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Monday, November 30, 2009

The Dubai Effect

The Dubai Effect
Michael J. Totten - 11.29.2009 - 9:00 AM

Max Boot is quite right that the Middle East needs Dubai, and not only because it embraces modernity and flouts the region’s taboos. It’s also an example of good government, at least by the Arab world’s standards, and good economics if you look past its excesses.

The United Arab Emirates’ most extravagant city-state has a more or less transparent market economy and a degree of personal freedom rarely found elsewhere in the Middle East outside Israel and Lebanon. The government doesn’t micromanage the personal lives of its citizens as in Iran and Saudi Arabia, nor does it smother the economy with heavy state socialism as in Egypt and Syria. Its bureaucracy is efficient — investors don’t spend years acquiring permits and filling out paperwork before they can open a shopping center, a hotel, or a Starbucks. The Islamic religion is respected as it is everywhere else in the Middle East, but clerics don’t make the rules.

for rest of the article, go to:

Israelis Fear Obama. That's The Point. Bernard Avishai



Israelis Fear Obama. That's The Point.

Bernard Avishai

Barack Obama can do virtually nothing to halt the mounting fear among Israelis that he is hostile to them: no visits, no speeches, no jets. If you need proof, and don't know Hebrew, just look at the body language of Ben Caspit, the populist-journalist host of the very widely watched "Journal" program on Channel One, Friday nights.

Caspit fancies himself the voice of the common people, or at least its conscience, sort of like Chris Matthews. He may, God help us, be right, at least for the moment. This past Friday, he was (let's call it) interviewing two relatively moderate members of Knesset, one from Likud, and one from Kadima, both of whom support the settlement freeze, both of whom insist that this is not just a sham, for all of its qualifications. Kadima's Gideon Ezra, the former deputy director of the Shavak (the state security services), even insisted the freeze was very late in coming, for all the obvious strategic reasons; he implied that Kadima might well be prepared to join the coalition if Netanyahu required their support to pursue a deal with the Palestinians.

Both of these responses might have raised the antennae of an interviewer. Caspit was having none of it. Instead, he wanted to talk about the public statement Friday by Likud's Limor Livnat, a formidable minister in Netanyahu's coaliton, that the freeze only proves Obama is anti-Israel, that "we have fallen into the hands of a terrible administration."

The MKs tried to finesse her statement. Caspit decided to answer his own question. (You can watch him by clicking here and sliding the time bar to about 13:40.) "But in essence," Caspit said, "she [Livnat] said courageously what most of us think. The Americans--this administration--and I don't fear them because I am not, lucky for all of us, a minister--is really an administration that burdens us, that is awful and terrible for Israel." Nobody contradicted him. Later (at around 17:10) Caspit said: "What, and soon we'll have to freeze in Jerusalem? This is unprecedented." Gideon Ezra protested that, for example, starting a new settlement in Nof Zion--"which is really Jabel Mukaber"--is an absurd provocation; that the key is to strengthen moderate forces among the Palestinians. Caspit's answer in the form of a question (21.30): "So we will have given up 10 months of settlement for nothing, just so the goyim will say we are okay."

I won't dwell on the pathos of Caspit's rhetoric. Let's just say that when Theodore Herzl wrote his play "The New Ghetto" he was not anticipating the journalists of "The Jewish State." (For an antidote, read Gideon Levy's exasperated columnfrom today's Haaretz.) Yet if Caspit was right to claim that he speaks for a majority of Israelis just now, what should Obama do about it? How to respond to the ways Caspi's talk embodies virtually everything Israelis fear in an American administration?

HERE"S THE THING. Instead of trying to allay this fear, Obama should use it. For what Caspit's outbursts really imply is the slow transformation of Israeli politics, where the fear of messing up relations with Washington slowly burns in; and Israelis, like Palestinians, are growing hungry for a "political horizon." Nobody really believes anymore in the "lets-give-them-land-and-maybe-they'll-leave-us-alone" school of peacemaking. But nobody but the hard right believes either in the plausibility of indefinite occupation. Caspit is afraid of change, and for all of his bravado, afraid of isolation. He may not realize this, but he's actually softening Israelis up for something creative from Washington.

