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Archive for September, 2008

Fostering investment, corralling greed

Posted in United States on September 25, 2008|

[Originally published in the Rutland Herald.]

Make no mistake about it, our current financial problems are the direct result of greed supported by a lack of effective regulation by the federal government. This is a climate that has been consciously created by the Bush administration, which, true to its Republican roots and convictions, does not believe in regulation and has done everything humanly possible to weaken and minimize it.

Lacking effective regulation, the markets revert to a jungle in which anything goes. The overwhelming greed involved in the subprime mess is a natural adjunct to our free enterprise system. When given the opportunity, people will cut virtually any corner to make money. And that is why we need regulation.

For anyone who has lived abroad, the democratic capitalist, free enterprise system is the one to beat. Essentially, it lets market forces provide the risk/reward system for investors. Communism, fascism, socialism, are all systems that impose political ideologies on economic activity, to the detriment of those managed economies everywhere.

The key to this issue lies in the corruptibility of man. If you acknowledge his imperfections and his proclivity to cheat, then you will conclude that in a country where we have the best known system, we must have regulatory systems that minimize man’s ability to successfully cheat. We haven’t had that since the Carter administration, and that’s why we are dealing with our financial meltdown today.

The consensus is that our current economic miseries are the result of the subprime mess and that we will not move on to better times until there has been a further “correction” in the housing market — shorthand for a further drop in the value of our homes.

The fact that banks were able to pull the sleight-of-hand required to slip the marginal mortgages they were selling in among other, stronger items, obfuscating, but not eliminating, the inherent weaknesses in their products is laid to the weak regulatory system.

If you balk at the thought of greater, more comprehensive regulation, consider the fact that in the AIG meltdown, all the fiscal problems that caused the collapse came in the unregulated sectors of the company. The regulated sectors within AIG had no problems, remain viable and are the only thing about the company that potential investors might find financially attractive.

The only peril in bolstering the regulatory climate in America lies in an overreaction. If in America’s currently politically polarized condition, class warfare, or political, populist grandstanding against corporate interests gain sway, we will be in trouble. To be successful and effective, any regulatory changes will have to carefully retain and nurture a free-enterprise, entrepreneurial system. That is what attracts capital investment and creates wealth.

The other side of our problem is that we create far too little capital here at home. Our main sources of investment capital come from abroad. Yet we live in a society that canonizes spending. We were recently told by our president to spend, spend, spend as the way out of the perils of 9/11. In fact, we spend more than any people in the world. We buy the most inefficient vehicles on earth and then spend, spend, spend to keep them rolling. We spend like drunken sailors at any mall. To do this, we mortgage ourselves to the hilt in our credit card and other retail debt. We pay for nothing and borrow everything.

Under globalization, most of the goods we see are made somewhere else. That means that our spendthrift tendencies not only create debt at home, but cause the flow of dollars abroad to pay for the goods we buy on credit at the mall. Dollars that could become capital instead end up in foreign producers’ hands.

A country that behaves this way cannot conceivably accumulate capital. Without capital, no one prospers, because it is the basis of all borrowing, not just for retail profligacy, but for business formulation and expansion and all the other endeavors that create wealth.

There is potential for a vast, untapped source of capital out there in the middle class, if one of the parties could figure out a way to make long-term investing more attractive and safe for them. That does not mean privatizing Social Security, for if we had given all the Social Security money to Wall Street, as the Republicans wished, that would have wiped out not only Social Security, but the middle class with it.

Not only must we design the world’s best regulatory system, we need to change our ways on capital creation.

Haviland Smith is a retired CIA station chief who lives in Williston.

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Real Change Means Democrats in Charge

Posted in United States on September 25, 2008|

[Originally published in The Herald of Randolph.]

The word “change” is all the rage these days on the presidential campaign trail.  Unfortunately, its meaning has been so obscured for political reasons that it’s hard to sort through what’s really going on.

