Saturday, 26 February 2011

Revolution in the Middle East and the Whitehouse response

Original Aritcle written on 19/2/2011
After the recent protests in Tunisia and Egypt which toppled their respective governments the civil unrest has spread to other nations in the Middle East. Anti government protests have spread to Bahrain, Libya, Iran, Qatar and numerous
other nations in the region. What has been truly deafening is the silence of the U.S during the uprising in Egypt, never did the Obama administration ever have a coherent plan other than wait and see what happens. This simply isn't good enough from a nation that is not only a hyper power but the driving force in the region. In this case doing nothing was worse than backing the wrong side during the unrest, not only has it reduced the United States standing in the region but it's made it seem irrelevant, perhaps even powerless in some peoples opinion to stop the Middle East from leaving its clutches.

This is a wakeup call for U.S friendly governments in Saudi Arabia and Jordan that if the winds of change blow towards democracy and rule of the people they won't intervene in their internal political disputes, something that has been the bread and butter of the U.S State department and CIA for decades. Some political commentators namely British Professor Niall Ferguson have lamented the lack of a "grand strategy" from the Obama administration for the Middle East, suggesting that the administrations only real message was "I'm not George W. Bush love me". And without sounding too much like a individual that wants to prop up dictators he is correct, the U.S needs to choose whether it will back democracy in the Middle East or not otherwise it will be left behind and rendered irrelevant like it was during the uprisings in Egypt. If the U.S backs democracy there is a chance that these nations may still be friendly to the U.S but there is no guarantee especially after a lifetime of interfering in the inner workings of the Middle East for example pre revolution Iran and more or less all policy's concerning Israel. By the same token if the U.S continues to prop dictators it may stabilise the region for the moment and maintain the flow of oil but ultimately lead to even more anti-American sentiment for when these countries finally do have a democratic revolution.

Either way the lack of a "Grand strategy" has severely dented America's credibility in the Middle East from the perspective of both its allies and its detractors. The Saudi king Abdullah backed former Egyptian president Mubarak wholeheartedly by insisting that if the United States withdrew its $1.5 billion in aid to Egypt the Saudi's would make up the short fall as both a show of defiance of U.S policy or their lack of but also of solidarity with a friend and fellow head of state propped up by the United States.

A policy of gradual democratisation in the Middle east supported by the Obama administration could perhaps get the moderates in the region to cool their heels and lead to secular democracy and prosperity across the region. This would win the United States many friends in the region and keep it friendly to the United States into the future. Also this prospective policy may also have the knock on effect of reducing the number of young Muslims to be recruited by terrorist organisations like Al-Qaeda, thereby making the region and the world a safer place.

Unfortunately this policy is impossible for as long the United States unilaterally supports all of Israel's actions even those considered illegal under international law. As I write this article the United States used its veto a UN security council vote to block a resolution condemning the building of Israeli settlements on what the UN considers Palestinian territory.

Until the U.S decides on its policy in the Middle East it's going to continue to seem more irrelevant as more crisis's crop across the region and the Obama administration is unable to come up with a strategy to deal with them in any meaningful sense. The U.S needs to realise it can't have its cake and eat it too after so many decades of doing so, it can no longer prop up dictators in some nations and yet lecture other nations on how they should be democratic. With the advent of the internet and the meeting of minds of not just for instance a couple of dozen people in a Cairo cafe, but millions from across the world. The U.S cannot afford not to act as this rebellion against established regimes in the Middle East uses new media to recruit from a massive pool of disenchanted youths and unemployed adults sick of decades of oppressive rule and economic stagnation. The momentum is with the protesters at the moment and it seems the remaining Middle Eastern nations still under the threat of uprisings are much more likely to turn to the sword than the olive branch to put down the uprising especially if the United States continues its "wait and see" method of foreign policy.

People say Egypt went well for the west but this is a rather short sighted view. The military run Egypt not the people, hardly what you call a successful end to a revolution. There may very well be a chance of a secular democracy but that is far outweighed by likelihood of either another dictator propped up by the military or a government dominated by the Muslim brotherhood which could be a positive or negative force in the region. Whichever outcome actually comes to pass its most likely not going to be a positive for the United States. Any Muslim Brotherhood government is going to challenge the U.s on its policy towards Israel which is going to cause incredible friction between the two nations and that is only one of many issues that may be bones of contention. If the military continues in power they will be aware that the majority of the armed forces are by inlarge  quite poor Egyptians who support the man and woman on the street so they will be ruled by public opinion perhaps more so than even a Western democracy, this can be beneficial when the public call for more jobs or better international relations but when the call in the streets is for instance the destruction of Israel they will be placed between an angry populace wanting its government to carry out its will and the military might of the United States.

People will no doubt say "Tarric well what would of done?" and the answer is simple send several warships to Egyptian ports in the Red Sea and Mediterranean to show the support of the United States for the democratisation of Egypt and I would of also requested access to Egyptian airspace and had 3 or 4 dozen fighter squadrons flying over Tahir square with the colours of the Egyptian flag coming out of the aircraft like at an air show. This along with a clear message from the White House of we want democracy for Egypt and a transitional civilian government without Mubarak and interference from the military. I believe this course of action would of won the United States many friends in the Middle East and around the world. This along with not unilaterally supporting all Israeli actions and actually committing to a equitable resolution to the Israeli-Palestinian conflict would drive the region to a more U.S friendly stance instead of the opposite which is the gradual gravitation of the Middle East towards the growing power of Iran.

