Reviewing India’s Nuclear Doctrine, by Ali Ahmed
IDSA, April 24, 2009
A long standing observation on India’s strategic culture is that national strategy remains unarticulated. A significant departure from this characteristic was made by India following a review of the nuclear doctrine in Jan 2003. It is now more than six years since the event. There is a need to review doctrine periodically in any case. In this specific case the need is more acute given changes in strategic circumstances. The present juncture is an apposite one in that a new government would be coming into power soon. Therefore initiating a case for a review of India’s nuclear doctrine is in order. This policy brief proposes a direction of review by interrogating a principal pillar of the doctrine – that of ‘massive punitive retaliation’.
There are other contending directions of review. These include whether India should continue to include ‘minimal’ in its formulation ‘credible minimum deterrent’ in light of ‘minimum’ seemingly contradicting the important dimension of the two i.e., ‘credible’. There has even been a recommendation by a departing National Security Advisory Board on jettisoning ‘No First Use’ – perhaps the most salient pillar of the doctrine. The votaries of the Triad would prefer a mention of a Triad based second strike capability in the doctrine. These possible directions indicate that there is a need for review. It is another matter that in doing so, some of the proposals would be accommodated and some disregarded.
In this regard, the proposal requires a shift away from ‘massive punitive retaliation’ in favour of ‘flexible punitive retaliation’. The policy brief first establishes the need to do so by discussing three conflict scenarios highlighting the dangers of the formulation and the advantages from the proposed shift. It concludes that a strategic dialogue with both China and Pakistan is necessary for clarity in communication. This would enhance deterrence and dispel possible misperceptions and apprehensions. This is particularly necessary with respect to Pakistan, given that the state is perpetually poised on ‘failed state’ status with implications for India.
The current doctrinal precept
The sub-paragraph of interest of the press release subsequent to the Cabinet Committee on Security endorsing the nuclear doctrine of 04 Jan 03 reads: “(ii) A posture of “No First Use”: Nuclear weapons will only be used in retaliation against a nuclear attack on Indian territory or on Indian forces anywhere; (iii) Nuclear retaliation to a first strike will be massive and designed to inflict unacceptable damage.”
The inclusion of the term ‘massive’ was a discernible change from the earlier formulation of the Draft Nuclear Doctrine in which the term had not found mention. Instead the Draft had used the term ‘sufficient’ implying a degree of choice on the nature of the response being available to the political decision maker. The specific sentence in the sub-paragraph on Credibility in the Draft reads: ‘Any adversary must know that India can and will retaliate with sufficient nuclear weapons to inflict destruction and punishment that the aggressor will find unacceptable if nuclear weapons are used against India and its forces.’ Though the Draft was just that - a ‘draft’ to compel the government’s attention, the critique stands. The principal problem with the change is that it restricts the choice of the decision maker by excluding the set of less expansive responses.
‘Massive’, not defined explicitly, can be taken as a product of throw weight and target set that produces the promised ‘unacceptable damage’. There are three implications: one is in terms of ‘pain’ implying counter value targeting; second, is reducing the ability of the enemy to mount a counterstrike, which would be counter force; and third is a mix of both. Since in all three options ‘unacceptable damage’ is inflicted, it is worth questioning whether only ‘massive’ nuclear counter strike would cause ‘unacceptable damage’. It is well understood that even a single warhead through a counter value strike can be ‘catastrophic’. Therefore, the term ‘massive’, in its emphasis on throw weight or numbers, is superfluous. It has even been averred that the inclusion of ‘massive’ was likely an ‘unconsidered formulation’. On this count there is a need for review.
Massive nuclear retaliation is definitely a possibility and would be credible in case the enemy’s nuclear first use is in an expansive (‘massive’) form such as resort to first strike, decapitating strike or counter value targeting. However, should ‘first use’ be of a restricted nature such as at the tactical level, for India to up the ante by going ‘massive’ to counter it would be irrational. This was an observation true in the Cold War era as pointed out by Thomas Schelling in his landmark, The Strategy of Conflict: ‘The threat of massive retaliation, if ‘massive’ is interpreted to mean unlimited retaliation, does indeed lose credibility with the loss of our hope that a skillfully conducted all out strike might succeed in precluding counter retaliation.’ Since precluding counter retaliation is not possible in India’s case with respect to Pakistan, leave aside China, it would be prudent for India to go down a route traversed by the US during the McNamara years. The logic that persuaded McNamara in his own words was:
‘One cannot fashion a credible deterrent out of an incredible action…What we are proposing is a capability to strike back after absorbing a first blow. This means we have to build and maintain a second strike force. Such a force should have sufficient flexibility to permit a choice of strategies… Such a prospect would give the Soviets no incentive to withhold attack against our cities in a first strike. We want to give them a better alternative…the strongest possible incentive to refrain from attacking our cities.’
India’s promise of massive counter strikes to first use against its territory or its forces is wanting in credibility, particularly if the strike were of a tactical nature but with a strategic purpose of nuclear signaling for war termination. This is particularly important since both the likely adversaries are unlikely to resort to nuclear weapons in a massive mode in the first salvo.
Consider the case of China. Though bound by an NFU, it is reportedly a qualified NFU in not being applicable to territory it claims. In a border conflict with India it could resort to nuclear first use on its claimed territory of Arunachal Pradesh. Such use would likely involve the use of tactical nuclear weapons. Since India’s is an Assured Retaliation doctrine, India would only be complicating the aftermath of the nuclear exchange for itself should its counter strike be ‘massive’.
The same is the case with Pakistan. Pakistan, emulating NATO in the Cold War era does not profess NFU. In case it were to resort to nuclear first use, it is quite apparent that this would not be of an order of a debilitating ‘first strike’ given the imbalance in numbers and the security of information surrounding locations of Indian nuclear assets. Even if it were to attempt to do so, it could not preclude assured Indian counter value retaliation. Having fired off a major proportion of its arsenal in attempting a first strike, it would not have the numbers to mount a counter strike. In effect, it would ab initio be deterred from attempting a first strike. Therefore Islamabad’s most likely first use is a tactical strike with a strategic purpose of forestalling Indian conventional military advances or to bring about conflict termination by focusing the efforts of the international community. Counter retaliation in a ‘massive’ mode to such a symbolic strike would be to India’s disadvantage since there is no guarantee that some Pakistani weapons would not survive. These would inevitably be directed at counter value targets to maximize vengeance. To open itself to such a threat would be irrational.
The problem has been pointed out earlier following the release of the Draft nuclear doctrine in the following manner:
‘….Our intent of causing ‘unacceptable damage’ is credible only in case our population centers and nuclear-industrial concentrations are hit, inclusion of military forces as targets that will invite such a response makes it less credible…the point is having caused ‘unacceptable damage’ is no consolation for ending up a recipient of it…Thus there is a need to move beyond the avatar of ‘massive retaliation’…in favour of ‘flexible response’…’ (Ali Ahmed, ‘Doctrinal Challenge’, USI Journal, Jan 2000)
It is seen that the term ‘massive’ is not only tying down India’s options but dangerously so. This is elaborated through scenarios in the next section with respect to Pakistan as the nuclear adversary. In the case of China as an adversary in similar scenarios, there is no way India could survive the eventual nuclear exchange.
[Full brief at the link above.]
Tuesday, April 28, 2009
Panama's Promise - Amid a massive canal expansion, a pro-American supermarket tycoon is poised to be elected president
Panama's Promise, by Jaime Daremblum
Amid a massive canal expansion, a pro-American supermarket tycoon is poised to be elected president.
The Weekly Standard, Apr 28, 2009
In a 2006 national referendum, Panamanian voters approved a $5.2 billion project to expand the Panama Canal. As the Panama Star reports, "Percentage wise, the canal expansion dwarfs any stimulus project the United States is planning. The project represents nearly a quarter of Panama's $23 billion gross domestic product."
President MartÃn Torrijos, a member of the center-left Democratic Revolutionary Party (PRD), eagerly championed the canal expansion, but it won't be completed on his watch. This coming Sunday (May 3), Panamanians will elect his successor. PRD presidential candidate Balbina Herrera is trailing opposition candidate Ricardo Martinelli by double digits. It is hard to see how Herrera can make up so much ground in so little time. All signs point to a Martinelli victory.
Compared to a Herrera regime, a Martinelli administration "would be a much more pro-American government." At least that's what Martinelli told a Miami Herald columnist last month, saying he would push aggressively for the U.S. Congress to approve a bilateral free trade pact with Panama, which was signed in June 2007. Founder of the center-right Democratic Change party, the 57-year-old Martinelli is representing a multiparty coalition in the May 3 election. He is a supermarket tycoon with a range of other business interests and a record of government service. Martinelli has worked in two different Panamanian presidential administrations. When the government officially assumed control of the Panama Canal at the end of 1999, Martinelli was serving as both board chairman of the Panama Canal Authority and minister of canal affairs.
The scandal-plagued Herrera, meanwhile, has a background in radical left-wing politics. A former National Assembly deputy and mayor of San Miguelito, she was a close confidant of Manuel Noriega, the drug-trafficking Panamanian dictator who was toppled by U.S. military forces in December 1989. In fact, Herrera was a leader of the thuggish Dignity Battalions, Noriega's paramilitary units, and Noriega hid in her home during the American invasion. Under the Torrijos administration, Herrera served as housing minister.
In a global economic environment characterized by recession and financial upheaval, Panama stands out as a relative bright spot. The United Nations Economic Commission for Latin America and the Caribbean projects that Panama's economy will expand by 4 percent in 2009 while the regional economy as a whole will contract by 0.3 percent. But 4 percent annual GDP growth represents a major drop from 9.2 percent growth in 2008 and 11.5 percent growth in 2007. In those years, Panama benefited from robust global trade and a massive housing boom. Its unemployment rate plummeted. Now international trade is shrinking rapidly and, as Jeremy Schwartz notes in the Austin-American Statesman, the Panamanian real-estate sector "might be heading for a sharp downturn."
Panama's economic slowdown has been deep and abrupt, and Panamanians seem increasingly unhappy with the incumbent Torrijos government, which has been in power since 2004. Torrijos, the son of former Panamanian military ruler Omar Torrijos, has pursued a range social programs but only managed to achieve a small drop in the national poverty rate, which fell from 32 percent in 2003 to 28 percent in 2008. Given Panama's strong economic growth over that period, the public expected more progress on poverty reduction. Living costs have increased sharply due to inflation, and Panamanians remain widely dissatisfied with their public services (namely health care and education). The country has also been dealing with a spike in crime.
For all these reasons and more, the Panamanian electorate is restless, and many voters appear to be taking out their frustrations on the PRD. However, the party currently holds a majority of seats in Panama's National Assembly, so even if Martinelli wins the presidential election, his agenda may be constrained by legislative opposition.
Twenty years after the U.S. operation that overthrew Noriega, Americans don't pay much attention to Panama. But it is a strategically important country that is playing a growing role in global trade. Indeed, it is estimated that 5 percent of all international trade-and a much higher percentage of U.S. trade-goes through the Panama Canal. Torrijos has successfully promoted Panama as a tourist hotspot and commercial hub. It is an increasingly popular retirement destination for Americans; indeed, U.S. expatriates helped fuel the recent Panamanian housing boom.
Now more than ever, responsible management of the Panama Canal is deeply important to the global economy in general and the U.S. economy in particular. Efficient canal management depends on political stability and sound governance. Torrijos has provided such governance. Let's hope his successor does too.
Jaime Daremblum, who served as Costa Rica's ambassador to the United States from 1998 to 2004, is director of the Center for Latin American Studies at the Hudson Institute.
Amid a massive canal expansion, a pro-American supermarket tycoon is poised to be elected president.
The Weekly Standard, Apr 28, 2009
In a 2006 national referendum, Panamanian voters approved a $5.2 billion project to expand the Panama Canal. As the Panama Star reports, "Percentage wise, the canal expansion dwarfs any stimulus project the United States is planning. The project represents nearly a quarter of Panama's $23 billion gross domestic product."
President MartÃn Torrijos, a member of the center-left Democratic Revolutionary Party (PRD), eagerly championed the canal expansion, but it won't be completed on his watch. This coming Sunday (May 3), Panamanians will elect his successor. PRD presidential candidate Balbina Herrera is trailing opposition candidate Ricardo Martinelli by double digits. It is hard to see how Herrera can make up so much ground in so little time. All signs point to a Martinelli victory.
Compared to a Herrera regime, a Martinelli administration "would be a much more pro-American government." At least that's what Martinelli told a Miami Herald columnist last month, saying he would push aggressively for the U.S. Congress to approve a bilateral free trade pact with Panama, which was signed in June 2007. Founder of the center-right Democratic Change party, the 57-year-old Martinelli is representing a multiparty coalition in the May 3 election. He is a supermarket tycoon with a range of other business interests and a record of government service. Martinelli has worked in two different Panamanian presidential administrations. When the government officially assumed control of the Panama Canal at the end of 1999, Martinelli was serving as both board chairman of the Panama Canal Authority and minister of canal affairs.
The scandal-plagued Herrera, meanwhile, has a background in radical left-wing politics. A former National Assembly deputy and mayor of San Miguelito, she was a close confidant of Manuel Noriega, the drug-trafficking Panamanian dictator who was toppled by U.S. military forces in December 1989. In fact, Herrera was a leader of the thuggish Dignity Battalions, Noriega's paramilitary units, and Noriega hid in her home during the American invasion. Under the Torrijos administration, Herrera served as housing minister.
In a global economic environment characterized by recession and financial upheaval, Panama stands out as a relative bright spot. The United Nations Economic Commission for Latin America and the Caribbean projects that Panama's economy will expand by 4 percent in 2009 while the regional economy as a whole will contract by 0.3 percent. But 4 percent annual GDP growth represents a major drop from 9.2 percent growth in 2008 and 11.5 percent growth in 2007. In those years, Panama benefited from robust global trade and a massive housing boom. Its unemployment rate plummeted. Now international trade is shrinking rapidly and, as Jeremy Schwartz notes in the Austin-American Statesman, the Panamanian real-estate sector "might be heading for a sharp downturn."
Panama's economic slowdown has been deep and abrupt, and Panamanians seem increasingly unhappy with the incumbent Torrijos government, which has been in power since 2004. Torrijos, the son of former Panamanian military ruler Omar Torrijos, has pursued a range social programs but only managed to achieve a small drop in the national poverty rate, which fell from 32 percent in 2003 to 28 percent in 2008. Given Panama's strong economic growth over that period, the public expected more progress on poverty reduction. Living costs have increased sharply due to inflation, and Panamanians remain widely dissatisfied with their public services (namely health care and education). The country has also been dealing with a spike in crime.
For all these reasons and more, the Panamanian electorate is restless, and many voters appear to be taking out their frustrations on the PRD. However, the party currently holds a majority of seats in Panama's National Assembly, so even if Martinelli wins the presidential election, his agenda may be constrained by legislative opposition.
Twenty years after the U.S. operation that overthrew Noriega, Americans don't pay much attention to Panama. But it is a strategically important country that is playing a growing role in global trade. Indeed, it is estimated that 5 percent of all international trade-and a much higher percentage of U.S. trade-goes through the Panama Canal. Torrijos has successfully promoted Panama as a tourist hotspot and commercial hub. It is an increasingly popular retirement destination for Americans; indeed, U.S. expatriates helped fuel the recent Panamanian housing boom.
Now more than ever, responsible management of the Panama Canal is deeply important to the global economy in general and the U.S. economy in particular. Efficient canal management depends on political stability and sound governance. Torrijos has provided such governance. Let's hope his successor does too.
Jaime Daremblum, who served as Costa Rica's ambassador to the United States from 1998 to 2004, is director of the Center for Latin American Studies at the Hudson Institute.
Iran's New Target: Egypt - Cairo's desire for Mideast peace threatens Tehran's ambitions
Iran's New Target: Egypt. By ABDEL MONEM SAID ALY
Cairo's desire for Mideast peace threatens Tehran's ambitions.
WSJ, Apr 28, 2009
On April 8, Egypt announced it had uncovered a Hezbollah cell operating inside its borders. This startling pronouncement offers a rare insight into the way Iran and its proxies are manipulating Middle East politics.
According to Egyptian authorities, the cell was tasked with planning attacks against tourist sites in Sinai, conducting surveillance on strategic targets including the Suez Canal, and funneling arms and money to Hamas. Hezbollah's leader, Hassan Nasrallah, has admitted that the ringleader of the cell was indeed a member of his organization to provide "logistical support to help the Palestinian brothers in transporting ammunition and individuals."
These latest actions by an emboldened Hezbollah have been spurred on by Iran, which is seeking to further its quest for power in the Arab Middle East. In the past six months, there have been irrefutable signs of Iran's determined effort to sabotage Egypt's attempts at regional stability. At Tehran's instigation, Hamas rejected the renewal of the six-month, Egypt-brokered cease-fire last summer between it and Israel. This rejection led to the Gaza war in December. At the height of that war, Mr. Nasrallah called on the people of Egypt and its army to march on the city of Rafah to open the border to Gaza by force, a highly inflammatory appeal aimed at causing insurrection.
After the war ended, Egypt resumed its efforts to reach a long-term cease-fire. Iran pressured the Hamas leadership to resist. Cairo's ongoing effort to build a Palestinian unity government, by bringing together Fatah and Hamas, has also been undermined by intense Iranian pressure on Hamas.
Tehran sees Egypt as its greatest rival in the region, and the most formidable Arab bulwark opposing its influence. It is in this context that Hezbollah actions in Egypt should be assessed. Acting as a front for Iranian objectives, Hezbollah is tasked with distracting Egypt from the diplomatic process that will hopefully lead one day to a two-state solution in the Palestine-Israel conflict.
Egypt's persistent attempts to bring about peace in this arena and its encouragement of other Arab countries to follow its path with Israel threaten to deprive Iran of the single most potent regional issue that it can exploit to further its radical agenda. Thus Tehran seeks to undermine the prospects for this peace -- and it, along with its clients, believe the way to do this is by undermining Egypt. Similarly, Egypt's security interests in the Gulf, and its traditional role as a force for regional stability, present a clear obstacle to Iran's wider regional ambitions.
For President Barack Obama and members of his administration watching from the sidelines, the implications should be clear. A final settlement of the Palestine-Israel conflict is indispensable if the U.S. wishes to check Iran's expanding influence in the Middle East.
Meanwhile, the U.S. administration will have to contend with a right-wing Israeli government that has yet to subscribe to the principle of a two-state solution in defiance of international consensus. It will also have to press Israel to halt its illegal settlement activity, which now more than ever endangers the fundamental basis for a solution.
