Month: March 2014
Lebanon’s neutrality in Syria
The Atlantic Council hosted a discussion on Friday about Lebanon’s neutrality toward the Syrian conflict. Is it hot air or realistic promise? The guest speakers were Paul Salem, Vice President for Policy and Research from the Middle East Institute and Bilal Saab, Resident Senior Fellow on International Security at the Atlantic Council. Faysal Itani, Fellow at the Atlantic Council Center for the Middle East, moderated.
Paul Salem said there is always an issue of neutrality in divided societies. For Lebanon, this has been a challenge for decades. Beirut is trying to survive in a turbulent environment. Figuring out how divided societies should manage foreign policy has been a challenge more recently for Syria and Iraq as well. One option is to reduce the load on the central government and have a foreign policy of neutrality, as it reduces the chances of division in a society.
One of the dangers of this tactic is that local parties will seek foreign alliances. Similarly, regional parties ally with local groups. We have seen this in the Levant and Ukraine. The dangers become particularly acute when the central government is weak. The Middle East today is in the midst of an intense proxy conflict between Iran and the Gulf countries. This has torn apart Syria and Lebanon and it is digging into Iraq. Often these divided societies are very small. Consequently, achieving neutrality requires domestic and external commitment. If the region or world does not respect neutrality, it is difficult for divided societies to maintain it. Machiavelli said that the most dangerous decision a polarized state can make is to try to remain neutral because it will have no regional allies. It is safer to pick a side. Lebanon has tried both. It faces challenges concerning its foreign relations in a turbulent region. On one hand, local players have sought alliances in the region and world to support their domestic positions. On the other hand, outside players have sought local alliances for proxy wars.
For now, the recently formed government is cohesive, with both the March 14 and March 8 alliances involved. However, the government only has until this week to announce its policy statement. Otherwise, it cannot be a full functioning government and will become a caretaker. In addition, the president’s term expires in May.
Deciding on its foreign policy is critical for Lebanon. This is an external and internal problem. Externally the fight between two elephants, Iran and Saudi Arabia, will continue to devastate the Levant. The region cannot survive this level of proxy conflict.
Bilal Saab tried to answer the question, is Lebanon’s neutrality hot air or a realistic promise? In his opinion it is hot air unless a specific scenario takes place. The scenario is as follows: Hezbollah would draw or greatly reduce its military involvement in Syria.
Hezbollah sees the Syrian conflict as an existential struggle. However, there have been several moments of crisis in its history when top leaders proclaimed the death of the organization, but it never happened. For example, after Abbas al-Musawi was assassinated, after the 1993, 1996, and 2006 high-intensity conflicts with Israel, and after the tribunal accusing Hezbollah of killing Rafic Hariri, the organization weathered the storms.
The reason it has overcome all of these crises is because Hezbollah has always maintained a strong relationship with the Shia community. Today there is no rupture in this bond, but we are starting to see a few cracks. In Bilal’s opinion, these cracks are key to forcing Hezbollah to change its approach to the Syrian civil war and focus on the Lebanese internal politics.
For now, Hezbollah is nowhere near reducing its involvement in Syria. It has suffered many losses and several bombings, but Hezbollah is willing to tolerate this. The more challenging the situation becomes in Syria, the more the relationship between Hezbollah and its constituency will become tenuous. Out of its own self-interest, Hezbollah will be forced to come up with a compromise where neutrality will again become an option. In this situation, involvement in regional struggles will not be an option anymore.
Another scenario is one in which the intensifying struggle in Syria creates a rally ‘round the flag effect and strengthens the bond between the Shia community and Hezbollah. Bilal does not believe this is the direction the Shia community will take. Greater cracks will force Hezbollah to make some big concessions. Today they may have a tight grip over the community, but older aspirations of the Shias that tended to be more secular and less in line with perpetual conflict will come back to the fore. It is hard to make the case to explain why Shia are dying in Syria. This is the only scenario Bilal thinks could bring about Lebanese neutrality. Otherwise he sees it only as hot air.
