Tag: Iran
The rich get richer
Yesterday’s conference on investment prospects in the wake of the Arab Spring over at the World Bank’s Multilateral Investment Guarantee Agency (MIGA) was a lively couple of hours–these economic types are briefer and more to the point than their political counterparts–but the bottom line was gloomy: the GCC states and Iraq are likely to attract the lion’s share of investment while Egypt and Tunisia (Syria, Yemen and Libya weren’t even mentioned) go begging in the short term. There was disagreement on longer-term prospects, with Ian Bremmer registering a strong minority view that the geopolitics are unfavorable, both because of Iran and the Israel/Palestine conflict.
An upbeat and indefatigible Afshin Molavi started off underlining that we live in a world of surprisingly interconnected risk, that there is a lot of diversity in what we should not really label “Arab Spring,” and that the Middle East and North Africa region (MENA) has a young population, many unable to get married because of the lack of jobs and looking for “dignity.” Growth has now slowed, hurting their prospects.
Citibank’s Hamid Biglari said investors have adopted a wait and see attitude toward the more revolutionary part of the region and are shifting their attention towards the GCC and Iraq, whose prospects are good if Baghdad can get security under control. Multinationals are not pulling out. Egypt is a larger and better known market than Tunisia, which however is more homogeneous, more secular, more middle class and better educated. Tunisia is more likely to succeed economically, but Egypt is the bigger prize. The immediate concerns of investors are about legitimacy and whether the new governments will treat the old elite decently, but it will be a decade before “equilibrium” returns.
Ian Bremmer of Eurasia Group admitted enthusiasm for the Arab Spring (“it feels good”) but noted that Ukraine and Georgia felt good at first too. Tunisia seems to be moving in the right direction, Egypt less so but will likely muddle through. Iraq is the most exciting investment opportunity in the region. U.S. influence is declining, and Saudi influence is increasing. Saudi policy objectives and conditionality will differ from those of the U.S. Overall though the immediate political risks have been overvalued. The problem is in the longer term, both because of Iran and the Israel/Palestine conflict. Europe and the U.S. will increasingly be occupied with other problems.
Cairo-based Walid Bakr of Riyada Enterprise Development, Abraaj Capital, was more optimistic in the medium and long term. Egypt’s big market and tourist attractions are not going away. Half the population is under 24, well educated and internet savvy, with lots of entrepreneurial spirit. The revolution has unleashed strong feelings of national pride and dignity. Youth is the engine of growth and can contribute to the all-important creation of small and medium enterprises so vital to job creation and wealth distribution.
Dubai-based Yasar Jarrar of PwC Middle East underlined that we are still at the beginning of the changes in the Middle East, which suffered a long period of stagnation (not real stability). The GCC countries are moving well to kickstart job creation for youth, major infrastructure investments and dialogue between their governments and the citizens. But it is going to be a long spring in a region that really does matter. Philip Haddad of Mubadala Infrastructure Partners agreed that we need to take the long view, but in the meanwhile as much as $38 billion is being invested in infrastructure, which is not bad.
The Omani ambassador, Hunaina Sultan Ahmed al-Mughairy, led off with a very upbeat assessment of the Sultanate’s prospects. The message was “yes, we can” reform ourselves, if we put our minds to it. Jean Francois Seznec of Georgetown said he was very pessimistic about Bahrain, where the basic issue is governance. In recent weeks, only 5% of the hotel rooms in Bahrain have been occupied.
There was a good deal of agreement that the issue everywhere is at least in part governance. Citizens did not feel they were benefiting under the old regimes, because of a lack of accountability. Political and economic reform need to go together, but it is not clear that new parliamentary democracies will credit competence and choose economic reform, which is discredited because it is associated with the old regimes.
Wrapping up, Ravi Vish of MIGA confirmed the importance of governance, addressing social inequality and the income gap, and job creation, mainly through a stronger and more entrepreneurial private sector. He also reviewed MIGA’s portfolio of political insurance products, for which demand is naturally rising in the region.
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Crunch time in Baghdad
Well into July and still no Baghdad decision on whether to ask the Americans to keep some troops in Iraq past the end of the year. Defense Secretary Panetta is making his displeasure known, even as the Iraqis postpone a decision for another couple of weeks.
