The (Ex) Washington Realist

Tonight was the annual dinner of The Nixon Center, where the distinguished service awards are presented. For 2005, awards were presented to Secretary Jim Schlesinger and Senator Pete Domenici of New Mexico.

Dr. Schlesinger's remarks drew from his article in the Winter 2005/06 issue of The National Interest, again a warning about the forthcoming "liquids crisis" in energy as petroleum stocks run down, and that the longer we wait to do something about it, the harder the crunch will be.

I was intrigued by the Senator's remarks. Those who are familiar with his positions know he supports drilling in ANWR, developing natural gas sources in the Gulf of Mexico, and building more nuclear plants to generate electrical power. People disagree vehemently over these courses of action, but I thought that he made a critical point: our standard of living depends upon (and is linked inextricably to) access to energy. We cannot sustain our lifestyle in the absence of energy supplies.

This means thinking about tradeoffs. He noted that some are calling for boycotting Iran as a means of pressuring them on their nuclear program. Well and good. This deprives the market of 1 million barrels of oil per day. ANWR could supply that. Or we should be prepared to pay at least $20 per barrel more. Or we have to be prepared to make changes in our lifestyle (for example, shifting to more mass transit).

What I thought was useful is that he dispensed with the fantasy land so many of us cling to: that we can have cheap energy, no changes in lifestyle, no environmental impacts and wield pressure against oil producing nations with no ill effects. Energy policy is not independent of or somehow separate either from foreign poicy or domestic policy--and we need to have the same setting of priorities that enables us to make choices.

This weekend, Reuel Marc Gerecht and I had a conversation about President Bush's democracy promotion strategy one year later on National Public Radio. I don't know whether the hosts were hoping for more clash, more of a traditional neocon "democracy is great" versus realist "stability is best" match up.

My closing point that was broadcast--" if our strategy is we're simply going to open up a political system and then our job is done because virtue is its own reward, and pro-American movements will just simply appear out of nowhere, then that's a misguided strategy. It leads to this situation where elections will produce results that we don't like."

Of course, we taped more material that wasn't broadcast due to time limitations. That democracy promotion to be in alignment with U.S. interests means that you have to cultivate broad pro-American constituencies. That trade, economic, immigration and security policy all have "democracy impacts" (e.g. you can't penalize a country's economic system due to your trade policies and then hope that voters will return pro-American politicians to power). That a country has to be committed to this strategy of democracy promotion--you can't expect to do these things on the cheap.

Which leads me to a final analysis. Realists often are accused of being anti-democracy. But what led me into the realist camp was to see the failure of idealist policies proclaimed with vigor and implemented on the cheap, which led me to the conclusion that if a country is not going to undertake the massive effort needed to transform societies then the best option is to encourage evolutionary change from within that can be sustained by modest support efforts.

Let's face it--no one is joining the U.S. military these days to "promote democracy"--and it is telling that our recruitment ads either trumpet "defending the homeland" or "learning skills".

Marco Vicenzino has analysis on this up at the FPA's Global Views site. I enclose below some of the paragraphs that I found of interest.

Steve Weisman in the New York Times looks at how the election results complicate Bush's goal of spreading democracy in the Middle East.

And on another subject we've been following here at the Washington Realist, the attempts by India to compartmentalize its relations with Washington and Tehran. In today's International Herald Tribune, a short piece on how ties between India and the United States are being being "tested over Iran".

From Marco's piece:


Athough Hamas' electoral victory stunned the international community, it was perhaps less shocking to ordinary Palestinians tired of a culture of corruption, principally institutional; the vicious cycle of violence, inefficiency and neglect it promotes; and the destructive political, social and economic consequences it engenders. The result was even more understandable in Gaza, where lawlessness has prevailed since Israel's withdrawal last August and immediately preceding the recent elections. Throughout the campaign, Hamas stuck firmly to its message, while Fatah tore itself asunder through factionalism and a split between the older and younger guard. Despite last-minute reconciliation, it was unable to recover. A vote for Hamas may not necessarily be considered a vote for its platform, but rather a vote for change and against the status quo.

In the first legislative elections since 1996, Hamas secured a comfortable majority of 76 seats in the 132-seat legislature, allowing it to form a government and avoid forging a coalition. With 43 seats, Fatah goes into opposition and has no other option but to redefine itself through a younger generation of leaders. A fundamental question is whether dogmatism or pragmatism will prevail in a new Hamas government. Many suspect that the sobering reality and often corrupting influence of power will distance a new Hamas government from the exuberant rhetoric of the campaign and the inebriating euphoria of victory.

The dominant question is how to deal with a government controlled by a movement labeled as terrorist by Israel, with whom the Palestinians must negotiate to secure a state; by the Europeans, who provide the majority of Palestinian aid; and by the United States, the ultimate guarantor and broker of any final settlement.

Despite scattered incidents of violence, the cease-fire declared by Hamas over a year ago has held for the most part. However, Hamas is unlikely to renounce its commitment to the destruction of Israel anytime soon or to sit with Israelis at a negotiating table to pursue peace talks, or vice-versa. Despite the terrorism branding, Hamas enjoys a reputation for clean government and as an efficient provider of social services among many ordinary Palestinians. However, much of Hamas' credibility also derives from its refusal to recognize Israel or its right to exist. For many on Israel's far right, the Hamas victory was a blessing to permanently terminate the current peace process. For the U.S., EU and Israel's center and left, the election outcome was the worst case scenario.

With a newfound popular mandate, Hamas will focus on desperately needed domestic reform to ensure political consolidation within its grass-roots, among ordinary Palestinians and any remaining skeptics. Hamas is thinking long-term, that is, life beyond the current peace process, whether successful or not, and replacing Fatah as the Palestinians' mainstream political party.

Barring targeted assassinations by Israel, Hamas is likely to continue its cease-fire for the time being and leave the public role of peace talks to Palestinian Authority President, Mahmoud Abbas, while exerting influence from behind. Ironically, the Hamas victory could eventually prove an asset to Abbas. As the only Palestinian official that Israel is likely to deal with publicly, Abbas may increase his leverage temporarily with reduced pressure from a demoralized Fatah, plagued by internal squabbles. In the short-term, the presence of Abbas as PA president is crucial in Hamas' quest for international legitimacy. In the long-term, Hamas may consider Abbas as an expendable figure whose final mission in political life is reaching a final settlement with Israel, an immensely difficult task that is unlikely to meet the expectations of the Palestinian public. From Hamas' perspective, the best and safest approach may be to distance and disassociate itself publicly from negotiations in order to avoid any negative consequences, risks or fallout from any final deal, or failure to achieve one. Should Abbas secure a positive outcome, let him bask in his moment of glory since his age will not present any long-term political threat to Hamas. If negotiations fail or a “bad deal” is reached, Abbas must bear the historical burden of having “sold out” the Palestinians.

Hamas is set to be in a position to form a Palestinian government without having to enter into a coalition with Fatah, according to the Christian Science Monitor's reporting.

Two tests as to whether the eastern European experience can be replicated in the Middle East.

The first is the "radicals moderate when asked to govern" thesis, proven when ex-Communists in eastern Europe who opposed market reforms in opposition tended to see those reforms through once in power. But one can argue that the overall lure of joining the EU helped to sweeten the deal, and that there is no such incentive here.

The second is the "boycott" approach to democratic results we don't like. Done with varying degrees of success against Austria and Slovakia--but shunning governments in both countries was feasible to the extent that other major issues were not affected. The very future of the peace process is up for grabs here.

In the Winter 2005/06 issue of The National Interest. Dan Pipes hadn't been very sanguine about the "pothole theory of democracy", that the challenges of governing would lead Hamas to moderation.

