Commentary Magazine


Topic: oil prices

Obama’s Iran Détente and Oil Prices

Americans may be enjoying some of the lowest gasoline prices in recent memory but this good news for consumers is very bad for those countries that count on oil revenue to keep them in business. Prominent among those suffering from the downturn in oil prices is the government of Iran. That regime has gambled its economy and its future on a nuclear program that it deems it sufficiently important to risk an economic collapse from international sanctions imposed in order to stop their nuclear program. The question is why won’t the Obama administration use the pressure that is building on Tehran due to oil prices to force it to give up its nuclear ambitions? The answer shows that President Obama clearly values his hopes for a new détente with Iran over the advantage that current economic conditions have handed him.

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Americans may be enjoying some of the lowest gasoline prices in recent memory but this good news for consumers is very bad for those countries that count on oil revenue to keep them in business. Prominent among those suffering from the downturn in oil prices is the government of Iran. That regime has gambled its economy and its future on a nuclear program that it deems it sufficiently important to risk an economic collapse from international sanctions imposed in order to stop their nuclear program. The question is why won’t the Obama administration use the pressure that is building on Tehran due to oil prices to force it to give up its nuclear ambitions? The answer shows that President Obama clearly values his hopes for a new détente with Iran over the advantage that current economic conditions have handed him.

As the Wall Street Journal reports today, the plunge of global oil prices is creating a potential crisis for an Iranian economy that has already been battered by international economic sanctions. Though Tehran is receiving $700 million a month from its frozen foreign bank accounts as a result of the weak interim nuclear deal signed by the West a year ago, the potential decline in revenue from its ongoing oil sales creates a genuine problem for the Islamist regime. That problem is being exacerbated by the decision of OPEC countries not to reduce its production output in response to the glut of cheaper oil on the market.

This ought to give U.S. negotiators the whip hand over their Iranian counterparts who have been stalling the talks while also stonewalling inspectors from the International Atomic Energy Agency who want to learn the extent of the regime’s research into military applications of their nuclear project. But as has been the pattern since President Obama came into office, the emphasis in the Iran talks has been on carrots for the ayatollahs, not sticks. From the start of the initial secret talks that led to the interim agreement through final status talks that have twice been extended past agreed deadlines, the administration has taken the position that Iran must be treated with kid gloves rather than confronted over its nuclear scofflaw status, let alone its support of international terrorism or ballistic missile program.

At each stage of the talks international demands for Iran to be more transparent or to give up its nuclear toys have been steadfastly denied, the U.S. scaled back its requests rather than standing up to the regime. Instead of halting enrichment of uranium, the U.S. has tacitly recognized an Iranian “right” to keep enriching as it amasses a stockpile of nuclear material that could be converted to use for a bomb. Instead of sticking to demands that Iran give up its centrifuges, the U.S. has acquiesced to Tehran’s insistence that they be allowed to keep them.

Under the circumstances, it’s little wonder that the Iranians continue to act as if it is they who have all the leverage in the talks since the U.S. long ago discarded most, if not all of the cards it holds. That’s why it is significant that rather than use the oil price decline as the kind of leverage that could be employed to pressure Iran to sign a deal, even another weak one, the U.S. meekly agreed to let the deadline pass without taking action of any sort. Even worse, the Iranians are aware of the fact that the administration seems to be far more worried about Congress imposing new sanctions on Iran that would shut down its oil sales once and for all than on the prospect of the Islamists’ delaying tactics that are bringing them closer to a bomb every day.

Rather than use the oil weapon, President Obama appears content to allow Iran to keep talking while running out the clock on the West. As the talks continue with no sense of urgency on the part of the West, once again it’s hard to argue with the proposition that it is the economic basket case in Iran that is acting as if it is in charge and not the American superpower that has already discarded most of the leverage it already had over Iran in the vain pursuit of détente that its leaders scorn. So long as that is true, the most likely outcome is not another weak nuclear deal but no deal at all with little chance that any sort of U.S. action might halt the nuclear danger.

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OPEC Battle Ahead for Iran

When OPEC meets later this month for its ministers’ summit, price-hawk Iran will confront a new reality – for the first time since the beginning of international sanctions against the regime in Tehran, oil prices are in free fall.

In the last few days, Brent Crude is finally trading below $100, a barrel benchmark. Crude traded at the New York Mercantile Exchange was trading today around $83 a barrel.

For Iran, this is bad news.

For years, the regime was able to somewhat cushion the combined impact of externally imposed sanctions and self-inflicted economic mismanagement thanks to high oil prices. No more.

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When OPEC meets later this month for its ministers’ summit, price-hawk Iran will confront a new reality – for the first time since the beginning of international sanctions against the regime in Tehran, oil prices are in free fall.

In the last few days, Brent Crude is finally trading below $100, a barrel benchmark. Crude traded at the New York Mercantile Exchange was trading today around $83 a barrel.

For Iran, this is bad news.

For years, the regime was able to somewhat cushion the combined impact of externally imposed sanctions and self-inflicted economic mismanagement thanks to high oil prices. No more.

There are several reasons why prices are falling – the most closely related to Iran is, no doubt, the fact that nuclear negotiations have reduced the risk of conflict, which an already extremely volatile market had factored into futures. Naturally, the hopes for conflict avoidance may be short-lived, as nuclear talks have yielded no result so far and are likely to fail – the only question being, how long will it take before this failure becomes manifest in Western capitals.

But conflict is not the only price fixer. Global economic slowdown influenced prices downward significantly. The steady expansion of Iraqi output is another game changer. The nearly completed recovery of Libyan oil is a significant psychological barrier that is now coming down to ease the pressure on markets. And last, but not least, a new pipeline designed to bypass the Strait of Hormuz is about to come online in the United Arab Emirates. The pipeline will reduce export costs for oil produced by Abu Dhabi and avoid exposing it to the hazards of an Iranian attempt to seal the Strait in the event of a conflict.

Another element is that sustained price hikes, over time, encourage further exploration because, at such prices, extraction of crude in remote locations becomes lucrative. Eventually, more oil comes into the market, affecting supply upward and contributing to price reduction. Finally, markets have discounted risk by moving away from Iran’s oil, even before the EU-imposed oil embargo sets in on July 1. Proof that Iran’s oil is less relevant to global markets is the fact that Iran’s oil production is actually declining, with no significant impact on pricing.

All this means that oil prices are likely to remain low and likely to leave Iran in a pickle.

After all, Tehran is already finding it difficult to export – it is selling at a discount to a number of customers who have difficulty paying or fear political repercussions of doing business with Iran. It is accepting yuan and rupees payments from China and India – an element likely to limit Iran’s ability to use the revenue for anything other than purchasing products on the Indian market. Looming sanctions on oil exports and on insurance and reinsurance of crude carriers will corner Iran more and more – probably forcing Tehran to offer further discounts to prevent further flight among its customers.

And here’s the rub. Iran’s budget is pegged to an $85 a barrel oil price.

With prices below that benchmark and Iran having to offer further discounts or being dragged into barter agreements to avoid dollar payments that could trigger U.S. sanctions, it is very likely the regime will have less and less funds available to keep its power base happy.

Trouble is brewing then, and offering a facile compromise on nuclear matters to this regime at this juncture would be a terrible mistake. Sanctions are slowly working – but we should keep using them less to extract an impossible deal and more to undermine the regime in Tehran.

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Is Obama Blaming Israel for Gas Prices?

The campaign of administration leaks aimed at undermining Israel’s position on Iran has been widely noted. But according to Robert Satloff, the respected head of the Washington Institute for Near East Policy, the White House isn’t satisfied with blaming Israel for the chance that Americans might be killed in the event force is used against Iran. Satloff says the Israelis see President Obama as blaming them for rising oil prices as well.

In comments quoted in the WorldTribune.com:

Satloff, who met “virtually everybody in the Iran debate,” said the Israeli leadership also saw the administration as blaming Israel for the sharp rise in U.S. gasoline prices. He said Washington attributed the higher prices to “Israel’s posturing” on Iran. “They [the Israelis] think the Iranians should be held responsible for the higher gasoline prices,” Satloff said.