In today’s America, when any politician talks of change, it simply has to mean change away from the policies of the Bush Administration, starting with Iraq, continuing through New Orleans/Katrina, tax cuts, deficit spending to the sub-prime mess, to name but a few. The need for change, if you are looking at it substantively, has to be change from current Republican policies – Republican because those policies were enacted with the compliance of a Republican Congress in the days before 2006.  That means, presumably, that the Republicans in Congress agreed with the President and supported him on his policies.

John McCain, who has supported Republican positions in 88.3% of his Senate votes, has decided that he is the true agent of change because he has disagreed with the Administration on a small number of points.  He is against earmarks, wants to stop lobbyist using money to get at legislators, co-authored a bill on climate change control, believes in using embryonic stem cells, and wants to legalize the flow of foreign workers to the US.  Thus, he sees himself as a maverick who has taken on his own party on a number of issues.  But, essentially, he has been an “agent of change” on only a few hobby issues.  In the main, he has supported Republican legislative goals at an almost 90% rate,

Sen. McCain has redefined “change” to mean taking on one’s own party, rather than the onerous policies of the opposition party.  He says that Obama can’t be an agent of change because he is a died-in-the-wool liberal Democrat who has never taken on his own party on any issue and therefore, under the new McCain definition, cannot be an agent of change!

Please, that’s why he is an agent of change!  The only politicians who can really be agents of change in today’s American context are the Democrats.  They are the only ones who think that the Republican policies of the Bush era are absolutely wrong and have to be changed for the good of the country.  They actually have alternative policies to offer as a change from Republican policies largely supported by McCain and are prepared to spell them out, if anyone will listen.

But then, this campaign, more than most, and thanks largely to Republican strategy, is not about issues and reality. It is about emotion and cosmetics. As long as the campaign remains that way, we will focus on a Republican presidential candidate whose best and boldest changes have been designed to make himself more appealing to the Republican base and a Democrat candidate whom Republicans paint negatively as a captive of his own party!

On real policy issues there isn’t a nickel’s difference between McCain and Bush and that covers economic, tax, energy, health care, military, education and foreign policies.  He calls himself an agent of change because he plans to “clean up Washington”, not radically change its current policies, with the help of a vice presidential candidate who has allegedly “cleaned up Alaska”, but whose main attraction to his base is her ultra-conservative philosophy.

There is no talk of changing those Bush policies that got us into the multiple messes in which we now find ourselves. That is presumably because he has no plans to change them.  No, he will fight corruption, lobbyists, the old ways of doing business, and that’s just fine, but he has articulated few plans to change the Bush policies that Obama says he will change.

The campaign appears to be going well for McCain, proprietor of the “Straight Talk Express”. On the heels of the Republican Convention, he is pulling even and even surpassing the Democrat candidate while running a campaign that has almost nothing to do with issues and everything to do with his new definition of “change”.  Is that really straight talk?

Unless the voting public suddenly becomes interested in the critical issues involved – the candidates’ real positions on Iraq, foreign policy, deficit spending and the rapidly worsening economy at home – it seems likely that this strange, disingenuous campaign strategy will continue in place, largely because the McCain campaign sees it as potentially leading to the White House.

If that is the case, we will have elected a new president who will change little other than the cosmetics of Washington dynamics, while pursuing the policies of his predecessor, policies that gave gotten us into the mess in which we now find ourselves and which easily could change the current downturn in America’s fortunes into a total disaster.

Haviland Smith is a former Northeastern Republican turned independent who believes in social liberalism and fiscal conservatism.   He sees his former party as having been hijacked by Dixiecrats and turned to social conservatism and fiscal profligacy.  He lives in Williston.

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Redefining success in Iraq

Posted in Iraq on September 21, 2008|

[Originally published in the Rutland Herald and Barre Times-Argus.]

In this election season, much is made of the surge. What is not clear in this ongoing discussion, and what is rarely discussed in the context of the surge, is its original purpose. It is not whether the surge has succeeded militarily (it has, and wildly so), but whether its far more important non-military goals are likely to be achieved. That is, conservatively speaking, the $3 trillion question.