Ray Takeyh and I argued in The Receding Shadow of the Prophet that Islamist movements generally have to adopt more moderate versions of their ideology to stay in power (AKP in Turkey, IAF in Jordan), but the Monitor piece notes concerns in more cosmopolitan areas like Ramallah about what exactly a Hamas government might do to promote Islamic values.

My take on why profoundly different narratives on the end of the Cold War have an impact on U.S.-Russia relations today, in the International Herald Tribune.

The Nixon Center hosted a debate today ("Promoting Democracy in Russia: For What End, At What Cost, By Which Means") featuring Lorne Carner, president of the International Republican Institute, and Dimitri K. Simes, president of the Nixon Center (moderated by General Brent Scowcroft, former National Security Advisor).

Craner opened his remarks by noting that some believe there is a divide in the Republican Party between "Nixonian realists" and "Reagan/Bush idealists", but pointed out that all Republicans agree that the first priority of U.S. foreign policy is to protect American interests. How the spread of democracy fits into that is the subject of discussion.

With regard to Russia, Craner discussed two recent meetings he had; the first with ambassadors of EU states concerned about the growing trend toward authoritarianism in Russia and the second a group of Central Asian experts who note that Russia's regression toward a more centralized, authoritarian form of governance has made Russia less open, less transparent and less predictable. There is a relationship, he said, between levels of democracy at home and the tendency to engage in adventurism abroad.

Overall, the trend in Russia is one of concern: Russia's federal system is being undermined, changes in electoral laws restrict pluralism, NGOs are under threat and the independence of the judiciary is being eliminated. The policy of the first term of the Bush Administration--to be largely silent in the hopes of encouraging domestic change and greater Russian-American cooperation in the international sphere, has brought about meager results; now there is a shift toward calling attention to these developments.

But the mistakes of the 1990s must not be repeated; to put faith in the success of an indivudal politician as opposed to building viable institutions, and to understand that the process of democracy promotional will be generational, not something "wrapped up" in two to three years. And the role of the educational system in producing future citizens must not be forgotten or ignored.

Simes opened his remarks by saying that the status of Russian democracy is "bleak and getting bleaker" and that not only opposition figures but even people in the current government are concerned about the direction of the country. The problem is that various pieces of legislation which in isolation do not threaten democracy (e.g. having the Duma be elected by party lists, having regional governors nominated from the center, even the amended NGO law) in totality work to shrink political space; moreover, the judicial system is unwilling to act as a check on arbitary bureaucratic power. The oligarchs were eliminated as a political force--a source of much of the corruption of the system--but there is no counterweight at the present time to the state. Moreover, as the Kremlin's treatment of the "Rodina" party demonstrates, it is uninterested in independent political forces.

Political parties and NGOs can have a public role in Russia if they play by the Kremlin's script--otherwise, while Russians are free to have any opinion they want, the Kremlin will decide who gets access to the public square.

Simes noted that those who lament the "destruction" of Russian democracy under Putin have chosen not to recognize that the seeds of the current authoritarian trend were sown under Yeltsin. Moreover, in encouraging Yeltsin to pursue "radical reform" at all costs, the West bears some of the blame. To get this agenda through, Yeltsin relied on oligarchs and security service veterans; Putin has simply been more effective at consolidating this system.

What is to be done? While Craner believed that it would be possible for the United States to be much more critical of Russia but preserve common action on issues of joint interest, Simes was less sanguine about the possibility of an a la carte partnership, that Moscow would be far less interested in accommodating U.S. concerns if the Russians believed that the U.S. was out to undermine their government and block their interests.

What about support for democracy? Simes noted what I have termed in other discussions the "democracy paradox", that most Russians today are not concerned about the shrinking space for democracy and civil society so long as they have access to new economic opportunities; the desire for law and order is outweighing democracy which many still associate with the 1990s period of chaos. Both seemed to see the development and consolidation of the rule of law and democratic institutions as something that will be a long-term process, but Simes was also concerned that the present chill in the U.S.-Russia relationship is leading to a shrinking diplomatic space that could lead to estrangement between Washington and Moscow.

Trying to make sense of the destruction of the gas pipelines and electricity networks linking Russia and Georgia. I don't think that this is something that GAZPROM or RAO UES would have sanctioned. Not only does it destroy infrastructure they have to repair, it damages their commercial interests. Why would GAZPROM not want to deliver gas to Georgia now that Georgians are paying a higher price? And why would they want to negatively impact the Armenians, Russia's closest ally in the Caucasus?

Lines of speculation--who is responsible and who benefits?


Was it done by the Russian special services in conjunction with the Ossetians--a "reminder" that Georgia's separatist regions can still impact the central government, given that the lines that were destroyed were done so in northern Ossetia. Or simply by the Ossetians themselves without any sanction from Moscow (but perhaps with the assistance of "rogue" or independent security elements)?

Was it done deliberately to "highlight" the problem of energy security--to blame it on "terrorists" (and conveniently to cause the Georgians deliberate hardship)?

A Chechen connection, given where the sabotage took place? To benefit the cause of destabilizing the Caucasus?

How does the Saakashvili administration benefit? Russia's image as a reliable energy supplier again tarnished, new emphasis on diversification of supply, ability to rally national sentiment against Russia?

How does the Putin administration recover? Two black eyes in January as Russia takes over the presidency of the G-8 which was supposed to cement Russia's position as the world's "reliable" energy supplier?

If this action was sanctioned at higher levels in Moscow, it really calls into question the quality of advice the Kremlin is receiving on how to use Russia's energy leverage to its best effect.

So that there is no confusion on my thinking on Ukraine--I believe that a strong Ukraine is absolutely vital to the stability and prosperity of Europe and Eurasia. Indeed, I've always felt that effective Eurasian integration can only occur when you have Ukraine and Kazakhstan able to deal with Russia from positions of strength.

But I'm tired of the Ukraine bait and switch here in Washington--where policymakers and pundits talk a good game about integrating Ukraine into the Euro-Atlantic community but are unprepared to pay the costs.

If U.S. national interests are best served by substantially changing the balance of power in Eurasia--and one can make a case for acting now to reshape the Eurasian environment, say by a major expansion of NATO--then do it--and be prepared for what it will cost.

Instead, Ukraine is being "Turkified"--if I can create that adjective. Remember how Turkey was promised it would be brought into the European community--by Charles de Gaulle? That was BEFORE I WAS BORN. For more than forty years, Turkey has been kept on the interdeterminate list. There were good reasons, but at what point should the Europeans have levelled with the Turks and said, full membership is not guaranteed to be on the table?

Ukrainians are being told they have a "European/Western" choice to make--but in reality they don't have a choice to the extent the Western option is not viable.

And speaking of Turkey--let's round out the discussion by talking about the two visits of Angela Merkel, to Washington and Moscow.

I recognize that symbolism and "impressions" are important components in the conduct of international affairs. Merkel has a much better relationship with Bush than her predecessor, and that was made abudantly clear. Similarly, I doubt Merkel will be getting any invitations to cozy get-togethers with the Putins at their dacha.

But what about the substance? Merkel could not give Washington firm assurances on two matters which are high-priority for the United States--that Turkey is on track for EU membership, not a "privileged partnership", and that Berlin sees eye to eye not only on the Iranian threat but what to do about it. Certainly a better dialogue than with Schroeder, that is for sure--but still nothing firm.

And while Merkel and Putin are "colleagues" rather than "friends" the core of the Russian-German partnership remains unaffected. The Baltic pipeline project is on track, Siemens is buying into a major Russian military-industrial complex, trade and business ties continue without interruption. Sure, Merkel met with NGO leaders in Moscow--just as Bush went to church in Beijing. Important symbolic gestures--but with the message that the core relationship remains unaffected.

