Obama on the Middle East: “Really Hard”

After President Obama delivered a much praised speech in Cairo, Egypt last year in which he called upon the Muslim world to end “the cycle of suspicion and discord,” his administration made little progress in the Middle Eastern peace progress. The president’s credibility with both Israelis and Palestinians “diminished” as his demand that Israel freeze settlement construction failed to bring about the desired result. Special envoy to the region George Mitchell promised to deliver peace in two years but doesn’t appear to have achieved anything concrete yet.

In an interview with Joe Klein of The New York Times, the president admitted that the “process has not moved forward” while Mitchell, he claimed, “got blinded” by the progress he saw from the Israelis, not realizing that it wasn’t enough for the Palestinian leadership.

“Even for a guy like George Mitchell who helped bring about the peace in Northern Ireland,” the Middle Eastern conflict “is just really hard,” according to Obama. The political situation in both Israel and the Palestinian territories made it “very hard for them to start engaging in a meaningful conversation.” Read more “Obama on the Middle East: “Really Hard””

Spheres of Waning Influence

Whenever a new non-Western alliance is formed somewhere in the world, Western commentators are quick to regard it as a threat to Western interests and security. Whereas the economic integration of the European Union and the military cooperation within NATO are considered to have significantly advanced peace and stability on both sides of the Atlantic, similar arrangements made independently of Western interference are regarded warily.

This is shortsighted and ignores how much the West stands to benefit from the copycat behavior of the Rest.

EU imitators

Oftentimes, international cooperation outside Europe and North America is pursued in defiance of perceived Western pressure. The South American Mercosur and Southeast Asia’s ASEAN are both free-trade blocks structured on the European model, founded in part to strengthen their members’ ability to resist the demands of the IMF and the World Bank which for decades have dictated economic policy to these nations.

The irony is that once freed from the Washington Consensus, these same countries embraced free-market capitalism, be it with some “softening” measures to fight poverty as happens, very successfully, in Brazil, for example.

Other EU imitators are less resistant to the West. The Gulf Cooperative Council, led by Saudi Arabia, is designed to counterbalance Iran and relies heavily on American support — and on Westerners buying its oil.

Sino-Russian competition

Until recently, the most potent of anti-Western alliances appeared to be the Shanghai Cooperation Organization (SCO) in which both China and Russia take part while India settled for an observer status.

In spite of its stated goals, the SCO has failed to achieve much regional cooperation in the last few years. China has been able to use the platform to project its influence across the region while Russia is reluctant to deepen its participation, writes Alexander Cooley in Foreign Affairs magazine. “Subtle but key differences in the regional security priorities of the two countries have started to play out,” he argues.

Russia regards Central Asia as its “zone of privileged interests.” For the past two decades, Moscow has sought to embed the states of Central Asia in a system of Russia-controlled institutions — the Collective Security Treaty Organization (CSTO), a mutual defense alliance; the Eurasian Economic Community (EurAsEC), a customs union; and the Commonwealth of Independent States (CIS), a loose federation of former Soviet countries. At the same time, it has actively worked to block Western actors such as NATO. China, in contrast, has been focused not so much on countering the West as on stabilizing its own western territory: the autonomous province of Xinjiang, which borders the Central Asian states.

At the time when color revolutions swept across Eastern Europe, Beijing and Moscow found their agendas aligned: both feared Western-backed democratization in Central Asia. Russia showed its teeth to prevent further foreign involvement in its former satellite states while China pressed down hard on calls for reform in its hinterland.

But a Sino-Russian split became apparent when the latter invaded Georgia in 2008. Days after a EU-brokered ceasefire went into effect, Russian president Dmitri Medvedev asked the SCO to support the independence of the breakaway Georgian provinces which Russia claimed to defend. China and the other members refused.

“After this diplomatic rebuke,” writes Cooley, “Moscow redoubled its efforts to promote the CSTO, an organization that includes the same Central Asian states but is safely in Russia’s pocket.”