Amendment written 26/2/2011
When I wrote this peace Libya's protests were still in their infancy and Gaddafi still had Libya firmly in his grasp. In the last 7 days however the situation has worsened considerably and he is loosing his grip on power quite rapidly. Some political commentators both from Libya and abroad are already calling his regimes demise all but a certainty.

But I digress, this amendment to my original piece is not about the political ramifications for Libya but about the economic ramifications currently echoing around the world and how this and similar events could have on the world at large. Oil prices have spiked dramatically rising by over 10% in the past month alone despite Libya producing only 2% of the worlds oil, the Saudi's have made assurances that they will make up any shortfall yet prices stay high at least for the time being.

If these events that took place in Libya and Egypt were to take place in a country that provided a much larger portion of the worlds oil for instance Saudi Arabia, that supplies over 12% of all the worlds oil the effect on the world economy could be catastrophic. Oil prices would skyrocket forcing inflation higher crippling the fragile economic recovery in the Western world and perhaps even the stronger recovery in fast growing developing countries like China and India.

Stagflation could once again be a reality for the West (Stagflation being low economic growth coupled with high inflation) making an already difficult situation worse. For instance US economic growth is predicted to be roughly 3% and with oil at $100 according to analysts that can knock off roughly 1% of GDP growth, if it were $120 you could knock off 2% of GDP growth. 

With growth stunted by high energy prices and then in turn high inflation the future may not be so rosy for the world if Saudi Arabia does undergo a revolution and does close the oil taps, the worlds volatile recovery would be stunted. The growing political and social divisions may rear their ugly heads with greater force and frequency than they have already on a small scale in both the U.S and in Europe.

This sort of scenario only reinforces my previous point about the Obama administration needing to become pro-active in the Middle East, pre-empting these criseses with talks of democratic reform and also a plan B if there is another round of whirlwind revolutions.

Friday, 18 February 2011

Controversy over Wisconsin Budget Cuts. Is this a preview for the rest of the U.S

The U.S economy at both state and federal level is currently quite precarious compared with any other time in American history. So the news coming out of Wisconsin that there is to be cuts to workers wages by making employees pay more their health insurance and pension premiums is causing quite a stir nationwide. One large bone of contention for the workers is that there will be a curtailing of the collective bargaining rights for most public sector unions thereby  reducing their power at the negotiating table.

Many people are outraged by these cuts and want them immediately rescinded, but what no one has yet provided with their mostly scalding responses is an alternative. I understand that many people find common cause with these employees as many Americans have had to endure pay cuts and layoffs throughout the financial crisis, but the question is if not from public sector pay cuts where does the money to pay back the debt come from?

Even the U.S congressional budget office's plan for the fiscal future of the United States is to run deficit after deficit every year until the year 2083. From both sides of politics there has been no real roadmap back to fiscal equilibrium, only politically based jabs at programs and policy's valued by the other party.

No party or at this point even any powerful individual in either party is willing to even speak about the types of cuts needed to get the budget deficit and national debt under control, even within the next few decades. I'm not suggesting by any stretch of the imagination to get the budget out of deficit by the end of this year or even next but there has to be a long term strategy for returning both the state and federal finances back into positive territory.

I realise what a daunting task and perhaps even politically impossible task this may be for law makers, but it's something that sooner or later has to be done and the longer the nation waits the harder it's going to be and the harder its going to hit the poor and the middle class.

We have become used to these policy's from the days of a booming economy, that generally make our lives better, helped us get paid more or make our taxes lower. But what is becoming alarmingly apparent is that we couldn't afford those policy's back then when you actually look back at previous budget deficits and that we definitely can't afford them now. The hard question for law makers though is which policy's to cut? do they make changes to Medicare, Social security, Defence, Medicaid or all of the above. How can you do something so politically damaging when the peoples first response is to storm the capital building and demand that you don't go through with your policy's?

As of this moment U.S government and state bonds are still seen as a safe haven for investors voyaging the still dangerous financial seas, but if those investors begin to believe that the U.S doesn't have a plan to pay off its debt in the long term investors are going to be much less willing to lend the U.S governments the money to fund these massive public debts thereby creating super high interest rates that would cripple the U.S economy like it has in Greece.

What it really boils down to at the lowest common denominator is lending a friend money, who while they still have a large income they already have other large debts and only pay the interest on those and don't actually pay the money back. I don't know about you but I wouldn't been keen to lend that friend money or go guarantor on a loan for them.

So while I don't entirely agree with the current cuts in Wisconsin I am forced to agree with their course of action because no one has presented another alternative and until someone does there will have to be these cuts into public policy to bide time until either a default on the debt or someone finally comes up with a plan to get Wisconsin and indeed the entire United States back into the black.

I leave you with a quote from Alan Simpson co-chair of President Obama's fiscal commission.

"“There’s only one way to [fix America’s long-term budget problems], You dig into the big four, Medicare, Medicaid, Social Security, and defence.”