As a result of their appearance at Challenging Orthodoxies lunch, the subsequent publication of their article "Prone to Violence" in the Winter 2005/06 issue of The National Interest, and their January appearance at a forum at Cato to discuss their new book Electing to Fight, Jack Snyder and Ed Mansfield have certainly had ample opportunity to disseminate their ideas to the Washington policy community.

In looking at the avalanche of criticism that their ideas have generated, however, I think that there is a right way and a wrong way to engage them in debate.

The right way was on display at the Saltzman Forum up at Columbia University back in October, when National Endowment for Democracy President Carl Gershman challenged the core thesis, that incomplete or premature democratization is what increases the risk of internal strife and external conflict. Looking at their case studies, Gershman countered that the cause was not democratization but poverty and economic performance; that poor authoritarian countries were just as more likely to be convulsed with strife.

This is a debate on the issues.

What I don't like to see is those who disagree with Snyder and Mansfield doing one of two things. The first is to say that because their research calls into question the "freedom crusade" then they must have been "friends of Saddam" or applauding the secret police massacring the Kurds, or that there were no alternatives but to support the way policy has been conducted in Iraq. Or that they (and other realists) really just prefer authoritarians.

It's hard to have a rational debate over policy with people who prefer to use the language of faith and belief.

The second is to play hard and fast with facts. I've already discussed this in relationship to rewriting Eurasian history. What I especially love, with regard to Ukraine, for example, is the dual-track approach. Yushchenko represents the demoratic breakthrough against previous "dictators" Kuchma and Kravchuk (denigrate the past to enhance the present). But then, to establish Ukraine's democratic "bona fides" and to qualify under the Robert Dahl two-decade rule for being considered a mature democracy, then Ukraine since 1991 has been a functioning democracy--and if a major push is to be mounted for Ukrainian membership in NATO this year, it will become imperative to stress Ukraine's "decade-long" democratic credentials, not imply that it "only" became a democracy in December 2003.

With regard to Snyder and Mansfield, we see this "fast and loose" approach with people removing "inconvenient" countries from their list of states. For some, Croatia does not become a "democracy" until 2000, post-Tudjman ... and the list of examples goes on (Ethiopia was or was not a democratizing country, etc.).

There is a realist case to be made for democracy promotion--John Owen IV and David Rivkin are both set to do so in the spring 2006 issue of TNI--and are willing to tackle head on these questions. That's the sort of debate we should be having.

Speaking at Georgetown University yesterday, Secretary of State Condoleezza Rice outlined some of her proposals to implement transformational diplomacy.

It's going to be a real challenge. Bill Odom wrote for us in 2001, outlining his pessimism about Russia's ability to really make significant breakthroughs in reform, and discussed "path-dependence" and "lock-ins"--that choices, once made, are difficult to alter once bureaucracies, institutions, and habits have developed around them.

And the real test comes in terms of funding change. The Pew Research/CFR polls indicate only 25 percent or so of Americans favor the U.S. playing a strong role in the world; 42 percent say the U.S. should "mind its own business." I don't see the groundswell of public support for new appropriations for diplomatic reform, language training, supporting new regional studies programs, etc. And I think that "virtual" solution (having people "talk" to U.S. diplomats via cyberspace) can only go so far.

This leads to another problem: if the U.S. doesn't want to fund diplomatic initiatives, study trips, educational programs--who will--and will other funders have U.S. national interests at heart? The January 23, 2006 issue of Time lists "Six Ways to Fix K Street" but notes that a ban on lobbyist-paid travel now be considered might be circumvented by "an exemption for 'educational' trips sponsored by policy groups and friendly foreign countries." Similarly, as U.S. institutions cut back funding for regional studies, foreign governments are happy to pick up the bill.

There's nothing wrong with this--as long as we keep our eyes open. But let's not be naive--if Country X pays to bring members of Congress to visit, sponsors study programs, and so on--it does so with a clear purpose of promoting X's national interests--which may or may not always align with those of the United States. If we continue to outsource more of our intelligence and diplomatic work in vital areas to friendly "third countries", the same caveat applies. But saving money at home comes at the risk of losing the ability to independently assess matters abroad.

My colleague Zeyno Baran put together a Turkish-American dialogue that met this afternoon at The Nixon Center, with distinguished visiting academics from Turkey from Bahcesehir University engaged in a roundtable discussion with American colleagues.

I was struck how the Turks, like their Indian and Chinese colleagues (per a discussion last month at The Nixon Center on India/China and Iran made reference to the limits they will go to isolate Iran. Turkey remains dependent on Iran for energy (even more so as a backup source for supply should there be interruptions from Russia, as the recent Ukrainian-Russian gas dispute threatened to do); therefore, even though there might be increased U.S. pressure for Turkey to lessen its relations with Iran, Turkey, for purely economic reasons, is in no position to comply.

It was also quite interesting to hear their recommendations on what to do about Iran--in essence, let the internal contradictions of the regime lead to its own implosion. The regime in Iran, they maintained, is not supported by the masses, it is alienated from the people--but external pressure allows it to divert attention from the economic crisis and to rejuvenate its legitimacy. Let time solve Iran; whether it builds up a nuclear infrastructure or not.

On Iraq and democracy promotion: participants noted that Turkey has had democratic institutions for up to 150 years--experiments with constitutions, political parties, a multiparty system, parliamentary governance--the challenge has been to take democratic institutions and turn them into a working system of democracy. Iraq has little of this infrastructure in place and few institutions ready--and so it is not possible to democratize via the creation of a constitution if the institutional basis is lacking. Moreover, there is a difference between a political elite involved in the process versus democratization which involves bringing the entire society, the entire population, into the system.

A quieting note: the fact that neither government in Ankara or Washington is talking about "the day after": what happens if Iraq cannot be held together or, even if Iraq stays together on paper, the de facto result is the emergence of an independent Kurdish state--a process already under way. Is the emergence of Kurdistan likely to enhance or detract from regional stability? Not surprisingly, the Turkish participants are concerned about the prospect of regional polarization.

I found it interesting that one of the participants raised the question about the thesis usually associated with the benefit of a Kurdistan separated from southern Iraq: the thesis that the Middle East balance of power changes for the better with the emergence of another "non-Arab" state to join Turkey and Israel (and, of course, in pre-1979 days, Iran); that the orientation of Kurdistan would naturally put it into the pro-Israel/pro-American camp.

Thanks to Gregg Willhauck over at the Center for International Private Enterprise for alerting me to their blog; initially this was in the discussion over Afghanistan (he had a post about the problems in combating drug cultivation) but the latest post about GAZPROM and foreign investment is worth a read.

Thanks to David Billington on the question of Iran, the EU and sanctions. It's my hope that in the spring issue we'll be able to have a European perspective on this question. I'm not particularly sanguine about the "targeted" sanctions approach, because, as with Italy and Ethiopia in the 1930s, you can put a selective embargo without affecting behavior. Sanctions that don't affect energy (I think the sine qua non for Chinese participation) won't really change behavior. Travel sanctions? If I remember what my colleague Ray Takeyh said, Ahmednijad traveled to Moscow and Beijing; whether he'd want to go to Paris or London or would feel deprived if there was a travel ban, I don't know.

Iran's national security establishment has made a calculation that the balance of power is shifting in the world to the extent that it is now possible to "defy" the Euro-Atlantic world and survive via the "Asia connection." That assessment may be premature, but it is revealing.

Leon Hadar was one of the participants in our forum on empire last week--the discussion continues at his blog.