The possibility that Washington would seek to scapegoat Israel for higher oil prices is an ominous development. While there have been, as yet, no public statements to that effect, or, as is generally the case with this administration, front page features in the New York Times claiming this is what anonymous senior officials are thinking, Israeli may believe this is something they expect to happen. Perhaps by making their fears on this score public, they hope to head off what they believe is an obvious next step from an administration that is friendly to Israel in public but oozing with hostility off the record.
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The campaign of administration leaks aimed at undermining Israel’s position on Iran has been widely noted. But according to Robert Satloff, the respected head of the Washington Institute for Near East Policy, the White House isn’t satisfied with blaming Israel for the chance that Americans might be killed in the event force is used against Iran. Satloff says the Israelis see President Obama as blaming them for rising oil prices as well.

In comments quoted in the WorldTribune.com:

Satloff, who met “virtually everybody in the Iran debate,” said the Israeli leadership also saw the administration as blaming Israel for the sharp rise in U.S. gasoline prices. He said Washington attributed the higher prices to “Israel’s posturing” on Iran. “They [the Israelis] think the Iranians should be held responsible for the higher gasoline prices,” Satloff said.

The possibility that Washington would seek to scapegoat Israel for higher oil prices is an ominous development. While there have been, as yet, no public statements to that effect, or, as is generally the case with this administration, front page features in the New York Times claiming this is what anonymous senior officials are thinking, Israeli may believe this is something they expect to happen. Perhaps by making their fears on this score public, they hope to head off what they believe is an obvious next step from an administration that is friendly to Israel in public but oozing with hostility off the record.

Rising gas prices are a direct threat to the president’s re-election and, as some administration officials made clear in a leaked story in the Times last week, they think Obama’s desire to sound tough on Iran in order to win votes in November is heightening tension with Tehran. As that leak made clear, the president has boxed himself in with his public declaration that he was not willing to “contain” a nuclear Iran. That means the U.S. and its European allies are going to have to make good on their threat of an oil embargo this summer, just when gas prices normally go up anyway. If Obama and the Euros blink on Iran and pass on the embargo, they will rightly be accused of appeasing the ayatollahs. In the event that they keep their word and choke off Iran’s oil export business, the consequent dislocation of petroleum supplies will cause a politically expensive hike in the price of gas.

The Israelis are right to complain that if anyone should be blamed, it is Iran. It should also be pointed out that if Obama hadn’t wasted much of his first three years in office trying to “engage” Iran rather than enforcing sanctions on the regime, he might not be in this bind now. Blame should also go to those countries that may well continue to buy Iranian oil, such as China, India and Obama’s special friend, Turkey.

But while U.S. officials may grouse about Israeli pressure to act on Iran and leak damaging stories about them to the press, any comments that could be traced back to the White House about Israel and oil prices would boomerang on the president. Scapegoating the Jews on oil is exactly the sort of strategic mistake rooted in the administration’s true sentiments that could have a highly negative impact on the voters in November.

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Iran Sanctions Exemptions Leave Room for Doubt About Obama’s Intentions

Secretary of State Hillary Clinton announced today that the United States was granting exemptions to Japan and several European countries from sanctions that are intended to prevent the sale of Iranian oil. However, Clinton represented the waivers as part of the administration’s effort to tighten the vise on Iran. This makes some sense, at least as far as Europe is concerned. The European Union has already forbidden its member nations from signing new oil contracts with Iran and has pledged itself to ending existing obligations by July 1. As for Japan, Clinton said the exemption was a reward for their efforts toward reducing their dependence on Iranian oil.

If these exemptions really part of an integrated strategy aimed at tightening the noose around Iran’s economy then it is fair to say that President Obama is keeping his word to implement the sanctions Congress passed last year over his objections. However, it is worth noting that the administration has history of non-enforcement of sanctions on Iran as well as the possibility that such waivers will be used as a way to prolong negotiations with Iran over its nuclear program. There is also the likelihood that the exemptions have more to do with a desire to stabilize oil prices than a campaign to force the ayatollahs to renounce their nuclear plans.

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Secretary of State Hillary Clinton announced today that the United States was granting exemptions to Japan and several European countries from sanctions that are intended to prevent the sale of Iranian oil. However, Clinton represented the waivers as part of the administration’s effort to tighten the vise on Iran. This makes some sense, at least as far as Europe is concerned. The European Union has already forbidden its member nations from signing new oil contracts with Iran and has pledged itself to ending existing obligations by July 1. As for Japan, Clinton said the exemption was a reward for their efforts toward reducing their dependence on Iranian oil.

If these exemptions really part of an integrated strategy aimed at tightening the noose around Iran’s economy then it is fair to say that President Obama is keeping his word to implement the sanctions Congress passed last year over his objections. However, it is worth noting that the administration has history of non-enforcement of sanctions on Iran as well as the possibility that such waivers will be used as a way to prolong negotiations with Iran over its nuclear program. There is also the likelihood that the exemptions have more to do with a desire to stabilize oil prices than a campaign to force the ayatollahs to renounce their nuclear plans.

Assuming that Clinton means what she says about sticking to a tough policy on Iran, the exemptions are a way to gradually achieve an oil embargo of Iran without causing a major disruption of oil markets that would harm America’s allies. And while avoiding a spike in oil prices is an imperative for the president’s re-election campaign, it is also desirable to avoid any actions that would create windfall profits for Iran.

That said, as the New York Times notes, the real test of the administration’s intentions is whether it is prepared to apply the law to China and India, the nations that are the primary consumers of Iranian oil. China has already committed itself to buying more Iranian oil in the future.

The danger here is not only that Iran doesn’t believe that President Obama has the guts to risk raising oil prices in an election year and thus will continue to defy international efforts to get it to back down. Though the waivers allow the administration some flexibility in implementation of the sanctions, the fear is that when push comes to shove, the president will lack the nerve to punish nations that still prefer to do business with Tehran. The waivers may also encourage the Iranians to use the promise of negotiations to string the West along without them ever having to give up their nukes. As with everything else about the administration’s Iran policy, the key issue here is trust. The Treasury Department has already issued thousands of exemptions to American companies who want to do business with Iran in violation of the law. So long as Obama and Clinton can keep talking tough, they may assume that the public will be unaware of the fact that the crippling sanctions Congress imposed on them are full of holes.

Given Washington’s ardent desire to prevent Israel from taking action against the existential nuclear threat from Iran on its own, the administration will have every incentive to keep granting exemptions while continuing to indulge in bellicose rhetoric aimed at Iran but really intended for the ears of American voters. An American government that is more committed to maintaining a window for dubious diplomacy with Iran than actually forcing Tehran to give up its nuclear ambitions may well use the exemptions to avoid a confrontation rather than to achieve their intended purpose.

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White House Launches Hamfisted Campaign to Silence Iran Critics

President Obama tried to water down congressional sanctions last year and then declined to implement them last week, part of a long-term policy that leaves pressuring Iran to “leaders in Congress and Europe.” And because the administration has a political interest in convincing voters that it’s taking a hardline stance on Iran, it has a rhetorical and argumentative interest in silencing the critics who (a) point out how the opposite is true and (b) urge the president to do more.

Because intimidation comes naturally to this White House – witness last week’s demagoguery of the Koch Brothers and on birth control – their pushbacks have been marked by vague warnings delivered in tones of great significance. In his AIPAC speech this morning, Obama literally blamed high gas prices on Iran critics. Because why not?

I would ask that we all remember the weightiness of these issues, the stakes involved for Israel, for America, and for the world. Already, there is too much loose talk of war. Over the last few weeks, such talk has only benefited the Iranian government, by driving up the price of oil, which they depend on to fund their nuclear program. For the sake of Israel’s security, America’s security and the peace and security of the world, now is not the time for bluster.