The administration's focus on the immediate issue of Iran's nuclear program should not distract it from addressing Tehran's overall posture towards the peace process or its support for terrorism. Iran's challenge to the regional status quo is multifaceted, which is why Washington must adopt a comprehensive approach as it formulates its nascent engagement with Iran.
It is said that Mr. Obama is still weighing when and where to deliver a major speech to the Arab world. If he were to make such a speech in Cairo, it would give heart to millions in the region who want to see the peace process succeed. It would also send a firm message to Tehran that America stands with Egypt on the side of peace and stability.
Mr. Aly is director of the Al Ahram Center for Political and Strategic Studies in Cairo.
Cairo's desire for Mideast peace threatens Tehran's ambitions.
WSJ, Apr 28, 2009
On April 8, Egypt announced it had uncovered a Hezbollah cell operating inside its borders. This startling pronouncement offers a rare insight into the way Iran and its proxies are manipulating Middle East politics.
According to Egyptian authorities, the cell was tasked with planning attacks against tourist sites in Sinai, conducting surveillance on strategic targets including the Suez Canal, and funneling arms and money to Hamas. Hezbollah's leader, Hassan Nasrallah, has admitted that the ringleader of the cell was indeed a member of his organization to provide "logistical support to help the Palestinian brothers in transporting ammunition and individuals."
These latest actions by an emboldened Hezbollah have been spurred on by Iran, which is seeking to further its quest for power in the Arab Middle East. In the past six months, there have been irrefutable signs of Iran's determined effort to sabotage Egypt's attempts at regional stability. At Tehran's instigation, Hamas rejected the renewal of the six-month, Egypt-brokered cease-fire last summer between it and Israel. This rejection led to the Gaza war in December. At the height of that war, Mr. Nasrallah called on the people of Egypt and its army to march on the city of Rafah to open the border to Gaza by force, a highly inflammatory appeal aimed at causing insurrection.
After the war ended, Egypt resumed its efforts to reach a long-term cease-fire. Iran pressured the Hamas leadership to resist. Cairo's ongoing effort to build a Palestinian unity government, by bringing together Fatah and Hamas, has also been undermined by intense Iranian pressure on Hamas.
Tehran sees Egypt as its greatest rival in the region, and the most formidable Arab bulwark opposing its influence. It is in this context that Hezbollah actions in Egypt should be assessed. Acting as a front for Iranian objectives, Hezbollah is tasked with distracting Egypt from the diplomatic process that will hopefully lead one day to a two-state solution in the Palestine-Israel conflict.
Egypt's persistent attempts to bring about peace in this arena and its encouragement of other Arab countries to follow its path with Israel threaten to deprive Iran of the single most potent regional issue that it can exploit to further its radical agenda. Thus Tehran seeks to undermine the prospects for this peace -- and it, along with its clients, believe the way to do this is by undermining Egypt. Similarly, Egypt's security interests in the Gulf, and its traditional role as a force for regional stability, present a clear obstacle to Iran's wider regional ambitions.
For President Barack Obama and members of his administration watching from the sidelines, the implications should be clear. A final settlement of the Palestine-Israel conflict is indispensable if the U.S. wishes to check Iran's expanding influence in the Middle East.
Meanwhile, the U.S. administration will have to contend with a right-wing Israeli government that has yet to subscribe to the principle of a two-state solution in defiance of international consensus. It will also have to press Israel to halt its illegal settlement activity, which now more than ever endangers the fundamental basis for a solution.
The administration's focus on the immediate issue of Iran's nuclear program should not distract it from addressing Tehran's overall posture towards the peace process or its support for terrorism. Iran's challenge to the regional status quo is multifaceted, which is why Washington must adopt a comprehensive approach as it formulates its nascent engagement with Iran.
It is said that Mr. Obama is still weighing when and where to deliver a major speech to the Arab world. If he were to make such a speech in Cairo, it would give heart to millions in the region who want to see the peace process succeed. It would also send a firm message to Tehran that America stands with Egypt on the side of peace and stability.
Mr. Aly is director of the Al Ahram Center for Political and Strategic Studies in Cairo.
Swine flu: Tools developed in the last few years will help the Obama administration fight back
How Bush Prepared for the Outbreak. By Tevi Troy
Tools developed in the last few years will help the Obama administration fight back.
WSJ, Apr 28, 2009
Swine flu has presented the Obama administration with its first major public-health crisis. Fortunately for the Obama team, the Bush administration developed new tools that will prove critical in meeting this challenge.
Under President Bush, the federal government worked with manufacturers to accelerate vaccine development, stockpiled crucial antivirals like Tamiflu, war-gamed pandemic scenarios with senior officials, and increased the Centers for Disease Control and Prevention's (CDC) sample identification capabilities. These activities are bearing fruit today.
The Department of Health and Human Services (HHS) has already deployed 12.5 million courses of antivirals -- out of a total of 50 million -- to states and local agencies. In addition, CDC's new capacities have allowed Mexican officials to send flu samples to CDC for quick identification, a capability that did not exist a few years ago. Collaboration between the government and the private sector on vaccines -- which Mr. Bush and his HHS team actively encouraged -- could potentially allow manufacturers to shepherd a vaccine to market within four months of identifying the strain and getting the go-ahead from CDC or the World Health Organization.
But new tools aside, top health officials must answer difficult questions about response efforts. One is when and where to deploy antivirals.
The Bush administration considered a "forest fire" approach to pandemic outbreaks abroad. This strategy calls for sharing some of our precious supply of antivirals with a foreign country in order to stop a small flame from becoming a forest fire. The risk is that we have only a limited number of courses, and the use of antivirals increases the odds that the flu strain in question will become resistant to that antiviral. With 37.5 million courses remaining in the federal stockpile, the administration needs to think very carefully about how to use them.
Another issue: Under the Public Readiness and Emergency Preparedness (PREP) Act of 2006, the government has the authority to issue "Prep Act Declarations" granting liability protection to manufacturers whose products were used in public-health emergencies. This helps encourage manufacturers to develop countermeasures. The government issued a series of such declarations in 2007 and 2008. They protected the development and use of influenza vaccines and pandemic antivirals, as well as anthrax, smallpox and botulism products. The Obama administration should consider granting more of them -- if appropriate -- in the weeks ahead.
A third policy question has to do with how to stop the spread of the disease both across borders and within countries. The administration has so far initiated "passive surveillance": Border guards are assessing if people entering the U.S. seem sick, but aren't actively stopping anyone. If things get worse, they may have to intensify border security.
The Bush administration examined the question of closing the borders in certain circumstances but determined that it would probably be ineffective. Worse, it could lead other nations to retaliate by closing their own borders, which could hurt Americans traveling abroad.
Another strategy, already in use to some degree in Mexico, is social distancing -- asking citizens to refrain from large social gatherings. During the 1918 influenza pandemic, St. Louis embraced such measures while Philadelphia eschewed them, and Philadelphia suffered a much higher death rate as a result. We are probably not yet at the point where such drastic measures are necessary, but senior officials had better start thinking about how they would address these questions.
Most importantly, the federal government must figure out how to reassure a nervous public. It doesn't help that none of the 20 top officials at HHS has been confirmed. Some of them, like FDA commissioner-designate Dr. Margaret Hamburg, are experts in biopreparedness and could help reassure Americans. Alas, she and her potential future colleagues, including the new secretary of HHS, are still in limbo. They need to be in place and on the job.
Mr. Troy, deputy secretary of Health and Human Services from 2007 to 2009, is a visiting senior fellow at the Hudson Institute.
Tools developed in the last few years will help the Obama administration fight back.
WSJ, Apr 28, 2009
Swine flu has presented the Obama administration with its first major public-health crisis. Fortunately for the Obama team, the Bush administration developed new tools that will prove critical in meeting this challenge.
Under President Bush, the federal government worked with manufacturers to accelerate vaccine development, stockpiled crucial antivirals like Tamiflu, war-gamed pandemic scenarios with senior officials, and increased the Centers for Disease Control and Prevention's (CDC) sample identification capabilities. These activities are bearing fruit today.
The Department of Health and Human Services (HHS) has already deployed 12.5 million courses of antivirals -- out of a total of 50 million -- to states and local agencies. In addition, CDC's new capacities have allowed Mexican officials to send flu samples to CDC for quick identification, a capability that did not exist a few years ago. Collaboration between the government and the private sector on vaccines -- which Mr. Bush and his HHS team actively encouraged -- could potentially allow manufacturers to shepherd a vaccine to market within four months of identifying the strain and getting the go-ahead from CDC or the World Health Organization.
But new tools aside, top health officials must answer difficult questions about response efforts. One is when and where to deploy antivirals.
The Bush administration considered a "forest fire" approach to pandemic outbreaks abroad. This strategy calls for sharing some of our precious supply of antivirals with a foreign country in order to stop a small flame from becoming a forest fire. The risk is that we have only a limited number of courses, and the use of antivirals increases the odds that the flu strain in question will become resistant to that antiviral. With 37.5 million courses remaining in the federal stockpile, the administration needs to think very carefully about how to use them.
Another issue: Under the Public Readiness and Emergency Preparedness (PREP) Act of 2006, the government has the authority to issue "Prep Act Declarations" granting liability protection to manufacturers whose products were used in public-health emergencies. This helps encourage manufacturers to develop countermeasures. The government issued a series of such declarations in 2007 and 2008. They protected the development and use of influenza vaccines and pandemic antivirals, as well as anthrax, smallpox and botulism products. The Obama administration should consider granting more of them -- if appropriate -- in the weeks ahead.
A third policy question has to do with how to stop the spread of the disease both across borders and within countries. The administration has so far initiated "passive surveillance": Border guards are assessing if people entering the U.S. seem sick, but aren't actively stopping anyone. If things get worse, they may have to intensify border security.
The Bush administration examined the question of closing the borders in certain circumstances but determined that it would probably be ineffective. Worse, it could lead other nations to retaliate by closing their own borders, which could hurt Americans traveling abroad.
Another strategy, already in use to some degree in Mexico, is social distancing -- asking citizens to refrain from large social gatherings. During the 1918 influenza pandemic, St. Louis embraced such measures while Philadelphia eschewed them, and Philadelphia suffered a much higher death rate as a result. We are probably not yet at the point where such drastic measures are necessary, but senior officials had better start thinking about how they would address these questions.
Most importantly, the federal government must figure out how to reassure a nervous public. It doesn't help that none of the 20 top officials at HHS has been confirmed. Some of them, like FDA commissioner-designate Dr. Margaret Hamburg, are experts in biopreparedness and could help reassure Americans. Alas, she and her potential future colleagues, including the new secretary of HHS, are still in limbo. They need to be in place and on the job.
Mr. Troy, deputy secretary of Health and Human Services from 2007 to 2009, is a visiting senior fellow at the Hudson Institute.
Monday, April 27, 2009
A Pacific Alliance for Peace - Japan and the US
A Pacific Alliance for Peace. By William R. Hawkins
FrontPageMagazine.com, Monday, April 27, 2009
Excerpts:
As [some] relish reports that President Barack Obama is seeking to temper the image of the United States as the world’s preeminent power, it can be forgotten that there are overseas allies who want and need America to remain strong and vigilant against rising threats. They want America to continue its leadership role in forging coalitions to meet global dangers. This message was very clear at a conference April 17 in Washington sponsored by two Japanese think tanks, the Sasakawa Peace Foundation and the Ocean Policy Research Foundation.
The theme of the conference was the U.S.-Japan Maritime Alliance and how it can be expanded. Japan’s ambassador Shotaro Yachi opened the session by reading a message from Prime Minister Taro Aso calling for Washington and Tokyo to take the lead in building an “Arc of Freedom and Prosperity” which would sweep across “Japan, the Republic of Korea, Southeast Asia, the Indian subcontinent, the Middle East, Central Asia, Guam, Central and Eastern Europe, the Baltic region and Scandinavia roughly speaking.” This geographical description is of the opposite side of the “Arc of Instability” that has been used since the 1970s to describe the main trouble spots in the Eurasian landmass. The positive concept of the Arc would be founded on the values of “freedom, democracy, basic human rights, the rule of law and the market economy” according to Aso. The Asia-Pacific section of the Arc, extending as far as the Persian Gulf, would be backed by a “Seapower Network” that should expand beyond the current U.S.-Japan alliance to include Australia, India and the United Kingdom.
In this formulation, it is not difficult to understand from where the threats to those protected by the Arc alliance are expected to come. For diplomatic reasons, Aso had to say that the Arc “is not intended to contain China or Russia,” but his extended remarks were filled with examples of the dangers Beijing and Moscow pose to peace, stability and economic development. The Prime Minister noted China’s advancement to the ocean is particularly spectacular. The Chinese Navy is proactively modernizing. We also have information that China is working to build aircraft carriers. China’s opaque expansion and modernization of its military, including the Navy, may greatly impact the maritime security environment which is so important to both Japan and the U.S. Moreover, Russia is increasingly more actively engaged in military activities in the Far East.
A major element in the “Japan-United States Seapower Alliance for Stability and Prosperity on the Oceans” paper presented at the conference by the Ocean Policy Research Foundation is development of seabed resources, both minerals and energy. The proposal calls for joint research and the sharing of new technology that can reach these untapped resources. But it is also clear that ocean wealth will also have to be protected from rivals. Prime Minister Aso pointed out that Japan and China have conflicting claims in the East China Sea, and that “China continues to carry out unilateral development based on its own claims. This cannot be considered to be an action of a responsible major power.” He also noted “excessive claims of jurisdiction by coastal states. This is a problem the U.S. Navy has faced from Chinese harassment of its ships in international waters. Beijing claims that the Exclusive Economic Zones awarded by the UN Law of the Sea Treaty confer sovereignty over large ocean expanses and not just a limited right to exploit resources.
Japan also has territorial disputes with Russia, and Aso mentioned the construction plan Moscow has for a strategic nuclear submarine base on the Kamchatka peninsula. China has recently built a similar base on Hainan Island menacing the South China Sea.
Former Prime Minister Shinzo Abe appeared in person to deliver the keynote address at the Sasakawa conference. He echoed Aso’s arguments, and even compared, without naming names, the rising Chinese threat to that posed earlier by the Soviet Union. He stated that during the Cold War, Japan was the “cap in the bottle” past which the Soviet fleet could not pass from its Pacific base at Vladivostok. He then observed that the “Japanese island chain can fulfill the same role against another power if it pushes the envelop.” Geographically that chain could be seen as extending all the way south to Taiwan and the Philippines, forming a base for containing China’s naval ambitions.
Beijing is well aware of island geography. In the 2005 report on China Military Power issued annually by the U.S. Defense Department, General Wen Zongren, Political Commissar of the elite People’s Liberation Army Academy of Military Science, is quoted as saying that taking control of Taiwan is of “far reaching significance to breaking international forces’ blockade against China’s maritime security….to rise suddenly, China must pass through oceans and go out of the oceans in its future development.” Chinese strategists have discussed the creation of their own “string of pearls” naval bases to control the sea lanes of the Pacific Rim.
The OPRF paper urges Washington and Tokyo “to cooperate with all nations opposing the emergence of any aspiring hegemonic state that could disrupt the balance of power on the seas and create instability in the security environment” another thinly veiled reference to the rise of China. “The process of building the new seapower alliance will also serve as a new challenge for the Japan-U.S. alliance that many believe is beginning to waiver, “says the OPRF document.
An example of those who believe the alliance should not just waiver but dissolve was presented during the question period following Abe’s speech. Stanley Kober, a research fellow at the libertarian Cato Institute, cited out of context George Washington’s warning against “entangling alliances.” He then claimed such alliances only serve to keep the world divided. He asked the former Prime Minister, “If the U.S. and Japan strengthen their alliance, what will Russia and China do?” Kober also thought it was a mistake to try to include India in the alliance. Cato has a history of trying to undermine American defense policy, and has been exhibiting a growing pro-Chinese bias.
Cato Vice President Gene Healy made the same reference to “entangling alliances” in a recent op-ed calling for “genuine, and deep, cuts in military spending” in which he also cited the “counterintuitive claim” of Christopher Preble, Cato’s Director of Foreign Policy Studies, that “our military dominance actually makes us less safe.” Last summer, Malou Innocent, another Cato foreign policy analyst, wrote an op-ed criticizing presidential candidate Sen. John McCain for “talking too tough on Russia and China.” She called on the next president “to continue cooperating with China and Russia.” Cato pronouncements are obsessed with trade and investment in China [...].
Abe responded to Kober by restating that the U.S., Japan and India “are democracies with shared interests” who also believe in human rights and the rule of law. Next year will mark the 60th anniversary of the U.S.-Japan alliance. Abe declared, “The United States has no better friend in the world than Japan.” Other Japanese speakers at the conference reinforced this point. Shunji Yanai, an advisor to the Ministry of Foreign Affairs and professor at Waseda University argued that the Iraq War has helped pull Washington and Tokyo closer together, as has the crisis over North Korean nuclear and missile programs. Japan sent military engineers to Iraq to help with reconstruction and has deployed naval units to support coalition operations in Afghanistan. Yanai also believes that North Korea has a secret uranium enrichment program that has not been addressed by the Six Party Talks orchestrated by China.
Naoyuki Agawa, a Dean at Keio University, joined Yanai in support of changes in Japanese constitutional interpretation to allow Tokyo to play a more active role in collective security operations. He agreed that joint operations in the Middle East have pulled the two fleets together and proclaimed, “Despite legal and constitutional restraints, the Japanese Maritime Self-Defense Force is willing to fight alongside its fellow sailors” in the U.S. Navy.
It may not come to that. A strengthened and expanded alliance of maritime nations can serve as a powerful deterrent to the ambitions of China, Russia and their dangerous prodigies in Iran, Burma, North Korea and elsewhere. It will, however, take more than proclamations. Words must lead to actions.
The lunch speaker at the conference was Deputy Chief of Naval Operations Vice Admiral William Crowder, who had been commander of the U.S. 7th Fleet in the Pacific. He was dismayed by how much the size of the U.S. Navy has declined in recent decades. Today it has less than half the warships that were as sea when Ronald Reagan was president. The cuts in naval programs announced April 6 by the Obama administration, along with other cuts in high end programs involving aviation and missile defense that are part of the proposed 2010 defense budget, will undermine the favorable balance of power now enjoyed by the United States.
A warning from Japanese leaders of what is at stake in Asia could not have come at a more important moment.
William Hawkins is a consultant on international economics and national security issues.
