Month: May 2014
Reform first
Steven Cook, who knows lots about Egypt, offers an insightful analysis of its impending financial and economic problems. In a word, Egypt could go broke and the state could disintegrate:
Egypt’s economy remains shaky and the threat of a solvency crisis lingers. Indeed, the continuation of violence, political protests, and general political uncertainty—even after planned presidential and parliamentary elections—along with a hodgepodge of incoherent economic policies, all portend continuing economic decline. This in turn could create a debilitating feedback loop of more political instability, violence, and economic deterioration, thus increasing the chances of an economic calamity and yet again more political turmoil, including mass demonstrations, harsher crackdowns, leadership struggles, and possibly the disintegration of state power.
Only Gulf generosity has kept Egypt’s foreign currency reserves above the minimum required, tourism is in a tailspin, debt is close to 100% of GDP and subsidies (especially for fuel) burden the state’s budget. There are many ways in which Egypt could be sent into default. I recommend you read Steven’s trenchant account.
But much as I am taken with his account of the problems, I find it difficult to see merit in the options he discusses: US loan guarantees, US debt relief, foreign assistance to pay down domestic debt and Gulf fuel transfers. He also proposes, in the event of default, that the US support the military, provide financial assistance and restore food aid. None of this is contingent on Egyptian economic reforms.
Here is where I depart from Steven:
It is up to the Egyptians to undertake reforms to forestall this outcome. Given the fact that the Egyptians have done little in this regard, a solvency crisis is entirely plausible. Consequently, the United States has a strategic responsibility to do what it can in Egypt to prevent the causes of insolvency…
This is a slippery slope: he is proposing that the US try to prevent insolvency, even though the Egyptians have been unwilling to undertake reforms. Doing so will relieve some of the pressure on Cairo to undertake reforms, make insolvency more likely and increase pressure on the US to prevent it. Moral hazard lights are flashing.
No. That is not the path we should go down. We should encourage Egypt to put forward a plan for reform first, then provide assistance. The way to do this without putting the US on the front line is to encourage Cairo to go first to the International Monetary Fund for money. This is politically difficult in Egypt, as everyone knows the IMF will condition its assistance on reforms. But it is a lot better for the US than asking American taxpayers to pay for Egyptian fuel subsidies. And Field Marshall, soon to be President, Sisi should be expected to do unpopular things as early as possible in his mandate. He surely won’t do them as the time approaches for another election.
Steven envisages the IMF eventually playing what he calls
an important role in assisting the next government to redraw Egypt’s social contract in a way that is both politically acceptable at home and can command the strong support of the rest of the world….foreign donors will need to accept a slower reduction in subsidies than under a conventional IMF program in order to increase the likelihood that Egyptians can make headway on reforms in a coordinated and more coherent manner.
I’ve got no problem with this: a slower than usual reduction in subsidies may be necessary, though it seems to me the IMF has in fact accepted some pretty slow reductions from other countries as well. What I object to is providing unconditional US assistance and then expecting the IMF to succeed in negotiating conditions. The IMF should go first. The US can then be generous, promising its taxpayers that the money it provides will in fact finance a transition away from subsidies.
The US has gotten very little for the billions it has provided Egypt in the past. Cairo is headed back to military autocracy and its economy to insolvency. Nor has Egypt gotten rich off the aid. A lot of it was wasted on military hardware Egypt didn’t need but American companies were glad to sell. The best that can be said is that the money encouraged Egypt to maintain its peace treaty with Israel, though Cairo had ample other reasons to avoid yet another, likely unsuccessful, war once it regained sovereignty over Sinai.
We need to avoid being trapped into another several decades of fruitless expenditure on aid to Egypt. Reform first is the way to go.
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What’s wrong with this picture?
After extending voting for a third day, the Egyptian authorities are claiming turnout of 46% of the 54 million eligible voters in the presidential election, with over 90% voting for Field Marshall Sisi. This would give him close to twice as many votes as Mohammed Morsi in 2012.