CNN asked me yesterday about a drop dead date–presumably the date past which the Americans can no longer get out in time, or after which the drawdown is essentially irreversible. The answer of course depends on how quickly we want to move. Better to ask U.S. Forces Iraq rather than me, but certainly we are there by October 1. I see no sign that the 46,000 still in Iraq are starting to move right now, though preparations have presumably been made.
Everyone is expecting a request to the Americans to stay, though the numbers are still unclear. Both Prime Minister Maliki and his rival (and coalition partner) Ayad Allawi want it. But neither wants to take the responsibility of making the decision, since it is widely unpopular in Iraq and will therefore likely redound to the benefit of Shia firebrand Moqtada al Sadr, who has led a vigorous campaign against what he terms the American “occupation.” Allawi is trying to use his agreement to ask the Americans to stay as a bargaining chip to get Maliki to agree to name defense and interior ministers agreeable to Iraqiyya, Allawi’s coalition.
The issue of course is much larger than a few thousand U.S. troops, who would be happily welcomed home by most Americans. The real issue is Iraq’s international alignment, and in particular its relationship with Iran, which is pushing hard for the Americans to leave (and pumping in weapons and training to aid those who are trying to push them out). The Americans want Iraq to act as a counterweight to Iran in the region, limiting its influence and providing a bulwark against Iran’s efforts to establish itself as a leader of the Muslim world.
Iraqis will be hesitant to cast their own role in such grandiose terms. Even those highly suspicious of Tehran regard Iran as a fact of life, one that unquestionably will have substantial influence in the largely Shia south. But
most Iraqis, including those in the south, will want the country to be able to protect its territorial integrity, defend itself and export its oil freely.
There are many ways to achieve these objectives, in addition to maintaining a U.S. troop presence. The purchase of American F-16’s fighter jets, reported today by the Wall Street Journal to have been quietly revived, is another important dimension of Iraq’s future military capabilities. The Iraqi navy is important too.
In my view, another important contribution to Iraq’s future international alignment could come from its capability to export oil other than by loading it on ships and moving it through the Gulf and the strait of Hormuz. The Gulf export facilities are already a bottleneck, not to mention the risk that conflict there could disrupt Iraq’s exports.
But Iraq is geographically advantaged. It can export oil (and gas) to the north and west, reaching European markets more directly and cheaply than through the Gulf. My understanding is that even Iraq’s southern oil fields can export more economically to the north and west, provided the “strategic pipeline” that once linked them to northern Iraq is repaired and enlarged.
If the Americans really want an Iraq that will see its interests more aligned with the West, oil and gas pipelines to the north and west are likely to be at least as important as F-16’s and American troops in the long run. There is no time like the present to get busy making the long run happen.
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Assad is sane but not secure
The headline writers are suggesting that Syria’s Bashar al Assad has lost his mind, and others that his speech today at Damascus University betrays weakness, but I take him seriously. Bashar is determined to stay in power, offering ill-defined amnesty and national dialogue with 100 regime-picked reformers while cracking down on “vandals” and “saboteurs,” who he claims are part of a conspiracy ensconced among the street protesters. The result is regime murder on a scale that dwarfs what happened in Egypt and Yemen, though it is still far from Gaddafi’s homicidal intentions in Benghazi or his siege of Misrata and other Libyan towns.
While many are appalled at what is going on, the international community has so far done little to stop it. The military option is clearly out, not only because of Syria’s problematic topology but also because the Russians–offended by the NATO effort against Libya–are not going to allow a UN Security Council resolution authorizing the necessary means to pass. In fact, they haven’t allowed any resolution to pass, not even one that simply condemns the regime’s violence, because they are afraid of again sanctioning NATO action. They should relax: there is no stomach in Washington and European capitals for another military intervention.
Bashar’s vulnerabilities lie in two areas: arms and money. It appears he has all the weapons he requires, but the loyalty of a substantial portion of the army is in doubt. Its Alawi leadership will stick with the regime, because it has no alternative, but sporadic indications of dissent among the Sunni officers and rank and file offer some hope that the army has its limits. Look for it to show those limits in the provinces first, not in Damascus or Aleppo.
As for money, the Syrian economy is certainly on the ropes, but I imagine Iran will do its damndest to keep Bashar financially afloat. He is an important link to Lebanon’s Hizbollah, which is Iran’s surrogate on the front line with Israel. It is hard to believe that Tehran would let Bashar fall for lack of hard cash.