The surge was undertaken against prevailing public opinion, congressional approval, the bipartisan Iraq Study Group findings, the Pentagon and the intelligence community. Just about no one wanted it.

Grudging approval of the surge by those contrary elements was reached using the argument that the president needed a strategy that would bring decreased violence and with it the opportunity for political reconciliation. In 2007, after more than four chaotic years in Iraq, the president needed a policy that would provide the opportunity for “success” – defined as Iraqi political reconciliation.

Most Democrats, including Sen. Barack Obama, and some Republicans, including Sen. Chuck Hagel, opposed the surge. Most Republicans, including Sen. John McCain and one Democrat, Sen. Joe Lieberman, supported the surge.

There is little reason to argue about the military success of the surge, for it has been extraordinary and as such, a great credit to our armed forces. Violence is way down, and that is precisely what the president sought when he undertook the surge.

The problem here is that today’s American politicians, who for purely political reasons want or need to be associated with success, are touting the undeniable military success of the surge as its ultimate goal. That is the case with McCain and all those Republicans and Democrats who have supported the Iraq war over the years. Needing the political capital brought by success, they have redefined the word: They no longer speak of national political reconciliation in Iraq, only of military success.

However, there are other factors involved that have nothing whatsoever to do with the surge, but which have had a major calming effect in Iraq.

Apparently our people in Iraq have developed methods that have allowed them to assassinate ranking members of al-Qaida. They have done that to the point where al-Qaida has been substantially weakened.

Further, Muqtada al-Sadr has unilaterally suspended his Sadrist Shia militia attacks on American forces and on his Shia and Sunni rivals. This has had a major calming effect in the country.

The Kurds have simply withdrawn into their historic lands, in effect creating a de facto Kurdistan. They participate in the al-Maliki government, but their only real purpose is to consolidate their post-Saddam gains in furtherance of their own autonomy.

Last, but perhaps most important, in 2007, American forces in Diyala and Anbar provinces began a program called the Sunni Awakening which has enlisted Sunni militias, some 80,000 strong, into the fight against their former allies, al-Qaida. We have paid, armed and trained these militias, which had formerly fought side by side with al-Qaida against our forces. They have been most effective.

The result has been that a diminished al-Qaida fights us alone; the Sunnis are allied with us and not killing us or Shia; and the main Shia militias have withdrawn from the battlefield, at least for the moment. These elements alone have probably had at least as much to do with the drop in violence as the surge.

However, the purpose of creating this lull in violence was to establish an environment conducive to reconciliation between Iraq’s traditionally warring factions. That has not happened.

Under the best of circumstances, such reconciliation is extremely difficult and improbable. These people really hate each other and if past is prologue, will live peacefully only under smotheringly oppressive rule. Turn them loose, as we have, and all those centuries-old animosities come to the surface.

Despite the lull in violence, all the old issues remain. The al-Maliki government has so far failed to schedule critical national elections. In a curious way, the Sunni Awakening turnabout represents an additional threat to the peace. The al-Maliki government is not only Shia, but highly partisan. It is wildly suspicious of the other ethnic and religious groups, the Kurds and the Sunnis. Unless the al-Maliki government integrates those Sunni militias into the army and police, which it has persistently refused to do, they will represent the potential for increased, severe future Sunni on Shia violence.

Certainly if that happens, the Shia Sadrists will re-evaluate, further weakening the prospects for reconciliation. Thus, all of the elements which caused the instability before the surge are intact, or even strengthened and waiting to protect their own interests against the others’.

However successful, if the surge does not enable an Iraqi national reconciliation, it will not “succeed.” There is not much history that argues for that ultimate success.

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Why is the U.S. being so provocative toward Russia?

Posted in Russia on September 15, 2008|

[Originally published on Nieman Watchdog.]