There are a lot of things wrong with this picture. No one seems to believe the the turnout figure was even close to what the High Election Commission is claiming. The third day of voting was testimony to popular disinterest in half the population. The other half is genuinely enthusiastic, so 90% or more of whatever percentage voted is believable. The trouble is it betrays the intimidatory atmosphere in which this shame election took place. Media and government institutions lined up to salute the new autocrat, who has shown no inclination whatsoever to reach out to his antagonists or to include anyone but yes men and women in the new government he will appoint. There is no parliament to approve or disapprove. Sisi will presumably proceed with parliamentary elections, which won’t likely be any freer, fairer or more participatory than the presidential poll.
Nathan Brown concluded earlier this month:
if the country is transitioning to anything, it is not to a democracy in anything other than the most technical sense of the term.
What should the US do, or not do, about all this? Frank Wisner, the extraordinarily capable former ambassador in Cairo, argues that we have no choice: our security interests dictate that we unfreeze assistance and support Sisi, lest Egypt turn away from the strategic relationship with the US. Frank suggests the autocracy won’t be as bad as last time around and the Egyptians will find a way to some decent modus vivendi.
I don’t agree. Sisi has already made a mockery of democratic process. This is restoration of military autocracy by electoral means. No one should have any doubts about that. Things are unlikely to move in the right direction of their own accord, but I’m not sure there is much we can do to turn things around. Senator Leahy is insisting that some assistance remain suspended. But Egypt is getting so much assistance from Saudi Arabia and the United Arab Emirates, which loathe the Muslim Brotherhood and have no problem with autocracy, that our contribution is a drop in the bucket. They have also pledged to replace any cuts we make.
So what should we do? First, we should not delude ourselves. The July coup was a coup, and this election was a sham. If US security interests require continued assistance, the Administration should convince the Congress and obtain relief from existing legislation. Meanwhile, our diplomats (there is still no ambassador in Cairo, as Senate Republicans are holding up nominations) should be explaining clearly and in detail why we can’t welcome an election that met neither international standards nor the aspirations of something like half the Egyptian population, if not more.
Egypt has its own reasons to fight terrorists and maintain the peace treaty with Israel. Cairo doesn’t need American pressure for our top immediate priorities to be fulfilled. Washington should keep its eye on the longer-term objective of seeing Egypt escape the autocracy trap it has fallen into. If Sisi is half as smart as his supporters like to think, he’ll recognize quickly that the country’s economic, water and political problems require a more open and transparent approach to governance than what it had under Mubarak and Morsi. If he fails to recognize that, he’ll follow them to the trash heap of Egyptian autocrats.
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Triage again
President Obama gave an intellectually vigorous response to his foreign policy critics today, in a commencement speech at West Point:
He made clear that the US would use military force, if necessary unilaterally, to defend its core interests. But at the same time he made it clear that crises that do not directly threaten the US do not merit the same response. Then, he suggests, nonmilitary efforts and multilateral military action are more appropriate and more effective.
Terrorism he identifies as the current top priority threat. But he wants to deploy the US military less and partner more with the countries where terrorists find haven. The now diffuse threat requires a more networked response, with other countries’ security forces taking the lead, as is soon to happen in Afghanistan. He wants $5 billion for training and equipping others. In Syria, he pledged to step up support to the neighbors and to the Syrian opposition, with the objective of reaching a political solution. In undertaking direct strikes against terrorists, the President cites the need for a continuing imminent threat and near certainty of no civilian casualties, so as not to create more enemies than we eliminate. He pledges to explain what we do publicly, asking the military to take the lead.
The second priority the President cites is protection of the international order, including multilateral international institutions. World opinion and international institutions blocked a Russian invasion of Ukraine and gave the country a chance to elect a new president, with America “firing a shot.” Sanctions on Iran, and the ongoing nuclear negotiations, are another example. We hope to achieve something better than what could have been achieved using force. These are signs of American strength and leadership, not weakness or hesistancy. So too is strengthening the forces of countries that contribute to international peacekeeping.