I took some good-natured ribbing from colleagues who felt my comments in the Christian Science Monitor expressing concern as to whether the United States could bring together a consensus on what to do about Iran were too pessimistic and that, in the last week or so, a common position was set to emerge.

But the Scotsman is reporting that, at present, there is no consensus between Britain, France and China over what to do next; while the British are angling for referral to the Security Council with an eye to imposing sanctions, the French want to concentrate on the IAEA meeting and the Chinese are already making noises that this issue shouldn't even be brought to the Council for discussion.

Iran is a classic case of a problem that is given different priority by different powers. No major power wants a nuclear Iran, that is very true. But that doesn't mean that the question--which many people feel will be the defining problem of U.S. foreign policy in 2006--is seen by other powers as their most pressing concern, or that the threat posed by a nuclear-capable Iran is equally threatening to each power. I've always felt that China and Russia would be prepared to live with a nuclear-capable Iran, since they've already adjusted to India and Pakistan having the bomb (and the Indian nuclear program is more directly threatening to China and extremists hostile to Russia would be much more likely to get a nuclear device from Pakistan, particularly if the current government falls, than from Iran, whose mullahs have never backed Chechen or other Caucasian radical movements). The EU-3 is currently dealing with the humiliation of having their diplomatic efforts come to naught and not being able to hand Washington and the Bush Administration a victory for European diplomatic superiority--so referral to the Security Council may be something they agree upon, but beyond that I think the consensus breaks down.

Getting a general statement of concern passed the Security Council, fine, but stronger action, not at this point, unless Ahmednejad continues his track record of stupidity. Interesting to see, by the way, whether Iran's "Supreme Leader" will at some point feel the need to step in, or whether Rafsanjani will use the current president's diplomatic blunders as a way to force him from power.

Geoffrey Kemp, director of regional strategic programs at The Nixon Center, organized a panel discussion today on the question of "Israel after Sharon." A few of the predictions:

--General Shlomo Brom (Jaffe Center for Strategic Studies): The new party that Ariel Sharon created, Kadima, is not solely dependent on Sharon's personal leadership and popularity to survive and grow. Israelis have grown tired of the ongoing conflict with the Palestinians and want new ideas and solutions. There is a strong desire for a new centrist party that breaks out of the Labor/Likud dynamic and thus his prediction that Kadima will not fall apart after Sharon leaves the political arena.

--Sam Lewis (American Academy of Diplomacy, former U.S. Ambassador to Israel): Sharon leaves a number of legacies to his successors, including the fact that the taboo on settlement removal has been broken; it is now acceptable to talk about a two-state solution; Israel may indeed move to a three-party system (with three stable blocs instead of two poles and a lot of smaller "kingmaker" parties); and the Sharon method of dealing with terror (targeting leaders for focused attacks) which is likely to be continued since Defense Minister Shaul Mofaz is expected to retain his position. But Ehud Olmert still faces real challenges: how to lead a cabinet bisected by rivalries and populated by ambitious politicians who each can envision himself as prime minister; and whether the task of removing settlement outposts in the West Bank will prove to be so difficult that Olmert, who has less political capital than Sharon, will not be able to tackle removing some of the hard-core settlers from other places in the territories.

--Edward "Ned" Walker (Middle East Institute, former U.S. ambassador both to Israel and to Egypt): Sharon was not as revolutionary as he has been depicted; back in the early 1980s he had never believed Gaza to be intrinsic to Israel's security and had always focused on settlements in the West Bank that he felt were of strategic importance to Israel.

Sharon's "unilateralism" was linked to his position that there was no current Palestinian leadership that could deliver on peace with Israel and therefore the best strategy was to create breathing room for Israel (10-15 years) until a Palestinian leadership emerges that recognizes the reality of Israel's existence.

Sharon has bequeathed to his sucessor his own "roadmap" for peace:

--Israeli-defined borders for the West Bank
--consolidation of the Israeli hold on Jerusalem
--extension of Israeli sovereignty over the large settlement blocs on the West Bank while withdrawing from exposed outposts and isolated settlements

Maurice R. "Hank" Greenberg spoke this evening at The Nixon Center on his article, "On Leadership", which appears in the current issue of The National Interest.

The U.S.-China relationship, in his opinion, is the most important one for us, and we cannot allow bickering and demogoguery to derail ties between the two countries. Of course, the United States needs to recognize that China, as well as all other countries, are going to pursue their own national interests--but we need to "engage China and encourage its integration into the larger global community--to make China a stakeholder in the existing American-led international system that facilitates trade, economic development and regional security."

He remains concerned that U.S. policymakers believe that they can "compartmentalize" the relationship with China--that we can criticize China and ignore its interests and then expect cooperation on a wide variety of issues from currency revaluation to North Korea and Iran and the war on terror--not to mention Chinese pruchases of our government bonds which have helped to keep our inflation and interest rates low.

The U.S. still needs to be prepared to exercise leadership in dealing with a number of global problems, including environmental issues and energy security, and pursuing a cooperative relationship with China can help to enhance that leadership.

We held an interesting roundtable today at the magazine in conjuction with the Coalition for a Realistic Foreign Policy. A high-powered, distinguished group of about 30 academics, analysts and policymakers were gathered around the table. Because Chatham House rules were in effect, I am not going to give a list of attendees or credit any particular thought or comment to any specific individual, but provide readers of The Washington Realistwith a sense of the questions raised.

Does the United States act as an "empire" in the international system? Certainly not in the traditional meaning of an empire as a collection of territories forcibly incorporated into a single political unit, but along the lines Ray Takeyh and I took the term "empire" to mean, drawing on the definition first given by Polybius, of an actor which compels other states and nations to follow its agenda? Is the U.S. a "benign liberal hegemon", for example?

This leads to three interrelated questions.

First, are failed and failing states as well as "rogue" states a threat to international peace and security? If yes, then:

Is a hegemon required to maintain global order? If yes, then:

Is the United States responsible for fixing failed states and slapping down rogue regimes?

Linked to these three questions is one that touches on American domestic politics: if the United States is a democratic republic where the bulk of the citizens do not wish to assume the burdens and responsibilities of empire, what are the alternatives?

Is there such as thing as "collegial empire" based on a concert of great powers? What are truly "global" interests (terrorism? environment? migration? global economy?) How many of these so-called "transnational problems" might just as well be solved by regional organizations?

Does neo-trusteeship really work? Is it feasible only for very small territories with small populations that can be saturated with aid and personnel? What about self-determination? Does this require us to let states fail?

Does the breakdown of the EU-3 process with Iran demonstrate the limits of "soft power" in compelling change, requiring there to be a credible military alternative? How relevant is the so-called "EU model" for encouraging democratic change and economic reform outside Europe, in Eurasia, the Greater Middle East and Africa?

Is the British empire really the norm for American liberal imperialism? Didn't the British practice a form of limited imperialism "on the cheap" rather than pursuing "full spectrum dominance"? Can Queen Victoria really be married to Woodrow Wilson to produce a viable form of liberal imperialism? Does liberal imperialism abroad promote "enlightened despotism" at home?

How relevant is the old Congress sytem to today's world, of having a dominant power as chairman of the board but sharing power with other key actors? Who should be part of this system? What about the democracy question, if two of those major powers are semi-democratic or non-democratic altogether? Does one work through the UN system or through some sort of community of industrial democracies to project power throughout the world? Is it better to create limited international organizations, even informal ones, to deal with specific security issues (the Proliferation Security Initiative, the anti-terror coalition)?

If the U.S. is indeed the global hegemon, should it be a micromanaging hegemon or the hegemon of last resort, intervening only when necessary? Should the U.S. be trying to "solve" the problems of the global "inner city" (the Arc of Instability) or working to contain spillover?