The fear is there, and growing, you see. To pressure less will not earn Obama less animus. The point is to fill the vacuum the fear creates; refocus the conversation not only on what Israelis should stop doing, but on positive steps that make concrete what positive steps the world community--goyim--expect Israelis and Palestinians to take.

Here, for example, are three things the Obama administration can do to help reshape the conversation here:

First, it can state--now, in response to the "freeze"--that American policy is to pursue a deal based on the Taba Agreements of 2001. The "Clinton parameters" were at the heart of those negotiations. Senator Mitchell and Secretary of State Hilary Clinton might well enlist the former president to lay out those principles in a joint press conference. Mahmoud Abbas has virtually said he will immediately resume negotiations if Netanyahu will agree "to restart talks where they were left off." Abbas was referring to his months of meetings with Ehud Olmert, but those talks were themselves based on variations of the Taba plan.

Second, the Dubai economic crisis could be a huge boost for Palestine, in the ironic way the Gulf war of 1991 was huge boost for Amman. Then, as now, the press was full of dire warnings about Palestinians losing their jobs in the Gulf and, hence, remittances back to families drying up. But, actually, the return of thousands of Palestinians (100,000 work in Dubai as engineers, instructors and in technology-related professions) to the West Bank would be a great boost to Palestinian intellectual capital. The Obama administration should publicly call for the return of qualified people, and task the American consul in Jerusalem with reviewing applications and monitoring Israeli responses to them. As I've argued in the past, Palestinians do not lack financial capital to develop their private sector. What they lack is access to their own talent and the capacity to execute their business plans under the burdens of the occupation. If Israel is serious about a peace partner, this is an extraordinary chance to help develop one.

Third, assuming Marwan Barghouti will indeed be released, Senator Mitchell should meet with him. The symbolic impact would be resounding.

These are all doable. Again, Obama will get no credit from Israelis by refraining from doing them.

Bad arguments never die, they just go to Afghanistan Marc Lynch



Bad arguments never die, they just go to Afghanistan

Marc Lynch

The wise souls who run the Washington Post op-ed page have ordained that what we, the American people, most need for Thanksgiving is another op-ed by Fred and Kim Kagan about Afghanistan (at least their third since August). It's the usual: surge, surge, surge, more troops, no conditionality or timeline, and so on.

I'll leave it to others to consider their arguments about Afghanistan (you'd think the Taliban were an important factor, but they astoundingly aren't mentioned once). I was just struck by the conclusions they draw from the Iraqi experience for Afghanistan. They write:

The recent American experience in Iraq illustrates how US forces and diplomacy helped correct the behaviors of a sometimes malign government in ways that helped neutralize insurgent groups. In early 2007, many Iraqi leaders were using instruments of state to support sectarian death squads. The dysfunctional government could not secure the population, pass laws or provide services to its people. The implementation of a fully resourced counterinsurgency strategy - enabled by the deployment of nearly six additional US combat brigades - transformed Iraq's government within 18 months. Opponents of the surge argued that Iraqis would "step up" politically and militarily only if they knew that US forces would leave. Instead, before committing to the fight, political leaders and populations throughout Iraq assessed whether US forces would stay long enough to secure them. Iraqis stepped up precisely because of the absence of conditionality and time limits on US force levels...

This catechism of the Iraq surge rests on at least two telling omissions.

First, it ignores the Awakenings. Completely absent from their narrative is the Sahwa -- the Sunni turn against the Islamic State of Iraq (AQI) which began half a year before the surge was even conceptualized. While it was helped along by some enterprising American military officers, the Sunni turn had much more to do with local power-struggles, intra-insurgency factionalism, and the crushing reality of the sectarian cleansing of Baghdad. The "surge" probably helped to consolidate those gains, and to spread the initiative through the urban areas, but the turn simply can't be explained through American willpower or doctrine alone. To know whether a surge in Afghanistan might have similar effects, you would need to know not just what the U.S. is doing but whether those underlying developments among Afghans are comparable (short version: they aren't).

Second, the narrative misreads Iraqi politics. In their telling, the Americans committed to staying for the long run -- no timeline, no conditions -- thus reassuring Iraqis that they could afford to risk turning against the insurgents. That may have been a factor at certain points on the ground, but it's only part of the story. They leave out the seemingly significant fact that throughout much of that period of unconditional commitment, the Iraqis failed to make significant progress towards political accommodation.