FrontPageMagazine.com, Monday, April 27, 2009
Excerpts:
As [some] relish reports that President Barack Obama is seeking to temper the image of the United States as the world’s preeminent power, it can be forgotten that there are overseas allies who want and need America to remain strong and vigilant against rising threats. They want America to continue its leadership role in forging coalitions to meet global dangers. This message was very clear at a conference April 17 in Washington sponsored by two Japanese think tanks, the Sasakawa Peace Foundation and the Ocean Policy Research Foundation.
The theme of the conference was the U.S.-Japan Maritime Alliance and how it can be expanded. Japan’s ambassador Shotaro Yachi opened the session by reading a message from Prime Minister Taro Aso calling for Washington and Tokyo to take the lead in building an “Arc of Freedom and Prosperity” which would sweep across “Japan, the Republic of Korea, Southeast Asia, the Indian subcontinent, the Middle East, Central Asia, Guam, Central and Eastern Europe, the Baltic region and Scandinavia roughly speaking.” This geographical description is of the opposite side of the “Arc of Instability” that has been used since the 1970s to describe the main trouble spots in the Eurasian landmass. The positive concept of the Arc would be founded on the values of “freedom, democracy, basic human rights, the rule of law and the market economy” according to Aso. The Asia-Pacific section of the Arc, extending as far as the Persian Gulf, would be backed by a “Seapower Network” that should expand beyond the current U.S.-Japan alliance to include Australia, India and the United Kingdom.
In this formulation, it is not difficult to understand from where the threats to those protected by the Arc alliance are expected to come. For diplomatic reasons, Aso had to say that the Arc “is not intended to contain China or Russia,” but his extended remarks were filled with examples of the dangers Beijing and Moscow pose to peace, stability and economic development. The Prime Minister noted China’s advancement to the ocean is particularly spectacular. The Chinese Navy is proactively modernizing. We also have information that China is working to build aircraft carriers. China’s opaque expansion and modernization of its military, including the Navy, may greatly impact the maritime security environment which is so important to both Japan and the U.S. Moreover, Russia is increasingly more actively engaged in military activities in the Far East.
A major element in the “Japan-United States Seapower Alliance for Stability and Prosperity on the Oceans” paper presented at the conference by the Ocean Policy Research Foundation is development of seabed resources, both minerals and energy. The proposal calls for joint research and the sharing of new technology that can reach these untapped resources. But it is also clear that ocean wealth will also have to be protected from rivals. Prime Minister Aso pointed out that Japan and China have conflicting claims in the East China Sea, and that “China continues to carry out unilateral development based on its own claims. This cannot be considered to be an action of a responsible major power.” He also noted “excessive claims of jurisdiction by coastal states. This is a problem the U.S. Navy has faced from Chinese harassment of its ships in international waters. Beijing claims that the Exclusive Economic Zones awarded by the UN Law of the Sea Treaty confer sovereignty over large ocean expanses and not just a limited right to exploit resources.
Japan also has territorial disputes with Russia, and Aso mentioned the construction plan Moscow has for a strategic nuclear submarine base on the Kamchatka peninsula. China has recently built a similar base on Hainan Island menacing the South China Sea.
Former Prime Minister Shinzo Abe appeared in person to deliver the keynote address at the Sasakawa conference. He echoed Aso’s arguments, and even compared, without naming names, the rising Chinese threat to that posed earlier by the Soviet Union. He stated that during the Cold War, Japan was the “cap in the bottle” past which the Soviet fleet could not pass from its Pacific base at Vladivostok. He then observed that the “Japanese island chain can fulfill the same role against another power if it pushes the envelop.” Geographically that chain could be seen as extending all the way south to Taiwan and the Philippines, forming a base for containing China’s naval ambitions.
Beijing is well aware of island geography. In the 2005 report on China Military Power issued annually by the U.S. Defense Department, General Wen Zongren, Political Commissar of the elite People’s Liberation Army Academy of Military Science, is quoted as saying that taking control of Taiwan is of “far reaching significance to breaking international forces’ blockade against China’s maritime security….to rise suddenly, China must pass through oceans and go out of the oceans in its future development.” Chinese strategists have discussed the creation of their own “string of pearls” naval bases to control the sea lanes of the Pacific Rim.
The OPRF paper urges Washington and Tokyo “to cooperate with all nations opposing the emergence of any aspiring hegemonic state that could disrupt the balance of power on the seas and create instability in the security environment” another thinly veiled reference to the rise of China. “The process of building the new seapower alliance will also serve as a new challenge for the Japan-U.S. alliance that many believe is beginning to waiver, “says the OPRF document.
An example of those who believe the alliance should not just waiver but dissolve was presented during the question period following Abe’s speech. Stanley Kober, a research fellow at the libertarian Cato Institute, cited out of context George Washington’s warning against “entangling alliances.” He then claimed such alliances only serve to keep the world divided. He asked the former Prime Minister, “If the U.S. and Japan strengthen their alliance, what will Russia and China do?” Kober also thought it was a mistake to try to include India in the alliance. Cato has a history of trying to undermine American defense policy, and has been exhibiting a growing pro-Chinese bias.
Cato Vice President Gene Healy made the same reference to “entangling alliances” in a recent op-ed calling for “genuine, and deep, cuts in military spending” in which he also cited the “counterintuitive claim” of Christopher Preble, Cato’s Director of Foreign Policy Studies, that “our military dominance actually makes us less safe.” Last summer, Malou Innocent, another Cato foreign policy analyst, wrote an op-ed criticizing presidential candidate Sen. John McCain for “talking too tough on Russia and China.” She called on the next president “to continue cooperating with China and Russia.” Cato pronouncements are obsessed with trade and investment in China [...].
Abe responded to Kober by restating that the U.S., Japan and India “are democracies with shared interests” who also believe in human rights and the rule of law. Next year will mark the 60th anniversary of the U.S.-Japan alliance. Abe declared, “The United States has no better friend in the world than Japan.” Other Japanese speakers at the conference reinforced this point. Shunji Yanai, an advisor to the Ministry of Foreign Affairs and professor at Waseda University argued that the Iraq War has helped pull Washington and Tokyo closer together, as has the crisis over North Korean nuclear and missile programs. Japan sent military engineers to Iraq to help with reconstruction and has deployed naval units to support coalition operations in Afghanistan. Yanai also believes that North Korea has a secret uranium enrichment program that has not been addressed by the Six Party Talks orchestrated by China.
Naoyuki Agawa, a Dean at Keio University, joined Yanai in support of changes in Japanese constitutional interpretation to allow Tokyo to play a more active role in collective security operations. He agreed that joint operations in the Middle East have pulled the two fleets together and proclaimed, “Despite legal and constitutional restraints, the Japanese Maritime Self-Defense Force is willing to fight alongside its fellow sailors” in the U.S. Navy.
It may not come to that. A strengthened and expanded alliance of maritime nations can serve as a powerful deterrent to the ambitions of China, Russia and their dangerous prodigies in Iran, Burma, North Korea and elsewhere. It will, however, take more than proclamations. Words must lead to actions.
The lunch speaker at the conference was Deputy Chief of Naval Operations Vice Admiral William Crowder, who had been commander of the U.S. 7th Fleet in the Pacific. He was dismayed by how much the size of the U.S. Navy has declined in recent decades. Today it has less than half the warships that were as sea when Ronald Reagan was president. The cuts in naval programs announced April 6 by the Obama administration, along with other cuts in high end programs involving aviation and missile defense that are part of the proposed 2010 defense budget, will undermine the favorable balance of power now enjoyed by the United States.
A warning from Japanese leaders of what is at stake in Asia could not have come at a more important moment.
William Hawkins is a consultant on international economics and national security issues.
Special Inspector General for the Troubled Asset Relief Program - quarterly report
Special Inspector General for the Troubled Asset Relief Program - quarterly report to Congress. By John Hinderaker
Powerline blog, Apr 27, 2009
Excerpts:
On April 21, the Special Inspector General for the Troubled Asset Relief Program Act of 2009--"SIGTARP"--submitted his quarterly report to Congress on his office's activities in relation to the TARP program. The report is a disquieting document that should be read by every American--certainly be every taxpayer.
The Inspector General's report documents the stunning and at least partly illegal expansion of TARP from the $700 billion originally allocated by Congress to what is now a $3 trillion complex of programs. This chart shows the various programs that are now included within SIGTARP's oversight, and how they have expanded from the initial $700 billion. Note that some of the programs are still incipient; $3 trillion is by no means a final number. [...]
The report is valuable for a number of reasons, not least because it provides the most coherent description I've seen of the various programs now underway to bail out--or take over, as the case may be--the country's financial sector. So far, the report's most commented-upon feature is its description of the many criminal investigations that are now underway, arising out of TARP:
Both from the Hotline and from other leads, SIGTARP has initiated, to date, almost 20 preliminary and full criminal investigations. Although the details of those investigations generally will not be discussed unless and until public action is taken, the cases vary widely in subject matter and include large corporate and securities fraud matters affecting TARP investments, tax matters, insider trading, public corruption, and mortgage-modification fraud.
It is safe to assume, however, that the investigations now in progress represent not even the tip of the iceberg. The most troubling feature of the SIG's report is its documentation of reluctance on the part of Tim Geithner's Treasury Department to make even modest efforts to protect the interests of the taxpayers. To take just one glaring example, Treasury has refused to require banks to account for what they do with the billions of dollars they receive in TARP money:
Treasury has indicated, however, that it will not adopt SIGTARP's recommendation that all TARP recipients be required to do the following:
• account for the use of TARP funds
• set up internal controls to comply with such accounting
• report periodically to Treasury on the results, with appropriate sworn certifications
In light of the fact that the American taxpayer has been asked to fund this extraordinary effort to stabilize the financial system, it is not unreasonable that the public be told how those funds have been used by TARP recipients. Treasury is now conducting regular surveys of the banks' lending activities; however, with the exception of Citigroup and Bank of America, Treasury has refused to seek further details on TARP recipients' use of funds.
Not just failed, but "refused." The report adds:
The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution's core business and may be little more than a way to gain access to the low-cost capital provided under TARP.
Later, with respect to the Capital Assistance Program specifically, the report says:
Treasury announced that it would require CAP applicants to set forth how they intend to use CAP funding. Notwithstanding this requirement, Treasury adamantly continues to refuse to adopt SIGTARP's recommendation that it require CAP recipients (and indeed all TARP recipients) to report on how they actually used TARP funds. Putting aside the value of this recommendation in other TARP programs, SIGTARP submits that it is largely meaningless to require an applicant to report on its intended use of funds without setting up a mechanism to monitor its actual use of funds.
[...]
The Treasury Department is now managing a vast portfolio of "troubled assets" on behalf of the American people. It has not, however, developed any plan for how to dispose of them, or how to manage them in the meantime. This may relate to the Obama administration's failure to staff the Department:
In its Initial Report, SIGTARP noted that "[t]o date, Treasury has not fully developed significant policies or controls with respect to asset management issues," and recommended that "Treasury needs, in the near term, to begin developing a more complete strategy on what to do with the substantial portfolio that it now manages on behalf of the American people."
As of the drafting of this report, however, no asset manager had been hired to manage the existing asset portfolio, and no investment strategy has been developed.
The Special Inspector General's office employs a number of people who are experts with respect to the various kinds of fraud that are invited by TARP's manifold programs. It is obvious from his report that the SIG foresees the prospect of fraud on a truly massive scale. Yet, for some reason, Treasury does not appear to have the same level of concern about fraud that could cost the taxpayers hundreds of billions of dollars.
With respect to specific TARP programs, the report goes into considerable detail about the features of the programs that make them susceptible to fraud and manipulation. Here, the SIG discusses the "Public-Private Investment Program," one of the most controversial aspects of TARP. PPIP is intended to form public-private "partnerships" to buy distressed assets, mostly mortgage-backed securities. But the vast majority of the risk lies with the taxpayers, while the program is rife with opportunities for connected insiders to make a fortune. The following excerpt is lengthy, but easily understandable:
Many aspects of PPIP could make it inherently vulnerable to fraud, waste, and abuse. First, PPIP deals with assets that have recently been illiquid, making valuation difficult, therefore raising the danger that the Government will overpay for the assets. Second, many of the participants in these markets, such as hedge funds, are substantially unregulated and the internal oversight and compliance capability at those institutions vary widely. Next, the interrelationships between the market participants can be extremely complex and difficult to anticipate: the same entity might buy and sell toxic assets for its own benefit and manage portfolios of toxic assets for others, all while holding or managing equity or debt securities of the banks and other institutions that have large positions in the same toxic assets. Finally, the sheer size of the program -- up to a trillion dollars for the PPIFs and up to another trillion dollars for the expansion of TALF -- is so large and the leverage being provided to the private equity participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives.
After receiving initial briefings from Treasury on PPIP and discussing the issue with law enforcement partners, SIGTARP has identified three of the most significant areas of potential vulnerability to fraud and abuse applicable across the program.
The program is rife with potential conflicts of interest. Again, the explanation is lengthy but is clearly written:
The first area of vulnerability is that the private parties managing the PPIFs might have a powerful incentive to make investment decisions that benefit themselves at the expense of the taxpayer. By their nature and design, including the availability of significant leverage, the PPIF transactions in these frozen markets will have a significant impact on how any particular asset is priced in the market. As a result, the increase in the price of such an asset will greatly benefit anyone who owns or manages the same asset, including the PPIF manager who is making the investment decisions.
As an extremely simplified example from the Legacy Securities Program, assume that the fund manager of the PPIF owns 1 million bonds of MBS [Mortgage-Backed Security] X in its own account. MBS X is currently valued on the fund manager's books at 20% of its original value, or $20 per bond, for a total of $20 million. The fund manager does an estimate and believes that, in a fully functioning market, MBS X is actually worth 30% of face value, or $30 per bond. In the absence of a conflict of interest, the fund manager, using PPIF funds, might be willing to pay up to $30 per bond in the market. However, the fund manager realizes that it can make more money for itself if it drives the price even higher. It thus uses the funds it controls in the PPIF to buy 1 million MBS X bonds from someone else at $40 per bond, or $40 million. This transaction has the potential, in the current illiquid market, of setting the market price for that MBS X at $40, even though that price is far above what the MBS is actually worth. As a result, the fund manager could sell the MBS on its own books and recognize a profit of $20 million. Over time, however, the price of MBS X declines to its actual value, $30 per bond, and results in a $10 million loss to the PPIF fund. This loss has no negative impact to the fund manager, however, because it did not have any of its own money invested in the fund. Indeed, the fund manager has made money on the PPIF, because it has received fees from both Treasury and the private investors based only on the total size of the PPIF. In other words, the conflict results in an enormous profit for the fund manager at the expense of the taxpayer.
The same incentives to overpay could exist in the Legacy Loans Program and in numerous other factual circumstances. The incentives exist, for example, even if the fund manager does not own MBS X but is merely managing other funds that hold MBS X, as the manager earns fees based on the value of that fund, a value that would, in this example, be significantly overstated (temporarily) as it can increase the value of that fund based on valuing, or "marking" the MBS X at the inflated "market" price that it set.
A second risk identified by the Special Inspector General is collusion between participants in the PPIP program--the issue that we highlighted here:
A closely related vulnerability is that PPIF managers might be persuaded, through kickbacks, quid pro quo transactions, or other collusive arrangements, to manage the PPIFs not for the benefit of the PPIF (and taxpayers), but rather for the benefit of themselves and their collusive partners. In both the Legacy Loans Program and the Legacy Securities Program, the significant Government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit.
This time, consider an example from the Legacy Loans Program. Imagine that a bank owns a pool of mortgage loans that both it and the private equity firm investing in a PPIF values at $600 million. The private equity firm invests $60 million into the PPIF, which is matched by $60 million of TARP funds, and which is leveraged by a loan of $720 million guaranteed by FDIC (the 6-to-1 debt-to-equity ratio). The PPIF private equity firm surreptitiously agrees with the bank to overpay for the pool of loans and causes the PPIF to bid $840 million at auction for that pool. After the auction, the bank secretly pays the PPIF private equity firm a kickback of $120 million, or half the difference between the auction price ($840 million) and the true value ($600 million).
Although the PPIF will eventually perform poorly as a result of the overpayment, the private equity firm's loss is relatively small. Even if the PPIF was completely wiped out, the most the PPIF private equity firm could lose is $60 million, which would still give it a guaranteed profit of at least $60 million as a result of the kickback, a 100% return. Meanwhile, the bank would have gained an illegal benefit of $120 million, all at the expense of the taxpayer and FDIC. Of course, in practice, the collusive scheme would be far more complex and would likely involve a series of affiliates and offsetting transactions, but the principle would be the same.
The same collusion could occur in the Legacy Securities Program between buyer and seller. Similarly, collusion could occur among other buyers.
The third broad area of risk identified by SIG is money laundering:
Because of the significant leveraging available and the inherent imprimatur of legitimacy associated with PPIP and TALF, these programs present an ideal opportunity to money-laundering organizations. If a criminal organization can successfully invest $10 million of illicit proceeds into a PPIF, not only does the organization enjoy the possibility of profiting through the Government-backed leverage, but any eventual distributions from the PPIF are successfully laundered because they appear to be PPIF investment gains rather than drug, prostitution, or illegal gambling proceeds.
[...] But it gets worse. Because Treasury has now announced that Public-Private Investment Fund money will be available to purchase mortgage-backed securities under the Term Asset-Backed Securities Loan Facility program. This makes the Special Inspector General distinctly unhappy:
In announcing the details of PPIP, Treasury has indicated that PPIFs under the Legacy Securities Program could, in turn, use the leveraged PPIF funds (two-thirds of which will likely be taxpayer money) to purchase legacy MBS through TALF, greatly increasing taxpayer exposure to losses with no corresponding increase of potential profits. By way of example, a PPIF manager could raise $500 million of private equity, which would be matched with $500 million of TARP funds, and a loan of an additional $500 million from TARP funds (according to the term sheet, loans will only be given up to 50% of the total equity if investments will be made through TALF rather than 100% otherwise). The PPIF could then take the total $1.5 billion, bring it to the TALF window, and effectively use that money as the "haircut" amount in a TALF financing to purchase legacy RMBS [Residential Mortgage-Backed Securities].
Assuming that the haircut will be 20% (larger than any existing haircut), the PPIF will be able to receive a non-recourse loan from FRBNY [the Federal Reserve Bank of New York] for an additional $6 billion, enabling the PPIF to purchase $7.5 billion in legacy RMBS. The private investors would thus enjoy 50% of the profits from this enhanced buying power, but only be exposed to less than 7% of the total losses if the fund were wiped out.