Tougher international sanctions targeted on the regime’s financial transfers might make some difference, as might a credible threat of an International Criminal Court (ICC) indictment. The ICC though won’t be allowed into the country to collect evidence. It was able to move against Gaddafi only because the rebels welcomed the court into the Libyan territory they control. I hope however that the ICC investigators are interviewing refugees in Turkey and Lebanon.
Would a clear statement from President Obama calling for Bashar to step down make a difference? I think not, and it would put American credibility at risk. We are already taking a beating from Gaddafi’s persistence in power in Libya, as well as Saleh’s in Yemen. Better it seems to me to lean on the Turks, who have influence and have begun to pressure Bashar.
He is unlikely to leave easily or soon, though like any decision by a single person timing is unpredictable. It is clear however that the foundations of his regime are shaken. His promise of amending the constitution to allow a multiparty political system would spell the end of the Ba’athist autocracy. He may try to renege of course, but Syrians show no sign of willingness to accept restoration of the status quo ante. One way or the other, we are witnessing the end of the Assad regime.
PS: Andrew Sullivan quoted this piece at The Dish, apparently having picked it up from Al Jazeera English. Regulars read it here first!
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A soggy version of the Arab spring
Big Carnegie Endowment/Harvard discussion of Arab Spring yesterday. Outcome: pretty gloomy. But these are experts, who admittedly failed to see the budding of the Arab Spring and are unlikely to be able to predict its course either. They all acknowledged the many unknowns and the difficulties of prediction.
Marwan Muasher, who prefers reform from above, thinks doing nothing in response to the protests is no longer an option but also noted there is more “empire strikes back” (Libya, Yemen, Syria) and “buying time with money” (the Gulf) than “promises of reform” (thin in Jordan, a bit more serious in Morocco). And his criteria for successful reform from above were exacting: it has to be holistic and inclusive, power has to be shared seriously, it should be gradual and measurable. Nothing makes the cut yet.
No optimism from Marina Ottaway either. She noted that even in Tunisia and Egypt there are problems of political will to complete the reform process, that some of the politicians formerly associated with the ruling parties will be able to recycle themselves, that secular parties are weak and fragmented, that Islamists may be a bit stronger but also fragmented, with Salafi influence rising. It is not clear yet what the protesters will be able or willing to do politically, and it is too early to count the military out.
Tarek Masoud did not like what he sees in Egypt. He noted the intense conflict among political forces and between political forces and the military, with the military wary of democracy. They don’t want democratic oversight, fear the demand for justice and don’t want to break with past policy on Israel and the U.S. The military would like to reign without ruling, keeping out of the public eye and avoiding responsibility for governing. They have already made mistakes by scheduling the constitutional referendum, then having to fix the amended constitution with their own constitutional declaration. Early elections will favor Islamists, and opening the constitution to a constituent assembly will open the question of the relationship between state and religion, which is not a good idea. The future holds more discord.
So spring wasn’t so cheery. How about the U.S. policy response?
Nick Burns praised President Obama’s relatively rapid and thoroughly nuanced response in a difficult international situation. He was not too late to support the Tahrir protesters, correctly hesitated about Libya but signed on in response to the Arab League appeal in light of Gaddafi’s threat to Benghazi, and gave the Gulfies more slack because there was no rebellion to sign on to in Saudi Arabia, Oman or Qatar. Only under questioning did Nick state baldly that he could not understand why we hadn’t zapped Bashar al Assad earlier and admit that in Bahrain Washington had chosen interests over values. Nick urged that we focus on Egypt, decrease out focus on governments and security, increase our focus on development and outreach to people, move on Israel/Palestine and shift to a containment policy on Iran.
