continue—and even double-down—on the sanction regime. Instead, sanctions will now be lifted and Iran will have more resources free for the sorts of activities that have bedeviled major parts of the Arab world, not to mention the U.S. and Israel. President Obama’s rationale for trading away the sanctions was that the world’s will in maintaining them was inevitably slipping away. He also argued that the sanctions were not preventing Iran from going nuclear. If so, then maybe there was never any hope of avoiding an atomic arms race in the Middle East, which now seems all but inevitable.

But think about this. In the 1980s and 1990s, sanctions eventually convinced the regime in South Africa to end the apartheid system. Would people who cared deeply about that issue have been content to lift sanctions on the apartheid regime in exchange for an agreement that had no more than a ten-year life?

Thursday, July 16, 2015

Greeks Burdened with Gifts

In literature class I learned that, in ancient Greek stories when the gods decided they had it in for somebody, that was pretty much it. That guy’s destiny was pretty much sealed—no matter what he did or what he tried to do. The gods always had the last word.

So is modern Greece’s economic destiny sealed by the gods? One wonders. Everything that has happened to that country in the past few years seems to suggest that some malevolently divine hand at work rather than comprehensible human logic. The series of disconnects goes on and on. Let’s review.

Disconnect #1: Everyone knows that Greece does not really meet the stated requirements for entering the Euro Zone, but it is allowed in anyway.

You can sort of understand why Greece might want to fudge its way into the euro. There are economic benefits to having a strong currency managed by a more major power and which is shared by a lot of people to whom you would like to sell stuff and who you would like to have come visit as tourists. Besides, once you are in, the European Union pretty much has to prop you up no matter what. Your economy has become part of something that is too big to fail.

But why would the other European countries look the other way and let Greece in? What is in it for them—besides serious risk down the road? Well, if you are Germany, it eliminates the problem of selling goods produced by your strong economy to countries with weaker currencies. Besides, maybe allowing the Greeks into the grownups’ club will actually encourage them to clean up their economic act.

Disconnect #2: When the Greeks’ fudging of their books finally catches up with them, they vote in a left-wing socialist party.

Why, when you get into trouble by spending and borrowing way more than you are taking in, would you turn over control of the government to a party whose governing philosophy is to do more of the same exact thing that got you into trouble in the first place? I don’t have a good answer to that question except that maybe it’s simply a classic case of hope triumphing over experience. In fairness, it wasn’t Syriza that got Greece into its predicament. Corruption and mismanagement seems to permeate the whole political spectrum in Greece.

Disconnect #3: When Prime Minister Alexis Tsipras’s strategy of “standing up” to the troika of the EU, the International Monetary Fund and the European Central Bank predictably doesn’t work, he not only rejects their ultimatum for severe austerity but then makes the whole country vote on it—even though he has already rejected it and, by then, it has been withdrawn anyway.

What was the point of holding that election? It served absolutely no purpose—unless it was meant to be some sort of symbolic gesture to the troika. But it accomplished nothing and wasted no small amount of precious Greek money since elections aren’t exactly cheap to conduct. Think about it. The Greek government actually went through the exercise of putting a question on a ballot and then asking voters to vote against it. Who does that?

Disconnect #4: Greeks tell opinion pollsters that they do not want to leave the euro but then vote overwhelming against the measure that was arguably their best chance for staying in the euro.

In fairness, there were conflicting arguments as to what a yes or no vote meant in the election. Some said a no vote meant leaving the euro, others said it didn’t. In any event, they backed their government which asked them to vote against the question that the government itself had put on the ballot.

Disconnect #5: Having secured the public rejection of severe austerity measures as he had wanted, Tsipras then immediately goes back to the troika and… agrees to austerity measures that are, if anything, more severe than what Greek voters had just rejected.

This is the hardest one to figure out. After getting the whole country to reject the austerity route, Tsipras then has to go back to his own parliament and ask it to approve even more severe austerity. This is in spite of the fact that his whole deal has always been that Greece’s problems can be solved without resorting to austerity measures.

Disconnect #6: At the very moment that the troika gets its way and makes Greece submit to even more severe austerity in exchange for aid, a member of the troika criticizes the new bailout deal as inadequate.

The IMF says that the Greek debt should be “restructured,” i.e. at least partially written off by its creditors because the size of the debt has gotten so large that there is no longer any realistic way that Greece can ever pay it back. Of course, the IMF may have a little conflict of interest here since the new bailout will essentially be a transfer of tax monies from other European countries to Greece which can then repay the IMF. Indeed, the best moment in all of the back and forth the past few weeks was when an exasperated Tsipras pointed out that the discussions were all basically about one member of the troika paying back another member so they might as well sort it out among themselves and leave Greece out of it.

Some, including darling of the left French economist Thomas Picketty, have pointed out the irony that Germany’s destroyed economy was turned around 70 years ago by the sort of aid and debt forgiveness it is now loath to extend to Greece. But that debt forgiveness happened because Germany had just been defeated militarily and was occupied by foreign powers. For Greece to be saved, apparently it has to also become occupied. It has now been required to turn over key assets to the control of foreigners.

In all of the strange choices the Greeks have been making lately, they have avoided making the one choice that really matters. They can have their sovereignty and independence or they can avoid financial ruin. But they have gone past the point of being able to do both. In the beginning, joining the euro must have made them feel like King Midas, creating gold out of nothing. But, of course, that story—like so many Greek stories—did not end happily.