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President Obama tried to water down congressional sanctions last year and then declined to implement them last week, part of a long-term policy that leaves pressuring Iran to “leaders in Congress and Europe.” And because the administration has a political interest in convincing voters that it’s taking a hardline stance on Iran, it has a rhetorical and argumentative interest in silencing the critics who (a) point out how the opposite is true and (b) urge the president to do more.

Because intimidation comes naturally to this White House – witness last week’s demagoguery of the Koch Brothers and on birth control – their pushbacks have been marked by vague warnings delivered in tones of great significance. In his AIPAC speech this morning, Obama literally blamed high gas prices on Iran critics. Because why not?

I would ask that we all remember the weightiness of these issues, the stakes involved for Israel, for America, and for the world. Already, there is too much loose talk of war. Over the last few weeks, such talk has only benefited the Iranian government, by driving up the price of oil, which they depend on to fund their nuclear program. For the sake of Israel’s security, America’s security and the peace and security of the world, now is not the time for bluster.

Lest you think this warning was anything but a calculated brushback, here’s Anthony Blinken, National Security Advisor to Vice President Biden and Deputy Assistant to the President for National Security Affairs, telling pro-Israel advocates last week that the Israelis may want to consider that Obama’s going to be reelected… if they know what’s good for them:

And he was unusually blunt about the partisan political attacks on the president’s Middle East record: he said what could really harm U.S.-Israeli relations and Israel’s national security is “subjecting either to the vagaries of partisan politics or election year talking points….” He also noted, without explicitly directing his comments at anyone in particular, that “there is a decent chance that the Obama-Biden administration will be around next November, so folks who are looking how to address these issues should probably factor that in as a reasonable possibility.”

Nice country you’ve got there. It’d be a shame if anything happened to it. How thoroughly charming.

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Obama Admin Admits Goal Isn’t to Reduce Oil Prices

It’s long been obvious the Obama administration is more interested in reducing oil dependency than reducing gasoline prices. But now Republican operatives have a sound bite to go with it, after Department of Energy Secretary Steven Chu acknowledged the policy while addressing Congress this morning:

But Americans need relief now, Rep. Alan Nunnelee (R-Miss.) said — not high gasoline prices that could eventually push them to alternatives. …

Chu expressed sympathy but said his department is working to lower energy prices in the long term. …

“But is the overall goal to get our price” of gasoline down? asked Nunnelee.

“No, the overall goal is to decrease our dependency on oil, to build and strengthen our economy,” Chu replied. “We think that if you consider all these energy policies, including energy efficiency, we think that we can go a long way to becoming less dependent on oil and [diversifying] our supply and we’ll help the American economy and the American consumers.”

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It’s long been obvious the Obama administration is more interested in reducing oil dependency than reducing gasoline prices. But now Republican operatives have a sound bite to go with it, after Department of Energy Secretary Steven Chu acknowledged the policy while addressing Congress this morning:

But Americans need relief now, Rep. Alan Nunnelee (R-Miss.) said — not high gasoline prices that could eventually push them to alternatives. …

Chu expressed sympathy but said his department is working to lower energy prices in the long term. …

“But is the overall goal to get our price” of gasoline down? asked Nunnelee.

“No, the overall goal is to decrease our dependency on oil, to build and strengthen our economy,” Chu replied. “We think that if you consider all these energy policies, including energy efficiency, we think that we can go a long way to becoming less dependent on oil and [diversifying] our supply and we’ll help the American economy and the American consumers.”

President Obama’s delay on the Keystone XL decision has already shown the administration doesn’t view gas price reduction as a top priority. In fact, they tend to embrace high gas prices as a way to reduce usage in the U.S. (at least in non-election years).

But while Chu’s comments will be attacked by Republicans as an example of Obama’s radical environmental agenda, this may actually end up helping the president. His recent decision to support partial construction on the Keystone XL pipeline has hurt his credibility with environmentalists. Chu’s admission that the administration is still more focused on cutting down on gasoline consumption than lowering prices is a signal to green groups that the administration is still with them in overall policy.

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Morning Commentary

House Republicans announced a vote to repeal health-care reform on Jan. 12, naming their bill the “Repealing the Job-Killing Health Care Law Act.” But even if the legislation passes the House, it’s almost certain to be blocked in the Senate: “The repeal effort is not expected to succeed, given that Democrats maintain control of the Senate and the president can veto the legislation. But Republicans could embarrass the White House if they persuade a number of Democrats to vote with them and, over the long term, plan to try to chip away at pieces of the law.”

Iran has invited Russia, China, the EU, and Arab nations on an all-expenses-paid tour of its nuclear facilities in an attempt to gain support before its next round of nuke talks with the permanent members of the UN Security Council.

It looks like Hillary Clinton’s brief meeting with Hugo Chavez over the weekend helped diffuse some of the diplomatic tensions between the U.S. and Venezuela. The Obama administration announced yesterday that it is considering nominating a new ambassador to Venezuela after Chavez very publicly rejected the last proposal.

Those who want to see massive cuts in the defense budget are dangerously underestimating the threats the U.S. will face in the coming years, warn Alvin S. Felzenberg and Alexander B. Gray in National Review. With the growing aggression of countries like Russia, China, Venezuela, and Iran, the military needs to be able to adapt in response to new challenges: “Counterinsurgency warfare and Predator-drone strikes against transnational terrorists certainly defined much of the last decade. But the next decade will witness increasing competition among nation-states for control of valuable resources and the exertion of influence worldwide.”

Apparently, Guam is a touchy subject for Michael Steele. During an interview with the Weekly Standard’s John McCormack, the embattled RNC chair went on the defensive about his spending decisions in U.S. territories: “Okay, so when you’re chairman you make that decision, and then you deal with the chairman and the national committeeman and the national committeewoman sittin’ on the phone with you, screaming at you for not helping them for $15,000. We won the governorship. The most wins here and now you’re going to sit back here and parse? Oh, well, gee if you had taken $15,000 from there and put it over here — tell me the seat you could have won with that, when you know you could have helped them out and won a groundbreaker for them in Guam.”

The Washington Post’s Anne Applebaum has an intriguing theory about what may have prompted the Kremlin’s recent bad behavior: “[P]erhaps the explanation is very simple: Oil is once again above $90 a barrel — and the price is rising. And if that’s the reason, it’s nothing new. In fact, if one were to plot the rise and fall of Soviet and Russian foreign and domestic reforms over the past 40 years on a graph, it would match the fall and rise of the international oil prices (for which domestic crude oil prices are a reasonable proxy) with astonishing precision.”

House Republicans announced a vote to repeal health-care reform on Jan. 12, naming their bill the “Repealing the Job-Killing Health Care Law Act.” But even if the legislation passes the House, it’s almost certain to be blocked in the Senate: “The repeal effort is not expected to succeed, given that Democrats maintain control of the Senate and the president can veto the legislation. But Republicans could embarrass the White House if they persuade a number of Democrats to vote with them and, over the long term, plan to try to chip away at pieces of the law.”

Iran has invited Russia, China, the EU, and Arab nations on an all-expenses-paid tour of its nuclear facilities in an attempt to gain support before its next round of nuke talks with the permanent members of the UN Security Council.

It looks like Hillary Clinton’s brief meeting with Hugo Chavez over the weekend helped diffuse some of the diplomatic tensions between the U.S. and Venezuela. The Obama administration announced yesterday that it is considering nominating a new ambassador to Venezuela after Chavez very publicly rejected the last proposal.

Those who want to see massive cuts in the defense budget are dangerously underestimating the threats the U.S. will face in the coming years, warn Alvin S. Felzenberg and Alexander B. Gray in National Review. With the growing aggression of countries like Russia, China, Venezuela, and Iran, the military needs to be able to adapt in response to new challenges: “Counterinsurgency warfare and Predator-drone strikes against transnational terrorists certainly defined much of the last decade. But the next decade will witness increasing competition among nation-states for control of valuable resources and the exertion of influence worldwide.”