Wary of China’s economic predominance, Russia subsequently sought to block many of its neighbor’s efforts to use the SCO to its own advantage. Chinese premier Wen Jiabao’s proposal to create a SCO free-trade area was met with Russian disapproval. Rather, Moscow champions the existing EurAsEC, which includes Belarus, Kazakhstan, Kyrgyzstan, Tajikistan — but not China.

Paper tiger

The SCO then is weak and far from the aggressively anti-Western pact is appeared to be a few years ago.

“As such,” writes Cooley, “it makes sense for the United States to work with the SCO to engage China and the Central Asian states on select Afghanistan issues.”

Moreover, Western engagement with the SCO could undercut Russia’s ambitions to dominate the region once again.

As the world moves toward more multilateral cooperation, the West should not stand in its way. The United States will probably lose some of its status and influence, as Western Europe has, but it will remain the uncontested superpower for decades to come.

More importantly, as the Latin American and Southeast Asian states have demonstrated, direct involvement in their development does not encourage them to do as the West did. Rather, allowing these nations to discover the advantages of free markets and shared security on their own is much more effective — and therefore more in the West’s own interest.

The Impossible Joy of Sacrifice

The recent disaster in Haiti has sparked a renewed wave of commentators to demand that men “sacrifice” for the sake of others’ needs. There is little mention of the injustice suffered by the Haitian people at the hands of their own government and, recently, at the hands of nature — which would be legitimate reasons for generosity. Rather, an appeal is made to people’s “altruistic nature” for as New York Times columnist Nicholas D. Kristof puts it, “generosity feels so good.” Indeed, according to Kristof, it is “difficult for humans to be truly selfless.”

Kristof presents readers with an interesting choice. Whom would you rather be, he asks. A successful, healthy 36 year-old businessman who hasn’t married but spends his spare time traveling the Pacific while authoring poetry, or a 64 year-old, overweight retired school assistant who dedicates her time to babysitting and Church charity? The journalist derives his example from the work of Jonathan Haidt, Professor of Psychology at the University of Virginia and author of The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom (2005).

The choice, both Haidt and Kristof seem to presume, is obvious. The businessman’s life is “stressful” and “lonely” while “happiness is tied to volunteering.” Moreover, “people with religious faith tend to be happier than those without.” Gaining wealth and advancing one’s career don’t do people any good. “Good works, religion or spirituality, or friends and family” — those are the things worth living for. “Helping others,” notes Kristof, “may be as primal a human pleasure as food or sex.”

The latter is an odd statement and deconstructing it leads one directly to the irrationality of Haidt’s and Kristof’s argument. Unlike food and sex, “helping others” is no requisite for survival. To the contrary, charity typically comes at a personal loss, equating it to sacrifice which is never a pleasure, let alone a “primal” one. That is why the moralists of altruism have to invent all sorts of arguments to justify it. Man is not inclined to sacrifice; he is bound by reality to pursue his own interests for the sake of his own survival.

Happiness is not a state attained at the command of whim. It is a state of non-contradictory joy: a joy devoid of guilt or punishment; a joy that does not clash with one’s values nor work for one’s own destruction. As such, happiness is possible only to men of reason — men who pursue realistic goals and seek to fulfill them by rational means. That fulfillment makes happiness; not the satisfaction of any emotional urges nor the achievement of altruistic virtues imposed upon man by savants who dare claim that happiness is found in its very renunciation.

Yet that is exactly what our aforementioned duo professes. Kristof even draws religion into the equation which, at least, promises a carefree afterlife as reward for the sacrificing that man must endure on this Earth. Later philosophies of altruism, as promulgated by Haidt, do away with this fantasy altogether and declare that sacrifice is its own reward — because it “feels so good”.

Altruism only “feels good” to men infected with the nefarious sense of morality that holds that life is not one’s own; that it belongs to the anonymous mass of humanity that is in need. Sacrifice therefore does not mean merely entail benevolence. It demands the surrender of that which one values in favor of that which one doesn’t.

Helping a friend then is not sacrifice; helping an unknown stranger is. Helping another at no personal expense is not sacrifice; helping another at the cost of one’s own happiness, is.