But by the summer of 2008, Iraqis clearly saw that the American presence would more likely than not soon decline, with the likely victory of Barack Obama and his pledge to withdraw from Iraq. And they responded to this increasing likelihood of U.S. withdrawal along a reasonable timeline by, yes, stepping up. It was in this period of an impending American election and likely change of strategy that Prime Minister Maliki took a series of gambles aimed at consolidating state authority (i.e. the Basra military campaign), and engaged in hard bargaining over the SOFA / SFA which forced the Bush administration to accept an unconditional timeline for withdrawal (which it did, very much to the Bush administration's credit in those closing days). This doesn't mean that the U.S. should commit to withdrawal from Afghanistan right now -- I don't think the situations are exactly comparable -- but it does cast doubt on the idea that leverage comes from unlimited and unconditional military commitment.

It's tiresome to have to go back and rehash these old arguments. But it's hard to avoid when the supposed lessons of Iraq are then inappropriately transposed onto Afghanistan. The debate over Afghan policy continues to suffer from General McChrystal's curious decision to appoint a group of surgenik think tankers such as the Kagans, with virtually no Afghan expertise, to ghost-write a "strategy review" which has shaped so much of the subsequent public debate. But I've been pleasantly surprised by the lengthy, critical evaluation in which the Obama administration has engaged -- with many of the underlying assumptions challenged and debated, as they should be.

I've never agreed with the widely aired opinion that Obama should just make a decision, whether it's right or wrong (as long as that decision is to escalate, presumably). I'm impressed that his team seems to have given serious thought to the relationship between al-Qaeda and the Taliban, the legitimacy of the Karzai government, the lessons of the Soviet experience, how to pre-empt future demands for more troops, how to maximize leverage, and how to craft an exit strategy. It doesn't mean that they'll get the policy right -- or even that there's a right policy to find. I predicted weeks ago that the result of the strategy review would be a decision to add 30,000 or so troops, it wouldn't work, hawkish critics would give Obama no credit for the decision, and next year we could have the whole argument over again. Here's to hoping that Obama's speech next week proves me wrong.

Hope Deflated Obama as the Manchurian Candidate By DAVE LINDORFF

Hope Deflated
Obama as the Manchurian Candidate


A "Necessary War" -- for a Gas Pipeline It's Obama's War Now By GARY LEUPP

A "Necessary War" -- for a Gas Pipeline
It's Obama's War Now


There are now at present some 68,000 U.S. troops and 42,000 allied forces occupying Afghanistan, in league with the Northern Alliance warlords and the corrupt and feeble Karzai regime in Kabul. President Obama clearly wishes to increase the figure and will announce before an audience of West Point cadets Tuesday that he will add over 30,000 more while pushing the Europeans to add 10,000. This will bring the total number of occupation forces to around the level of the Soviet deployment at its peak in the 1980s.

The Soviets were trying to protect the secular government in Afghanistan and to discourage Islamic fundamentalism, a potential threat to the neighboring Soviet Central Asian republics such as Uzbekistan. What is Obama trying to do?

Because make no mistake about it, this is Barack Obama’s war now. With this announcement he will have personally increased the force in Afghanistan by over 50,000 troops in response to appeals from his generals.

Obama’s mantra about the conflict in Afghanistan is that it is a “war of necessity.” But this is really just a version of the neocon “War on Terror” trope, which is to say that it implies that it is the natural, reasonable retaliatory response to the 9-11 attacks. (They started it, after all, so we have to take the war to them.)

But neocon strategy has always required the simplistic conflation of disparate phenomena, and the exploitation of public ignorance and fear, in the execution of policy. Who are they, after all? The invasion of Iraq required the Big Lie that Saddam Hussein had something to do with 9-11. The earlier invasion of Afghanistan required the clever sleight-of-hand by which the mainly Saudi Arab but international al-Qaeda was equated with the purely Afghan Taliban. “We don’t distinguish between terrorists and the governments that support them,” Bush declared.

This was almost a boast that the U.S. would be boldly ignorant as a matter of public policy, and a warning to the empirical rationalists of the world that the White House was in the grip of truly simplistic minds and would indeed shamelessly exploit popular Islamophobia as they pleased even as they made elaborate public gestures in support of religious tolerance. (The calculated message was: Be scared, world, because we’ve got cowboys in power, and hell, we can get kinda crazy when we’re pissed!)