Does anyone really think that expanding NATO into Eastern Europe is going to bring out the best in Russia? A former CIA station chief says there’s a lot more to the Georgian conflict than meets the eye.

In the aftermath of the Russian invasion of Georgia, the media have been filled with accusations, charges and countercharges about what “really” happened.  The simplistic, disingenuous claims and explanations from all the parties — the U.S., Russia, and Georgia — leave a lot to the imagination and a great deal of unexamined and unreported fodder for the media.

Q. Just what sort of threat does Russia pose to the U.S. today? Should the nature of this threat persuade us to undertake an aggressive policy toward them, such as expanding NATO into Eastern Europe and involving Poland and the Czech Republic in a “missile shield”?

It is difficult to see how Russia, unlike the U.S.S.R. with its ideological imperatives and military might, represents a strategic threat to the U.S. and hard to understand why we treat them as provocatively as we do.

Q. Does the United States have the moral authority lead the charge against Russia?

Our adventure in Iraq and our moral ambiguity in supporting undemocratic regimes in that region make that an open question.

Q. What was Russia really trying to accomplish in invading Georgia?

The invasion appears to have been a response to Russian concerns over what it views to be increasing NATO hostility toward them.  The past inclusion of so many countries within the Soviet sphere of influence was bad enough.  But the proposal to incorporate Georgia and Ukraine into NATO and the installation of “missile shield” components in Poland and the Czech Republic are seen as  matters of national interest to the Russians.  They are seen as a pure NATO provocation, appropriately met with the full force of Russian diplomatic and military power.

Q.  Did Georgia believe it had western guarantees for protection? Do we really believe that Georgia would have attempted the invasion of South Ossetia, without some hope or maybe even assurance that we would support them when the Russians responded militarily?

Given the historically difficult relationship between the two counties, it is doubtful that Georgia would have taken such a risk without some assurances.

Q. Why did the Georgians send 2,000 troops to Iraq, the most of any other nation other than Great Britain?

The logical conclusion is that they saw it as a chip in the game designed to get the U.S. and NATO to support their territorial ambitions in Abkhazia and Ossetia.

Q.  Did anyone in the Bush administration encourage Georgian President Saakashvili to attack the South Ossetian capital of Tskhinvali?

Post-invasion comments by Vice President Dick Cheney and Republican presidential candidate John McCain support the contention that they welcomed the invasion.

Q. Is there a difference between Kosovo and Ossetia/Abkhazia?

We recognized Kosovo as an independent country despite Russian protests.  Now we protest when they do the same with Ossetia and Abkhazia.

Q. What is the purpose of a militarized NATO today?

It looks to the Russians like a continuation of the West’s Cold War containment of the U.S.S.R.  Other than that — and supporting the U.S. in Afghanistan — what other purpose could it possibly have?

Q. Did the Reagan administration tell the Russians prior to the fall of the U.S.S.R. that we would not extend NATO into the East European countries?

This is said to have been the quid pro quo for Soviet acceptance of German reunification. Whatever assurances we gave them, our expansion of NATO has been a pure provocation to Russia.

Q.  Why is the U.S. supporting Georgian membership in NATO?

Are we intent on picking a fight with Russia — something that is clearly not in our interests? It was our intention 17 years ago to see Russia peacefully join the rest of the world, yet NATO remains an active barrier to that integration.

Q. What role has Randy Scheunemann, Sen. McCain’s top foreign policy advisor, played in the Georgia affair?

Scheunemann is a neoconservative, on the board of directors of the Project for a New American Century, and is a registered agent for Georgia. The Los Angeles Times has reported that the Georgian government has paid his two-member lobbying firm $830,000 since 2004.

Haviland Smith is a retired CIA station chief, who served in Eastern and Western Europe, Lebanon and Tehran and as chief of the counter-terrorism staff.

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U.S. hamstrung by irrational foreign policy

Posted in foreign policy on September 7, 2008|

[Originally published in the Rutland Herald and Barre Times-Argus.]