Aside from potential unfairness to the taxpayer, this leverage upon leverage on legacy RMBS raises other significant issues. First, it only magnifies the dangerous incentives discussed above (the conflicts of interest and collusion issues), because the fund manager now has up to five times the buying power than it would if it participated in the Legacy Securities PPIF alone. Moreover, it severely undermines the validity of the methodology that the Federal Reserve has used to build the haircut percentages in TALF thus far. The Federal Reserve has told SIGTARP that it has determined its haircut percentage based at least in part on the fact that the haircut represents a TALF borrower's "skin in the game" -- someone's own capital at risk -- that incentivizes appropriate due diligence on the borrower's part. If leveraged PPIFs are permitted to participate in TALF, that effectively lowers the private equity's skin in the game by at least the amount of money borrowed from TARP, materially diminishing the incentive to do due diligence. Put in simpler terms, an investor who is funding 100% of the haircut amount with his own money (as is typical in TALF) can logically be expected to be far more careful than one only putting up 33% (as would occur under this example).
It strikes me as a deep irony that the Treasury Department is creating perverse incentives similar to those that plunged the country into a financial crisis in the first place.
Surely that must be the end of the bad news? No. We haven't yet gotten to the government's Mortgage Modification Program, which bails out individual homeowners. Here, the Special Inspector General brings considerable expertise to the table:
SIGTARP's recommendations were made in the context of the Special Inspector General's prior experience as the founder of the Mortgage Fraud Group in the United States Attorney's Office for the Southern District of New York and after consultation with and advice from mortgage fraud experts at the Federal Bureau of Investigation. The recommendations address some of the patterns of the rampant mortgage fraud that contributed to the current financial crisis, including corruption of many of the potential gatekeepers who were supposed to limit such fraud: attorneys, appraisers, notaries, mortgage brokers, title insurance agents, and insiders at banks and mortgage originators.
Recognizing that many of the most prevalent frauds had common characteristics, SIGTARP's recommendations reflected an attempt to shield the program from such schemes before they could be adapted to the mortgage modification plan.
Is the Treasury Department heeding the experts' warnings about how to avoid fraud in the mortgage modification program? The short answer is No. Read the report for the details.
What conclusions can we draw? 1) The government's $3 trillion and counting TARP program represents the greatest opportunity for sharp operators to profit at taxpayer expense in history. 2) The Obama administration is either in favor of giving Wall Street sharks this opportunity or, at a minimum, doesn't much mind doing so. (If this seems odd, remember where Obama got the biggest chunk of campaign contributions in 2008.) 3) It may be that the TARP complex of programs is the beginning of a national-socialist type takeover of the financial services industry by the federal government. Thus, 4) we can only hope that this turns out not to be the case, and TARP is only the biggest--and perhaps, by the end of the day, the crookedest--waste of taxpayer money in history. Finally, 5) so far the only person or organization who appears to be looking out for the taxpayers is the Special Inspector General. We will be reading his future reports with great interest.
Powerline blog, Apr 27, 2009
Excerpts:
On April 21, the Special Inspector General for the Troubled Asset Relief Program Act of 2009--"SIGTARP"--submitted his quarterly report to Congress on his office's activities in relation to the TARP program. The report is a disquieting document that should be read by every American--certainly be every taxpayer.
The Inspector General's report documents the stunning and at least partly illegal expansion of TARP from the $700 billion originally allocated by Congress to what is now a $3 trillion complex of programs. This chart shows the various programs that are now included within SIGTARP's oversight, and how they have expanded from the initial $700 billion. Note that some of the programs are still incipient; $3 trillion is by no means a final number. [...]
The report is valuable for a number of reasons, not least because it provides the most coherent description I've seen of the various programs now underway to bail out--or take over, as the case may be--the country's financial sector. So far, the report's most commented-upon feature is its description of the many criminal investigations that are now underway, arising out of TARP:
Both from the Hotline and from other leads, SIGTARP has initiated, to date, almost 20 preliminary and full criminal investigations. Although the details of those investigations generally will not be discussed unless and until public action is taken, the cases vary widely in subject matter and include large corporate and securities fraud matters affecting TARP investments, tax matters, insider trading, public corruption, and mortgage-modification fraud.
It is safe to assume, however, that the investigations now in progress represent not even the tip of the iceberg. The most troubling feature of the SIG's report is its documentation of reluctance on the part of Tim Geithner's Treasury Department to make even modest efforts to protect the interests of the taxpayers. To take just one glaring example, Treasury has refused to require banks to account for what they do with the billions of dollars they receive in TARP money:
Treasury has indicated, however, that it will not adopt SIGTARP's recommendation that all TARP recipients be required to do the following:
• account for the use of TARP funds
• set up internal controls to comply with such accounting
• report periodically to Treasury on the results, with appropriate sworn certifications
In light of the fact that the American taxpayer has been asked to fund this extraordinary effort to stabilize the financial system, it is not unreasonable that the public be told how those funds have been used by TARP recipients. Treasury is now conducting regular surveys of the banks' lending activities; however, with the exception of Citigroup and Bank of America, Treasury has refused to seek further details on TARP recipients' use of funds.
Not just failed, but "refused." The report adds:
The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution's core business and may be little more than a way to gain access to the low-cost capital provided under TARP.
Later, with respect to the Capital Assistance Program specifically, the report says:
Treasury announced that it would require CAP applicants to set forth how they intend to use CAP funding. Notwithstanding this requirement, Treasury adamantly continues to refuse to adopt SIGTARP's recommendation that it require CAP recipients (and indeed all TARP recipients) to report on how they actually used TARP funds. Putting aside the value of this recommendation in other TARP programs, SIGTARP submits that it is largely meaningless to require an applicant to report on its intended use of funds without setting up a mechanism to monitor its actual use of funds.
[...]
The Treasury Department is now managing a vast portfolio of "troubled assets" on behalf of the American people. It has not, however, developed any plan for how to dispose of them, or how to manage them in the meantime. This may relate to the Obama administration's failure to staff the Department:
In its Initial Report, SIGTARP noted that "[t]o date, Treasury has not fully developed significant policies or controls with respect to asset management issues," and recommended that "Treasury needs, in the near term, to begin developing a more complete strategy on what to do with the substantial portfolio that it now manages on behalf of the American people."
As of the drafting of this report, however, no asset manager had been hired to manage the existing asset portfolio, and no investment strategy has been developed.
The Special Inspector General's office employs a number of people who are experts with respect to the various kinds of fraud that are invited by TARP's manifold programs. It is obvious from his report that the SIG foresees the prospect of fraud on a truly massive scale. Yet, for some reason, Treasury does not appear to have the same level of concern about fraud that could cost the taxpayers hundreds of billions of dollars.
With respect to specific TARP programs, the report goes into considerable detail about the features of the programs that make them susceptible to fraud and manipulation. Here, the SIG discusses the "Public-Private Investment Program," one of the most controversial aspects of TARP. PPIP is intended to form public-private "partnerships" to buy distressed assets, mostly mortgage-backed securities. But the vast majority of the risk lies with the taxpayers, while the program is rife with opportunities for connected insiders to make a fortune. The following excerpt is lengthy, but easily understandable:
Many aspects of PPIP could make it inherently vulnerable to fraud, waste, and abuse. First, PPIP deals with assets that have recently been illiquid, making valuation difficult, therefore raising the danger that the Government will overpay for the assets. Second, many of the participants in these markets, such as hedge funds, are substantially unregulated and the internal oversight and compliance capability at those institutions vary widely. Next, the interrelationships between the market participants can be extremely complex and difficult to anticipate: the same entity might buy and sell toxic assets for its own benefit and manage portfolios of toxic assets for others, all while holding or managing equity or debt securities of the banks and other institutions that have large positions in the same toxic assets. Finally, the sheer size of the program -- up to a trillion dollars for the PPIFs and up to another trillion dollars for the expansion of TALF -- is so large and the leverage being provided to the private equity participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives.
After receiving initial briefings from Treasury on PPIP and discussing the issue with law enforcement partners, SIGTARP has identified three of the most significant areas of potential vulnerability to fraud and abuse applicable across the program.
The program is rife with potential conflicts of interest. Again, the explanation is lengthy but is clearly written:
The first area of vulnerability is that the private parties managing the PPIFs might have a powerful incentive to make investment decisions that benefit themselves at the expense of the taxpayer. By their nature and design, including the availability of significant leverage, the PPIF transactions in these frozen markets will have a significant impact on how any particular asset is priced in the market. As a result, the increase in the price of such an asset will greatly benefit anyone who owns or manages the same asset, including the PPIF manager who is making the investment decisions.
As an extremely simplified example from the Legacy Securities Program, assume that the fund manager of the PPIF owns 1 million bonds of MBS [Mortgage-Backed Security] X in its own account. MBS X is currently valued on the fund manager's books at 20% of its original value, or $20 per bond, for a total of $20 million. The fund manager does an estimate and believes that, in a fully functioning market, MBS X is actually worth 30% of face value, or $30 per bond. In the absence of a conflict of interest, the fund manager, using PPIF funds, might be willing to pay up to $30 per bond in the market. However, the fund manager realizes that it can make more money for itself if it drives the price even higher. It thus uses the funds it controls in the PPIF to buy 1 million MBS X bonds from someone else at $40 per bond, or $40 million. This transaction has the potential, in the current illiquid market, of setting the market price for that MBS X at $40, even though that price is far above what the MBS is actually worth. As a result, the fund manager could sell the MBS on its own books and recognize a profit of $20 million. Over time, however, the price of MBS X declines to its actual value, $30 per bond, and results in a $10 million loss to the PPIF fund. This loss has no negative impact to the fund manager, however, because it did not have any of its own money invested in the fund. Indeed, the fund manager has made money on the PPIF, because it has received fees from both Treasury and the private investors based only on the total size of the PPIF. In other words, the conflict results in an enormous profit for the fund manager at the expense of the taxpayer.
The same incentives to overpay could exist in the Legacy Loans Program and in numerous other factual circumstances. The incentives exist, for example, even if the fund manager does not own MBS X but is merely managing other funds that hold MBS X, as the manager earns fees based on the value of that fund, a value that would, in this example, be significantly overstated (temporarily) as it can increase the value of that fund based on valuing, or "marking" the MBS X at the inflated "market" price that it set.
A second risk identified by the Special Inspector General is collusion between participants in the PPIP program--the issue that we highlighted here:
A closely related vulnerability is that PPIF managers might be persuaded, through kickbacks, quid pro quo transactions, or other collusive arrangements, to manage the PPIFs not for the benefit of the PPIF (and taxpayers), but rather for the benefit of themselves and their collusive partners. In both the Legacy Loans Program and the Legacy Securities Program, the significant Government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit.
This time, consider an example from the Legacy Loans Program. Imagine that a bank owns a pool of mortgage loans that both it and the private equity firm investing in a PPIF values at $600 million. The private equity firm invests $60 million into the PPIF, which is matched by $60 million of TARP funds, and which is leveraged by a loan of $720 million guaranteed by FDIC (the 6-to-1 debt-to-equity ratio). The PPIF private equity firm surreptitiously agrees with the bank to overpay for the pool of loans and causes the PPIF to bid $840 million at auction for that pool. After the auction, the bank secretly pays the PPIF private equity firm a kickback of $120 million, or half the difference between the auction price ($840 million) and the true value ($600 million).
Although the PPIF will eventually perform poorly as a result of the overpayment, the private equity firm's loss is relatively small. Even if the PPIF was completely wiped out, the most the PPIF private equity firm could lose is $60 million, which would still give it a guaranteed profit of at least $60 million as a result of the kickback, a 100% return. Meanwhile, the bank would have gained an illegal benefit of $120 million, all at the expense of the taxpayer and FDIC. Of course, in practice, the collusive scheme would be far more complex and would likely involve a series of affiliates and offsetting transactions, but the principle would be the same.
The same collusion could occur in the Legacy Securities Program between buyer and seller. Similarly, collusion could occur among other buyers.
The third broad area of risk identified by SIG is money laundering:
Because of the significant leveraging available and the inherent imprimatur of legitimacy associated with PPIP and TALF, these programs present an ideal opportunity to money-laundering organizations. If a criminal organization can successfully invest $10 million of illicit proceeds into a PPIF, not only does the organization enjoy the possibility of profiting through the Government-backed leverage, but any eventual distributions from the PPIF are successfully laundered because they appear to be PPIF investment gains rather than drug, prostitution, or illegal gambling proceeds.
[...] But it gets worse. Because Treasury has now announced that Public-Private Investment Fund money will be available to purchase mortgage-backed securities under the Term Asset-Backed Securities Loan Facility program. This makes the Special Inspector General distinctly unhappy:
In announcing the details of PPIP, Treasury has indicated that PPIFs under the Legacy Securities Program could, in turn, use the leveraged PPIF funds (two-thirds of which will likely be taxpayer money) to purchase legacy MBS through TALF, greatly increasing taxpayer exposure to losses with no corresponding increase of potential profits. By way of example, a PPIF manager could raise $500 million of private equity, which would be matched with $500 million of TARP funds, and a loan of an additional $500 million from TARP funds (according to the term sheet, loans will only be given up to 50% of the total equity if investments will be made through TALF rather than 100% otherwise). The PPIF could then take the total $1.5 billion, bring it to the TALF window, and effectively use that money as the "haircut" amount in a TALF financing to purchase legacy RMBS [Residential Mortgage-Backed Securities].
Assuming that the haircut will be 20% (larger than any existing haircut), the PPIF will be able to receive a non-recourse loan from FRBNY [the Federal Reserve Bank of New York] for an additional $6 billion, enabling the PPIF to purchase $7.5 billion in legacy RMBS. The private investors would thus enjoy 50% of the profits from this enhanced buying power, but only be exposed to less than 7% of the total losses if the fund were wiped out.
Aside from potential unfairness to the taxpayer, this leverage upon leverage on legacy RMBS raises other significant issues. First, it only magnifies the dangerous incentives discussed above (the conflicts of interest and collusion issues), because the fund manager now has up to five times the buying power than it would if it participated in the Legacy Securities PPIF alone. Moreover, it severely undermines the validity of the methodology that the Federal Reserve has used to build the haircut percentages in TALF thus far. The Federal Reserve has told SIGTARP that it has determined its haircut percentage based at least in part on the fact that the haircut represents a TALF borrower's "skin in the game" -- someone's own capital at risk -- that incentivizes appropriate due diligence on the borrower's part. If leveraged PPIFs are permitted to participate in TALF, that effectively lowers the private equity's skin in the game by at least the amount of money borrowed from TARP, materially diminishing the incentive to do due diligence. Put in simpler terms, an investor who is funding 100% of the haircut amount with his own money (as is typical in TALF) can logically be expected to be far more careful than one only putting up 33% (as would occur under this example).
It strikes me as a deep irony that the Treasury Department is creating perverse incentives similar to those that plunged the country into a financial crisis in the first place.
Surely that must be the end of the bad news? No. We haven't yet gotten to the government's Mortgage Modification Program, which bails out individual homeowners. Here, the Special Inspector General brings considerable expertise to the table:
SIGTARP's recommendations were made in the context of the Special Inspector General's prior experience as the founder of the Mortgage Fraud Group in the United States Attorney's Office for the Southern District of New York and after consultation with and advice from mortgage fraud experts at the Federal Bureau of Investigation. The recommendations address some of the patterns of the rampant mortgage fraud that contributed to the current financial crisis, including corruption of many of the potential gatekeepers who were supposed to limit such fraud: attorneys, appraisers, notaries, mortgage brokers, title insurance agents, and insiders at banks and mortgage originators.
Recognizing that many of the most prevalent frauds had common characteristics, SIGTARP's recommendations reflected an attempt to shield the program from such schemes before they could be adapted to the mortgage modification plan.
Is the Treasury Department heeding the experts' warnings about how to avoid fraud in the mortgage modification program? The short answer is No. Read the report for the details.
What conclusions can we draw? 1) The government's $3 trillion and counting TARP program represents the greatest opportunity for sharp operators to profit at taxpayer expense in history. 2) The Obama administration is either in favor of giving Wall Street sharks this opportunity or, at a minimum, doesn't much mind doing so. (If this seems odd, remember where Obama got the biggest chunk of campaign contributions in 2008.) 3) It may be that the TARP complex of programs is the beginning of a national-socialist type takeover of the financial services industry by the federal government. Thus, 4) we can only hope that this turns out not to be the case, and TARP is only the biggest--and perhaps, by the end of the day, the crookedest--waste of taxpayer money in history. Finally, 5) so far the only person or organization who appears to be looking out for the taxpayers is the Special Inspector General. We will be reading his future reports with great interest.
WaPo: Reforming Health Care
Reforming Health Care. WaPo Editorial
How a government-run plan could fit -- or not
WaPo, Monday, April 27, 2009
OF THE many possible issues that could snarl health-care reform, one of the biggest is whether the measure should include a government-run health plan to compete with private insurers. The public plan has become an unfortunate litmus test for both sides. The opposition to a public plan option is understandable; conservatives, health insurers, health-care providers and others see it as a slippery step down the slope to a single-payer system because, they contend, the government's built-in advantages will allow it to unfairly squash competitors.
For liberals, labor unions and others pushing to make health care available to all Americans, however, the fixation on a public plan is bizarre and counterproductive. Their position elevates the public plan way out of proportion to its importance in fixing health care. It is entirely possible to imagine effective health-care reform -- changes that would expand coverage and help control costs -- without a public option.
President Obama has said that he favors a public option but has been sketchy on details. His nominee for secretary of health and human services, Kathleen Sebelius, said that she wants a public plan to "challenge private insurers to compete on cost and quality" but "recognizes the importance of a level playing field between plans and ensuring that private insurance plans are not disadvantaged."
The argument for a public plan is that, without the need to extensively market itself or make a profit, it would do a better job of providing good health care at a reasonable cost, setting an important benchmark against which private insurers would be forced to compete. Even in a system where insurers are required to take all applicants, public plan advocates argue, incentives will remain for private plans to discourage the less healthy from signing up; a public plan is a necessary backstop. Moreover, if the playing field is level, public plan advocates argue, private insurers -- and those who extol the virtues of a competitive marketplace -- should have nothing to fear.
We disagree. It is difficult to imagine a truly level playing field that would simultaneously produce benefits from a government-run system. While prescription drugs are not a perfect comparison, the experience of competing plans in the Medicare prescription drug arena suggests that a government-run option is not essential to energize a competitive system that has turned out to cost less than expected. Insurers and private companies have been at least as innovative as the federal government in recent years in finding ways to provide quality care at lower costs. Medicare keeps costs under control in part because of its 800-pound-gorilla capacity to dictate prices -- in effect, to force the private sector to subsidize it. Such power, if exercised in a public health option, eventually would produce a single-payer system; if that's where the country wants to go, it should do so explicitly, not by default. If the chief advantage of a public option is to set a benchmark for private competitors, that could be achieved in other ways, for example, by providing for the entry of a public plan in case the private marketplace did not perform as expected.