The fact is, there was and is a difference between al-Qaeda, an international jihadist organization that wants to reestablish a global Caliphate and confront the U.S., and the Taliban, which wanted to stabilize Afghanistan under a harsh interpretation of the Sharia but maintain a working relationship with the U.S. And now, eight years after being toppled, the Taliban are back with a vengeance, demonstrating that they have a real social base. Moreover a Pakistani Taliban has emerged across the border as a direct consequence of the U.S. invasion.

Any number of intelligence reports have pointed out the obvious: more troops just breed more “insurgency.”

Obama’s national security advisor, Gen. James Jones, has stated clearly, “The Al Qaeda presence [in Afghanistan] is very diminished. The maximum estimate is less than 100 operating in the country, no bases, no ability to launch attacks on either us or our allies.” If there had been a “necessity” to destroy al-Qaeda in Afghanistan that matter has been taken care of. What does Obama think necessary to achieve now?

I imagine he will argue that the Taliban must not be allowed to return to power. But doesn’t that mean implicitly acknowledging that they have genuine roots in Afghan, particularly Pashtun society? The best military estimates put the number of Taliban militants at no more than 25,000, with fully-armed fighters around 3,000. There are about 100,000 soldiers in the Afghan National Army (ANA) in addition to all the foreign occupying troops. ANA forces are often described as of “poor quality,” meaning they are illiterate, and mainly attracted by the money. But the Talibs are also generally illiterate and many of them fight largely for the pay as well. Why is it whole provinces like Nuristan have come under Taliban control despite all the counterinsurgency manpower?

Why in attempting to “secure” Helmand province in an anti-Taliban offensive over the summer did the U.S. forces discover that their ANA allies included almost no Pashtuns but were disproportionately Tajiks? Why were U.S. forces unable to dislodge the Taliban from Marjeh, a city of about 50,000 people and hub of the opium trade?

The problem isn’t too few forces. Were that the case the increasing number of forces over the last several years would have produced a better, not worse, security situation. The problem is the premise that imperialists can re-colonize a country under the pretense of counter-terrorism, counter-insurgency or liberation in the face of mass resistance.

But why is Obama so intent on staying the course in Afghanistan? What is so important about Afghan policy that the Man of Change can’t change it, even when 57 per cent of the people of the U.S. say they want out?

He will say on Tuesday evening, as eloquently as he and his speechmakers can manage the task, that we simply cannot afford to let Islamist extremists back into power so that they might harbor terrorists who’ll attack the United States.

But recall there was a time when the U.S. State Department was hell-bent to drive a secular government out of Afghanistan---one that wanted to educate girls and establish local clinics and curb the power of the tribal chiefs and mullahs---and determined to assist the most profoundly reactionary forces in Afghanistan with Gulbuddin Hekmatyar at their head in establishing an alternative Islamist regime. Jimmy Carter’s national security advisor Zbigniew Brzezinski thought the pro-Soviet Saur Revolution in 1978, in which left-wing Afghan Army officers staged a coup and the Democratic People’s Party seized power, producing a backlash from the mullahs and tribal chiefs, was a golden Cold War opportunity.

Even before Soviet forces crossed the border in December 1979, the CIA was organizing Afghan and international forces to challenge the leftish government and Brzezinski was urging the fighters to view their struggle as a jihad or Holy War. This continued of course through the eight bloody years of the Reagan administration. The jihadis won, Washington’s friends established a regime in 1993, immediately fell out among themselves plunging the country into Tajik-Pashtun civil war involving the bombing of Kabul (hitherto spared in the fighting). Washington politely distanced itself, having lost interest with the collapse of the Soviet Union, leaving ally Pakistan to deal with the mess.

Pakistan opted to support the Taliban, a force which against the motley backdrop of opium-dealing, boy-raping warlords seemed attractive by virtue of its reputation for moral probity if nothing else. Former Pakistani Prime Minister Benazir Bhutto later explained Islamabad needed to embrace the Taliban to maintain the trade lines through Central Asia. The U.S. kept its distance from the harshly fundamentalist group, which took power in 1996, withholding diplomatic recognition. But it was historically responsible for its inception and the descent of Afghanistan into the disaster of medieval reaction that began with the stoning of adulterous women in soccer stadiums and culminated with the blasting of the Buddhas of Bamiyan in 2001.