The Bush administration’s foreign policy is internally inconsistent. It claims the virtually exclusive right to bring democracy to any poor, misbegotten, non-democratic country of its choosing, while at the same time supporting some very undemocratic regimes.

It would be easy to understand this bifurcated policy if it were possible to determine that it was in the U.S. national interest, but that does not always seem to be the case. Far too often, the support or non-support of a given country is dependent on factors that have nothing to do with any rational thought process.

If you examine the best of America’s philosophical underpinnings, it is easy to understand why this administration or any other, for that matter, would want to spread democracy around the world. We truly believe that we have the best political system that has ever existed. We believe that if the entire world were based on democratic principles, there would be far fewer conflicts and far fewer dangers facing us from abroad. Whether or not this is objectively true, as a nation, we believe it to be.

We also know that this is a wildly dangerous world. If we learned nothing from the immense dangers of the Cold War, 9/11 taught us a lesson we will never forget: America, despite its historic sense of geographic isolation (safety) from the constantly warring worlds in Europe and Asia, is newly vulnerable in today’s technologically advancing world.

For the first time, our enemies really can get to us! They can cause us to be afraid – a traditionally alien emotion in fortress America. As we know from the past seven years, fear promotes compromise on constitutional issues like: civil rights, torture and interrogation and personal freedoms. The world has watched as we have fearfully condoned or at least overlooked wireless wiretapping, the abrogation of habeus corpus rights, questionable detention, interrogation and torture activities and the physical and mental abuse of military prisoners in the hope that such compromise would bring us more safety. This has not helped our image in the world. Sadly, we have forgotten Benjamin Franklin’s admonition that he who gives up freedom for safety deserves neither.

So, we are faced with a real dilemma. Who are we? Are we, as we believe, the most democratic people in the world? Or are we a people faced with a real existential threat from those terrorists who would do us harm and thus backed into a corner where adopting undemocratic methods and supporting undemocratic foreign elements is our only route to survival?

On the one hand, we support undemocratic regimes in Chad, Nigeria, Uganda, Ethiopia and elsewhere, either because they support us on our “War on Terror,” have oil or are somehow politically or economically important to us. The same is true in Egypt, the Sudan, Libya, Morocco and Saudi Arabia, to name a few. China is hardly a bastion of democracy. Yet, we have been told by our administration, after admissions that there were no weapons of mass destruction, no connection to 9/11 and that Iraq was really no threat to the United States, that we invaded Iraq in order to install democracy there. Why have we not invaded Myanmar to throw out those horrible people, or the Sudan to stop the horrors in Darfur, or Zimbabwe to get rid of Mugabe? The list goes on and on. Their peoples have suffered no less and probably considerably more than the Iraqis did under Saddam Hussein.

The purpose here is not to say which road we should take. The purpose is to point out that as long as we are pursuing two mutually incompatible policies, we will continue to marginalize ourselves as hypocrites in the outside world.

Today, all America has is its military power which is being worn down and overextended in its roles in Iraq and Afghanistan. We have no diplomatic, political or economic clout in the world. That is the case because our policies are laughed at by much of the rest of the world. If you don’t believe that, take a look at the Pew poll that shows what the rest of the world thinks of us today. It is not a pretty sight.

We need to decide what course to take. Shall we be the ultimate pragmatists who conduct our relationships based on our own national interest, without reference to difficult, nuanced issues of right and wrong? That’s our Saudi Arabian or China or Egypt policy today. Or shall we do this totally idealistically by supporting all movements that employ the democratic process? That’s what got us Hamas in Palestine.

This is not a simple issue, but it is one that needs to be examined and debated in this country. Whatever we actually are, or wish to think we are, we can’t get away with supporting two mutually contradictory policies at the same time.

Haviland Smith is a retired CIA Station Chief who served in East and West Europe and the Middle East and as Chief of the Counterterrorism Staff. He lives in Williston.

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Let’s Define ‘Terrorism’ More Carefully

Posted in terrorism on September 3, 2008|

[Originally published in the Randolph Herald.]