Maybe we're wrong. Maybe it's possible to design a public option that aids consumers without undermining competition. If so, we certainly wouldn't oppose a program that included a public component. But it would be a huge mistake for the left to torpedo reform over this question.
How a government-run plan could fit -- or not
WaPo, Monday, April 27, 2009
OF THE many possible issues that could snarl health-care reform, one of the biggest is whether the measure should include a government-run health plan to compete with private insurers. The public plan has become an unfortunate litmus test for both sides. The opposition to a public plan option is understandable; conservatives, health insurers, health-care providers and others see it as a slippery step down the slope to a single-payer system because, they contend, the government's built-in advantages will allow it to unfairly squash competitors.
For liberals, labor unions and others pushing to make health care available to all Americans, however, the fixation on a public plan is bizarre and counterproductive. Their position elevates the public plan way out of proportion to its importance in fixing health care. It is entirely possible to imagine effective health-care reform -- changes that would expand coverage and help control costs -- without a public option.
President Obama has said that he favors a public option but has been sketchy on details. His nominee for secretary of health and human services, Kathleen Sebelius, said that she wants a public plan to "challenge private insurers to compete on cost and quality" but "recognizes the importance of a level playing field between plans and ensuring that private insurance plans are not disadvantaged."
The argument for a public plan is that, without the need to extensively market itself or make a profit, it would do a better job of providing good health care at a reasonable cost, setting an important benchmark against which private insurers would be forced to compete. Even in a system where insurers are required to take all applicants, public plan advocates argue, incentives will remain for private plans to discourage the less healthy from signing up; a public plan is a necessary backstop. Moreover, if the playing field is level, public plan advocates argue, private insurers -- and those who extol the virtues of a competitive marketplace -- should have nothing to fear.
We disagree. It is difficult to imagine a truly level playing field that would simultaneously produce benefits from a government-run system. While prescription drugs are not a perfect comparison, the experience of competing plans in the Medicare prescription drug arena suggests that a government-run option is not essential to energize a competitive system that has turned out to cost less than expected. Insurers and private companies have been at least as innovative as the federal government in recent years in finding ways to provide quality care at lower costs. Medicare keeps costs under control in part because of its 800-pound-gorilla capacity to dictate prices -- in effect, to force the private sector to subsidize it. Such power, if exercised in a public health option, eventually would produce a single-payer system; if that's where the country wants to go, it should do so explicitly, not by default. If the chief advantage of a public option is to set a benchmark for private competitors, that could be achieved in other ways, for example, by providing for the entry of a public plan in case the private marketplace did not perform as expected.
Maybe we're wrong. Maybe it's possible to design a public option that aids consumers without undermining competition. If so, we certainly wouldn't oppose a program that included a public component. But it would be a huge mistake for the left to torpedo reform over this question.
Costa Rica Follow-Up: Fatal Dependence on Renewable Electricity
Costa Rica Follow-Up: Fatal Dependence on Renewable Electricity (Tom Friedman’s energy paradise loses its luck). By Donald Hertzmark
Master Resource, April 25, 2009
“When an abundant natural fall of water is at hand, nothing can be cheaper or better than water power. But everything depends upon local circumstances. The occasional mountain torrent is simply destructive. Many streams and rivers only contain sufficient water half the year round and costly reservoirs alone could keep up the summer supply. In flat countries no engineering art could procure any considerable supply of natural water power, and in very few places do we find water power free from occasional failure by drought.”
- W. S. Jevons, The Coal Question (London: Macmillan and Co., 1865), p. 129.
Thomas Friedman in the New York Times has presented Costa Rica as a model for the energy world, noting its reliance on renewable energy (hydro) to generate electricity. In response, we posted last week about how such dependence had left it vulnerable to the vagaries of rainfall, and (to a much lesser degree) wind. W. S. Jevons, the father of energy economics, said as much in 1865.
With all hydro development in the hands of the government, and with hydro responsible for 75-80% of power generation, any shortfall in rain can, within 1-2 weeks result in reduced electricity generation. And the odds have now caught up with Costa Rica – recent dryer conditions have led to blackouts in the country.
Exacerbating the country’s policy of hydro dependence for its power sector, recent investments have been run-of-river. This means that new dams have little storage capability and power output can be regulated only within broad ranges and depend on rainfall patterns over a very short period, ranging from hours to less than two weeks. Run-of-river projects are the ecologically preferred type of hydro development these days, since the construction does not involve flooding a large amount of land to create a reservoir. At the same time, the project’s output will fluctuate – not as much as wind or solar, but significant nevertheless.
When run-of-river hydro provides an essential element of a country’s electricity output, the system can be highly sensitive to even small variations in rainfall. For Costa Rica, a small reduction in rainfall, down just a bit over 2008, has proven beyond the capabilities of the country’s storage reservoirs to buffer.
As a result of recent rainfall variations, even the country’s modest electricity growth of just over 2% could not be met from current generation resources. The result has been cutbacks in electricity supply through periodic load shedding across the country. Predictably, the country’s industrial sector bears the brunt of unreliable electricity supply, and is 2% below last year’s level. Fluctuating electricity supply is bound to lead to problems with modern industrial process technologies and the country has virtually assured its continued dependence on tourism and plantation crop exports with such an energy policy.
The results of the country’s energy policy, denying citizens the ability to develop better sources of power generation, will be applauded by foreign eco-tourists who will return to an electricity supply rendered utterly reliable by reliance on coal, gas and nuclear. But what of the supposed beneficiaries – the citizens of Costa Rica – do they all really want to see their economic horizons shrink to hotel and restaurant jobs and agricultural labor? Talk about McJobs!
Master Resource, April 25, 2009
“When an abundant natural fall of water is at hand, nothing can be cheaper or better than water power. But everything depends upon local circumstances. The occasional mountain torrent is simply destructive. Many streams and rivers only contain sufficient water half the year round and costly reservoirs alone could keep up the summer supply. In flat countries no engineering art could procure any considerable supply of natural water power, and in very few places do we find water power free from occasional failure by drought.”
- W. S. Jevons, The Coal Question (London: Macmillan and Co., 1865), p. 129.
Thomas Friedman in the New York Times has presented Costa Rica as a model for the energy world, noting its reliance on renewable energy (hydro) to generate electricity. In response, we posted last week about how such dependence had left it vulnerable to the vagaries of rainfall, and (to a much lesser degree) wind. W. S. Jevons, the father of energy economics, said as much in 1865.
With all hydro development in the hands of the government, and with hydro responsible for 75-80% of power generation, any shortfall in rain can, within 1-2 weeks result in reduced electricity generation. And the odds have now caught up with Costa Rica – recent dryer conditions have led to blackouts in the country.
Exacerbating the country’s policy of hydro dependence for its power sector, recent investments have been run-of-river. This means that new dams have little storage capability and power output can be regulated only within broad ranges and depend on rainfall patterns over a very short period, ranging from hours to less than two weeks. Run-of-river projects are the ecologically preferred type of hydro development these days, since the construction does not involve flooding a large amount of land to create a reservoir. At the same time, the project’s output will fluctuate – not as much as wind or solar, but significant nevertheless.
When run-of-river hydro provides an essential element of a country’s electricity output, the system can be highly sensitive to even small variations in rainfall. For Costa Rica, a small reduction in rainfall, down just a bit over 2008, has proven beyond the capabilities of the country’s storage reservoirs to buffer.
As a result of recent rainfall variations, even the country’s modest electricity growth of just over 2% could not be met from current generation resources. The result has been cutbacks in electricity supply through periodic load shedding across the country. Predictably, the country’s industrial sector bears the brunt of unreliable electricity supply, and is 2% below last year’s level. Fluctuating electricity supply is bound to lead to problems with modern industrial process technologies and the country has virtually assured its continued dependence on tourism and plantation crop exports with such an energy policy.
The results of the country’s energy policy, denying citizens the ability to develop better sources of power generation, will be applauded by foreign eco-tourists who will return to an electricity supply rendered utterly reliable by reliance on coal, gas and nuclear. But what of the supposed beneficiaries – the citizens of Costa Rica – do they all really want to see their economic horizons shrink to hotel and restaurant jobs and agricultural labor? Talk about McJobs!
The "Idea of India" after Mumbai
The "Idea of India" after Mumbai. By Apoorva Shah
AEI, Friday, April 24, 2009
India's founding ideal of multicultural democracy is critical to both domestic cohesion and geopolitical interest, and it has defined how the country confronts terrorism at home. Modern India has much experience with terrorism, but most attacks have been rooted in separatist and ethnic insurgencies in rural frontier provinces. In the last decade, however, India has seen a steep rise in the number of attacks in urban areas, aimed at civilians, and committed not by rural insurgents but by young, middle-class jihadists. These domestic threats, which expose fault lines in the "idea of India," have been welcomed and at times supported by Pakistan, whose existence is founded in opposition to India. In fact, the apparent paradox between Pakistan's tolerance of the Lashkar-e-Taiba (LeT) terrorist group leading up to the November 26, 2008, attacks in Mumbai and Pakistan's internal struggle against extremists can be understood in the framework of these conflicting ideologies. For India, countering the threat of domestic jihadism is not only a security imperative; it is also a strategic necessity. This merits a new counterterrorism response by the Indian government and a renewed understanding of Indian Muslims and their place in India's pluralistic society.
Full outlook here.
AEI, Friday, April 24, 2009
India's founding ideal of multicultural democracy is critical to both domestic cohesion and geopolitical interest, and it has defined how the country confronts terrorism at home. Modern India has much experience with terrorism, but most attacks have been rooted in separatist and ethnic insurgencies in rural frontier provinces. In the last decade, however, India has seen a steep rise in the number of attacks in urban areas, aimed at civilians, and committed not by rural insurgents but by young, middle-class jihadists. These domestic threats, which expose fault lines in the "idea of India," have been welcomed and at times supported by Pakistan, whose existence is founded in opposition to India. In fact, the apparent paradox between Pakistan's tolerance of the Lashkar-e-Taiba (LeT) terrorist group leading up to the November 26, 2008, attacks in Mumbai and Pakistan's internal struggle against extremists can be understood in the framework of these conflicting ideologies. For India, countering the threat of domestic jihadism is not only a security imperative; it is also a strategic necessity. This merits a new counterterrorism response by the Indian government and a renewed understanding of Indian Muslims and their place in India's pluralistic society.
Full outlook here.
Misconceptions About the Interrogation Memos
Misconceptions About the Interrogation Memos. By William M McSwain
Their goal was to allow the CIA and military to stay within the parameters of a murky area of the law.
WSJ, Apr 26, 2009
President Barack Obama has reinvigorated the critics of George W. Bush's antiterror policies by opening the door to prosecuting or sanctioning those who crafted interrogation policy in the aftermath of the Sept. 11, 2001, terrorist attacks. These critics -- including the president -- are laboring under numerous misconceptions. Many of them have no experience with or understanding of military or CIA interrogation, the purpose of which is to gain actionable intelligence to safeguard our country. The recently released memos by lawyers in the Department of Justice's Office of Legal Counsel were written to assist interrogators in that critical mission. The memos cannot be fairly evaluated without that mission in mind.
Military and CIA interrogators are trained to use creative means of deception, and to play on detainee emotions and fears. This can be a nasty business. People unfamiliar with it, therefore, might even view a perfectly legitimate interrogation of a prisoner of war that is in full compliance with the Geneva Conventions as abhorrent by its very nature.
But military interrogation is not akin to a friendly chat across a conference table -- nor is it designed to gather evidence in a criminal trial, as an FBI interview might be. There is a fundamental distinction between law enforcement and military interrogations that we ignore at our peril.
Second-guessers can also fail to appreciate the increased importance of interrogation (and human intelligence in general) in the post 9/11 world. We face an enemy that wears no uniform, blends in with civilian populations, and operates in the shadows. This has made eliciting information from captured terrorists vital to the effort of finding other terrorists. As interrogation has become more important, drawing out useful information has become more difficult -- because hardened terrorists are often trained to resist traditional U.S. interrogation methods.
Fortunately, aggressive interrogation techniques like those outlined in the memos to the CIA are effective. As the memos explain, high-value detainees like Khalid Sheikh Mohammed (KSM), the mastermind of 9/11, and Abu Zubaydah, one of Osama bin Laden's key lieutenants, provided no actionable intelligence when facing traditional U.S. methods. It is doubtful that any high-level al Qaeda operative would ever provide useful intelligence in response to traditional methods.
Yet KSM and Zubaydah provided critical information after being waterboarded -- information that, among other things, helped to prevent a "Second Wave" attack in Los Angeles, according to the memos. Similarly, the 2005 report by Vice Adm. Albert Church on Defense Department interrogation policies, the "Church Report" -- of which I served as the executive editor -- documented the success of aggressive techniques against high-value detainees like Mohamed al Kahtani, 9/11's "20th hijacker."
The aggressive techniques in the CIA memos are also undeniably safe, having been adopted from Survival, Evasion, Resistance, Escape (SERE) training used with our own troops.
I have personally been waterboarded, put into stress positions, sleep deprived, slapped in the face. While none of this was enjoyable, I am none the worse for wear.
While such techniques are used in U.S. military training, some apparently consider them too brutal, too abusive, too inhumane -- in short, too much like "torture" -- to be used on fanatics like KSM who are bent on the mass murder of innocent American civilians. And if legal advisers such as Steven G. Bradbury, Jay S. Bybee and John Yoo are to be prosecuted for having sanctioned their use under careful controls, who's next? Every commander who ever implemented a SERE course?
Many critics also play the Abu Ghraib "trump card": The abuses of prisoners at that facility in Iraq allegedly "prove" the Bush administration's supposed policy of abuse, first codified in its legal memos. This ignores all relevant evidence.
As the Church Report concluded, after a thorough review of all Defense Department interrogation policies, the pictured abuses at Abu Ghraib bore no resemblance to approved policies at any level, in any theater. The 2004 Independent Panel to Review Department of Defense Detention Operations -- whose four members included two former secretaries of defense under President Jimmy Carter -- also stated that "no approved procedures called for or allowed the kinds of abuse that in fact occurred. There is no evidence of a policy of abuse promulgated by senior officials or military authorities."
Similarly, the critics like to default to Guantanamo as a symbol of the kind of abuse that Mr. Bush's antiterror policies allowed. Yet, at the time of the Church Report, there had been more than 24,000 interrogation sessions at Guantanamo and only three cases of substantiated interrogation-related abuse. All of them consisted of minor assaults in which military interrogators had exceeded the bounds of approved interrogation policy. Notably, the Church Report found that detainees at Guantanamo were more likely to have been injured playing recreational sports than in confrontations with interrogators or guards.
Mr. Bush's advisers were public servants with the memory of 9/11 still fresh in their minds, doing their best to give legitimate legal advice in a murky, largely undefined area of the law. Is this the stuff of which federal prosecutions, or even sanctions, are made?
As a former federal prosecutor, I know a good case from a bad one. I know a case based on solid evidence and even-handed application of the law versus one based on scoring political points. Mr. Obama and his attorney general, Eric Holder, have professed their desire to take politics out of the Justice Department, to restore integrity to a department that they believe had gone astray under Mr. Bush. Their recent actions, however, speak otherwise.
The bottom line is that any attempt to prosecute or sanction lawyers such as Messrs. Bradbury, Bybee or Yoo would be a fool's errand. And whatever our new president and his attorney general are, they aren't fools. Or at least I don't think they are. For the good of the country, I hope they don't prove me wrong.
Mr. McSwain, a former scout/sniper platoon commander in the Marines and assistant U.S. attorney, was executive editor of the 2005 Review of Department of Defense Detention Operations and Detainee Interrogation Techniques (The Church Report). He is an attorney in private practice in Philadelphia.
Their goal was to allow the CIA and military to stay within the parameters of a murky area of the law.
WSJ, Apr 26, 2009
President Barack Obama has reinvigorated the critics of George W. Bush's antiterror policies by opening the door to prosecuting or sanctioning those who crafted interrogation policy in the aftermath of the Sept. 11, 2001, terrorist attacks. These critics -- including the president -- are laboring under numerous misconceptions. Many of them have no experience with or understanding of military or CIA interrogation, the purpose of which is to gain actionable intelligence to safeguard our country. The recently released memos by lawyers in the Department of Justice's Office of Legal Counsel were written to assist interrogators in that critical mission. The memos cannot be fairly evaluated without that mission in mind.
Military and CIA interrogators are trained to use creative means of deception, and to play on detainee emotions and fears. This can be a nasty business. People unfamiliar with it, therefore, might even view a perfectly legitimate interrogation of a prisoner of war that is in full compliance with the Geneva Conventions as abhorrent by its very nature.
But military interrogation is not akin to a friendly chat across a conference table -- nor is it designed to gather evidence in a criminal trial, as an FBI interview might be. There is a fundamental distinction between law enforcement and military interrogations that we ignore at our peril.
Second-guessers can also fail to appreciate the increased importance of interrogation (and human intelligence in general) in the post 9/11 world. We face an enemy that wears no uniform, blends in with civilian populations, and operates in the shadows. This has made eliciting information from captured terrorists vital to the effort of finding other terrorists. As interrogation has become more important, drawing out useful information has become more difficult -- because hardened terrorists are often trained to resist traditional U.S. interrogation methods.
Fortunately, aggressive interrogation techniques like those outlined in the memos to the CIA are effective. As the memos explain, high-value detainees like Khalid Sheikh Mohammed (KSM), the mastermind of 9/11, and Abu Zubaydah, one of Osama bin Laden's key lieutenants, provided no actionable intelligence when facing traditional U.S. methods. It is doubtful that any high-level al Qaeda operative would ever provide useful intelligence in response to traditional methods.
Yet KSM and Zubaydah provided critical information after being waterboarded -- information that, among other things, helped to prevent a "Second Wave" attack in Los Angeles, according to the memos. Similarly, the 2005 report by Vice Adm. Albert Church on Defense Department interrogation policies, the "Church Report" -- of which I served as the executive editor -- documented the success of aggressive techniques against high-value detainees like Mohamed al Kahtani, 9/11's "20th hijacker."
The aggressive techniques in the CIA memos are also undeniably safe, having been adopted from Survival, Evasion, Resistance, Escape (SERE) training used with our own troops.