If that doesn’t make you “feel good,” don’t despair though. Kristof paraphrases John Stuart Mill who “had a point,” according to the columnist, when he suggested that, “It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied.” In other words: the egoist is a “pig” and a “fool” whereas the altruist might not be happy but can at least consider himself a “noble” human being. And “nobility,” writes Kristof, “can lead to happiness” — expect when one holds reason and selfishness and self-esteem as the noblest of virtues, of course.

Helping others or donating to charity should not be done out of a misplaced sense of responsibility or guilt for one’s own accomplishments. Emotions are the products of man’s values and man’s pride and should on themselves never be called upon to justify any course of action. Justice is the only righteous motive for charity. Only if the person or people profiting from one’s help are deserving of it can such help be in accordance with a proper morality. Then, by living up to one’s own code and achieving one’s own virtues, will generosity truly “feel good”.

Punishing Banks Won’t Work

We’re not the only ones opposing President Obama’s recently announced Financial Crisis Responsibility Fee, the new tax on “big” Wall Street banks that is to pay for the billions of dollars thrust into the financial system by the American government since the recession begun.

Where we argued against the morality of the tax, Nicole Gelinas, author of After the Fall: Saving Capitalism from Wall Street — and Washington (2009) explains in the New York Post why it won’t work.

The administration is trying to address public outrage over bankers’ bonuses but people aren’t just upset over the money that’s being made on Wall Street. “They’re angry,” writes Gelinas, that the bonuses are “going to people at firms that got bailed out last year as ‘too big to fail’.”

In other words, the public’s angry that the government’s made the financial industry immune from consistent market discipline. Small businesses go under if their owners make catastrophic mistakes — but shareholders of failed insurer AIG live to see another day.

“The popular impulse is right,” says Gelinas. The financial sector must realize that bankruptcies will happen when warranted. That, she notes, is the best defense against bank failures — not more regulation. Indeed, the “too-big-to-fail fee” will achieve the very opposite.

All imposing this fee will do is hammer home the idea in bondholders’ minds that the firms […] are too big to fail, that the government will bail them out again the next time they screw up.

Freeing banks from the safety net of “oversight” benefits them as well as their customers. As we noted before, “In a truly free market, failure is possible and consumers are aware of the risk — with the result that they rationally and voluntarily assume less of it.”

Krugman Says: Spend More!

Since the early days of the Obama Administration, economist Paul Krugman has been more than eager to defend every spending measure enacted by the Democrats newly in office.

Writing in August of last year, Krugman credited “big government” with saving the country from a Second Great Depression. While George W. Bush was in power, the economist used to complain about government spending running amok but after Obama moved into the White House, budget deficits were “actually a good thing.”

At the start of the Bush Administration Krugman argued in favor of lowering the interest rate in order to “promote spending on housing.” He even proposed a fiscal stimulus package that “should include only measures that really will promote spending,” he noted. “Giving money to lower-income families would also be sensible.”

Krugman might see things differently but President Bush followed his advice. The interest rate was lowered while the government-sponsored enterprises affectively known as Fannie Mae and Freddie Mac facilitated an irrational lending policy that ultimately undermined the whole of the American financial sector to bring about the meltdown of 2008. Banks are blamed but it was government that made the recession.

The answer, predictably, was: more government. At a time when the United States had already to finance two wars in the Middle East, both Democrats and Republicans approved of bailing out not only banks but much of the auto industry as well. Although journalists predicted that banks would mostly abuse the infamous Troubled Asset Relief Program (TARP) and although even Congress found (PDF) that it had in no way stimulated America’s ailing housing market, Krugman relishes in the “deliberate efforts of the government to pump up the economy.” Indeed, just a few months ago, he declared that the world “would be better off if governments were willing to run even larger deficits over the next year or two.”

This week, the High Priest of Keynesianism reiterated that sentiment, complaining that the stimulus was “too small”. He in part turned his back on his own party, claiming that the Obama Administration was “wrong” to think that more spending wasn’t “necessary.”