Agreeing that the case-by-case contextual approach was the right one, Steve Walt concluded that we would soon face Arab governments more sensitive to public opinion, that there would be no easy fixes for the problems of over-centralization and corruption in the Arab countries, Western governments are not flush and would find it hard to ante up, Israel’s position would be weakened as Egypt and Jordan became less compliant to U.S. wishes and that U.S. strategy in the region is obsolete even if its interests are the same as always: unhindered flow of oil and gas, nuclear nonproliferation, countering terrorism and protecting Israel. A more effective policy would pay more attention to Arab public opinion, embrace reform, sustain multipolarity in the region, get U.S. troops out (to an offshore balancing role, naturally, that would still prevent others from exerting control), internationalize the Israel/Palestine peace process (including encouragement of European support for the Palestine resolution at the GA and a possible settlement imposed by the Security Council). Most importantly: we need to stop threatening Iran, which gives Tehran incentives to build nuclear weapons and attempt more creative (unspecified) diplomacy. In response to a question, Walt said he also thought we need a residual force in Iraq to counter Iran.
Chris Boucek, focused mainly on Yemen, warned of economic meltdown, suggested we manage the Saudis better and noted that the youthful protesters are espousing our ideals.
There was a good deal more, but this gives you the flavor: the U.S. focus on stability, peace and democracy has failed: no stability, little prospect for peace and not much for democracy either. Burns and Walt, each in his own way, thought the U.S. could still play an important role, but no one was sanguine about the prospects for the Arab spring or U.S. interests in its aftermath.
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Bashar won’t stop
I’d have liked to entitle this post “stop!”, but I know that Bashar al Assad won’t. He is fully committed to the crackdown. If it doesn’t succeed, he knows he will have to step down, or be drawn and quartered. I understand why President Obama Thursday offered him the option of leading the way on reform, but it has been clear for some time that will not happen.
Instead, Bashar intends to frighten his population into submission. He is scary. It would be foolish to express any certainty about whether repression will work or not. It depends on unknowable factors like the courage of Syrian young people, the unity of the army and the loyalty of regime cronies. Even someone inside Syria would have a hard time making definitive judgments on these factors, which will clarify only the day after the rebellion succeeds or is defeated.
In the meanwhile, what should we be doing? First and foremost what President Obama tried to accomplish in his speech: make sure everyone concerned understands that the United States stands with those who protest peacefully for freedom and human dignity. We should not expect instantaneous results from this, and our stance may not weigh heavily in the mix. But for our own sake, we need to be clear that the regime’s behavior is wrong. Naming Bashar and other heavies to the sanctions list, which Washington did earlier this week, is a necessary corollary.
What else can we do? Listen, and amplify the voices of those who are courageous enough to speak out. Dorothy Parvaz, an Iranian American journalist arrested in Syria and deported to Iran, is one of the few professional journalists who has seen Syrian treatment of prisoners up close (I would discount her description of treatment in Iran, since she has relatives there and intends to visit them again soon):
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The Palestine question needs answers
I am perfectly willing to believe that today’s pro-Palestinian demonstrations on Israel’s borders with Syria, Lebanon and Gaza, in which Israeli security forces killed at least eight people, were in part efforts to use the annual Nakba (“catastrophe”) commemoration of Israel’s founding as a way of refocusing attention away from poor governance in Arab countries and towards the plight of the Palestinians. This seems especially likely in the case of Syria, which has a real need to show Israel and the United States that there is good reason to preserve autocratic rule, which has ensured peace on the Syrian-Israeli border for decades. Israeli claims that Iran is stirring the pot seem far-fetched, but who knows, maybe even that is true.
None of that excuses the ham-fisted reaction of the Israeli security forces, which seemed unprepared and undermanned for the occasion. Of course the country has a right to defend its borders, and stone-throwers in my view do not qualify as unequivocally peaceful demonstrators. But how stupid is it for democratic Israel to adopt the methods of the Arab autocrats in responding to provocation? Where has shooting protesters had a stabilizing impact? And just how serious is the presence on your sovereign territory of even a few hundred demonstrators? How long do you think they will be able to stay once the security forces move deliberately and without violence to cut them off from support across the border?
This overreaction comes at a delicate moment, with Prime Minister Netanyahu getting ready to visit Washington and President Obama preparing to unveil who knows what now that his Middle East special envoy, George Mitchell, has quit in obvious frustration. If Iran and its Arab allies in Syria, Lebanon and Gaza are successful in an effort to refocus the Arab Spring on Palestinian issues, Israel and the United States are both in deep difficulty. The best thing they can do to avoid that unfortunate trap is to stop killing protesters and offer some clear answers on when and how the state of Palestine can emerge from the chaotic soup in which the Middle East finds itself.
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