I have personally been waterboarded, put into stress positions, sleep deprived, slapped in the face. While none of this was enjoyable, I am none the worse for wear.
While such techniques are used in U.S. military training, some apparently consider them too brutal, too abusive, too inhumane -- in short, too much like "torture" -- to be used on fanatics like KSM who are bent on the mass murder of innocent American civilians. And if legal advisers such as Steven G. Bradbury, Jay S. Bybee and John Yoo are to be prosecuted for having sanctioned their use under careful controls, who's next? Every commander who ever implemented a SERE course?
Many critics also play the Abu Ghraib "trump card": The abuses of prisoners at that facility in Iraq allegedly "prove" the Bush administration's supposed policy of abuse, first codified in its legal memos. This ignores all relevant evidence.
As the Church Report concluded, after a thorough review of all Defense Department interrogation policies, the pictured abuses at Abu Ghraib bore no resemblance to approved policies at any level, in any theater. The 2004 Independent Panel to Review Department of Defense Detention Operations -- whose four members included two former secretaries of defense under President Jimmy Carter -- also stated that "no approved procedures called for or allowed the kinds of abuse that in fact occurred. There is no evidence of a policy of abuse promulgated by senior officials or military authorities."
Similarly, the critics like to default to Guantanamo as a symbol of the kind of abuse that Mr. Bush's antiterror policies allowed. Yet, at the time of the Church Report, there had been more than 24,000 interrogation sessions at Guantanamo and only three cases of substantiated interrogation-related abuse. All of them consisted of minor assaults in which military interrogators had exceeded the bounds of approved interrogation policy. Notably, the Church Report found that detainees at Guantanamo were more likely to have been injured playing recreational sports than in confrontations with interrogators or guards.
Mr. Bush's advisers were public servants with the memory of 9/11 still fresh in their minds, doing their best to give legitimate legal advice in a murky, largely undefined area of the law. Is this the stuff of which federal prosecutions, or even sanctions, are made?
As a former federal prosecutor, I know a good case from a bad one. I know a case based on solid evidence and even-handed application of the law versus one based on scoring political points. Mr. Obama and his attorney general, Eric Holder, have professed their desire to take politics out of the Justice Department, to restore integrity to a department that they believe had gone astray under Mr. Bush. Their recent actions, however, speak otherwise.
The bottom line is that any attempt to prosecute or sanction lawyers such as Messrs. Bradbury, Bybee or Yoo would be a fool's errand. And whatever our new president and his attorney general are, they aren't fools. Or at least I don't think they are. For the good of the country, I hope they don't prove me wrong.
Mr. McSwain, a former scout/sniper platoon commander in the Marines and assistant U.S. attorney, was executive editor of the 2005 Review of Department of Defense Detention Operations and Detainee Interrogation Techniques (The Church Report). He is an attorney in private practice in Philadelphia.
Strengthen U.S.-China Trade Ties
Strengthen U.S.-China Trade Ties. By Chen Deming
Now is no time for protectionism.
WSJ, Apr 27, 2009
Economic links have always been an important basis for the China-U.S. relationship, and the growth in trade between the two countries has been robust since the establishment of normal diplomatic relations. Today, China and the U.S. are each other's second-largest trading partner; the value of the two-way trade in goods exceeds $300 billion.
U.S. businesses have benefited greatly. In the past five years, American exports to China have doubled. The U.S. trade surplus with China in services has grown 36% every year, and the overall value of U.S. export services to China exceeded $16 billion last year. U.S. businesses have invested more than $60 billion in 57,000 projects in China. In 2007, American-funded companies in China enjoyed a 17% increase of profit, while domestically the profit of U.S. businesses dropped by 3% on average.
But the commercial ties between our two nations are affected by the global financial crisis. Chinese statistics show bilateral trade dropped 6.8%, and U.S. investment in China slumped 19.4%, on a year-on-year basis in the fourth quarter of last year and the first quarter of this year.
History tells us that the more serious a crisis becomes, the more committed we must be to openness and cooperation. Regrettably, however, trade measures by the U.S. against China are on the rise. Recently, American industries have petitioned the U.S. government for antidumping investigations, and for investigations under the World Trade Organization's "special safeguard provision," which could restrict imports of Chinese products. This will seriously test China-U.S. economic and trade relations.
Despite these challenges, the need to foster positive Sino-American ties has never been greater. We need to recognize the existing differences between us in social systems and economic development, and constantly enhance mutual understanding and trust. Both countries should step up cooperation on trade and investment issues, and explore and establish new possibilities for cooperation in such areas as agriculture, new and high technology, finance, energy and the environment. Dialogue and communication also need to be intensified concerning multilateral and regional trade and economic affairs. To that end, I would like to put forth four proposals:
- First, seize the opportunity for cooperation, and work together to tackle the crisis. At present, both governments have rolled out economic stimulus packages on a massive scale, which in turn are expected to become new growth areas for our trade and investment cooperation. For example, China's demand for infrastructure, machinery and equipment, and environmental protection is huge. It is hoped that both countries would turn these opportunities into tangible outcomes.
- Second, mutually open markets to expand trade and investment. The Chinese government does not pursue a trade surplus with the U.S. We will continue to encourage Chinese companies to import more from the U.S., and we will also welcome U.S. companies and trade-promotion agencies to be more active in China.
Since foreign direct investment is a basic element of China's opening-up policy, we welcome American companies that want to increase their investment in China. Meanwhile, we also encourage capable Chinese companies to invest in the U.S. We hope that the U.S. government will welcome Chinese investments and create an open and transparent investment environment.
- Third, strengthen bilateral dialogue and resolve differences properly. As trading partners with broad and close ties, both countries should not allow differences on some issues to affect their cooperation in areas of common interests. We need to use the U.S.-China Strategic and Economic Dialogue and the U.S.-China Joint Commission on Commerce and Trade to boost strategic mutual trust, expand dialogue and cooperation, and establish a high-level and stable regime of bilateral trade and investment facilitation.
- Fourth, safeguard the environment for trade and advance the Doha Round. The U.S. and China, as the largest and the third-largest trading countries in the world, respectively, should take the lead in following up the consensus reached at the G-20 Summit in London and refrain from formulating any new trade protection policies before the end of 2010. We should also exercise caution, avoid arbitrary use of the trade remedies allowed by the World Trade Organization, and honor our commitment to fight protectionism. The two countries should also work together to advance the Doha Round, strictly follow the mandates of the Doha Development Agenda, lock in what has already been agreed to in past negotiations, avoid reopening negotiations or adding new subjects, and seek the success of this round.
A positive, cooperative and comprehensive Sino-American relationship will surely bring new prosperity and development to both economies. I hope and believe that bilateral trade will rise to a new high and exceed $500 billion in the coming five years, growing in a more balanced way.
Mr. Chen is minister of commerce for the People's Republic of China.
Now is no time for protectionism.
WSJ, Apr 27, 2009
Economic links have always been an important basis for the China-U.S. relationship, and the growth in trade between the two countries has been robust since the establishment of normal diplomatic relations. Today, China and the U.S. are each other's second-largest trading partner; the value of the two-way trade in goods exceeds $300 billion.
U.S. businesses have benefited greatly. In the past five years, American exports to China have doubled. The U.S. trade surplus with China in services has grown 36% every year, and the overall value of U.S. export services to China exceeded $16 billion last year. U.S. businesses have invested more than $60 billion in 57,000 projects in China. In 2007, American-funded companies in China enjoyed a 17% increase of profit, while domestically the profit of U.S. businesses dropped by 3% on average.
But the commercial ties between our two nations are affected by the global financial crisis. Chinese statistics show bilateral trade dropped 6.8%, and U.S. investment in China slumped 19.4%, on a year-on-year basis in the fourth quarter of last year and the first quarter of this year.
History tells us that the more serious a crisis becomes, the more committed we must be to openness and cooperation. Regrettably, however, trade measures by the U.S. against China are on the rise. Recently, American industries have petitioned the U.S. government for antidumping investigations, and for investigations under the World Trade Organization's "special safeguard provision," which could restrict imports of Chinese products. This will seriously test China-U.S. economic and trade relations.
Despite these challenges, the need to foster positive Sino-American ties has never been greater. We need to recognize the existing differences between us in social systems and economic development, and constantly enhance mutual understanding and trust. Both countries should step up cooperation on trade and investment issues, and explore and establish new possibilities for cooperation in such areas as agriculture, new and high technology, finance, energy and the environment. Dialogue and communication also need to be intensified concerning multilateral and regional trade and economic affairs. To that end, I would like to put forth four proposals:
- First, seize the opportunity for cooperation, and work together to tackle the crisis. At present, both governments have rolled out economic stimulus packages on a massive scale, which in turn are expected to become new growth areas for our trade and investment cooperation. For example, China's demand for infrastructure, machinery and equipment, and environmental protection is huge. It is hoped that both countries would turn these opportunities into tangible outcomes.
- Second, mutually open markets to expand trade and investment. The Chinese government does not pursue a trade surplus with the U.S. We will continue to encourage Chinese companies to import more from the U.S., and we will also welcome U.S. companies and trade-promotion agencies to be more active in China.
Since foreign direct investment is a basic element of China's opening-up policy, we welcome American companies that want to increase their investment in China. Meanwhile, we also encourage capable Chinese companies to invest in the U.S. We hope that the U.S. government will welcome Chinese investments and create an open and transparent investment environment.
- Third, strengthen bilateral dialogue and resolve differences properly. As trading partners with broad and close ties, both countries should not allow differences on some issues to affect their cooperation in areas of common interests. We need to use the U.S.-China Strategic and Economic Dialogue and the U.S.-China Joint Commission on Commerce and Trade to boost strategic mutual trust, expand dialogue and cooperation, and establish a high-level and stable regime of bilateral trade and investment facilitation.
- Fourth, safeguard the environment for trade and advance the Doha Round. The U.S. and China, as the largest and the third-largest trading countries in the world, respectively, should take the lead in following up the consensus reached at the G-20 Summit in London and refrain from formulating any new trade protection policies before the end of 2010. We should also exercise caution, avoid arbitrary use of the trade remedies allowed by the World Trade Organization, and honor our commitment to fight protectionism. The two countries should also work together to advance the Doha Round, strictly follow the mandates of the Doha Development Agenda, lock in what has already been agreed to in past negotiations, avoid reopening negotiations or adding new subjects, and seek the success of this round.
A positive, cooperative and comprehensive Sino-American relationship will surely bring new prosperity and development to both economies. I hope and believe that bilateral trade will rise to a new high and exceed $500 billion in the coming five years, growing in a more balanced way.
Mr. Chen is minister of commerce for the People's Republic of China.
Sunday, April 26, 2009
Dingell: Cap and trade a "great big" tax
Dingell: Cap and trade a "great big" tax. By Glenn Thrush
Politico, April 24, 2009
Rep. John Dingell (D-Mich.), the former chairman of the Energy and Commerce Committee, raised eyebrows during his questioning of Al Gore today -- describing cap-and-trade as a "great big" tax.
Dingell, who backs a carbon tax, didn't express opposition to House leadership's cap-and-trade proposal but was asking Gore how to avoid missteps made in countries that implemented c-and-t.
"Every economist says that a carbon tax is a better, more efficient, fairer way of doing it... The Europeans have had two, maybe three fine failures in their application of cap and trade. How do we avoid the mistakes that they have made?...Nobody in this country realizes that cap and trade is a tax and it’s a great big one… I want to get a bill that works—how do we choose the best way?"
Matt Lloyd, spokesman for House Republican Conference Chairman Mike Pence, passed the YouTube along, saying: "Chairman Dingell agrees with what Republicans have been saying all along: the Democrat cap and trade bill is a national energy tax on working families.”
Politico, April 24, 2009
Rep. John Dingell (D-Mich.), the former chairman of the Energy and Commerce Committee, raised eyebrows during his questioning of Al Gore today -- describing cap-and-trade as a "great big" tax.
Dingell, who backs a carbon tax, didn't express opposition to House leadership's cap-and-trade proposal but was asking Gore how to avoid missteps made in countries that implemented c-and-t.
"Every economist says that a carbon tax is a better, more efficient, fairer way of doing it... The Europeans have had two, maybe three fine failures in their application of cap and trade. How do we avoid the mistakes that they have made?...Nobody in this country realizes that cap and trade is a tax and it’s a great big one… I want to get a bill that works—how do we choose the best way?"
Matt Lloyd, spokesman for House Republican Conference Chairman Mike Pence, passed the YouTube along, saying: "Chairman Dingell agrees with what Republicans have been saying all along: the Democrat cap and trade bill is a national energy tax on working families.”
Can we start shooting the geese yet?
h/t Greg Pollowitz, Planet Gore/NRO
28 aircraft destroyed by animal strikes since 2000. By Vasiliy Baziuk (AP)
Southern Ledger, Apr 24, 2009
Airplane collisions with birds or other animals have destroyed 28 aircraft since 2000, with New York's Kennedy airport and Sacramento International reporting the most incidents with serious damage, according to Federal Aviation Administration data posted for the first time Friday. And the problem appears to be growing.
The FAA list of wildlife strikes, published on the Internet, details more than 89,000 incidents since 1990, costing 11 people their lives. Most incidents were bird strikes, but deer and other animals have been hit on runways, too.
The situation seems to be getting worse: Airplane collisions with birds have more than doubled at 13 major U.S. airports since 2000, including New Orleans, Houston's Hobby, Kansas City, Orlando and Salt Lake City. Wildlife experts say increasingly birds, particularly large ones like Canada geese, are finding food and living near cities and airports year round rather than migrating.
The figures are known to be far from complete. Even the FAA estimates its voluntary reporting system captures only 20 percent of wildlife strikes. The agency, however, has refused for a decade to adopt a National Transportation Safety Board recommendation to make the reports mandatory.
Friday's first disclosure of the entire FAA database, including the locations of strikes, occurred largely because of pressure following the ditching of a US Airways jet in the Hudson River after bird strikes knocked out both of its engines on Jan. 15. Within days, The Associated Press asked for the database under the Freedom of Information Act.
All 155 people aboard survived that incident as pilot Chesley "Sully" Sullenberger ditched the powerless jet safely. That plane had at least seven earlier collisions with birds since February 2000, including one in March 2002 at Orlando International Airport when it sucked a red-tailed hawk into an engine during a night takeoff. The plane returned to the airport immediately with a damaged engine.
The data revealed one positive trend: strikes that caused major damage dropped noticeably in 2007 and 2008. In 2000, pilots reported 178 such strikes; in 2007 there were 125, and in the first 11 months of 2008 only 85. December 2008 numbers are not yet listed.
There was no immediate explanation from the FAA for the decline in major damage, but the agency tightened engine design standards in 2004 to better withstand bird strikes, and more and more airports engage in wildlife management.
Topping the list of airports where planes were either substantially damaged or destroyed by birds since 2000 were John F. Kennedy International Airport in New York with at least 30 such accidents and Sacramento International Airport in California with at least 28.
Kennedy, the nation's sixth-busiest airport, is located amid wetlands that attract birds. Ron Marsico, spokesman for the port authority that owns JFK, said it has been protected for years by aggressive wildlife management that includes habitat disruption, fireworks and the "killing of thousands of birds each year." He said the agency recently added a wildlife expert to increase vigilance.
Sacramento International, the nation's 40th busiest, lies beneath the Pacific Flyway used by millions of geese, swans, ducks, cranes, raptors and other birds that migrate with the seasons and stop to feed on crops in the farms that abut the airport. Airport spokeswoman Karen Doron said that in 2007 alone the five airports managed by Sacramento County "used loud noises, distress calls and other techniques to disperse more than 53,000 birds from our runway areas."
At Sacramento International on Friday, Dawn Holliman, a 51-year-old real estate agent from Placerville who was flying to Phoenix, said she felt the odds of being in an airplane struck by birds were relatively low. She was more concerned that the government previously withheld the information.
"It's irritating they don't let the public know about the risks," said Holliman.
The FAA had long argued the public couldn't handle the full truth about bird strikes, so it withheld the names of specific airports and airlines involved while releasing only aggregate data. The agency said the public might use the data to "cast unfounded aspersions" on those who reported strikes, and airports and airlines in turn might make fewer reports.
On Friday, FAA spokesman Ian Gregor cautioned "against comparing one airport's bird strike numbers to another airport. If a certain airport is very diligent in reporting these kinds of events, its diligence could make it appear as if it has more bird strikes than an airport that isn't as diligent."
The most recent fatal bird-strike came in October 2007: A student and instructor pilot died when their twin-engine business plane crashed in Browerville, Minn., after it struck a Canada goose during a night training flight. The plane's left engine had been damaged by a bird strike the day before and was repaired the day of the fatal crash.
All told, pilots reported striking at least 59,776 birds since 2000. The most common strikes involved mourning doves; pilots reported hitting 2,291 between 2000 and 2008. Other airborne victims included gulls (2,186), European starlings (1,427) and American kestrels (1,422).
A single United Airlines 737 passenger jet suffered at least 29 minor collisions with birds and one with a small deer _ more than any other plane since 2000. Only one case produced significant damage _ when the jet climbed out of Philadelphia International Airport into a flock of gulls at 1,000 feet the night of Jan. 30, 2006. The pilot declared an emergency after one engine sucked in a large gull and began vibrating badly. No one was hurt, but repairs cost the airline $37,000.
That same plane experienced incidents in San Francisco; Salt Lake City; San Jose, Calif.; Houston; Denver; Toronto; New Orleans; Chicago, Spokane, Wash, and most recently in Denver.
Since 2000, reported bird strikes have resulted in five fatalities and 93 injuries. The cost of repairs during that period was estimated at more than $267 million in inflation-adjusted dollars, but many of the incident reports contained no estimate of the repair cost.
The largest trade association of U.S. airlines hastened to note that bird strikes "are, of course, rare events,"
"The vast majority of cases result in little or no aircraft damage," the Air Transport Association of America added.
An overwhelming majority of reported strikes _ nearly 16,000 _ occurred on approach for landing, the data showed. An additional 20,000 were split nearly evenly among takeoff, landing and climbing.
This week, Transportation Secretary Ray LaHood rejected a proposal quietly advanced by the FAA on March 19 to formally make the data exempt from public disclosure _ even as other FAA officials were saying the AP would soon get the records in response to its Freedom of Information Act request.
With President Barack Obama promising a more open government and releasing secret Bush administration legal memos about harsh interrogations of terrorism suspects, LaHood said he found it hard to justify the FAA's plan to withhold records about birds at airports.