Still, at least the Democrats favor spending before anything else, right? “And aren’t you glad that right now the government is being run by people who don’t hate government?” Even though they are saddling up the American people with debts that their unborn great-grandchildren might, if lucky, be able to pay off. But who really cares about the future? As the grand master himself once professed, “In the long run we are all dead.”

Tension? What Tension?

“Asia has emerged as a diplomatic hornet’s nest,” according to The New York Times, “even beyond the perennial threat of North Korea.” Secretary of State Hillary Clinton is in the midst of it all, trying to defuse “tension” between the United States, China and Japan. What is going on?

American commentators continue to dread a confrontation with China even as both powers are growing more interdependent every day. In spite of China’s economic ties across the region, there is fear moreover that East Asia is becoming something of a powder keg, about to explode any minute now.

There is real tension, of course. Although China and Japan are quickly becoming each other’s most important of trading partners, militarily they compete. The strong American military presence in Japan as well as its reluctance to sell the F-22 fighter airplane to Japan are complicating factors in a triangular relationship that is intricate to begin with.

The new Japanese government meanwhile is delaying the relocation of a American military base on the island of Okinawa despite Clinton’s demand that they “follow through on their commitments.” Three times, the secretary indicated that Washington is not open to compromise on the issue but Prime Minister Yukio Hatoyama campaigned for moving the base off Okinawa or even out of Japan altogether, reasoning that Japan should pursue a foreign policy more independent of the United States — exactly because of its sometimes bellicose language toward China.

Then there’s Taiwan. Its president, Ma Ying-jeou, has been pursuing a more conciliatory policy toward China which still likes to consider the island a renegade province of the mainland. While 1,500 missiles stand aimed and ready to fire across the Strait, Taiwan is a healthy, capitalist democracy which, for the time being, is not stressing the matter of de jure independence. Rather, China and Taiwan are in negotiation to reduce import and travel restrictions between the two countries: a necessary move for Taiwan considering the recent creation of a Southeast Asian free-trade zone that makes the island less attractive as trading partner to China.

The United States is bound by law to arm Taiwan, however, and a recent sale of missiles met with strong Chinese disapproval. Sino-American relations are still shaky but as Clinton said last Tuesday, “America’s future is linked to the future of this region, and the future of this region depends on America.” Obama was even happy to call himself a “Pacific president” and for good reasons: East Asia is fast becoming the new core of the world economy while politically, its integration can be fragile at times. American involvement is able spark discontent but it also helps smooth over differences by providing great power leadership to those nations fearing Chinese domination.

The political discord should not be exaggerated. Today’s tension springs from relatively minor disagreements and will, in the end, be resolved.

The Kremlin Two-Step

“Westerners often see Russian politics in terms of a high-level struggle between liberals and conservatives,” observes Dmitri Trenin, director of the Carnegie Moscow Center, writing for The Moscow Times. For instance, under President Boris Yeltsin, reformers fought nationalists while under Vladimir Putin, economic liberals opposed the siloviki — a class of politicians that originally served the security services and stresses national interests.

That view, argues Trenin, is a simplification of Russian politics and it fails to properly account for the Putin-Medvedev relationship.

To dismiss Medvedev as a mere Putin puppet — a constitutional bridge between Putin’s second and third presidential terms — would be both unfair and wrong. […] Conversely, portraying Putin as “a man from the past” and Medvedev as “a hope for the future” exaggerates the differences between them and omits the more important factors that unite them.

Dmitri Medvedev does appear to be more of a reformer, noting last November that the “country’s prestige and national prosperity cannot rest forever on past achievements.” Medvedev proposed modernization. Democracy, transparency, and a clean and healthy service economy were supposed to do away with a past of authoritarianism and heavy industry. All this is “borrowing massively from Putin’s vocabulary of 2000,” according to Trenin.

Medvedev was installed in the Kremlin as part of “Putin’s plan,” the substantive part of which was known as the “Strategy 2020,” a blueprint for renewed economic growth and diversification. Although last year’s financial meltdown hit Russia hard, it has only made Moscow modify and sharpen its scheme. “Medvedev is a key agent in its execution” and Putin chose him carefully — not only for his loyalty, “vitally important as that is.” The former president truly intends to move Russia forward. He “wants Russia to succeed in a world of competing powers.”