Can an empire promote the economic development necessary to allow democracy to take root in the greater Middle East?

These were some of the points raised and discussed.

What the great stumbling block appears to be: China. A Congress system might work if the overwhelming balance of power was shared between North America and Western Europe. But the rise of China means that global order can be established only in one of two ways: either a Euro-Atlantic condominium to promote liberal democracy over a more limited zone of hte world, or a global condominium which has a lower common denominator (rules-based non-tyrannical governments versus liberarl democracies as the norm) for determining the global system. It seems that around these two poles the pendulum swings.

What also isn't clear is whether China is prepared to become a superpower and to uphold the Bretton Woods/IMF global system as a rising power and whether the United States would be prepared to share more power with China in such a fashion.

An interesting discussion, also touching on a number of different pieces that have appeared in TNI (Kawaguchi, Choi, Bremmer on a Northeast Asia Regional Forum for integrating China into a larger economic and security system, in the current issue; Tucker/Hendrickson piece in the fall issue and the accompanying symposium in the current issue; the Jack Snyder piece on imperial temptations and other articles in the "Empire" issue of TNI several years back, and so on.)

To share with readers of the Washington Realist, perspectives from two different analysts and observers:

First, from Peter Lavelle, over at Untimely Thoughts, on why Russia, GAZPROM and investors are the big winners of the recent flare-up:

"Gazprom shares have increased over 10% in the first four trading days of 2006 and are set to sustain that price rally in the coming weeks as investors see just how important a company it really is and how cheaply it is rated relative to global peers. ...

"Why Gazprom is a winner in the “gas war” with Ukraine (2)

"Gazprom intends to eventually sell all of its exported gas at the EU average price. That confirms the implied strategy of changing Gazprom from a “political arm” of the Kremlin to a more transparent and commercially orientated concern.

"Why Gazprom is a winner in the “gas war” with Ukraine (3)

"There should be greater drive to get an agreement in place to start the Shtokman project. Partly this will come from the EU countries interested to diversify the “routing” of gas imports away from the current dependency/vulnerability to the Ukraine corridor and also from the Kremlin as it will be keen to reconfirm its commitment to energy partnership with consumer countries."


Second, from James Poulos, the Postmodern Conservative

With Russian Gas, Real "Market Fairness"--why new pipelines, including both the Russian Baltic system and the ones proposed by Georgian President Saakashvili, could lead to a "gas race in Europe, in which a full diversification of pipeline supplies accompanies competetive price cuts, would be an excellent spur to productivity on the continent."

Two items:

The first is Anatol Lieven's piece on Ukraine in today's International Herald Tribune, where he points out "why a serious debate is necessary in the West is
that in recent months, and even over the past ten years, the West's strategy towards Ukraine has been founded on a bizarre illusion: that Ukraine would leave Russia's orbit and "join the West", and that Russia would pay for this process. If continued, this self-deception could lead to a severe geopolitical defeat."

He goes on to note: "Consider the figures: Until the latest price hike for gas, Russia was supplying Ukraine with a de facto annual energy subsidy estimated by independent experts at somewhere between $3 billion and $5 billion a year. That is more than the whole of EU aid in the 14 years since Ukrainian independence. As to US bilateral aid, last year it stood at a mere $174 million - and this after all the talk of US admiration and support for Ukraine's Orange Revolution."

The second, from Larry Johnson's blog, "The Elusive Iraqi Tipping Point":

"The outlook for the next 10 months is not pretty. We will see a continued upsurge in violence, most of it sectarian in nature, with Iraqis dying at a far greater rate than Americans. U.S. military casualties will decline if the United States opts for a garrison strategy (keeping its forces on secure bases and devoted almost exclusively to training Iraqi forces). However, if the United States feels compelled to send its forces into cities to fight the insurgents the U.S. death rate will go up.

"What we can't answer at this point is whether or not an Iraqi Government dominated by Shia religious extremists will allow the United States to play a constructive role in trying to build a secure, safe Iraq, or if U.S. forces will be used as proxies to kill Sunni opponents of the Government, or if the Shia will tell us to get out. My friend, recently back from Iraq, sees little chance that new Iraqi Government will opt for a non-sectarian solution to the security crisis. That leaves us two bad options--killing Sunnis or getting out. Either choice does not strengthen our policy in the Middle East."

What both commentaries have in common is the need for us to think about U.S. objectives, means and "budget" in terms of blood and treasure in defining our policy--but also what options are realistically open to us. If we don't get the secular non-ethnic democracy we wanted in Iraq, or the EU decides not to bring Ukraine in from the cold as a full member in six months--then what do we do?

For those of you who were unable to attend our "Challenging Orthodoxies" luncheon on December 8, another opportunity to engage with Jack Snyder and Ed Mansfield--they will be speaking at the Cato Institute on January 12, an event
that is open to the public (after registration).

Whether you agree with Snyder and Mansfield or not, the debate and discussion will focus on facts, not faith, in dealing with the challenges of democracy promotion. Tom Carothers, of the Carnegie Endowment, and Robert W. Merry, President and Publisher of Congressional Quarterly, will offer comments. (Robert Merry, by the way, is one of the contributors to a recent TNI symposium on the Bush Doctrine, also discussed in these pages.) Justin Logan of the Cato Institute will preside.

Newsweek has this somewhat depressing picture of what is going on in Afghanistan.

From the article:


Karzai is in the most difficult of positions. Many of the figures under suspicion were useful to the United States in the overthrow of the Taliban and continue to serve as checks against the old regime's resurgence. The president sometimes reassigns officials who have come under scrutiny, but rarely in a way that would upset the status quo. He's particularly careful with the war-lords who run many of the biggest opium-growing provinces. "His options are limited," says senior presidential adviser Javed Ludin. "These guys have been propped up by and are allied with U.S.-led Coalition forces." Now Karzai depends on the military strength and political influence of his warlord governors. Ludin says: "The same people who are being accused by some in the international community of being drug traffickers... are our most reliable partners in the war against terrorism."

Meanwhile the traffickers are waging a political war of their own—and winning. Diplomats and well-informed Afghans believe that up to a quarter of the new Parliament's 249 elected members are linked to narcotics production and trafficking. One especially controversial figure is Arif Noorzai, who has won the post of deputy speaker of Parliament. (He denies any wrongdoing.) In a study for the independent Afghanistan Research and Evaluation Unit, Afghan expert Andrew Wilder concludes that at least 17 newly elected M.P.s are drug traffickers themselves, 24 others are connected to criminal gangs, 40 are commanders of armed groups and 19 face serious allegations of war crimes and human-rights abuses.

...

It is a real tragedy that even though Mexico is America's next-door neighbor, a careful study of its political history and development has never been high on our agenda. I've always felt that Mexico's post-Civil War/Revolution reconstruction in the 1920s held a lot of useful lessons for Afghanistan, especially in the co-optation of the warlords and the creation of a stable political system. Yes, there are significant differences between Mexico and Afghanistan, but interesting parallels, too.

Of course, another problem is the utopian belief that there are short-cuts. My colleague Anatol Lieven once noted that, with regard to a country like Afghanistan, it still needs to go through the same stages of state- and nation-building that helped to produce the modern states of the West if it is to ever become a viable country and beyond that a democracy. These stages can be accelerated; no one is suggesting that it take hundreds of years. But the veneer of modernity that comes with technology can be deluding. I've always liked the following quote from the 1990s television series La Femme Nikita:

"The Dark Ages were a thousand years of chaos, war, famine and disease. You think that won't happen again because we have computers and jet planes and cellular
phones?"