Apparently, Guam is a touchy subject for Michael Steele. During an interview with the Weekly Standard’s John McCormack, the embattled RNC chair went on the defensive about his spending decisions in U.S. territories: “Okay, so when you’re chairman you make that decision, and then you deal with the chairman and the national committeeman and the national committeewoman sittin’ on the phone with you, screaming at you for not helping them for $15,000. We won the governorship. The most wins here and now you’re going to sit back here and parse? Oh, well, gee if you had taken $15,000 from there and put it over here — tell me the seat you could have won with that, when you know you could have helped them out and won a groundbreaker for them in Guam.”

The Washington Post’s Anne Applebaum has an intriguing theory about what may have prompted the Kremlin’s recent bad behavior: “[P]erhaps the explanation is very simple: Oil is once again above $90 a barrel — and the price is rising. And if that’s the reason, it’s nothing new. In fact, if one were to plot the rise and fall of Soviet and Russian foreign and domestic reforms over the past 40 years on a graph, it would match the fall and rise of the international oil prices (for which domestic crude oil prices are a reasonable proxy) with astonishing precision.”

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Obama’s Iran Policy Is Producing Arab Fallout

A key concern of those who believe a nuclear Iran would be disastrous is that it would prompt “moderate” Arab states to switch into the Iranian camp — due to fear that America would be unable to protect them against a nuclear-armed neighbor and a desire to align themselves with the “strong horse,” which succeeded in going nuclear despite American opposition, rather than the “weak horse,” which proved unwilling or unable to prevent this development. But it now seems Iran won’t even need to obtain the bomb to make this happen: the growing realization that Washington has no real stomach for stopping it is enough.

This conclusion emerges from two incidents reported by Haaretz Arab affairs analyst Zvi Bar’el. First, Iran’s military exercises in the Persian Gulf this week were observed by “a high-level military delegation from Qatar. It was headed by Admiral Abed al-Rahim al-Janahi, who said his country wants to benefit from the Iranian experience, and that he was planning joint exercises for the two armies.”

This is particularly noteworthy given a fact that Bar’el didn’t mention: U.S. forces used Qatar’s Al Udeid Air Base for their campaigns in both Afghanistan and Iraq. Indeed, Qatar originally upgraded the base to lure the U.S. military. Now it’s planning joint military exercises with Iran.

Bar’el also quoted an Al-Arabiya interview with Turki al-Faisal, head of the King Faisal Institute of Global Strategic Studies — and also a former head of Saudi Arabian intelligence, a former ambassador to London and Washington, the Saudi foreign minister’s brother, and King Abdullah’s cousin. As such, Bar’el wrote, al-Faisal most likely represents the ruling family’s views.

And what are those views? Hitherto, Riyadh has considered Tehran its chief regional rival. But al-Faisal termed the Gulf states’ ties with Iran “historic ties that are built on interests, blood relationships and proximity.” He also opposed sanctions on Tehran, saying he prefers “dialogue,” and said Israel posed a far greater threat to the region than Iran does.

The prospect of a shift in Saudi Arabia’s allegiance ought to alarm even the Obama administration. Saudi Arabia is not only one of America’s main oil suppliers; it’s also the country Washington relies on to keep world oil markets stable — both by restraining fellow OPEC members from radical production cuts and by upping its own production to compensate for temporary shortfalls elsewhere.

Granted, Riyadh is motivated partly by self-interest: unlike some of its OPEC colleagues, it understands that keeping oil prices too high for too long would do more to spur alternative-energy development than any amount of global-warming hysteria. And since its economy depends on oil exports, encouraging alternative energy is the last thing it wants to do.

Nevertheless, the fact remains that Saudi Arabia has been generally effective as stabilizer-in-chief of world oil markets and has no plausible replacement in this role. And since the U.S. economy remains highly oil-dependent, a Saudi shift into Iran’s camp would effectively put America’s economy at the mercy of the mullahs in Tehran.

That’s a prospect that ought to keep Washington policymakers awake at night.

A key concern of those who believe a nuclear Iran would be disastrous is that it would prompt “moderate” Arab states to switch into the Iranian camp — due to fear that America would be unable to protect them against a nuclear-armed neighbor and a desire to align themselves with the “strong horse,” which succeeded in going nuclear despite American opposition, rather than the “weak horse,” which proved unwilling or unable to prevent this development. But it now seems Iran won’t even need to obtain the bomb to make this happen: the growing realization that Washington has no real stomach for stopping it is enough.

This conclusion emerges from two incidents reported by Haaretz Arab affairs analyst Zvi Bar’el. First, Iran’s military exercises in the Persian Gulf this week were observed by “a high-level military delegation from Qatar. It was headed by Admiral Abed al-Rahim al-Janahi, who said his country wants to benefit from the Iranian experience, and that he was planning joint exercises for the two armies.”

This is particularly noteworthy given a fact that Bar’el didn’t mention: U.S. forces used Qatar’s Al Udeid Air Base for their campaigns in both Afghanistan and Iraq. Indeed, Qatar originally upgraded the base to lure the U.S. military. Now it’s planning joint military exercises with Iran.

Bar’el also quoted an Al-Arabiya interview with Turki al-Faisal, head of the King Faisal Institute of Global Strategic Studies — and also a former head of Saudi Arabian intelligence, a former ambassador to London and Washington, the Saudi foreign minister’s brother, and King Abdullah’s cousin. As such, Bar’el wrote, al-Faisal most likely represents the ruling family’s views.

And what are those views? Hitherto, Riyadh has considered Tehran its chief regional rival. But al-Faisal termed the Gulf states’ ties with Iran “historic ties that are built on interests, blood relationships and proximity.” He also opposed sanctions on Tehran, saying he prefers “dialogue,” and said Israel posed a far greater threat to the region than Iran does.

The prospect of a shift in Saudi Arabia’s allegiance ought to alarm even the Obama administration. Saudi Arabia is not only one of America’s main oil suppliers; it’s also the country Washington relies on to keep world oil markets stable — both by restraining fellow OPEC members from radical production cuts and by upping its own production to compensate for temporary shortfalls elsewhere.

Granted, Riyadh is motivated partly by self-interest: unlike some of its OPEC colleagues, it understands that keeping oil prices too high for too long would do more to spur alternative-energy development than any amount of global-warming hysteria. And since its economy depends on oil exports, encouraging alternative energy is the last thing it wants to do.

Nevertheless, the fact remains that Saudi Arabia has been generally effective as stabilizer-in-chief of world oil markets and has no plausible replacement in this role. And since the U.S. economy remains highly oil-dependent, a Saudi shift into Iran’s camp would effectively put America’s economy at the mercy of the mullahs in Tehran.

That’s a prospect that ought to keep Washington policymakers awake at night.

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Nervous Employers, Obtuse Politicians

The Wall Street Journal editors observe:

Sooner or later the economic recovery will start creating new jobs, we promise. But it sure is turning out to be a long, agonizing wait. The economy has been growing for at least six months, amid high productivity growth and rebounding corporate profits, yet employers still shed a net 85,000 jobs in December. . . Perhaps most dismaying is that nearly four in 10 (39.8%) of the jobless have been unemployed for six months or more. The longer these Americans stay out of the workplace, the more their career prospects will suffer in an economy that rewards ever-higher skills.

As the editors remind us, the American economy is resilient and will rebound, but the pace of that rebound and the speed with which employers add to their payrolls is influenced by policy in Washington and the state capitals. And bad policy — or the threat of bad policy — takes its toll. So long as the Democrats in Washington refuse to give up their ultra-liberal agenda, “no one can be sure what they will pay for energy (rising oil prices, cap and trade) or new regulation (antitrust), how high their taxes will rise, and how much each new employee will cost (health care).” The Beltway set seems bent on making the employment environment more treacherous while they trot out this or that new program. Perhaps if they just promised to do nothing, employers might breathe a sigh of relief and start to hire again.

The Wall Street Journal editors observe:

Sooner or later the economic recovery will start creating new jobs, we promise. But it sure is turning out to be a long, agonizing wait. The economy has been growing for at least six months, amid high productivity growth and rebounding corporate profits, yet employers still shed a net 85,000 jobs in December. . . Perhaps most dismaying is that nearly four in 10 (39.8%) of the jobless have been unemployed for six months or more. The longer these Americans stay out of the workplace, the more their career prospects will suffer in an economy that rewards ever-higher skills.