Faysal Itani asked, in light of the divide in Lebanon, what are US interests here? What should they be?
Paul Salem: Look at Lebanon in the context of the Levant; it is part of a broader dynamic. When the Syrian uprising started and became increasingly violent, another US administration would have seen a potential to impact of balance of power in the Levant. There was a brief period when the Assad regime would have been vulnerable. That moment has passed mainly because of US reluctance to engage in the Syrian conflict. In the past there was an opportunity to roll back Iranian reach in Syria and Lebanon, which is a potentially major US interest. It might have also brought about a quicker resolution to the Syrian crisis.
By inaction, we have arrived at a bloody balance of power that has destroyed the Syria that used to exist. The war will likely go on for years. It is now the biggest humanitarian crisis of our generation and hugely destabilizes the whole region. From today’s perspective, the attempt to reach a negotiated ending with Assad’s departure and the creation of some sort of transition has collapsed.
The Ukraine issue has collapsed any chance of US-Russian cooperation. The main challenge for Lebanon is to survive the Syrian war. It is not clear if it will survive if the situation continues. The only way to reach a political resolution is by looking at the Geneva I framework. Assad has to leave. For Assad to leave, he must be forced to leave. This means the United States leading allies to raise pressure. The Assad regime is one that governs by force and will only relinquish its power by force. A resolution will not happen until the U.S. puts pressure first, diplomacy second.
Any post-conflict Syria must be more neutral. The united Syria of tomorrow cannot be closely aligned with Iran or it would not be united. To survive the Syrian war, Lebanon could benefit from a strong government and aid from the US to deal with the refugee crisis. Lebanon might otherwise be sunk by the refugee situation. If the refugees become more desperate and armed, Lebanon will not be able to survive. It will collapse and once again become a failed state.
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All deliberate speed, please
UN Secretary General Ban is marking the third anniversary of the Syrian uprising, which by my reckoning is March 15, by appealing to Russia and the US to revive peace talks. That’s his job, but prospects are not good.
The Asad regime continues to make slow progress on the battlefield. The opposition continues to insist that he step down to initiate a transition to democracy. There is no “zone of possible agreement.” Asad is preparing to conduct what he will call an election this spring to reconfirm his hold on power. The conditions in regime-controlled areas will not permit the election to be anything like free or fair. The conditions in liberated and contested areas won’t allow an election to occur at all. But Asad will claim legitimacy. Russia will concur.
In the US, consciousness of the horrors occurring in Syria is growing. The recent reports of the Save the Children and UNICEF boosted the case for humanitarian relief. The US has already been generous, even to a fault, as it appears to be buying tolerance for the failure to bring about a political resolution of the conflict. Russia, more committed to realpolitik, continues to arm, finance and provide political support to the regime. The crisis in Crimea leaves little oxygen in Washington for Syria. There is an argument for replying to Putin’s moves in Ukraine by strengthening opposition efforts in Syria, but I am not seeing signs that it is winning the day.
Some key members of the Syrian Opposition Coalition (Etilaf) will be in DC next week making the case for more support, including to the more moderate fighters. What Etilaf needs to do is convince the Obama Administration that vital American interests are at risk in Syria. The two most striking are the risk of extremism putting down deep roots in Syria and the risk of state collapse, both of which would affect not only Syria but its neighbors, especially Lebanon, Iraq and Jordan. Perhaps eventually also Turkey and even Israel, whose boundary with Syria in occupied Golan could become hotter than it has been for many years.
Etilaf has not yet convinced Washington that it can be an effective bulwark against these threats. The Coalition has precious little control over even the relative moderates among the fighters. It has little to no capacity to counter Jabhat al Nusra or the Islamic State of Iraq and Syria (ISIS), the former the official al Qaeda franchisee and the latter its Iraq-based competitor. Etilaf favors preservation of the Syrian state, but with every passing day that becomes less likely. Nor has Etilaf demonstrated a lot of traction with the ad hoc administrative councils that pop up in liberated areas.