Getting Afghanistan to 1934 Mexico will be a major achievement, just as the immense economic progress that China has undertaken in the past two decades is unparalleled. Sustained development is the key--and appreciating the distance a society has come is just as important as charting how much it still needs to accomplish.

Doug Bandow's mea culpa in the Los Angeles Times today ("The Lesson Jack Abramoff Taught Me"), after acknowledging his own mistakes, makes the case that what happened to him is not an isolated example. He writes:

"Many supposedly "objective" thinkers and "independent" scholar/experts these days have blogs or consulting gigs, or they are starting nonprofit Centers for the Study of …. Who funds their books, speeches or other endeavors? Often it's those with an interest in the outcome of a related debate. The number of folks underwriting the pursuit of pure knowledge can be counted on one hand, if not one finger.

"These are not excuses for my actions — these are issues that should be addressed. Is it "journalism" if the research is helped along by a foundation whose board members have some interest in the subject? How can we be sure that newspapers keep advertisers out of news decisions? Don't broadcast media hire consultants and pollsters to contribute to their news coverage, people who could benefit financially from promoting the ideas of their other clients? And haven't reporters sometimes pocketed thousands of dollars speaking at conventions or corporate events and then covered those businesses — or their issues — in one way or another?"

Over at The Washington Note, Steve Clemons renews his callfor a "best practices" effort because of his concerns that it is far too easy now for think tanks, expert organizations and other groups that provide pundits and commentators to "become money launderers for lobbyists and corporate consulting organizations." (Steve will be speaking on this issue at an event at The Nixon Center to be held next Friday, January 13, by the way--we'll cover the event on these pages).

Readers of The Washington Realist have noted, from time to time, posts dealing with these questions. They need to be discussed. Think tanks need to return to their original intended purpose--to think, to provide analysis and recommendations--not to be lobbyists under a different name. Journalists need to decide whether they want to be reporters searching out facts or conveyors of partisan or interest talking points.

President of the Eurasia Group and TNI contributing editor Ian Bremmer lays out his predictions for 2006:

To kick off 2006, I’d like to rank the biggest political risks I see for the coming year. Then, all the upside...as well as the headlines we can safely ignore.

First, a quick overview. I see a couple of significant macro risks for 2006 (China and avian flu) and the political-risk horizon still looks seriously problematic for global energy. But a broader number of potential hotspots will drop off the radar (particularly Taiwan, North Korea, and much of the Middle East). On balance, 2006 looks like one of the better years in terms of political risk in the post-September 11 environment.

So starting with the biggest risks of the year, in descending order:

1) Iran. An escalation of tension over Iran’s nuclear program is a near certainty for 2006; even the potential for a military confrontation (surgical strikes by US/Israel and the risks of Iranian response) is steadily increasing...60% by the end of first quarter 2007.

Just how far is Mahmoud Ahmadinejad prepared to press his luck? Or as some wags put it, is the Iranian president crazy like a fox…or just crazy? The answer may not matter much in the near term for two reasons. First, the broad institutional base around Ahmadinejad is politically inexperienced and fundamentally hostile to the west (imagine the most retrograde elements of Turkish prime minister Erdogan's AKP party, i.e. virulently anti-US...but actually running the country's central institutions). Second, it's hard to find any incentive for Ahmadinejad to back down.

On the latter point, despite mounting concern from the US and Europe, there's very little effective international pressure on the Iranian government at the moment. A host of non-aligned states (and an even broader group of multinationals) are still willing to cut commercial deals with Tehran. Meanwhile, despite some public infighting among conservatives, Ahmadinejad has largely consolidated his domestic power, benefiting from the support of supreme leader Khameini (the ultimate arbiter of nuclear policy) and an increasingly cohesive new cabinet. The new ministers, as well as recent high-level replacements throughout the bureaucracy, are much more hard-line (and less market-oriented) than their predecessors.

In that context, there's little reason for Ahmadinejad to back down on nuclear negotiations (indeed, if anything, he has become more bellicose, going out of his way to provoke Israel with a series of hostile public statements). The most likely outcome is that the IAEA negotiations (and sideline diplomacy between Iran and Russia) will produce no breakthrough by March, and Iran will be formally referred to the Security Council.

Iran has already said that such a referral would provoke further limitations on—if not the expulsion of—international inspectors and a resumption of uranium enrichment. The easiest way out of the thicket (and what white house officials are privately hoping for, though certainly not banking on) is that, at that point, Iran’s intransigence will be so obvious—and dangerous—that china will back off its threat to veto sanctions against Iran and will press Tehran to accept a deal (as when china, at least early on, pressured North Korea over its nuclear program). That could happen, though Beijing isn't likely to press too hard, given its need for Iranian energy...but even in that scenario, it's reasonably likely Tehran will refuse to back down. After all, North Korea has gotten away with worse...and there's no credible threat to actually go to war with Iran.

That leaves the unlikely possibility that Ahmadinejad’s regime might be toppled from within--perhaps at the behest of erstwhile leaders like Ali Akbar Hashemi Rafsanjani, who would be happy to see the back of the Iranian president. But short of assassination (which I’m not about to lay odds on), it's not happening.

So either way you look at it, the conflict over Iran’s nuclear program appears likely to escalate. The next question—timing. How long will it take for last-ditch diplomacy and half-hearted economic sanctions/asset freezing to fail? And will the US/Israel blink at the last moment? Given strong international (and Arab) concerns about Iran, and Israeli prime minister Ariel Sharon’s increasingly secure political position, we don't expect capitulation.

Even before the dispute reaches a head, there’s likely to be plenty of new risk generated. Iran will look to make energy and other commercial deals with politics in mind. Tehran may use its leverage in Iraq to limit Iraqi oil output. Iran may cut a symbolic amount of oil output to protest the application of diplomatic pressure. Japan and us allies in Europe may see disruptions in long-term supply contracts with Iran. Us pressure on China, India, European states, Japan, Malaysia, and others to halt deals with Iran will create some market instability. For all these reasons, Iran clearly leads concerns for political risk in 2006.

2) China. 2006 continues to look extremely strong for Chinese economic growth—we'd be surprised to see even a modest slowdown. But markets continue to consistently underrate political risks in china. These risks are growing, both internally and internationally.

On the domestic front, the rigidity of the Chinese communist leadership and its bureaucratic machinery leaves the party increasingly unsteady in the face of spiraling social discontent. Most demonstrators will continue to focus their anger on local authorities, but the growth of local-level NGO’s and the increasing ease of internal communications means that small provincial protests can quickly spread to other parts of the country... And pose serious challenges for the Chinese political system itself.

Beijing is taking a harder line on corrupt regional officials and business leaders—and has made public example of those accused of abuse of power. But there remains zero tolerance for challenges to the communist party or calls for policy changes, no matter how justified. Beijing has raised the stakes by putting in place tens of thousands of new "counterterrorism police" to quell riots and over one million local police to monitor the internet. These measures have been—and will continue to be—ineffectual.

At the same time, China will increasingly be seen as a growing threat in the international community. It is in East Asia that the prospects for geopolitical conflict represent the biggest structural shift in global politics since the fall of the Soviet Union, and nowhere is the anxiety over china’s growth greater than in Japan. Japanese foreign minister Taro Aso recently said as much, when he spoke candidly about the china threat. Much the same sentiment is growing within the US Defense Department.