As the editors remind us, the American economy is resilient and will rebound, but the pace of that rebound and the speed with which employers add to their payrolls is influenced by policy in Washington and the state capitals. And bad policy — or the threat of bad policy — takes its toll. So long as the Democrats in Washington refuse to give up their ultra-liberal agenda, “no one can be sure what they will pay for energy (rising oil prices, cap and trade) or new regulation (antitrust), how high their taxes will rise, and how much each new employee will cost (health care).” The Beltway set seems bent on making the employment environment more treacherous while they trot out this or that new program. Perhaps if they just promised to do nothing, employers might breathe a sigh of relief and start to hire again.

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Slavin Gets It Wrong

Barbara Slavin’s op-ed in today’s San Francisco Chronicle tackles the question of Iran in order to rebuke what she considers as growing “war talk” within the Bush Administration–although the White House Press Office today strongly rebuked the Jerusalem Post for publishing an article that attributed such war talk to the President, and denied any of its assertions. After criticizing this newfound militancy, Slavin explains why Iran would not be so much of a problem for the West after all. In her defense of Iran’s motives and intentions, Slavin mentions Tehran’s nuclear nuclear program only once–though Iran’s nuclear program is the principal reason why an outgoing Bush Administration might contemplate at all a military strike.

There are many reasons why a military strike poses significant risks and has potentially very serious consequences. But to ignore the the consequences of the alternative–that Iran succeeds in its nuclear pursuit–is not the most intellectually honest thing to write, though it spares Slavin from the troublesome exercise of having to list the likely consequences of Iranian success. And this is what’s truly missing from the debate about Iran–what would happen if Iran succeeded in its pursuit? Slavin dismisses Iran’s comparison with either Nazi Germany or the Soviet Union–but while at some levels Iran may not be comparable to either, Iran remains wedded to a revolutionary ideology. A revolutionary power, by definition, will seek to change the regional status quo and to remake the world in its own image. In this trajectory, it will eventually find itself embroiled in war, even if that is the result of plain miscalculation. Slavin reassures us that the Iranians will not overstretch:

A country whose boundaries have barely changed since the 16th century, Iran is not able to or interested in recreating the Persian Empire and is not about to become a second Nazi Germany or Soviet Union. As Mohammad Atrianfar, a veteran publisher who is close to former Iranian President Akbar Hashemi Rafsanjani, told me recently in Tehran: “We are not going to stretch our legs beyond the capacity of our carpets.”

The problem with that statement is that neither Nazi Germany nor the Soviet Union believed they were overstretching until it was too late. Nuclear capability will give Iran the kind of umbrella of impunity that will allow it to double its mischief in the region without fear of retribution. Do you like the way Hezbollah and Hamas behave in their respective domains? You will love it when Iran has nukes! Do you find it hard to solve the Arab-Israeli conflict now? Try when Iran’s nukes enable its proxies to up the ante. Are you worried about Shia unrest in Kuwait and Bahrain? Prepare for more trouble when Iran’s nuclear bomb casts a shadow on those countries. Do you think oil prices are too high? Save for a cold winter, when Iran’s speedboats swarm the Gulf and harass supertankers. Do you really think anyone will risk a nuclear showdown for any of the above?

Consider this as well: Iran might lend its nukes and ballistic missiles to friends like Venezuela, to get San Francisco within range. It would not be overstretching–Hugo Chavez will surely pick up the bill to pay the costs of the exercise. Unbelievable? Why? Fidel Castro did it with the Russians in 1962–so why shouldn’t we expect a not a rerun, given that Iran’s revolutionary vocation, as an anti-Western power aspiring to change the world to its own image, does not need to overstretch. It will suffice to have some allies, friends and supporters to bankroll and supply, under its nuclear umbrella, in order to make this world an infinitely more dangerous place.

War might be premature–but war talk, as a reminder to Iran that it will pay a steep price for staying the course, is a better option than what Slavin has to offer.

Barbara Slavin’s op-ed in today’s San Francisco Chronicle tackles the question of Iran in order to rebuke what she considers as growing “war talk” within the Bush Administration–although the White House Press Office today strongly rebuked the Jerusalem Post for publishing an article that attributed such war talk to the President, and denied any of its assertions. After criticizing this newfound militancy, Slavin explains why Iran would not be so much of a problem for the West after all. In her defense of Iran’s motives and intentions, Slavin mentions Tehran’s nuclear nuclear program only once–though Iran’s nuclear program is the principal reason why an outgoing Bush Administration might contemplate at all a military strike.

There are many reasons why a military strike poses significant risks and has potentially very serious consequences. But to ignore the the consequences of the alternative–that Iran succeeds in its nuclear pursuit–is not the most intellectually honest thing to write, though it spares Slavin from the troublesome exercise of having to list the likely consequences of Iranian success. And this is what’s truly missing from the debate about Iran–what would happen if Iran succeeded in its pursuit? Slavin dismisses Iran’s comparison with either Nazi Germany or the Soviet Union–but while at some levels Iran may not be comparable to either, Iran remains wedded to a revolutionary ideology. A revolutionary power, by definition, will seek to change the regional status quo and to remake the world in its own image. In this trajectory, it will eventually find itself embroiled in war, even if that is the result of plain miscalculation. Slavin reassures us that the Iranians will not overstretch:

A country whose boundaries have barely changed since the 16th century, Iran is not able to or interested in recreating the Persian Empire and is not about to become a second Nazi Germany or Soviet Union. As Mohammad Atrianfar, a veteran publisher who is close to former Iranian President Akbar Hashemi Rafsanjani, told me recently in Tehran: “We are not going to stretch our legs beyond the capacity of our carpets.”

The problem with that statement is that neither Nazi Germany nor the Soviet Union believed they were overstretching until it was too late. Nuclear capability will give Iran the kind of umbrella of impunity that will allow it to double its mischief in the region without fear of retribution. Do you like the way Hezbollah and Hamas behave in their respective domains? You will love it when Iran has nukes! Do you find it hard to solve the Arab-Israeli conflict now? Try when Iran’s nukes enable its proxies to up the ante. Are you worried about Shia unrest in Kuwait and Bahrain? Prepare for more trouble when Iran’s nuclear bomb casts a shadow on those countries. Do you think oil prices are too high? Save for a cold winter, when Iran’s speedboats swarm the Gulf and harass supertankers. Do you really think anyone will risk a nuclear showdown for any of the above?

Consider this as well: Iran might lend its nukes and ballistic missiles to friends like Venezuela, to get San Francisco within range. It would not be overstretching–Hugo Chavez will surely pick up the bill to pay the costs of the exercise. Unbelievable? Why? Fidel Castro did it with the Russians in 1962–so why shouldn’t we expect a not a rerun, given that Iran’s revolutionary vocation, as an anti-Western power aspiring to change the world to its own image, does not need to overstretch. It will suffice to have some allies, friends and supporters to bankroll and supply, under its nuclear umbrella, in order to make this world an infinitely more dangerous place.

War might be premature–but war talk, as a reminder to Iran that it will pay a steep price for staying the course, is a better option than what Slavin has to offer.

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In the Kitchen with Bin Laden

Senator Hillary Clinton has a new ad that describes the presidency as “the toughest job in the world. You need to be ready for anything–especially now, with two wars, oil prices skyrocketing, and an economy in crisis.” The ad quotes Harry Truman–“if you can’t stand the heat, get out of the kitchen”– and concludes with this question: “Who do you think has what it takes?”