Where Etilaf showed itself to best advantage was at the Geneva 2 talks, where it outmaneuvered the Asad regime and scored lots of good points in favor of a managed transition and against the horrors of what Asad is doing. There is irony then in Etilaf emphasizing the limits of diplomacy, which is the arena in which it has done best.
That is not however a good reason to revive the talks, which really went nowhere. Nor can they be expected to, given what is happening on the battlefield. Until Iran and Russia are convinced that they risk more by continuing to support Asad rather than abandoning him, Tehran and Moscow will provide the edge he needs to continue to gain ground, albeit slowly. This is a formula for more war, not less.
A couple of weeks ago, the Obama Administration was thought to be looking at new options for Syria. There is no sign they have emerged from the “interagency” labyrinth. That’s not surprising. It took 3.5 years for something meaningful to emerge from the National Security Council in Bosnia, and depending on how you count at least that long in Kosovo. Only in Afghanistan and in Iraq have such decisions proved quick, mistakenly and disastrously so in Iraq.
Deliberation is wise. But if it takes too long, vital American interests in blocking extremists and maintaining the states of the Levant may suffer irreparable damage. Not to mention the harm to Syrians, who deserve better. All deliberate speed, please.
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Putin’s playbook
I wouldn’t want to impugn Russian President Putin’s originality, but his playbook does seem borrowed from Slobodan Milosevic. Ukraine is not really a country. Nor was Bosnia to Milosevic. The threat to Russian-speakers in Ukraine (and Georgia and Moldova) requires that they be protected. So too the Serbs in Croatia, Kosovo and Bosnia. Russia did not start what is happening in Ukraine–it was the West that chased President Yanukovich from Kiev. So, too, for Milosevic it was Croatian President Tudjman who precipitated things in Zagreb, Bosnian President Izetbegovic in Bosnia and of course rioting Albanians in Kosovo: “no one should dare to beat you again!”
There is of course some degree of truth–I won’t go into how much–in each of these allegations. In revolutionary situations, there are bound to be bad moments, bad actors, bad provocations. The playbook requires that you overreact: mobilize paramilitaries, occupy territory, saturate the airwaves with justification and crush any hint of violent response on the part of a far weaker enemy. This is Machiavelli, suggesting ways to seize control of territory as quickly and inexpensively as possible and ensuring by whatever means you can get away with that it remains yours.
There is one play missing, so far: ethnic cleansing. So far as I am aware, the Russians are not, yet, expelling Tatars or Ukrainian speakers from Crimea. For the moment they are reported to be taking the soft power approach, trying to convince the Tatars to support them and arresting relatively few Ukrainian speakers and oppositionists, even as they box in or take over Ukrainian military installations. But that may change. With what I anticipate will be an overwhelming victory of the independence referendum in Crimea Sunday, Moscow may see the development of some real resistance to its plan to absorb Crimea into Russia as well as clashes in other parts of Ukraine between Russian and Ukrainian speakers. If it doesn’t happen spontaneously, Moscow can of course make it happen.
That’s when I would expect the next play. It is still early in the Ukraine saga. Things can get much worse and likely will. Crimea is more philo-Russian than other provinces in eastern and southern Ukraine. It already had autonomy and governed itself in many ways. It is not a great leap to independence, or to returning to the Russia from which it originated. The contestants will be more evenly matched in other provinces, requiring removal at least some of those who won’t cooperate.
Russian troops are said today to be massing and exercising near Ukraine’s eastern border. Success in Crimea could well embolden Putin further, tempting him to take a few more provinces piecemeal. If he does, his need to expel Ukrainian speakers and others who oppose Moscow’s rule will be greater than in Ukraine. We are far from the worst that can happen.