Cybersecurity, the South China Sea and climate change require a multinational approach. The President said we need to lead by example, subjecting ourselves to the same rules that apply to everyone else, including the still unratified Law of the Sea Convention. America is made exceptional by affirming international law and its own values, not by flouting it. This means closing Guantanamo and putting rules in place to regulate intelligence collection.
American leadership also requires acting in favor of human dignity. This means support for democracy, open economies and human rights, even where security interests come first, as in Egypt. Everyone’s best example these days is Burma (despite the many equivocal aspects of its still ongoing transition). But the President also squeezed in helping with electricity in Africa and education in Nigeria. “Human dignity” is a category that encompasses a lot of things.
It wasn’t a particularly stirring speech, but it was a logical one. I still wish he would do more about Syria, which threatens to collapse the neighboring states and provide haven to international terrorists. But he is into triage, not retreat, trying to limit American commitments and conserve America’s strength for whatever serious threats lie ahead. That’s what any smart president would want to do.
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Glad tidings
I’m counting the glad tidings today:
1. Egypt: Egyptians are staying away from the polls in an election conducted under conditions that are far from free and fair. General Sisi will be elected, but without the acclamation he had once expected. Maybe he’ll feel he has to work for popular approval, which would be a big change in Egyptian political culture.
2. Ukraine: Ukraine pulled off its presidential election and appears to be gaining an upper hand over separatists who made the mistake of seizing the Donetsk airport, where newly elected Petro Poroshenko was intending to land. While Russian President Putin is still capable of rejecting Poroshenko’s legitimacy, I doubt he’ll do it. He needs Poroshenko to garner the Western support that will enable Ukraine to pay its debts to Russia.
3. Afghanistan: President Obama has decided to leave 9800 American troops in Afghanistan at the end of this year’s withdrawal, but they too are scheduled to come out within two years (end of 2016). That’s a whole lot faster than some people feel comfortable with, but it is presumably intended to give the new Afghan government incentive either to defeat the Taliban or negotiate a political settlement with them.
4. Middle East: I don’t really expect the Pope inviting Presidents Peres and Abbas to the Vatican to bring peace, but in my book he did the right thing to pray at the separation barrier as well as at the Wailing Wall. I have no objection to the Israelis protecting themselves from suicide bombings, but the wall should be on an agreed border, not built unilaterally and all too frequently on territory the Palestinians (and most Israelis) believe belongs within their state.
5. Europe: Yes, the European parliament election returned lots of xenophobes and extreme nationalists, but not so many that the European project is at serious risk of anything more than demands to be more responsive to popular opinion and more aware of resistance to bureaucratic arrogance. Whoever tweeted that those who want change won everywhere but in Germany, which is the only country that can really change things, got it close to right. The government parties did relatively well in Italy too.
6. India/Pakistan: Pakistani Prime Minister Sharif attended Indian Prime Minister Modi’s swearing in and both came away from their meeting sounding notes of hope and conciliation. They will need a lot of both to overcome the problems that divide the two countries, but it was at least a start.
None of this good news comes even close to making the world what it should be, and much of it might be reversed tomorrow. Syria in particular haunts me. I can’t bring myself to praise the UN Secretary General for proposing humanitarian assistance be authorized by the Security Council directly into liberated areas from Turkey, knowing full well that Russia will veto any such move. But when we have a good day or two somewhere in the world, we should acknowledge it.
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Memorial Day for the people
I have little to add to what I said the past three years on Memorial Day, so I am republishing what I wrote originally in 2011 with slight updates and a short additional paragraph:
I spent my high school years marching in the Memorial Day parade in New Rochelle, New York and have never lost respect for those who serve and make sacrifices in uniform. Even as an anti-war protester in the Vietnam era, I thought denigration of those in uniform heinous, not to mention counterproductive.
It is impossible to feel anything but pride and gratitude to those who have served in Iraq and Afghanistan, not to mention Kosovo, Bosnia, Panama and Somalia during the previous decade. Nor will I forget my Memorial Day visit to the American cemetery in Nettuno accompanying Defense Secretary Les Aspin in the early 1990s, or my visit to the Florence cemetery the next year. These extraordinarily manicured places are the ultimate in peaceful. It is unimaginable what their inhabitants endured. No matter what we say during the speechifying on Memorial Day, there is little glory in what the troops do and a whole lot of hard work, dedication, professionalism and horror.