Since 9/11, the Bush administration has changed the way America looks at the two phenomena of terrorism and insurgencies. It has blurred the lines between the two and in doing so, has created some long lasting foreign policy problems for the United States simply because there is a vast difference between a pure terrorist group like Al Qaida and an insurgency that practices terrorism.

The US Code defines international terrorism as “violent acts or acts dangerous to human life that are a violation of the criminal laws of the United States or any state…. (and which)….appear to be intended to intimidate or coerce a civilian population; influence the policy of a government by intimidation or coercion; or affect the conduct of a government by mass destruction, assassination or kidnapping and occur primarily outside the territorial jurisdiction of the United States or transcend national boundaries in terms of the means by which they are accomplished, the persons they appear intended to intimidate or coerce, or the locale in which their perpetrators operate or seek asylum. [18 U.S.C. § 2331(1)]

The Department of Defense defines insurgency as “an organized movement aimed at the overthrow of a constituted government through the use of subversion and armed conflict”.

It is important to carefully differentiate between terrorism and insurgency because, once classified into either group, a dissident movement will be given a level of treatment either formally or by general international consensus from which it will be difficult for it to extricate itself.

Historically, it has been easier to deal with terrorism than insurgencies.  When terrorist movements are left to run their course they tend to last around a dozen years. The good news about them is that, unlike insurgencies, which rarely lose, terrorism never seems to win. Terrorism is a short-term, dramatically violent irritant and not much more.

Terrorist organizations cannot survive unless local populations support them.  Recently Al Qaida has been losing support from mainstream Muslims because it indiscriminately kills civilians in defiance of the teachings of the Koran.

Insurgents, on the other hand, generally have fairly widespread support from their local populations, largely because they are normally fighting against a repressive ruler or occupier.  That is why they tend to endure and succeed.

How does any ruler or occupier protect itself under those conditions? They simply focus their military might on the assumed enemy positions and pull the trigger. Insurgents have no uniforms, barracks or bases.  They live and work in and around the rest of the civilian population, whether in Pakistan, Lebanon, Afghanistan or Iraq. Under attack, there is bound to be a lot of collateral damage which is likely to be seen as collective punishment and equally likely to encourage more indigenous support of the insurgency.  It is a difficult enemy to vanquish.

The Bush administration is prone to brand any group which threatens any status quo, including insurgencies, as a terrorist organization, without any thought to the origins of or reasons for the struggle being waged.  If a group of dissident Egyptians, tired of their repressive government, decided to try to overthrow the Mubarak regime, how would we label them?  How would we label indigenous dissidents trying to overthrow the “friendly”, but not necessarily democratic government of Saudi Arabia, Pakistan or any other “friendly” country?  It’s not a stretch to say that they would be labeled terrorists overnight.

What this does is de-legitimize what are or could be legitimate national liberation movements involved in insurgencies, much like the American War of Independence in 1775-1783.  It goes back to the old saw, “One man’s terrorist is another man’s freedom fighter”.

If America wishes to be seen as a supporter of the democratic process in the world, which the Bush administration constantly avows it does, then it can’t pick and choose where and when to support it without risk of being immediately labeled as hypocritical.  Our decision to not even acknowledge the existence of Hamas in Palestine, even though they were elected as the result of a democratic process, is a perfect example of the pitfalls involved in the selective application of democratic principles.  It earned us a diplomatic black eye, as has our similar attitude toward Hizballah in Lebanon.

If we are going to support the democratic process, we will not be able to randomly label indigenous insurrections as terrorist movements simply because we don’t like their politics or because we think that the status quo government in power in their country, however repressive or undemocratic, is a better alternative.  The rest of the world is not dumb enough to let us get away with that kind of hypocrisy.  And yet, we continue to try!

Haviland Smith is a retired CIÅ station chief who served in East and West Europe, the Middle east and as Chief of the counterterrorism staff.  A longtime resident of Brookfield, he now lives in Williston.

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