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The wrinkles in aid to Ukraine
Columbia University Financial Law Visiting Scholar Jeremy Pam, who did sovereign debt restructuring (including for Iraq) at Cleary Gottlieb and then went off to Baghdad for the Treasury Department and Kabul for the State Department, kindly offers some clarification of points I raised on Tuesday about assistance to Ukraine. He writes:
1. Here’s some insight on the accounting for loan guarantees generally, from an April 2013 CRS report on US Foreign Aid to Israel:
Since 1972, the United States has extended loan guarantees to Israel to assist with housing shortages, Israel’s absorption of new immigrants from the former Soviet Union and Ethiopia, and its economic recovery following the 2000-2003 recession that was sparked by a Palestinian uprising (known as the second intifada). Loan guarantees are a form of indirect U.S. assistance to Israel, since they enable Israel to borrow from commercial sources at lower rates. Congress directs that subsidies be set aside in a U.S. Treasury account for possible default. These subsidies, which are a percentage of the total loan (based in part on the credit rating of the borrowing country; in the case of the loan guarantees in the 1990s, the subsidy amount was 4.1%), have come from the U.S. or the Israeli government.
2. Here‘s a subtle discussion by Simon Johnson and Peter Boone on both the political and policy dynamics of IMF assistance to Ukraine and the larger problems caused by pressure on both the West and Russia to provide large, relatively unconditioned aid to Ukraine.
3. The questionable international law doctrine of “odious debt” seems unlikely to be of much help to Ukraine, particularly as given the numbers that Johnson and Boone provide about Ukraine’s concrete debts (to Russia and to other creditors) that have been coming due it seems reasonable to assume that Russia’s late-in-the-game subscription to $3 billion in Yanukovich-era sovereign bonds mostly went to keeping the ship of state afloat after the EU/IMF deal fell through.
4. Boone and Johnson do not suggest any easy solutions. A quick bailout will just defer needed reforms (they’d previously written here about the economic and political need for a more Western-oriented Ukraine to bite the bullet on ending the gas subsidies enabled by the agreement with Russia to discount gas — in part for the extension of the lease to Sevastopol! Putin described the gas bill discount for the naval base extension as “exorbitant”, saying “there’s no military base in the world that costs this much money.”
On the other hand, a “disorderly” debt default is always scary. The best solution implied might be what we used to call an “orderly” debt restructuring, but the problem with that is that there are not that many people around anymore (both inside the official sector and outside) with the skills and experience to do it well. This is what I take to be one of the real lessons of the Iraq debt deal — unless there is a new appreciation of the value of such skills and experience, we may not look upon its like again….
So if I understand correctly, the Congress prefers loan guarantees because only a small fraction shows up on the books. It is not clear to me yet whether guarantees are really an effective way of producing more money for Ukraine, though I suppose without them no one would ante up. Little of the aid is likely to arrive quickly, especially if the EU and US insist on needed reforms. Debt reduction will be difficult because a lot of the money is owed to Russia, putting the West in the awkward position of getting Putin his money. Default could make a messy situation worse. Lots of wrinkles in aid to Ukraine.
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Election results count
Tarik Lazović, editor in chief of the Bosnian News Agency Patria, asked a few questions yesterday. He published today. Here are the Q and A in English.
Q: Would you like to comment on a statement of Bakir Izetbegović, chief of the Bosnian presidency, who said that US will intensify engagement in Bosnia and Herzegovina after the election. He said that this was confirmed to him in direct contact with US officials.
DPS: The Americans have made it known they are searching for a new approach to Bosnia and Herzegovina. It is reasonable that they would wait until after the election to implement whatever it is they decide. And of course the results of the election will have an impact on what is feasible.
Q: What do you think about the impact of Serbian elections on Bosnia?
DPS: The Serbian election will strengthen the position of Aleksandar Vucic, who is likely to become prime minister. He and President Nikolic are no friends of Milorad Dodik, who backed the losing horse in Serbia’s last presidential election.