Among the images in the ad is one of Osama bin Laden. It turns out that was too much for some of Barack Obama’s supporters. In his interview last night with Clinton, MSNBC’s Keith Olbermann said:

Let me ask you about the campaign and something you said in Pittsburgh today and again, let me read the quote about being president. “It’s the toughest job in the world and you have to be ready for anything. Two wars, skyrocketing oil prices, an economy in crisis. Well, if you can’t take the heat, get out of the kitchen.” That is almost word for word the narration of this new ad that your campaign put out today, and that ad flashes a very brief image of Osama bin Laden. For nearly six years now since Senator Max Cleland was cut down by a commercial that featured a picture of bin Laden, that has been — that tactic has been kind of a bloody shirt for many Democrats. Is it not just, in your opinion, as much of a scare tactic for a Democrat to use it against another Democrat, as it is for a Republican to use it in a race against the Democrat?

Jamal Simmons, a Democratic strategist, was on CNN making the same complaint:

What’s really disappointing about this ad is all of us should remember in 2002 when the Republicans ran an ad featuring Osama bin Laden against Max Cleland. And all the Democrats were upset about that, because they used Osama bin Laden to stir up fear. And now here we are again, watching Democrats use Osama bin Laden to stir fear against other Democrats.

The Max Cleland ad has become an urban legend in some quarters. According to this narrative, an ad run by Cleland’s opponent, Saxby Chambliss, questioned the patriotism of Cleland, a man who served in Vietnam and became a triple amputee. In point of fact, this ad did no such thing. Cleland had voted multiple times against a homeland security bill that would have given the President freedom from union rules which Bush had deemed necessary to make the new Department of Homeland Security more effective. Chambliss’s ad included pictures of bin Laden and Saddam Hussein, underscoring the threats faced by America. At no point was Cleland’s patriotism impugned. What the ad did do was dispute Cleland’s claim that he had the “courage to lead” and that he “supports President Bush at every opportunity.”

So it has come to this: simply the picture of Osama bin Laden in an ad highlighting threats to America has become a “scare tactic” and a “bloody shirt for many Democrats.” Forget the fact that the threats we face are real, that bin Laden was responsible for killing almost 3,000 Americans on September 11th, and that he is leading figure in a jihadist movement that wants to destroy our country and kill many more of our people. Using the image of bin Laden is verboten.

This is yet one more example of the delicate sensibilities and manufactured outrage that makes people wonder about contemporary liberalism. I suspect Americans are more concerned with the threat posed by bin Laden than they are concerned by the use of his image in an ad. The public is right to be impatient with such childishness.

Senator Hillary Clinton has a new ad that describes the presidency as “the toughest job in the world. You need to be ready for anything–especially now, with two wars, oil prices skyrocketing, and an economy in crisis.” The ad quotes Harry Truman–“if you can’t stand the heat, get out of the kitchen”– and concludes with this question: “Who do you think has what it takes?”

Among the images in the ad is one of Osama bin Laden. It turns out that was too much for some of Barack Obama’s supporters. In his interview last night with Clinton, MSNBC’s Keith Olbermann said:

Let me ask you about the campaign and something you said in Pittsburgh today and again, let me read the quote about being president. “It’s the toughest job in the world and you have to be ready for anything. Two wars, skyrocketing oil prices, an economy in crisis. Well, if you can’t take the heat, get out of the kitchen.” That is almost word for word the narration of this new ad that your campaign put out today, and that ad flashes a very brief image of Osama bin Laden. For nearly six years now since Senator Max Cleland was cut down by a commercial that featured a picture of bin Laden, that has been — that tactic has been kind of a bloody shirt for many Democrats. Is it not just, in your opinion, as much of a scare tactic for a Democrat to use it against another Democrat, as it is for a Republican to use it in a race against the Democrat?

Jamal Simmons, a Democratic strategist, was on CNN making the same complaint:

What’s really disappointing about this ad is all of us should remember in 2002 when the Republicans ran an ad featuring Osama bin Laden against Max Cleland. And all the Democrats were upset about that, because they used Osama bin Laden to stir up fear. And now here we are again, watching Democrats use Osama bin Laden to stir fear against other Democrats.

The Max Cleland ad has become an urban legend in some quarters. According to this narrative, an ad run by Cleland’s opponent, Saxby Chambliss, questioned the patriotism of Cleland, a man who served in Vietnam and became a triple amputee. In point of fact, this ad did no such thing. Cleland had voted multiple times against a homeland security bill that would have given the President freedom from union rules which Bush had deemed necessary to make the new Department of Homeland Security more effective. Chambliss’s ad included pictures of bin Laden and Saddam Hussein, underscoring the threats faced by America. At no point was Cleland’s patriotism impugned. What the ad did do was dispute Cleland’s claim that he had the “courage to lead” and that he “supports President Bush at every opportunity.”

So it has come to this: simply the picture of Osama bin Laden in an ad highlighting threats to America has become a “scare tactic” and a “bloody shirt for many Democrats.” Forget the fact that the threats we face are real, that bin Laden was responsible for killing almost 3,000 Americans on September 11th, and that he is leading figure in a jihadist movement that wants to destroy our country and kill many more of our people. Using the image of bin Laden is verboten.

This is yet one more example of the delicate sensibilities and manufactured outrage that makes people wonder about contemporary liberalism. I suspect Americans are more concerned with the threat posed by bin Laden than they are concerned by the use of his image in an ad. The public is right to be impatient with such childishness.

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The “Iraq Recession” Fallacy

I couldn’t believe my ears when I was on a radio program a few days ago with Rep. Barbara Lee, one of the most liberal members of Congress (she represents Berkeley and environs). She referred to our current economic difficulties as the “Iraq recession,” blaming the downturn not on the mortgage crisis or other commonly cited factors but on the Iraq War. This is a nonsensical argument on its face: If the recession is due to the war in Iraq, why has it started (if in fact it has started—the evidence isn’t definitive) after five years of war?

In a slightly more sophisticated form, Barack Obama picked up this theme in a speech yesterday in West Virginia. Obama is too savvy to come right out and call it the Iraq Recession but he hints at the same linkage: “Because at a time when we’re on the brink of recession–when neighborhoods have For Sale signs outside every home, and working families are struggling to keep up with rising costs–ordinary Americans are paying a price for this war.”

He then goes on to blame the war for the high cost of oil: “When you’re spending over $50 to fill up your car because the price of oil is four times what it was before Iraq, you’re paying a price for this war.” But why blame the war for the increase in oil prices?

According to page 36 of the Brookings Iraq Index, Iraq this month will produce 2.44 million barrels of oil a day, close to the peak prewar level (2.5 million barrels). Iraqi oil exports, at 2.11 million barrels a day, are actually higher today than at some periods before the war when exports ranged from 1.7 to 2.5 million barrels of oil a day.

In short, it is absurd to suggest that a lack of Iraqi production is responsible for the rise in oil prices; the likely culprits are increased demand in China, India, and other emerging markets.

Obama is more on target when he laments the continuing cost of the war which is running at some $120 billion a year. What he leaves out is any context. The overall size of our economy is $13.1 trillion. So the Iraq War is costing us less than 1% of GDP (0.91% to be exact). Even if you add in the entire defense budget that still only gets us to roughly 4% of GDP—roughly half of what we spent on average during the Cold War, to say nothing of previous “hot” wars such as World War II (34.5% of GDP), Korea (11.7%), and Vietnam (8.9%). (A handy chart may be found here.)

You can make a lot of arguments against the war in Iraq, but the one Obama is now making is the least persuasive of all—that this is a war that “America can’t afford.” At least in dollar terms, it is eminently affordable. What we really can’t afford is a precipitous pullout which, among other consequences, could spread turmoil throughout the Middle East that would greatly exacerbate our current economic woes.

I couldn’t believe my ears when I was on a radio program a few days ago with Rep. Barbara Lee, one of the most liberal members of Congress (she represents Berkeley and environs). She referred to our current economic difficulties as the “Iraq recession,” blaming the downturn not on the mortgage crisis or other commonly cited factors but on the Iraq War. This is a nonsensical argument on its face: If the recession is due to the war in Iraq, why has it started (if in fact it has started—the evidence isn’t definitive) after five years of war?