That said, it is a mistake to forget those who serve out of uniform, as we habitually do. Numbers are hard to come by, but a quick internet search suggests that at at least 2000 U.S. civilians have died in Iraq and Afghanistan, plus quite a few “third country” nationals. They come in many different varieties: journalists, policemen, judges, private security guards, agriculturalists, local government experts, computer geeks, engineers, relief and development workers, trainers, spies, diplomats and who knows what else. I think of these people as our “pinstripe soldiers,” even if most of them don’t in fact wear pinstripes. But they are a key component of building the states that we hope will some day redeem the sacrifices they and their uniformed comrades have endured.
Iraqi and Afghan civilians killed number at least 100 times the number of American civilians killed. Numbers this large become unfathomable. Of course some–and maybe more–would have died under Saddam Hussein or the Taliban, but that is not what happened. They died fighting American or Coalition forces, or by accident, or caught in a crossfire, or trying to defend themselves, or in internecine violence, or because a soldier got nervous or went beserk, or….
Memorial Day in this age of “war among the people” should be about the people, civilian as well as military, non-American as well as American, not only about the uniform, the flag or the cause.
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Landslide
According to exit polls, Ukrainians Sunday gave Petro Poroshenko a landslide mandate in the presidential poll. While voting in the eastern provinces of Donbas was sparse, turnout elsewhere was high and the margin over also-ran Yulia Tymoshenko was so wide that it is difficult to see how even Russian President Putin could question the legitimacy of the result. The Ukraine crisis is not over, but Poroshenko’s election could open the way to a negotiated political settlement, which is his often expressed preference. Poroshenko has not favored NATO membership for Ukraine and has pledged to protect the rights of Russian speakers, but he also favors stronger ties to the European Union.
Russian President Putin has reason to be content. His red line is NATO membership for Ukraine. Poroshenko has indicated he will not cross it, though he occasionally suggests Russian intransigence will make him reconsider the proposition. Putin will plump for maximum self-governance in Donbas, to allow Russian speakers the kind of de facto ethnic independence Serbs have in Bosnia. He will also want Poroshenko to attract lots of money from the EU and the International Monetary Fund, so that Russia will get back the money it loaned Poroshenko’s predecessor.
While likely to oblige Putin’s interest in getting his money back, Poroshenko has his work cut out for him. He has pledged to visit Donbas first, including to thank the Ukrainian security forces who have tried–without much success–to restore order there. Parliamentary elections are not due until 2017. There appear to be no plans to bring that date forward. The parliament has been an important player since previous President Yushenko abandoned his post. Its slate of priorities will be daunting: Ukraine needs to phase out its expensive energy subsidies, attract private investment, end oligarchical cronyism and cut back on corruption.
Europe has some serious thinking to do in light of the Ukraine crisis. Its dependence on Russian natural gas, its weak military forces and its diplomatic clumsiness–all closely related–should make not only Brussels but the 28 member state capitals think harder about what it takes to sustain a coherent and successful foreign and security policy.
If in fact the Ukraine crisis now heads in the direction of a peaceful denouement, the Obama administration will have reason to boast that its low-key diplomatic approach has produced a decent result. Particularly important was the decision not to listen to experts who advised agreeing with Putin to postpone the election.
But even if things go well now with Ukraine, Washington needs to rethink policy towards a Russia bent on expanding its hegemony in what it considers its “near abroad.” NATO expansion in particular needs presidential attention: Montenegro and Macedonia are technically qualified and could be admitted at the Summit in Cardiff, Wales in September, but Macedonian membership will require President Obama to deliver bad news to Athens. A broader package of moves closer to NATO would be ideal, one that includes Kosovo, Bosnia, Sweden and Finland. I am hesitant about Georgia, a country NATO is in no way capable of defending. But letting Putin know that NATO is determined to expand to those countries that it can defend, that meet the membership criteria and that want to join will limit his ambitions and encourage those who seek a democratic future.
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