But there is nothing permanent about friendships in the Balkans. I expect Dodik to try to ingratiate himself with Vucic, who however needs to do everything he can to avoid slowing Serbia’s progress towards the EU. Telling Dodik to stop talking about independence for RS and to start cooperating with the government in Sarajevo so that it can take on the responsibility of negotiating and implementing the obligations of EU membership would be one way to facilitate Serbia’s own accession process.
Q: What do you think about the demonstrations and plenums in Bosnia?
DPS: I think it perfectly reasonable for citizens of Bosnia and Herzegovina to complain about corruption, nepotism, unemployment, social conditions and abuses of privilege by government officials. So long as the demonstrations are non-violent, they are likely to attract large crowds—because the grievances are real. But it is unclear how this popular discontent will be translated into political change. The nationalist political parties are trying hard to repress and hijack the discontent to promote their own agendas by warning of danger to their respective ethnic groups and offering protection from imaginary threats. The authorities are also trying to frighten people away from the streets by bringing terrorist charges against some of the more rowdy demonstrators.
Someone has to figure out how to translate discontent and manifestations of direct democracy into a program of reform that can win votes and legislate change. Bosnia may not be an idyllic democracy, but election results count [Bosnia’s next election is scheduled for October 5.]
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Grading assistance to Ukraine
Larry Summers, not my favorite public persona but a savvy economist to be sure, offers sage advice on aid for Ukraine. But he fails to consider how we are likely to measure up to his “lessons for the design of support programs,” so here are my guesstimates (the proposals in bold are his, the rest is mine):
1. Immediate impact is essential. While Congress has acted quickly to approve $1 billion in loan guarantees and the European Union has in principle approved $15 billion, the International Monetary Fund has not yet acted. Odds are it will take time, not only for the IMF to extract reform promises from Ukraine but also for the bureaucratic arrangements to be made by the EU and US. And the total amount is likely to fall far short of the $35 billion Ukraine says it needs.
2. Avoid “Potemkin money.” I wonder if loan guarantees fall in the category of Potemkin money, as I imagine it is difficult to know how much new money they make available. Perhaps a reader or two who are expert can enlighten me. EU money is rarely quick in my experience. IMF money is real but takes time to get approved. Months rather than weeks before they write a check. Potemkin-like in the meanwhile.
3. Be realistic about debts. Summers wants us to consider rescheduling or restructuring, which is something often done after a revolution (but never quick–it often takes years). Relief from official and private sector debt is often in the 35-60% range. Uniquely Iraq got 80% off its official debt at the Paris Club. Post-Communist Poland got 40% off. But of course much of Ukraine’s debt is owed to Russia, which is unlikely to be cooperative in any effort to reduce, reschedule or restructure. The usual consensus is not likely to be available, unless we strike a deal with Moscow that is likely to be inimical to Ukraine’s interest in Crimea.
4. Honest management is as important as prudent policy. We don’t want the Ukrainians stealing the money we send them, and we should want to recover as much as possible from past abuse. Lots of luck on the latter. Yanukovich and his cronies will have squirreled away a lot of money in difficult to trace places. Some of Ukraine’s wealthy tycoons are prominent supporters of the post-Yanukovich regime. It will not be easy to prevent problems in the future either, as Ukraine clearly lacks the mechanisms required for serious transparency and accountability. Sure we should insist, but it will take legislation and courage to put them in place. Recovery of ill-gotten gains takes years, as does establishment of institutions designed to prevent theft.
5. Countries need to pursue broad polices in a way that benefits Ukraine. There is a pretty good chance the Obama administration will do the right things on the IMF and on energy policy by building the Keystone pipeline and approving natural gas exports. Europe is also likely to do at least some of the right things: continue to pay for the gas it receives through Ukraine, so long as the Russians continue to send it, and help Ukraine develop alternative energy sources for its own use, reducing its dependency on Russia.
The big problems are with immediacy and impact. Ukraine needs a lot of money quickly, much faster than it will get honest management or debt reduction. Washington and Brussels look likely to have won the tug of war for Kiev and any other parts of Ukraine that remain attached to it. They need to do everything they can to avoid financial implosion of their prize.
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