In a slightly more sophisticated form, Barack Obama picked up this theme in a speech yesterday in West Virginia. Obama is too savvy to come right out and call it the Iraq Recession but he hints at the same linkage: “Because at a time when we’re on the brink of recession–when neighborhoods have For Sale signs outside every home, and working families are struggling to keep up with rising costs–ordinary Americans are paying a price for this war.”

He then goes on to blame the war for the high cost of oil: “When you’re spending over $50 to fill up your car because the price of oil is four times what it was before Iraq, you’re paying a price for this war.” But why blame the war for the increase in oil prices?

According to page 36 of the Brookings Iraq Index, Iraq this month will produce 2.44 million barrels of oil a day, close to the peak prewar level (2.5 million barrels). Iraqi oil exports, at 2.11 million barrels a day, are actually higher today than at some periods before the war when exports ranged from 1.7 to 2.5 million barrels of oil a day.

In short, it is absurd to suggest that a lack of Iraqi production is responsible for the rise in oil prices; the likely culprits are increased demand in China, India, and other emerging markets.

Obama is more on target when he laments the continuing cost of the war which is running at some $120 billion a year. What he leaves out is any context. The overall size of our economy is $13.1 trillion. So the Iraq War is costing us less than 1% of GDP (0.91% to be exact). Even if you add in the entire defense budget that still only gets us to roughly 4% of GDP—roughly half of what we spent on average during the Cold War, to say nothing of previous “hot” wars such as World War II (34.5% of GDP), Korea (11.7%), and Vietnam (8.9%). (A handy chart may be found here.)

You can make a lot of arguments against the war in Iraq, but the one Obama is now making is the least persuasive of all—that this is a war that “America can’t afford.” At least in dollar terms, it is eminently affordable. What we really can’t afford is a precipitous pullout which, among other consequences, could spread turmoil throughout the Middle East that would greatly exacerbate our current economic woes.

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Putin’s Real Record

Surprise, surprise. In an “election” with all the suspense of the Harlem Globetrotters beating the Washington Generals, Russian voters dutifully handed their presidency to Vladimir Putin’s hand-picked successor, Dmitri Medvedev, who promised to keep Czar Vladimir around as his prime minister.

There is little doubt that Putin and Medvedev are genuinely popular, if only because their critics have been denied access to the news media, parliament, and any other possible source of opposition. But does Putin have a real record of achievement to run on? He tells Russian voters all the time that he restored the country’s greatness and prosperity after the terrible times of the 1990s. But an article in the last issue of Foreign Affairs, “The Myth of the Authoritarian Model” by Michael McFaul and Kathryn Stoner-Weiss of Stanford University, shreds those claims.

The authors concede that Russia’s economy has done well in recent years:

As Putin has consolidated his authority, growth has averaged 6.7 percent — especially impressive against the backdrop of the depression in the early 1990s…. Since 2000, real disposable income has increased by more than 10 percent a year, consumer spending has skyrocketed, unemployment has fallen from 12 percent in 1999 to 6 percent in 2006, and poverty, according to one measure, has declined from 41 percent in 1999 to 14 percent in 2006. Russians are richer today than ever before.

But, they argue, most of this growth is not due to Putin’s policies. Instead it can be traced to the natural recovery from the traumas of communism combined with high oil prices. In fact, notwithstanding Russia’s mineral riches, it has not fared any better than most of its neighbors: “Between 1999 and 2006, Russia ranked ninth out of the 15 post-Soviet countries in terms of average growth. Similarly, investment in Russia, at 18 percent of GDP, although stronger today than ever before, is well below the average for democracies in the region.”

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Surprise, surprise. In an “election” with all the suspense of the Harlem Globetrotters beating the Washington Generals, Russian voters dutifully handed their presidency to Vladimir Putin’s hand-picked successor, Dmitri Medvedev, who promised to keep Czar Vladimir around as his prime minister.

There is little doubt that Putin and Medvedev are genuinely popular, if only because their critics have been denied access to the news media, parliament, and any other possible source of opposition. But does Putin have a real record of achievement to run on? He tells Russian voters all the time that he restored the country’s greatness and prosperity after the terrible times of the 1990s. But an article in the last issue of Foreign Affairs, “The Myth of the Authoritarian Model” by Michael McFaul and Kathryn Stoner-Weiss of Stanford University, shreds those claims.

The authors concede that Russia’s economy has done well in recent years:

As Putin has consolidated his authority, growth has averaged 6.7 percent — especially impressive against the backdrop of the depression in the early 1990s…. Since 2000, real disposable income has increased by more than 10 percent a year, consumer spending has skyrocketed, unemployment has fallen from 12 percent in 1999 to 6 percent in 2006, and poverty, according to one measure, has declined from 41 percent in 1999 to 14 percent in 2006. Russians are richer today than ever before.

But, they argue, most of this growth is not due to Putin’s policies. Instead it can be traced to the natural recovery from the traumas of communism combined with high oil prices. In fact, notwithstanding Russia’s mineral riches, it has not fared any better than most of its neighbors: “Between 1999 and 2006, Russia ranked ninth out of the 15 post-Soviet countries in terms of average growth. Similarly, investment in Russia, at 18 percent of GDP, although stronger today than ever before, is well below the average for democracies in the region.”

Meanwhile, on a host of other measures relating to “public safety, health” and a “secure legal and property-owning environment,” Putin’s autocracy is doing no better, and in many cases worse, than the more democratic Yeltsin regime which preceded it.

McFaul and Stoner-Weiss cite a host of eye-opening statistics to make their point:

• “In the “anarchic” years of 1995-99, the average annual number of murders was 30,200; in the “orderly” years of 2000-2004, the number was 32,200.”

• “The frequency of terrorist attacks in Russia has increased under Putin. The two biggest terrorist attacks in Russia’s history — the Nord-Ost incident at a theater in Moscow in 2002, in which an estimated 300 Russians died, and the Beslan school hostage crisis, in which as many as 500 died — occurred under Putin’s autocracy, not Yeltsin’s democracy.”

• “The death rate from fires is around 40 a day in Russia, roughly ten times the average rate in western Europe.”

• “At the end of the 1990s, annual alcohol consumption per adult was 10.7 liters (compared with 8.6 liters in the United States and 9.7 in the United Kingdom); in 2004, this figure had increased to 14.5 liters. An estimated 0.9 percent of the Russian population is now infected with HIV, and rates of infection in Russia are now the highest of any country outside Africa.”

• “Life expectancy in Russia rose between 1995 and 1998. Since 1999, however, it has declined to 59 years for Russian men and 72 for Russian women.”

• “In 2006, Transparency International ranked Russia at an all-time worst of 121st out of 163 countries on corruption, putting it between the Philippines and Rwanda.

• “Russia ranked 62nd out of 125 on the World Economic Forum’s Global Competitiveness Index in 2006, representing a fall of nine places in a year.”

• “On the World Bank’s 2006 “ease of doing business” index, Russia ranked 96th out of 175, also an all-time worst.”

If he had not eliminated the independence of the press and made it virtually impossible for the opposition to field candidates, Putin might have been made to pay a price for some of these problems at the ballot box.

It will be interesting to see what fate will befall the Kremlin clique if oil prices fall in a big way. By then, of course, their power might be so secure that it won’t make any difference, but a collapse in oil prices would make clear for all to see what McFaul and Stoner-Weiss argue so persuasively: that autocracy in Russia isn’t really a success story.

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Unpardonable Behavior

The New York Times yesterday carried a front-page article entitled “As Democrats See Security Gains in Iraq, Tone Shifts.” The story details the rank cynicism of the Democratic presidential candidates, who—with the possible exception of Joe Biden—have tailored their presidential campaigns to a narrative of defeat in Iraq. Now that the tide unmistakably is turning for the better, Democrats seem to have found themselves in a quandary: their campaign slogans not only are embarrassingly incongruous with the facts on the ground, but also seem politically obsolescent. Now that American defeat in Iraq no longer is an inevitability—and thus, no longer a “victory” for partisans who view Iraq in terms of how it will affect the fortunes of the Bush administration, rather than contemplating what a defeat there might mean for the United States and its allies—the Democrats “are also turning to pocketbook concerns with new intensity as the nominating contests approach in January.” One wonders what the Democrats will do if “pocketbook concerns” like the economy and oil prices fare better in the coming months and they’re left with less and less to lament.