Sino-Japanese relations will become even more problematic in 2006, with China’s rapid growth provoking a more assertive Japanese foreign policy. Because the balance of regional political and economic power is steadily tilting in China’s favor, it is Japan that is more likely to initiate the market-moving risks. Japanese leaders may draw policy lines in the sand which china feels compelled to cross. Two flash points in particular bear watching in 2006—in the spring, Japan may decide to drill for gas in contested areas of the East China Sea; in September, two Japanese officials with hard-line views on Beijing, chief cabinet secretary Shinzo Abe and foreign minister Aso, are the most likely candidates to replace Koizumi. Either flashpoint could lead to wide-scale anti-Japanese demonstrations in China, which could further upset economic relations between the two countries.

The Bush administration will remain on the sidelines, neither quelling nor inflaming these tensions—though closer US-Japanese military relations will irritate Beijing. The more immediate Washington-generated market risks come from possible protectionist legislation in congress, particularly in the run-up to mid-term elections, when populist appeals are especially profitable.

3) The rise of the left in Latin America. In recent years, central bankers have provided most of the risk in the region, and political scientists have had little to contribute. Not this year.

Economic fundamentals should be sound throughout Latin America in 2006 (with the marginal exception of Chile)...but the politics will be increasingly problematic. The spate of elections in the region will be influenced by the growth of anti-Americanism there, spearheaded by the increasingly effective (and quite popular) Venezuelan president Hugo Chavez. That's creating bigger uncertainties for Brazil, as Lula has an uphill struggle toward re-election. It's problematic in Mexico too, with the possibility of a tight presidential race and the rise of populist Andres Manuel Lopez Obrador, leader of the party of democratic revolution.

The tilt of Argentina toward Venezuela will further complicate the region’s politics. (erratic president Nestor Kirchner has appointed a strongly pro-Chavez politician and former leftist guerilla as his defense minister.) With bold steps toward nuclear proliferation in Iran and North Korea, 2006 could be the year Chavez decides to follow suit and contend for regional security primacy. For the first time in a decade, Latin America is an area of significant political risk—and it's hard to see markets not reacting negatively to these developments.

4) Iraq--the Kurds. Of all the flashpoints in postwar Iraq, the Kurds have been the dog that hasn't yet barked. They're doing extremely well economically, their political institutions are functional and increasingly mature, and they therefore have no reason to challenge the status quo. But this year, that status quo may be put to the test. Gubernatorial elections (in November '06) will force Kurdish political contenders to offer opposing programs, and it will become expedient for some Kurdish factions to publicly support a platform of independence. In addition, cooler heads will struggle to postpone a divisive 2007 referendum on the final status of the oil-rich city of Kirkuk.

The political debate over Kirkuk and a gradual withdrawal of US troops (particularly from hotspots) will raise the stakes over control of Iraq’s energy resources. A hard-line Kurdish position on both independence and Kirkuk will raise hostilities with the Sunnis, and possibly with Turkey. With growing Iranian influence over southern Iraq (and over the 'central' Iraqi government), Iraq will look less functional a year from now than it does today.

A quick note on Turkey—it's worth noting the reasonable likelihood that Turkey/EU accession talks will come to an impasse over Cyprus in mid-2006. That would increase domestic pressure on Erdogan's government to intervene in northern Iraq if and when Kurds push for autonomy. The Turkish prime minister may decide to invite a coalition partner to join his government, if he believes that pressures from the EU and Kurds might cut into his political margin for error in advance of 2007 elections.

5) Avian flu. It's difficult to quantify the global pandemic threat, because, while scientists agree it's coming (and increasingly likely), nobody has a well-informed prediction of whether it's really a one- or a ten-year risk. Still, biosecurity worries represent a massive fat tail for global markets... And even in its absence, the combination of lack of transparency in key countries (particularly China), together with the near complete lack of preparation by international institutions will cause both market-wrenching headlines, false scares, enormous expenditure, and legislative activity.

In short, biosecurity bears a close watch this year. Market attention tailed off considerably as 2005 came to a close, but headlines in 2006 will bring these worries to the fore very quickly. That will be particularly noteworthy in Southeast Asia—in Indonesia, where almost no steps have been taken to limit the likelihood of an epidemic, and in China, where the government sees full transparency on the issue as a direct threat to political stability. There's already evidence of significant cover-ups by Beijing, and new Chinese cases of bird-to-human transmission will set markets on edge.

6) Nigeria. With 2007 presidential elections looming, it looks likely that president Obasanjo and his parliamentary supporters will push to amend the constitution, to allow him to run for a third term. There's good reason for the international community to support him—he's proven adept at handling macroeconomic policy, and the likeliest presidential alternatives (particularly vice president Abubakar) all look much less capable. But if the country’s holdouts and have-nots decide that their opportunities to share power are dwindling, they will create trouble for Obasanjo in the run-up to the elections, and Nigeria will become particularly unstable in 2006. Though recent shifts in Nigeria’s coalition politics have dimmed Obasanjo's chances, 16 southern governors are now demanding constitutional change—so it's a good bet the process will continue.

Add the tensions in the Niger delta and the pending trial of militia leader Asari Dokubo, and the risk of serious violence and large-scale, sustained oil supply disruption is growing. Africa doesn't usually make international headlines, but with continued strong economic growth from China and India, and in the absence of a sudden serious drop-off in energy demand from the west, Nigeria deserves our attention.

7) Terror. Since the beginning of the war on terror in 2001, international counterterrorist efforts have made considerable headway in tracking down the leadership, funding, and network of Al Qaeda. But the organization remains more resilient than international intelligence agencies had hoped, and local terrorist networks (more Al Qaeda-inspired affiliates than a part of the broader organization) continue to pose a threat to western assets all over the world.

Most problematically, Iraq and the north Caucasus have emerged as the two largest training camps for terrorist organizations; and both are beginning to export terror beyond their borders.

Russia remains at greater risk of a "macro" terror event in the coming year than any other country in the world—recent catastrophic radiation levels at nuclear plants in Chechnya reveal the broader danger. Terrorist threats to the core of governance are also a risk in Iraq (where an assassination of ayatollah Sistani by Sunni terrorists, for example, would be a tipping point in bringing the country into civil war).

Beyond that, terror threats remain considerably higher in continental Europe (and certainly in East Asia), where the indigenous Muslim populations are considerably harder to police, than in the US. An increasing threat also exists in Iraq’s neighbors, particularly Jordan and Lebanon, where counterterrorist capacity remains low. We also remain concerned about energy infrastructure in the gulf, which remains vulnerable (with the strong exceptions of Saudi Arabia and the UAE). Kuwait, in particular, is more vulnerable than is widely accepted.

* * *

Now, the places we don't have to worry about.

Taiwan. The strong showing by the opposition KMT in recent parliamentary elections only bolstered our underlying view that president Chen is too isolated to pull off a threatening move toward independence in the run-up to Beijing’s Olympics in the summer of 2008. Rather, China's willingness to accept Taiwan’s gradual economic dependence on the mainland (in the hopes of creating a de facto single state) will overwhelm local Taiwanese discomfort with their eroding international position. The US (and Taiwan’s traditional Asian allies) will stay on the sidelines. Cross-strait confrontation is not a concern for 2006.

North Korea. The US has capitulated on North Korea, and the six-party talks are stalled. We expect there will be another round of six-party negotiations at some point this year, and they will prove equally uneventful. China and South Korea, meanwhile, will slowly but steadily improve their bilateral relations with Pyongyang. (South Korea, whose leading candidate to be the next unification minister will commit to a faster-track sunshine policy, has essentially accepted North Korea's status as a nuclear power.) It's a big problem long term (both in terms of broader proliferation and the eventual North Korean succession issue), but nothing for markets to worry about in 2006.