He has both money — the government’s budget and the oligarchs’ fortunes — and the coercive power of the state firmly in his hand. He is the arbiter at the top and the troubleshooter in social conflicts below. His most precious resource is his personal popularity, which adds a flavor of consent to his authoritarian regime.

That isn’t good enough though. An overwhelming majority of Russians support Putin but those are largely the people reminiscing about the Stalin era, longing for what Trenin calls “the preservation of a paternalistic state.” The best and the brightest aren’t among them.

Enter Medvedev. His Internet surfing, compassionate and generally liberal image helps recruit a key constituency — those beyond the reach of Putin himself — to Putin’s plan.

But in order to fully modernize Russia, the Putin-Medvedev twosome has not only to appeal to young urban professionals; they need to offer them actual modernization as well. They “must break the stranglehold of corruption, establish accountability and free the media.” At some point, argues Trenin, the Kremlin will have to decide between steady marginalization and opening up the system, putting the established order at risk. “Given the weight of geopolitical factors in Russian decisionmaking, it is difficult to foretell which path they will choose.”

The Government of Whim

“We want our money back,” cried President Obama yesterday, “and we’re going to get it!” Announcing a Financial Crisis Responsibility Fee — a tax perfectly named for an era in which banks are held responsible for a recession that was beyond their control — the president promised American taxpayers that they would get “every single dime” which they are “owed” back. Don’t expect a tax cut any time soon though. “Back” here means: right into the state coffers for the government had had to borrow that money in the first place.

The fee will be in place for at least a decade with the possibility of being prolonged for as long as it takes to get the TARP money back. Only “large” firms are subject to the new regulation. Banks that hold less than $50 billion in assets are not affected. Indeed, the White House boasts, so much as 60 percent of the revenue will come from just the ten largest banks.

Describing TARP as “a distasteful but necessary thing to do,” the president admitted that against expectations, most of the money has been recouped already. But “most” is not enough. “If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers.”

Not only are banks distributing bonuses again — which in itself is something the administration thinks they should be ashamed of — they are “once again engaging in risky bets to reap quick rewards,” said Obama and that does not “reflect what the country has been through.” It looks like “business as usual” to the president and for whatever reason, America can’t go back to that.

Wall Street is protesting. First, the government bailed them out because they were supposedly “too big to fail,” upsetting the natural order of the free market by rewarding failing businesses. Next, the very same financial institutions were held responsible for a crisis that started in the single-most regulated sector of the American economy — the housing market. Now, they are further penalized for a crime they did not commit as the White House announces a largely redundant policy that only reinvigorates existing misconceptions and hatred of the financial sector at large.

The president sees things differently. He denounced the “twisted logic” of Wall Street that supposedly argues that it would be “more appropriate for the American people to bear the costs of the bailout, rather than the industry that benefited from it,” adding, “even though these executives are out there giving themselves huge bonuses.” And these monocle-wearing, cigar-smoking big shots are complaining they’re being treated unfairly?

In fact, they are. Most banks didn’t ask to be bailed out. Rather they were coerced into participating in TARP and they paid back the money as quick as they could. Getting it all back is one thing. Demanding that they change their way of doing business is a serious infringement on their freedom of enterprise and shouldn’t be the policy of any government. That public opinion appears to be against banks and bonuses shouldn’t be reason enough for the Obama Administration to persecute them or capitalism as such. Such is the government of whim and it does not become a republic as the United States.

Sino-American Relations Still Shaky

While the current administration realizes that China is little threat to the United States, last year’s Impeccable incident, when the US Navy’s ocean surveillance ship was harassed by Chinese vessels in the South China Sea, came as a harsh reminder that the two superpowers don’t always get along.

Moreover, the two continue to clash on human rights, Taiwan, and China’s reluctance to push for sanctions against “rogue states” as North Korea and Iran. China’s accidental empire is a matter of concern for many Asian states, India foremost among them, and it is in part responsible for the Asian naval race.