___
Associated Press writers Ted Bridis, Frank Bass and Joan Lowy in Washington and Samantha Young in Sacramento contributed to this report.
FAA database: http://wildlife-mitigation.tc.faa.gov/public_html/index.html#access [obsolete link]
---
Update Aug 2019: FAA Wildlife Strike Database https://wildlife.faa.gov/home
---
Check also Can We Start Shooting the Geese Now? By Greg Pollowitz. Jan 2009. https://www.bipartisanalliance.com/2009/01/can-we-start-shooting-geese-now.html
28 aircraft destroyed by animal strikes since 2000. By Vasiliy Baziuk (AP)
Southern Ledger, Apr 24, 2009
Airplane collisions with birds or other animals have destroyed 28 aircraft since 2000, with New York's Kennedy airport and Sacramento International reporting the most incidents with serious damage, according to Federal Aviation Administration data posted for the first time Friday. And the problem appears to be growing.
The FAA list of wildlife strikes, published on the Internet, details more than 89,000 incidents since 1990, costing 11 people their lives. Most incidents were bird strikes, but deer and other animals have been hit on runways, too.
The situation seems to be getting worse: Airplane collisions with birds have more than doubled at 13 major U.S. airports since 2000, including New Orleans, Houston's Hobby, Kansas City, Orlando and Salt Lake City. Wildlife experts say increasingly birds, particularly large ones like Canada geese, are finding food and living near cities and airports year round rather than migrating.
The figures are known to be far from complete. Even the FAA estimates its voluntary reporting system captures only 20 percent of wildlife strikes. The agency, however, has refused for a decade to adopt a National Transportation Safety Board recommendation to make the reports mandatory.
Friday's first disclosure of the entire FAA database, including the locations of strikes, occurred largely because of pressure following the ditching of a US Airways jet in the Hudson River after bird strikes knocked out both of its engines on Jan. 15. Within days, The Associated Press asked for the database under the Freedom of Information Act.
All 155 people aboard survived that incident as pilot Chesley "Sully" Sullenberger ditched the powerless jet safely. That plane had at least seven earlier collisions with birds since February 2000, including one in March 2002 at Orlando International Airport when it sucked a red-tailed hawk into an engine during a night takeoff. The plane returned to the airport immediately with a damaged engine.
The data revealed one positive trend: strikes that caused major damage dropped noticeably in 2007 and 2008. In 2000, pilots reported 178 such strikes; in 2007 there were 125, and in the first 11 months of 2008 only 85. December 2008 numbers are not yet listed.
There was no immediate explanation from the FAA for the decline in major damage, but the agency tightened engine design standards in 2004 to better withstand bird strikes, and more and more airports engage in wildlife management.
Topping the list of airports where planes were either substantially damaged or destroyed by birds since 2000 were John F. Kennedy International Airport in New York with at least 30 such accidents and Sacramento International Airport in California with at least 28.
Kennedy, the nation's sixth-busiest airport, is located amid wetlands that attract birds. Ron Marsico, spokesman for the port authority that owns JFK, said it has been protected for years by aggressive wildlife management that includes habitat disruption, fireworks and the "killing of thousands of birds each year." He said the agency recently added a wildlife expert to increase vigilance.
Sacramento International, the nation's 40th busiest, lies beneath the Pacific Flyway used by millions of geese, swans, ducks, cranes, raptors and other birds that migrate with the seasons and stop to feed on crops in the farms that abut the airport. Airport spokeswoman Karen Doron said that in 2007 alone the five airports managed by Sacramento County "used loud noises, distress calls and other techniques to disperse more than 53,000 birds from our runway areas."
At Sacramento International on Friday, Dawn Holliman, a 51-year-old real estate agent from Placerville who was flying to Phoenix, said she felt the odds of being in an airplane struck by birds were relatively low. She was more concerned that the government previously withheld the information.
"It's irritating they don't let the public know about the risks," said Holliman.
The FAA had long argued the public couldn't handle the full truth about bird strikes, so it withheld the names of specific airports and airlines involved while releasing only aggregate data. The agency said the public might use the data to "cast unfounded aspersions" on those who reported strikes, and airports and airlines in turn might make fewer reports.
On Friday, FAA spokesman Ian Gregor cautioned "against comparing one airport's bird strike numbers to another airport. If a certain airport is very diligent in reporting these kinds of events, its diligence could make it appear as if it has more bird strikes than an airport that isn't as diligent."
The most recent fatal bird-strike came in October 2007: A student and instructor pilot died when their twin-engine business plane crashed in Browerville, Minn., after it struck a Canada goose during a night training flight. The plane's left engine had been damaged by a bird strike the day before and was repaired the day of the fatal crash.
All told, pilots reported striking at least 59,776 birds since 2000. The most common strikes involved mourning doves; pilots reported hitting 2,291 between 2000 and 2008. Other airborne victims included gulls (2,186), European starlings (1,427) and American kestrels (1,422).
A single United Airlines 737 passenger jet suffered at least 29 minor collisions with birds and one with a small deer _ more than any other plane since 2000. Only one case produced significant damage _ when the jet climbed out of Philadelphia International Airport into a flock of gulls at 1,000 feet the night of Jan. 30, 2006. The pilot declared an emergency after one engine sucked in a large gull and began vibrating badly. No one was hurt, but repairs cost the airline $37,000.
That same plane experienced incidents in San Francisco; Salt Lake City; San Jose, Calif.; Houston; Denver; Toronto; New Orleans; Chicago, Spokane, Wash, and most recently in Denver.
Since 2000, reported bird strikes have resulted in five fatalities and 93 injuries. The cost of repairs during that period was estimated at more than $267 million in inflation-adjusted dollars, but many of the incident reports contained no estimate of the repair cost.
The largest trade association of U.S. airlines hastened to note that bird strikes "are, of course, rare events,"
"The vast majority of cases result in little or no aircraft damage," the Air Transport Association of America added.
An overwhelming majority of reported strikes _ nearly 16,000 _ occurred on approach for landing, the data showed. An additional 20,000 were split nearly evenly among takeoff, landing and climbing.
This week, Transportation Secretary Ray LaHood rejected a proposal quietly advanced by the FAA on March 19 to formally make the data exempt from public disclosure _ even as other FAA officials were saying the AP would soon get the records in response to its Freedom of Information Act request.
With President Barack Obama promising a more open government and releasing secret Bush administration legal memos about harsh interrogations of terrorism suspects, LaHood said he found it hard to justify the FAA's plan to withhold records about birds at airports.
___
Associated Press writers Ted Bridis, Frank Bass and Joan Lowy in Washington and Samantha Young in Sacramento contributed to this report.
FAA database: http://wildlife-mitigation.tc.faa.gov/public_html/index.html#access [obsolete link]
---
Update Aug 2019: FAA Wildlife Strike Database https://wildlife.faa.gov/home
---
Check also Can We Start Shooting the Geese Now? By Greg Pollowitz. Jan 2009. https://www.bipartisanalliance.com/2009/01/can-we-start-shooting-geese-now.html
Let the Senate Investigate the Interrogations
Let the Senate Investigate the Interrogations. By Dianne Feinstein
It's the only way we'll understand the program.
WSJ, Apr 26, 2009
President Barack Obama's release of memos detailing CIA interrogation policies under the Bush administration has ignited a political firestorm that continues to dominate the nation's front pages and news programs. The pressure is intense -- on Capitol Hill and elsewhere -- for Congress to "do something," and do it fast.
It's time to step back, take a breath, and set the record straight.
Here are the facts:
We already are doing something. Last year, the U.S. Senate Select Committee on Intelligence began reviewing CIA materials on the first two high-value detainees to be captured, and is finalizing a classified report on their detention and interrogation.
Last month, we launched a comprehensive, bipartisan review of CIA interrogation and detention policies. Since then, we have identified and requested from the CIA, among other things, a voluminous amount of materials and records related to conditions of detentions and techniques of interrogations.
The Senate Intelligence Committee is the appropriate body to conduct this review, because it is responsible for the oversight of America's 16 intelligence agencies -- most specifically, the CIA. The committee has access, on a regular basis, to classified materials and is supplementing its existing professional staff to carry out the investigation with bipartisan oversight.
All of this will be done in a classified environment, and the results will be brought to the full committee for its careful consideration. The committee will make a determination with respect to findings and recommendations.
It's important to note the fundamental realities underpinning this effort. First, it's vital that our work be structured in such a way as to avoid a "witch hunt" or a "show trial." That's easy. We do the vast bulk of our work behind closed doors -- precisely because the subject matter is highly classified. This allows us to examine the entire, unvarnished record in our search for the truth.
Second, for our review to succeed, it simply must be bipartisan, as is our tradition. This committee's last major investigation, in 2004, into prewar Iraq intelligence, was both bipartisan and critical in providing public understanding of the failed intelligence on Iraq's weapons of mass destruction. Democrats and Republicans on the committee came together with shared purpose in this latest endeavor. And we announced the committee's action, in a joint statement issued March 5.
Here's part of what we said: "The Senate Select Committee on Intelligence has agreed on a strong bipartisan basis to begin a review of the CIA's detention and interrogation program. The purpose is to review the program and to shape detention and interrogation policies in the future."
We went on to explain that the review would specifically examine:
- How the CIA created, operated and maintained conditions of detention and interrogation.
- Whether the CIA accurately described the detention and interrogation program to other parts of the U.S. government, including the Department of Justice Office of Legal Counsel, and the Senate Intelligence Committee.
- Whether the CIA implemented the program in compliance with official guidance, including covert action findings, Office of Legal Counsel opinions and CIA policy.
- The intelligence gained through the use of enhanced and standard interrogation techniques.
Our objective is clear: to achieve a full understanding of this program as it evolved in the wake of the Sept. 11, 2001, terrorist attacks.
So amid all the quarreling and confusion, I say this: Let's not prejudge or jump to conclusions. And let's resist the temptation to stage a Washington spectacle, high in entertainment value, but low in fact-finding potential.
Let the Senate Intelligence Committee do its job.
Mrs. Feinstein is chairman of the U.S. Senate Select Committee on Intelligence.
It's the only way we'll understand the program.
WSJ, Apr 26, 2009
President Barack Obama's release of memos detailing CIA interrogation policies under the Bush administration has ignited a political firestorm that continues to dominate the nation's front pages and news programs. The pressure is intense -- on Capitol Hill and elsewhere -- for Congress to "do something," and do it fast.
It's time to step back, take a breath, and set the record straight.
Here are the facts:
We already are doing something. Last year, the U.S. Senate Select Committee on Intelligence began reviewing CIA materials on the first two high-value detainees to be captured, and is finalizing a classified report on their detention and interrogation.
Last month, we launched a comprehensive, bipartisan review of CIA interrogation and detention policies. Since then, we have identified and requested from the CIA, among other things, a voluminous amount of materials and records related to conditions of detentions and techniques of interrogations.
The Senate Intelligence Committee is the appropriate body to conduct this review, because it is responsible for the oversight of America's 16 intelligence agencies -- most specifically, the CIA. The committee has access, on a regular basis, to classified materials and is supplementing its existing professional staff to carry out the investigation with bipartisan oversight.
All of this will be done in a classified environment, and the results will be brought to the full committee for its careful consideration. The committee will make a determination with respect to findings and recommendations.
It's important to note the fundamental realities underpinning this effort. First, it's vital that our work be structured in such a way as to avoid a "witch hunt" or a "show trial." That's easy. We do the vast bulk of our work behind closed doors -- precisely because the subject matter is highly classified. This allows us to examine the entire, unvarnished record in our search for the truth.
Second, for our review to succeed, it simply must be bipartisan, as is our tradition. This committee's last major investigation, in 2004, into prewar Iraq intelligence, was both bipartisan and critical in providing public understanding of the failed intelligence on Iraq's weapons of mass destruction. Democrats and Republicans on the committee came together with shared purpose in this latest endeavor. And we announced the committee's action, in a joint statement issued March 5.
Here's part of what we said: "The Senate Select Committee on Intelligence has agreed on a strong bipartisan basis to begin a review of the CIA's detention and interrogation program. The purpose is to review the program and to shape detention and interrogation policies in the future."
We went on to explain that the review would specifically examine:
- How the CIA created, operated and maintained conditions of detention and interrogation.
- Whether the CIA accurately described the detention and interrogation program to other parts of the U.S. government, including the Department of Justice Office of Legal Counsel, and the Senate Intelligence Committee.
- Whether the CIA implemented the program in compliance with official guidance, including covert action findings, Office of Legal Counsel opinions and CIA policy.
- The intelligence gained through the use of enhanced and standard interrogation techniques.
Our objective is clear: to achieve a full understanding of this program as it evolved in the wake of the Sept. 11, 2001, terrorist attacks.
So amid all the quarreling and confusion, I say this: Let's not prejudge or jump to conclusions. And let's resist the temptation to stage a Washington spectacle, high in entertainment value, but low in fact-finding potential.
Let the Senate Intelligence Committee do its job.
Mrs. Feinstein is chairman of the U.S. Senate Select Committee on Intelligence.
WaPo: What does the Obama administration hope to accomplish by publicly warning of a Pakistani collapse?
Sound the Alarm. WaPo Editorial
What does the Obama administration hope to accomplish by publicly warning of a Pakistani collapse?
WaPo: Sunday, April 26, 2009
THE TALIBAN raised fears in Pakistan last week by briefly seizing new territories near the capital, Islamabad. But in its own way, the Obama administration offered as much reason for panic about the deteriorating situation in that nuclear-armed Muslim country. In the course of just three days, the U.S. secretaries of State and Defense, the chairman of the Joint Chiefs, and the commanding general of American forces in the Middle East all publicly warned, in blunt and dire language, that Pakistan was facing an existential threat -- and that its government and Army were not facing it. "I think that the Pakistani government is basically abdicating to the Taliban and to the extremists," said Secretary of State Hillary Rodham Clinton.
That they felt compelled to openly air such conclusions about a nominally close U.S. ally -- for which the administration is proposing billions in new aid dollars -- was a measure of the desperation that seems to have infected the Obama administration's dealings with Pakistan's weak civilian government and obtuse military leadership. In the months since the administration took office, as in the last months of the Bush administration, private cajoling of President Asif Ali Zardari and Army chief Gen. Ashfaq Kiyani to fight the Taliban has done little good. It's not yet clear whether the public campaign will have more effect -- but it is sure to get many in Washington stirred about what Ms. Clinton described as the "mortal threat" a Taliban regime armed with nuclear weapons could pose to the United States.
That threat is certainly real. The government's decision to tolerate what amounts to Taliban control of the Swat Valley northwest of Islamabad has emboldened the extremists, who now are seeking to infiltrate neighboring districts even closer to the capital. The Pakistani army, untrained in counterinsurgency and rigidly focused on India, is reluctant to take on the militants; when it has tried to fight them in areas near the Afghan border, it has been mostly ineffective. Though the vast majority of Pakistanis oppose the Taliban's fundamentalism, most also dislike Mr. Zardari's government and suspect that operations against the insurgents serve U.S. interests more Pakistan's.
The loud U.S. warnings did provoke the Zardari government and Gen. Kiyani to say that they would fight the Taliban if it continued to advance; the black-turbaned fighters subsequently withdrew from one district on Friday. Pakistani officials say that the public support needed for the military offensive Washington wants won't be forthcoming unless Pakistanis believe that their government has tried all peaceful options. It is certainly the case that Pakistanis as well as their government must embrace the fight against the Taliban as their own, and not as a proxy war for the United States. It is also true that, apart from mounting missile strikes by remote-controlled aircraft, there is little the United States can do directly to defeat the Pakistani Taliban; the administration must try to work through the government and army.
But the United States has leverage: Without the billons flowing into Pakistan in direct U.S. aid as well as from other donors marshaled by Washington, Pakistan's economy would collapse. Perhaps the dire U.S. warnings will galvanize the country's political class into demanding action from the army and government -- or replacing the latter. But shouts of '"fire" have risks: They can also cause panic, or go unheeded.
What does the Obama administration hope to accomplish by publicly warning of a Pakistani collapse?
WaPo: Sunday, April 26, 2009
THE TALIBAN raised fears in Pakistan last week by briefly seizing new territories near the capital, Islamabad. But in its own way, the Obama administration offered as much reason for panic about the deteriorating situation in that nuclear-armed Muslim country. In the course of just three days, the U.S. secretaries of State and Defense, the chairman of the Joint Chiefs, and the commanding general of American forces in the Middle East all publicly warned, in blunt and dire language, that Pakistan was facing an existential threat -- and that its government and Army were not facing it. "I think that the Pakistani government is basically abdicating to the Taliban and to the extremists," said Secretary of State Hillary Rodham Clinton.
That they felt compelled to openly air such conclusions about a nominally close U.S. ally -- for which the administration is proposing billions in new aid dollars -- was a measure of the desperation that seems to have infected the Obama administration's dealings with Pakistan's weak civilian government and obtuse military leadership. In the months since the administration took office, as in the last months of the Bush administration, private cajoling of President Asif Ali Zardari and Army chief Gen. Ashfaq Kiyani to fight the Taliban has done little good. It's not yet clear whether the public campaign will have more effect -- but it is sure to get many in Washington stirred about what Ms. Clinton described as the "mortal threat" a Taliban regime armed with nuclear weapons could pose to the United States.
That threat is certainly real. The government's decision to tolerate what amounts to Taliban control of the Swat Valley northwest of Islamabad has emboldened the extremists, who now are seeking to infiltrate neighboring districts even closer to the capital. The Pakistani army, untrained in counterinsurgency and rigidly focused on India, is reluctant to take on the militants; when it has tried to fight them in areas near the Afghan border, it has been mostly ineffective. Though the vast majority of Pakistanis oppose the Taliban's fundamentalism, most also dislike Mr. Zardari's government and suspect that operations against the insurgents serve U.S. interests more Pakistan's.
The loud U.S. warnings did provoke the Zardari government and Gen. Kiyani to say that they would fight the Taliban if it continued to advance; the black-turbaned fighters subsequently withdrew from one district on Friday. Pakistani officials say that the public support needed for the military offensive Washington wants won't be forthcoming unless Pakistanis believe that their government has tried all peaceful options. It is certainly the case that Pakistanis as well as their government must embrace the fight against the Taliban as their own, and not as a proxy war for the United States. It is also true that, apart from mounting missile strikes by remote-controlled aircraft, there is little the United States can do directly to defeat the Pakistani Taliban; the administration must try to work through the government and army.
But the United States has leverage: Without the billons flowing into Pakistan in direct U.S. aid as well as from other donors marshaled by Washington, Pakistan's economy would collapse. Perhaps the dire U.S. warnings will galvanize the country's political class into demanding action from the army and government -- or replacing the latter. But shouts of '"fire" have risks: They can also cause panic, or go unheeded.