Russia. President Putin’s recent political shakeups notwithstanding, it remains unclear whom Putin is planning to anoint as his successor. We're prepared to bet he's not going to make the move for a third term himself; which means the run-up to 2008 will be a difficult investment climate, and indeed should see some additional capital flight from worried oligarchs. But, barring the macro terror incident discussed above, we shouldn't see any threats to Russia’s governance, its international relations, or its energy production. Post-2008 is another story—Russia’s never been successful with the power-sharing concept of dvoevlastie (literally "two powers").

India/Pakistan. Bilateral relations still look extremely positive—there’s even a chance for a breakthrough military agreement over Kashmir. Either way, we see strong political stability in both countries. We expect India to continue to over-perform economically through improved governance, the benefits of long-overdue infrastructure investment over the last few years, and the efforts of global firms to diversify away some of their china risk. One small worry—terrorism targeted at economic disruption in Bangalore. But we think it's too marginal a risk for serious concern in 2006.

Israel/Palestine. Prime minister Ariel Sharon looks set to win big in March elections, and together with an ineffectual Palestinian authority, there's going to be very little movement on the road map. Essentially, the Israelis will consolidate their political gains, cut their losses, and seek to move on. The Palestinians don't have such good fortune, and Hamas is likely to make significant gains in popularity—and at the polls—in the coming year. But in the middle term, that's going to force even Hamas to become less extreme, to eventually sit down at the negotiating table with the Israelis, and to bargain from a very weak position. Meanwhile, Israel’s economy (with its technology boom) looks robust. While we're in the area, international pressure on Syria should recede, and sporadic fighting aside, we expect neither open hostilities with Israel nor deterioration toward civil war in Lebanon.

The Persian Gulf. Nearly all the governments of the gulf region have deployed substantial portions of their recent budget surpluses toward shoring up domestic political support. Several—notably Saudi Arabia, Bahrain, and Kuwait—have even implemented gradual political reforms, which could ultimately improve the sustainability of their regimes. Massive population growth and a lack of economic diversity remains an enormous risk for the House of Saud in the long term, but it's very long term...there's nothing in the coming three years that looks regime-threatening.

Southeast Asia. Continues to look pretty strong. We see significant increases in foreign investment, as the US, China, and Japan compete for regional influence. There's also the benefit of surprisingly good governance from Susilo Bambang Yudhoyono's government in Indonesia, which is set to have a particularly strong 2006.

The Caspian. All quiet this year—no more colored revolutions, despite the recent “managed” elections in Azerbaijan and Kazakhstan. All the countries of the region will work to play growing Chinese economic interests off Russian efforts to maintain political and military dominance, while maintaining at least a modicum of American interest. And, for the most part, they'll succeed.

* * *

Last but not least, a moment on the United States.

The Bush administration has largely succeeded in winning back Republican support for White House policy; but the Democrats are largely lost, so we're going to see strongly partisan politics in the run-up to mid-term elections. Bush has six months of only modest troop draw-downs to limit criticism of his Iraq policy, but sniping will become increasingly aggressive as mid-term elections approach. Meanwhile, legislation will stall, and the deficit will grow.

A host of scandals will continue to roil both the administration and the congress, and it's nearly certain there will be significant additional indictments related to the Plame case. All the while, vice president Cheney and key white house staffers will remain very much under fire; and the Bush administration will have a hard time clearing house until the scandals break.

The main point—significant U. S. efforts at transformational foreign policy (whether in China, Iraq, the greater Middle East, North Korea or elsewhere) have been rolled back in favor of more modest goals... Maintenance of Republican support, preparation for mid-term elections, and efforts to keep the economy humming...all while trying to keep their heads down.

I was overly optimistic that the Russian-Ukrainian game of chicken over gas would come to an end with seconds left on the clock to spare; it also seems that scenario #2--a symbolic day of gas supplies shut off followed by a new agreement--is also not likely to come to pass. (See earlier postings on December 29)

It appears that Moscow's twin hopes--discrediting the Orange Revolution and reviving support for the Baltic Pipeline System that bypasses Ukraine and other east-central European countries in favor of direct supplies to Western Europe via Germany--are now being threatened because the question of European dependence on Russia is being put back on the agenda. The Scotsman is reporting "The (British) Department of Trade and Industry was warned at least four years ago that relying on imported gas would render the British economy vulnerable to disruption from Russia" and that a forthcoming energy review "is also expected to call for clear rules on gas imports to ensure that no one supplier becomes vital to Britain's needs. That could mean constructing new pipelines and other supply routes from nations including Canada, and regions including North Africa and South America." (By the way, this tracks with Barry Lynn's recent essay in the Winter 2005/06 issue of The National Interest that the global economy needs to diversify sources of supply of both raw materials and finished goods).

Meanwhile, one wonders about the consistency of support for free-market remedies in the U.S. government. Iraq's oil minister resigned after criticizing the IMF advice which led the government to triple gasoline prices, effectively ending subsidies. At the same time, the U.S. State Department statement on the Ukraine-Russia gas crisis calls for market pricing to be introduced gradually. The theory in Iraq was that sudden price liberalization would cause Iraqis to save fuel and not depend on subsidies; interestingly, some Ukrainians saw a silver lining in the Russian demands--if not entirely pleased by the timing!, seeing a sudden price hike as a way to introduce efficiency and over time cut the country's dependence on Russia.

Greg Djerejian has an interesting point in his New Year's entry over at Belgravia Dispatch:

"It's often the nature of the blogosphere that we get all in a tizzy over some major issue of the day (Brownie & Katrina! Eurabian Intifada on the Seine! Fitzmas Came Early!) only to (overly?) quickly move on to the Next Big Thing ..."

He actually follows up on what has happened in France since the riots -- well worth reading.

Over at Postmodern Conservative, James Poulos outlines some predictions for 2006. Among them:

1. Ahmed Chalabi will not fall from grace. Named Iraq Oil Minister, his instincts for survival will rise to the level of art. At best an Iraqi Talleyrand, at worst a sort of Herod, Chalabi could facilitate a true democratic revolution in Iran or pull off the opposite in Iraq. The bet leans toward the former: collusion with Ariel Sharon in the runup to Prediction 2.

2. The Iran-nuke crisis goes pop. The Iranians will toy with the Russian proposal, embrace it again, demur again, raise questions, withhold answers, tinker furiously, and let their actions constitute a de facto rejection. By then the Security Council will pass an unenforceable resolution, unanimous but with the absention of the last country that can seriously abstain -- China. Israel will be granted, de facto as well, its right to self-defense by an international community that has run out of options and run out of time. The plans to Osirak Iran will be expert but hopelessly risky; although the Russian-import missiles meant to blow Israel's jets from the sky would mysteriously malfunction, if only they'd been put to use, the operation is called off at T - 4 hours when Sharon, Chalabi, and the CIA throw a hail-Mary pass to Hossein Khomeini, who wins a 24-hour coup/civil war involving certain Sunni tribesmen in Persian Baluchistan and our generation's Kermit Roosevelt.

3. The EU will debalkanize the Balkans. By the end of 2006, membership for Romania, Bulgaria, and Croatia will be a done deal. Macedonia will be in line with Serbia and Montenegro, the latter (like Al Gore) as its own man. Transnistria will still be occupied by Russians, who will make a quiet fortune off of the opium and spare-parts trades. Abkhazia will be more independent, not less; Georgia's entry into NATO will be contingent upon a weird agreement that has German and Russian forces occupying the Caucasus for the first time since 1943, and on opposite terms. All the non-Russian Warsaw Pact countries will be officially Westernized, "and, for the first time since 395 AD," "the old Roman 'commonwealth'" will be nestled "into a single entity." ...

9. The Republicans will lose neither the House nor the Senate. Something momentous will happen that involves Dick Cheney.

10. There will be more terrorism than you hope, and less than you fear.