The sins of U.S. imperialism in Afghanistan are just staggering. Imagine what might have happened had the U.S. just stayed out of Afghan affairs from the late 1970s and allowed that experiment in secular. reformist government in a highly conservative Muslim society to take its course without billions in arms to precisely the sort of fighters who are being vilified as “Islamic extremists” and “terrorists” today. There may have never been an international CIA-coordinated mujahadeen movement, no young Osama bin Laden persuaded to suspend his studies to head up Arab holy warriors in coordination with the CIA, no total collapse of Afghan society, no “blowback.” Unfortunately people in this country are generally clueless about the recent history of Southwest Asia and the role of U.S. administrations in producing the very problems about which they complain. (I don’t include Obama among these; he knows what he’s doing. Hence total moral culpability.)

The Taliban never invited Osama bin Laden to Afghanistan; he was there when they took power, guest of a warlord who had been hostile to themselves. He had flown in from Sudan, booted out by the government there following a demand from the U.S. The Taliban extended to him the hospitality required by the pashtunwali code, in appreciation for his services in anti-Soviet struggle in the 1980s. But as Alexander Cockburn and Jeffrey St. Clair have documented on this site, from 2000 the Taliban initiated talks in Frankfurt with the EU, facilitated by the Afghan-American businessman Kabir Mohabbat, to transfer bin Laden out of the country. Mohabbat was employed from November by the National Security Council to negotiate with the Taliban about bin Laden’s fate.

The Taliban, who had confined bin Laden and his key aides to his compound at Daronta, 30 miles from Kabul, invited the U.S. to send one of two Cruise missiles as the easiest way to solve the problem but the Clinton administration delayed in taking action. The Bush administration also dispatched Mohabbat repeatedly to Kabul---three times in 2001---to discuss bin Laden. In other words, at minimum, on can say that the State Department knew, and we should know, and Obama should know, the Taliban and al-Qaeda are two very different things.

So if the president argues that we need to continue the fight with more troops to keep the Taliban down, to prevent Afghanistan from again becoming a center of international terrorism, he’s going to be speaking so much eloquent nonsense.

He will probably not address the recent comment by the Prime Minister of Pakistan, the country after Afghanistan itself most victimized by U.S. aggression in the region. Speaking in English Yousef Raza Gilani told reporters:

“Our only concern is that when US sends more troops to Afghanistan’s Helmand area, if there will be influx of militants they will be moving to Balochistan. This is the concern that we already discussed with the US administration, that influx of militants towards Balochistan should be taken care of otherwise that can destabilise Balochistan.

“A stable Afghanistan is in Pakistan’s interest - but at the same time we also do not want our country to be destabilized. We have asked US administration to consult us in case of any paradigm shift in the policy... so that we can formulate our strategy accordingly.”

Balochistan is over 40 per cent of the land area of his country. It is beset with ethnic unrest; some of the majority Balochis resent the fact that they receive few profits from the exploitation of the uranium and copper of their region, and are neglected by Islamabad. There is an armed insurgency led by members of the Bugti tribe. This has some support from educated Pakistanis critical of “Pashtun chauvinism” who accuse the state of trying to keep Balochis backward. (While listed as “terrorist” by the State Department this movement is a separate phenomenon from the Taliban.)

State Department officials have dismissed Pakistani concerns. Isn’t that typical though? They have been dismissing them since the initial invasion in 2001, and as Pakistan becomes more and more destabilized, the U.S. merely repeats its demands for more military cooperation, continues its drone strikes across the border, and pursues its goals in the region in what Islamabad perceives as disregard for its interests. Pakistan has its own problems that policy-makers in the U.S. State Department seem either not to understand or to willfully ignore as it exacerbates them.

And President Obama will not mention that according to the Asia Foundation’s 2009 poll in Afghanistan 56 per cent of respondents say they have some sympathy for the motivations of the armed groups, including the Taliban and Hekmatyar’s outfit, opposing occupation. He won’t note how the PR strategy of depicting this effort as a “liberation” symbolized by the removal of the burqa has been long since quietly shelved, since the burqa is actually back with a vengeance and the warlords upon whom the U.S. must rely to maintain order have always laughed at U.S. proposals for social reform. They know that’s not what the troops are there for.