In the United States, there are plenty of commentators who dread China’s military expansion while politicos typically fail to understand why the country is so hesitant to pursue a more aggressive foreign policy when it could be in the interest of the United States. The red giant appears to be waffling more than usual on the issue of Iran recently, rescheduling meetings and refusing to pledge anything concrete.

Meanwhile, Secretary of State Hillary Clinton, on a trip to Hawaii, Papua New Guinea, New Zealand and Australia, tries to pretend that nothing is out of the ordinary. “Everyone’s aware that China is a rising power of the twenty-first century,” she said Monday. “But people want to see the United States fully engaged in Asia, so that as China rises the United States is there as a force for peace.”

“Fully engaged” referring to a $1 billion arms sale to Taiwan, heavily criticized by Chinese officials last week. Clinton doesn’t expect any trouble though. “What I’m expecting is that we actually are having a mature relationship.”

Asked about Iran, Clinton proposed to push for “smarter” sanctions, targeting specific groups within the regime rather than the Iranian economy on the whole. “It is clear that there is a relatively small group of decisionmakers inside Iran,” she said. “They are in both political and commercial relationships, and if we can create a sanctions track that targets those that actually make the decisions, we think that is a smarter way to do sanctions.” Something the Chinese may be more willing to accept, perhaps?

Chávez Shuts Down Shops

Until a few years ago, Venezuelan dictator Hugo Chávez was sometimes described as the benevolent kind but in recent years, his reign has grown ever more authoritarian. He abolished presidential term limits, withdrew Venezuela from both the World Bank and the International Monetary Fund in 2007, nationalized the oil industry and built relations with countries as Iran, Libya and Syria — not exactly the most friendly of nations.

In Venezuela, opposition against what may turn out be a president-for-life is mounting however. Protests are far from an unusual sight in the streets of Caracas. Tens of thousands of Venezuelans have already abandoned the country: artisans, engineers, lawyers, managers and scientists all fled socialism en masse last year. So much as one million people are estimated to have left the country since Chávez came to power. The exodus sabotages the country’s future and no industry is hit harder than oil on which the Venezuelan economy still thrives primarily.

Unsurprisingly, the voice of the opposition is silenced. Dozens of radio stations and two television networks have been pulled off the air already with Chávez attempting to pass legislation that will further penalize “media crimes.”

Last week, amid enduring economic hardship, Chávez devaluated the currency, cutting the exchange rate of the bolivar against the dollar by half for oil incomes and for goods deemed nonessential in order to bolster the state coffers. Currency controls have been imposed to prevent capital flight while inflation is likely to sour.

Earlier today, authorities backed by soldiers closed dozens of retail outlets for price gouging after a shopping frenzy had plagued the nation in reaction to the currency devaluation. Thousands of shoppers mobbed stores during the past week to snap up imported television sets and computers, worried that their savings would lose value soon. Chávez responded by sending troops to monitor prices in shopping districts. So much as seventy retailers were shuttered while raids continue this very day.

It is the typical cycle of government intervention at work: regulation is passed “for the common good”; the regulation fails, or works only temporarily; the private sector takes a beating; the economy turns down — at which point more regulation is proposed to save society from the supposed ills of the “free market.”

Chávez’ struggle against free-market capitalism and what he calls the “imperialism” of American businesses operating overseas is well recorded as are his numerous social programs. As is typical of any movement that begins by “redistributing” wealth, Caracas ends up distributing sacrifices these days. The industrialists were first to fall victim to the new regime. Then came the journalists and the independent thinkers, many of whom fled the country in response. Shopkeepers and entrepreneurs in general are next as today’s news amply demonstrates. In all likelihood, the persecution of his minority will fail however, finally undermining Chávez’ crusade against free enterprise because there are simply too many retailers.

Sadly, the Venezuelan people will bare the burden in the end as their country is internationally isolated and their standard of living declining sharply — all, Chávez insists, because of that evil, American capitalism.