The Times article reveals that, regarding Iraq, of foremost concern to the Democrats is how the situation there will affect their political prospects:

“The politics of Iraq are going to change dramatically in the general election, assuming Iraq continues to show some hopefulness,” said Michael E. O’Hanlon, a senior fellow at the Brookings Institution who is a supporter of Mrs. Clinton’s and a proponent of the military buildup. “If Iraq looks at least partly salvageable, it will be important to explain as a candidate how you would salvage it—how you would get our troops out and not lose the war. The Democrats need to be very careful with what they say and not hem themselves in.”

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The New York Times yesterday carried a front-page article entitled “As Democrats See Security Gains in Iraq, Tone Shifts.” The story details the rank cynicism of the Democratic presidential candidates, who—with the possible exception of Joe Biden—have tailored their presidential campaigns to a narrative of defeat in Iraq. Now that the tide unmistakably is turning for the better, Democrats seem to have found themselves in a quandary: their campaign slogans not only are embarrassingly incongruous with the facts on the ground, but also seem politically obsolescent. Now that American defeat in Iraq no longer is an inevitability—and thus, no longer a “victory” for partisans who view Iraq in terms of how it will affect the fortunes of the Bush administration, rather than contemplating what a defeat there might mean for the United States and its allies—the Democrats “are also turning to pocketbook concerns with new intensity as the nominating contests approach in January.” One wonders what the Democrats will do if “pocketbook concerns” like the economy and oil prices fare better in the coming months and they’re left with less and less to lament.

The Times article reveals that, regarding Iraq, of foremost concern to the Democrats is how the situation there will affect their political prospects:

“The politics of Iraq are going to change dramatically in the general election, assuming Iraq continues to show some hopefulness,” said Michael E. O’Hanlon, a senior fellow at the Brookings Institution who is a supporter of Mrs. Clinton’s and a proponent of the military buildup. “If Iraq looks at least partly salvageable, it will be important to explain as a candidate how you would salvage it—how you would get our troops out and not lose the war. The Democrats need to be very careful with what they say and not hem themselves in.”

O’Hanlon is correct in predicting that the Democrats—none of whom supported the troop surge, which has led to the positive gains in and around Baghdad—will have a tough time waging a campaign on the supposed failure of Iraq if the situation there proves “at least partly salvageable” come November of next year. And certainly it would be nice to hear something more constructive than mere defeatism coming from the mouths of Democratic candidates. Yet will voters trust a Democratic nominee to explain how they “would salvage” Iraq, especially in light of the fact that said nominee inevitably will have opposed from the very start and decried every step of the way the very strategy that got us to the present moment?

This situation (in which good news must be, at best, ignored and, at worst, distorted) poses a difficult problem for the antiwar Left in general and the Democrats in particular, and brings to mind the latest offering from Christopher Hitchens, who, while readily acknowledging that the good news out of Iraq may prove ephemeral, last week argued that:

What worries me about the reaction of liberals and Democrats is not the skepticism, which is pardonable, but the dank and sinister impression they give that the worse the tidings, the better they would be pleased. The latter mentality isn’t pardonable and ought not to be pardoned, either.

Given his own political odyssey, Hitchens is quite familiar with this sort of crass anti-Americanism. Wishing for America’s defeat at the hands of whatever enemy wearing an “anti-imperialist” mantle it happens to face is a longstanding article of faith amongst many of his erstwhile comrades on the Left. The times and conflicts may have changed dramatically since the days Hitchens was an unreconstructed Marxist, but the enemy—American power—remains, apparently, the same.

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That 70’s Show

Director Jonathan Demme’s documentary on Jimmy Carter—Jimmy Carter Man from Plains—has been drawing dozens of the former President’s devotees to the theaters. The film couldn’t be better timed. What with the shock of skyrocketing oil prices, a feeling of political malaise, the renewed threat of Iranian extremism, and an economy that no longer conforms to tried and true assumptions, it’s starting to seem like the Carter years all over again. (As it did then, it feels now like we’re in a kidney stone of a period that will pass only with great difficulty.)

If you let your memory roam a bit during last Tuesday’s Democratic Party debate, you could, listening to Barack Obama (who is nearly as unctuous as Carter) speak of how only he could deal “honestly with the American people,” hear further echoes of the Carter era. Evidently, such honest dealings require the good will of the Iranian leadership. Carter reached out to Khomeini as “one man of God to another.” Obama, holding out the promise of membership for the Persian state in the World Trade Organization, says he too wants to “engage in aggressive personal diplomacy” with Iran.

But it was John Edwards, like Carter a Southern liberal, who took the most Carter-like approach. President Carter spoke of the need to put aside “our inordinate fear of Communism.” A would-be President Edwards similarly complained that we have been “governed by fear” of terrorism; he promised to put an end to the “politics of fear.” Carter and his spokesmen, such as UN Ambassador Andrew Young, spoke insistently and repeatedly of the need to “restore America’s reputation.” Edwards also speaks about “restoring our good name” in the world.

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Director Jonathan Demme’s documentary on Jimmy Carter—Jimmy Carter Man from Plains—has been drawing dozens of the former President’s devotees to the theaters. The film couldn’t be better timed. What with the shock of skyrocketing oil prices, a feeling of political malaise, the renewed threat of Iranian extremism, and an economy that no longer conforms to tried and true assumptions, it’s starting to seem like the Carter years all over again. (As it did then, it feels now like we’re in a kidney stone of a period that will pass only with great difficulty.)

If you let your memory roam a bit during last Tuesday’s Democratic Party debate, you could, listening to Barack Obama (who is nearly as unctuous as Carter) speak of how only he could deal “honestly with the American people,” hear further echoes of the Carter era. Evidently, such honest dealings require the good will of the Iranian leadership. Carter reached out to Khomeini as “one man of God to another.” Obama, holding out the promise of membership for the Persian state in the World Trade Organization, says he too wants to “engage in aggressive personal diplomacy” with Iran.

But it was John Edwards, like Carter a Southern liberal, who took the most Carter-like approach. President Carter spoke of the need to put aside “our inordinate fear of Communism.” A would-be President Edwards similarly complained that we have been “governed by fear” of terrorism; he promised to put an end to the “politics of fear.” Carter and his spokesmen, such as UN Ambassador Andrew Young, spoke insistently and repeatedly of the need to “restore America’s reputation.” Edwards also speaks about “restoring our good name” in the world.

Both then and now, seemingly paradoxical developments in the economy shredded the old certainties. The Democrats had, since the late 1930’s, organized their economic policy around the requirements of Keynesian demand management. Government spending was their means to avoid economic downturns and ensure a robust economy. This approach was summarized by what was known as the Phillips curve, which described how x percentage of inflation brought y percentage in unemployment reduction. But by the late 1970’s, as business had become accustomed to the Keynesian game and oil prices ramified through the economy, government spending produced the combination of stagnation and inflation known as stagflation. Stagflation ended the Keynesian era and left the Democrats economically rudderless.

Republicans, notes economist Joel Kotkin, face something similar now. There is no doubt that global trade has expanded our GDP. The aggregates, as Larry Kudlow points out, are looking very good. But people don’t live in the aggregate economy. Paradoxically, a sharp increase in inequality, as middle-class incomes grow slowly at best, has accompanied the increase in overall prosperity (the economy grew at a very strong 3.9 percent rate in the last quarter). As former Treasury Secretary Larry Summers explains, “If the distribution of income in the U.S. today were the same as it was in 1979, and the U.S. had enjoyed the same growth, the bottom 80 percent would have about $670 billion more, or about $8,000 per family a year. The top 1 percent would have about $670 billion less, or about $500,000 a family.”

One response to this seeming paradox has been an increasingly critical attitude towards global trade, as if there were an alternative. Politically, this represents a huge opening for the Democrats—much as stagflation helped make Reagan’s election possible.

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