WaPo: Expiring Tax Cuts - What to do before the 2010 drop-dead date
Expiring Tax Cuts. WaPo Editorial
What to do before the 2010 drop-dead date
WaPo. Sunday, April 26, 2009
THE LOOMING expiration of the Bush tax cuts offers an opportunity that the Obama administration and the Democratic Congress seem determined to squander. No one is proposing allowing all the tax cuts to expire as scheduled, on Dec. 31, 2010, nor should they. But a rational discussion of tax policy would include thoughtfully weighing which tax cuts to keep in place, which ones to pay for and perhaps even which taxes to increase. It may not surprise you to learn that this not happening. Instead, Congress is busy figuring out how to best break its own rules -- the ones that supposedly require tax cuts to be paid for rather than simply tacked on to the already bulging bill for the next generation. Meanwhile, President Obama has appointed a tax reform panel -- a good idea -- but counterproductively constrained its mission.
In an ideal world, the House and Senate would stick to their pay-as-you-go rules and offset the costs of any new tax cuts, either by raising other revenue or reducing spending. But the Senate, in its version of the budget resolution, assumes that pay-go rules will be waived to allow extension of the expiring income tax cuts for families making less than $250,000, the estate tax cuts and a temporary fix for the alternative minimum patch. The House wants to achieve the same result through a different mechanism: It would explicitly exempt these tax cuts from having to be paid for, but insist that, going forward, the rules will be really, really strict. Between the two positions, the House is right: A stricter rule is better. But a negotiation about whether to keep pay-go but waive it (the Senate solution) or to alter the rule so it is only in place once you have broken the original version (the House option) misses the larger point: Given the fiscal picture, it is absurd to consider borrowing to cover the costs of more than $2 trillion in tax reductions. For years now, the House and Senate have been limping along, patching things here and waiving things there, adding to the deficit all along the way. This would be a good time to stop.
Then there is the new tax reform panel, headed by Paul A. Volcker. The panel's instructions are to make recommendations for closing corporate tax loopholes, closing the gap between taxes paid and taxes owed, and simplifying the tax code. Great, as far as it goes. But the instructions unduly limit the panel's purview: Taxes cannot go up for any family earning less than $250,000 a year. As we have said before, this is not a sustainable or rational tax policy. By imposing that limit on the tax panel, the president is denying himself a political opening to get out of a campaign promise that, a few years and a couple of trillion dollars in debt later, will make even less sense. Mr. Volcker has said that he would like to work on the more fundamental issues of tax reform, once the panel has completed its first round of tax recommendations. Our recommendation, to Congress and Mr. Volcker: Get started now.
What to do before the 2010 drop-dead date
WaPo. Sunday, April 26, 2009
THE LOOMING expiration of the Bush tax cuts offers an opportunity that the Obama administration and the Democratic Congress seem determined to squander. No one is proposing allowing all the tax cuts to expire as scheduled, on Dec. 31, 2010, nor should they. But a rational discussion of tax policy would include thoughtfully weighing which tax cuts to keep in place, which ones to pay for and perhaps even which taxes to increase. It may not surprise you to learn that this not happening. Instead, Congress is busy figuring out how to best break its own rules -- the ones that supposedly require tax cuts to be paid for rather than simply tacked on to the already bulging bill for the next generation. Meanwhile, President Obama has appointed a tax reform panel -- a good idea -- but counterproductively constrained its mission.
In an ideal world, the House and Senate would stick to their pay-as-you-go rules and offset the costs of any new tax cuts, either by raising other revenue or reducing spending. But the Senate, in its version of the budget resolution, assumes that pay-go rules will be waived to allow extension of the expiring income tax cuts for families making less than $250,000, the estate tax cuts and a temporary fix for the alternative minimum patch. The House wants to achieve the same result through a different mechanism: It would explicitly exempt these tax cuts from having to be paid for, but insist that, going forward, the rules will be really, really strict. Between the two positions, the House is right: A stricter rule is better. But a negotiation about whether to keep pay-go but waive it (the Senate solution) or to alter the rule so it is only in place once you have broken the original version (the House option) misses the larger point: Given the fiscal picture, it is absurd to consider borrowing to cover the costs of more than $2 trillion in tax reductions. For years now, the House and Senate have been limping along, patching things here and waiving things there, adding to the deficit all along the way. This would be a good time to stop.
Then there is the new tax reform panel, headed by Paul A. Volcker. The panel's instructions are to make recommendations for closing corporate tax loopholes, closing the gap between taxes paid and taxes owed, and simplifying the tax code. Great, as far as it goes. But the instructions unduly limit the panel's purview: Taxes cannot go up for any family earning less than $250,000 a year. As we have said before, this is not a sustainable or rational tax policy. By imposing that limit on the tax panel, the president is denying himself a political opening to get out of a campaign promise that, a few years and a couple of trillion dollars in debt later, will make even less sense. Mr. Volcker has said that he would like to work on the more fundamental issues of tax reform, once the panel has completed its first round of tax recommendations. Our recommendation, to Congress and Mr. Volcker: Get started now.
Saturday, April 25, 2009
Porter J. Goss: Security Before Politics
Security Before Politics. By Porter J. Goss
WaPo, Saturday, April 25, 2009
Since leaving my post as CIA director almost three years ago, I have remained largely silent on the public stage. I am speaking out now because I feel our government has crossed the red line between properly protecting our national security and trying to gain partisan political advantage. We can't have a secret intelligence service if we keep giving away all the secrets. Americans have to decide now.
A disturbing epidemic of amnesia seems to be plaguing my former colleagues on Capitol Hill. After the Sept. 11, 2001, attacks, members of the committees charged with overseeing our nation's intelligence services had no higher priority than stopping al-Qaeda. In the fall of 2002, while I was chairman of the House intelligence committee, senior members of Congress were briefed on the CIA's "High Value Terrorist Program," including the development of "enhanced interrogation techniques" and what those techniques were. This was not a one-time briefing but an ongoing subject with lots of back and forth between those members and the briefers.
Today, I am slack-jawed to read that members claim to have not understood that the techniques on which they were briefed were to actually be employed; or that specific techniques such as "waterboarding" were never mentioned. It must be hard for most Americans of common sense to imagine how a member of Congress can forget being told about the interrogations of Sept. 11 mastermind Khalid Sheik Mohammed. In that case, though, perhaps it is not amnesia but political expedience.
Let me be clear. It is my recollection that:
-- The chairs and the ranking minority members of the House and Senate intelligence committees, known as the Gang of Four, were briefed that the CIA was holding and interrogating high-value terrorists.
-- We understood what the CIA was doing.
-- We gave the CIA our bipartisan support.
-- We gave the CIA funding to carry out its activities.
-- On a bipartisan basis, we asked if the CIA needed more support from Congress to carry out its mission against al-Qaeda.
I do not recall a single objection from my colleagues. They did not vote to stop authorizing CIA funding. And for those who now reveal filed "memorandums for the record" suggesting concern, real concern should have been expressed immediately -- to the committee chairs, the briefers, the House speaker or minority leader, the CIA director or the president's national security adviser -- and not quietly filed away in case the day came when the political winds shifted. And shifted they have.
Circuses are not new in Washington, and I can see preparations being made for tents from the Capitol straight down Pennsylvania Avenue. The CIA has been pulled into the center ring before. The result this time will be the same: a hollowed-out service of diminished capabilities. After Sept. 11, the general outcry was, "Why don't we have better overseas capabilities?" I fear that in the years to come this refrain will be heard again: once a threat -- or God forbid, another successful attack -- captures our attention and sends the pendulum swinging back. There is only one person who can shut down this dangerous show: President Obama.
Unfortunately, much of the damage to our capabilities has already been done. It is certainly not trust that is fostered when intelligence officers are told one day "I have your back" only to learn a day later that a knife is being held to it. After the events of this week, morale at the CIA has been shaken to its foundation.
We must not forget: Our intelligence allies overseas view our inability to maintain secrecy as a reason to question our worthiness as a partner. These allies have been vital in almost every capture of a terrorist.
The suggestion that we are safer now because information about interrogation techniques is in the public domain conjures up images of unicorns and fairy dust. We have given our enemy invaluable information about the rules by which we operate. The terrorists captured by the CIA perfected the act of beheading innocents using dull knives. Khalid Sheik Mohammed boasted of the tactic of placing explosives high enough in a building to ensure that innocents trapped above would die if they tried to escape through windows. There is simply no comparison between our professionalism and their brutality.
Our enemies do not subscribe to the rules of the Marquis of Queensbury. "Name, rank and serial number" does not apply to non-state actors but is, regrettably, the only question this administration wants us to ask. Instead of taking risks, our intelligence officers will soon resort to wordsmithing cables to headquarters while opportunities to neutralize brutal radicals are lost.
The days of fortress America are gone. We are the world's superpower. We can sit on our hands or we can become engaged to improve global human conditions. The bottom line is that we cannot succeed unless we have good intelligence. Trading security for partisan political popularity will ensure that our secrets are not secret and that our intelligence is destined to fail us.
The writer, a Republican, was director of the CIA from September 2004 to May 2006 and was chairman of the House Permanent Select Committee on Intelligence from 1997 to 2004.
WaPo, Saturday, April 25, 2009
Since leaving my post as CIA director almost three years ago, I have remained largely silent on the public stage. I am speaking out now because I feel our government has crossed the red line between properly protecting our national security and trying to gain partisan political advantage. We can't have a secret intelligence service if we keep giving away all the secrets. Americans have to decide now.
A disturbing epidemic of amnesia seems to be plaguing my former colleagues on Capitol Hill. After the Sept. 11, 2001, attacks, members of the committees charged with overseeing our nation's intelligence services had no higher priority than stopping al-Qaeda. In the fall of 2002, while I was chairman of the House intelligence committee, senior members of Congress were briefed on the CIA's "High Value Terrorist Program," including the development of "enhanced interrogation techniques" and what those techniques were. This was not a one-time briefing but an ongoing subject with lots of back and forth between those members and the briefers.
Today, I am slack-jawed to read that members claim to have not understood that the techniques on which they were briefed were to actually be employed; or that specific techniques such as "waterboarding" were never mentioned. It must be hard for most Americans of common sense to imagine how a member of Congress can forget being told about the interrogations of Sept. 11 mastermind Khalid Sheik Mohammed. In that case, though, perhaps it is not amnesia but political expedience.
Let me be clear. It is my recollection that:
-- The chairs and the ranking minority members of the House and Senate intelligence committees, known as the Gang of Four, were briefed that the CIA was holding and interrogating high-value terrorists.
-- We understood what the CIA was doing.
-- We gave the CIA our bipartisan support.
-- We gave the CIA funding to carry out its activities.
-- On a bipartisan basis, we asked if the CIA needed more support from Congress to carry out its mission against al-Qaeda.
I do not recall a single objection from my colleagues. They did not vote to stop authorizing CIA funding. And for those who now reveal filed "memorandums for the record" suggesting concern, real concern should have been expressed immediately -- to the committee chairs, the briefers, the House speaker or minority leader, the CIA director or the president's national security adviser -- and not quietly filed away in case the day came when the political winds shifted. And shifted they have.
Circuses are not new in Washington, and I can see preparations being made for tents from the Capitol straight down Pennsylvania Avenue. The CIA has been pulled into the center ring before. The result this time will be the same: a hollowed-out service of diminished capabilities. After Sept. 11, the general outcry was, "Why don't we have better overseas capabilities?" I fear that in the years to come this refrain will be heard again: once a threat -- or God forbid, another successful attack -- captures our attention and sends the pendulum swinging back. There is only one person who can shut down this dangerous show: President Obama.
Unfortunately, much of the damage to our capabilities has already been done. It is certainly not trust that is fostered when intelligence officers are told one day "I have your back" only to learn a day later that a knife is being held to it. After the events of this week, morale at the CIA has been shaken to its foundation.
We must not forget: Our intelligence allies overseas view our inability to maintain secrecy as a reason to question our worthiness as a partner. These allies have been vital in almost every capture of a terrorist.
The suggestion that we are safer now because information about interrogation techniques is in the public domain conjures up images of unicorns and fairy dust. We have given our enemy invaluable information about the rules by which we operate. The terrorists captured by the CIA perfected the act of beheading innocents using dull knives. Khalid Sheik Mohammed boasted of the tactic of placing explosives high enough in a building to ensure that innocents trapped above would die if they tried to escape through windows. There is simply no comparison between our professionalism and their brutality.
Our enemies do not subscribe to the rules of the Marquis of Queensbury. "Name, rank and serial number" does not apply to non-state actors but is, regrettably, the only question this administration wants us to ask. Instead of taking risks, our intelligence officers will soon resort to wordsmithing cables to headquarters while opportunities to neutralize brutal radicals are lost.
The days of fortress America are gone. We are the world's superpower. We can sit on our hands or we can become engaged to improve global human conditions. The bottom line is that we cannot succeed unless we have good intelligence. Trading security for partisan political popularity will ensure that our secrets are not secret and that our intelligence is destined to fail us.
The writer, a Republican, was director of the CIA from September 2004 to May 2006 and was chairman of the House Permanent Select Committee on Intelligence from 1997 to 2004.
World Bank Report Card: 'Material weakness' on corruption
World Bank Report Card. WSJ Editorial
'Material weakness' on corruption.
WSJ, Apr 25, 2009
[The IEG report referred to can be requested from us]
The world's finance ministers are gathered in Washington this weekend for the spring meeting of the World Bank, which recently announced that it would spend up to $45 billion over three years for public-works projects alone. But as they shovel the money out the door, they might want to consider how carefully it will be spent -- or misspent.
Last week, the bank quietly released a review of the internal controls of its International Development Association, or IDA, which dispenses about $10 billion a year in long-term, interest-free loans to the world's poorest countries. While broadly congratulating the bank, the review discovered "significant deficiencies" in six areas, from "management oversight of project processes" to "operational risk management." The review also noted that the bank suffered "material weakness" in "the complex of controls to manage the risk of fraud and corruption" in IDA-financed projects. Material weakness is bank-speak for an "F."
The review was commissioned in 2006 during Paul Wolfowitz's tenure and is a first of its kind for the bank. It is the work of the Independent Evaluation Group (IEG), a misnamed unit since its staff are on secondment from the bank and have careers to consider in assessing the work of their colleagues. So consider the review to have been graded on a curve. And at 690 acronym-laced pages, it is almost purposely written to be read by as few people as possible.
Still, give the IEG credit for producing a remarkable rebuke of an institution that likes to boast of its "action plans" and "governance strategies" to reduce corruption. As the review gets around to noting on page 38 of Annex D, while the bank has initiated various initiatives to combat fraud and corruption, "the internal controls to make these effective are not yet in place."
Thus, the IEG reports that the bank's "treatment of F&C [fraud and corruption] considerations has often been sparse." That goes for the bank's design of country strategies and its project supervision. The bank's procurement guidelines, for instance, "were designed to ensure equity and economy, and there is no explicit F&C prevention in these guidelines."
The IEG also faults the bank for what it calls "tone at the top": "There is still fear among some staff that seeking out F&C issues in projects and reporting on observed improprieties may lead to reprisals from their managers, and managerial signals and behavior are not always consistent with these messages. Overall, mixed messages and ambivalence are still considered prevalent."
This ambivalence is reflected in the bank management's response to the IEG findings. While management acknowledged "significant deficiencies" in its handling of fraud and corruption, it rejected the finding of a material weakness. Instead it praised itself for the "assertive and concrete" actions it has taken since Robert Zoellick became president nearly two years ago.
This response reflects the bank management's belief that corruption, while regrettable, is a tolerable cost of the bank's good works. Meanwhile, the only real sanction that would matter -- cutting off corrupt projects -- almost never happens. To wit, the bank has just doled out another quarter-billion dollars to a Kenyan project the corruption of which we reported over a year ago. Bank staff will get the message.
'Material weakness' on corruption.
WSJ, Apr 25, 2009
[The IEG report referred to can be requested from us]
The world's finance ministers are gathered in Washington this weekend for the spring meeting of the World Bank, which recently announced that it would spend up to $45 billion over three years for public-works projects alone. But as they shovel the money out the door, they might want to consider how carefully it will be spent -- or misspent.
Last week, the bank quietly released a review of the internal controls of its International Development Association, or IDA, which dispenses about $10 billion a year in long-term, interest-free loans to the world's poorest countries. While broadly congratulating the bank, the review discovered "significant deficiencies" in six areas, from "management oversight of project processes" to "operational risk management." The review also noted that the bank suffered "material weakness" in "the complex of controls to manage the risk of fraud and corruption" in IDA-financed projects. Material weakness is bank-speak for an "F."
The review was commissioned in 2006 during Paul Wolfowitz's tenure and is a first of its kind for the bank. It is the work of the Independent Evaluation Group (IEG), a misnamed unit since its staff are on secondment from the bank and have careers to consider in assessing the work of their colleagues. So consider the review to have been graded on a curve. And at 690 acronym-laced pages, it is almost purposely written to be read by as few people as possible.
Still, give the IEG credit for producing a remarkable rebuke of an institution that likes to boast of its "action plans" and "governance strategies" to reduce corruption. As the review gets around to noting on page 38 of Annex D, while the bank has initiated various initiatives to combat fraud and corruption, "the internal controls to make these effective are not yet in place."
Thus, the IEG reports that the bank's "treatment of F&C [fraud and corruption] considerations has often been sparse." That goes for the bank's design of country strategies and its project supervision. The bank's procurement guidelines, for instance, "were designed to ensure equity and economy, and there is no explicit F&C prevention in these guidelines."
The IEG also faults the bank for what it calls "tone at the top": "There is still fear among some staff that seeking out F&C issues in projects and reporting on observed improprieties may lead to reprisals from their managers, and managerial signals and behavior are not always consistent with these messages. Overall, mixed messages and ambivalence are still considered prevalent."
This ambivalence is reflected in the bank management's response to the IEG findings. While management acknowledged "significant deficiencies" in its handling of fraud and corruption, it rejected the finding of a material weakness. Instead it praised itself for the "assertive and concrete" actions it has taken since Robert Zoellick became president nearly two years ago.
This response reflects the bank management's belief that corruption, while regrettable, is a tolerable cost of the bank's good works. Meanwhile, the only real sanction that would matter -- cutting off corrupt projects -- almost never happens. To wit, the bank has just doled out another quarter-billion dollars to a Kenyan project the corruption of which we reported over a year ago. Bank staff will get the message.
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