The U.S. intervened indirectly in Afghanistan in the ‘80s, with no thought for the welfare of the Afghan people and with tragic consequences for them, in order to fight the Soviets and the imagined menace of “communism.” To do that it nurtured a ferocious Islamist extremist trend. There’s never been any acknowledgement of error or apology and don’t expect one. It all made sense at the time from a U.S. imperialist point of view.

What makes sense now, from a U.S. imperialist point of view? Just look at the map. Realize that Afghanistan has no products the U.S. corporate world wants or needs. During the Cold War, Iran, Iraq, Turkey sometimes played crucial roles in U.S. geostrategic thinking but Afghanistan was practically conceded to the Soviet camp even before 1978. It only acquired significance as a Cold War battleground when U.S. strategists realized (in Brzezinski’s words) that they could “bleed the Soviets…the way they did us in Vietnam.” More recently, it has acquired significance as U.S. energy corporations do global battle with the Russians over access to Caspian Sea natural gas.

At present Europe is dependent on the supply of gas via Russia from the Caspian Sea, principally from Turkmenistan. This gives Moscow enormous political leverage when it comes to such matters as NATO’s decision to admit Georgia or Ukraine. U.S. policy has been to build pipelines from the Caspian avoiding Russia or Iran. Construction of the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline which will pump the gas straight to the Indian Ocean and on to world markets has been long delayed due to the fighting in Afghanistan.

The pipeline will run through Helmand province, then into Pakistan’s Balochistan. If it all works out, this will represent a highly significant improvement in the geostrategic position of the U.S. in the region, including in the event of another world war (such as might be provoked by a U.S. attack on Iran’s nuclear facilities and unpredictable repercussions of such action).

But Obama will not be talking about the history of U.S. intervention in Afghanistan, or the feelings of the Afghan people about occupation, or the reactions of the Pakistanis to the unmitigated disaster on their doorstep, or the real geopolitical reasons for U.S. interest in this backward impoverished Central Asian nation that has been “the graveyard of empires” since the time of Alexander the Great.

He will say it’s still a necessary war to defend Americans from terrorist attack. We should recall, once again, the observation of Nazi war criminal Hermann Goering during the Nuremburg trial that while “naturally the common people don’t want war … the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country.”

We should respond: No it’s not necessary! in the streets that day and those following---until we force Obama to end what are now unmistakably his criminal imperialist wars.

Gary Leupp is Professor of History at Tufts University, and Adjunct Professor of Religion. He is the author of Servants, Shophands and Laborers in in the Cities of Tokugawa Japan; Male Colors: The Construction of Homosexuality in Tokugawa Japan; and Interracial Intimacy in Japan: Western Men and Japanese Women, 1543-1900. He is also a contributor to CounterPunch's merciless chronicle of the wars on Iraq, Afghanistan and Yugoslavia, Imperial Crusades. He can be reached at:

Dubai: Government Will Not Stand Behind Dubai World Debt

Dubai: Government Will Not Stand Behind Dubai World Debt

from Calculated Risk by CalculatedRisk
From The Times: Investors face huge losses as Dubai abandons debt company

The Government of Dubai said today that it will not stand behind its wholly-owned subsidiary Dubai World, prompting fears that the company’s creditors could lose billions of dollars.

Today's comment, from Abdulrahman al-Saleh, the director general of Dubai’s Department of Finance, effectively confirms that country does not have enough money to repay Dubai World’s $60 billion of liabilities. ...

From the Financial Times: Dubai official confirms no guarantee

From MarketWatch: Dubai World debt not backed by governmentfficial

The Times: United Arab Emirates takes hard line on Dubai

The Times: United Arab Emirates takes hard line on Dubai
from Calculated Risk by CalculatedRisk
For some reason The Times has been removed from news stands in Dubai ...

From The Times: Central Bank of the United Arab Emirates takes hard line as Dubai counts soaring cost

... The rulers of Abu Dhabi are expected to make a statement before the markets open on whether they will bail out Dubai and which businesses and projects will be rescued.
Senior analysts in the region expect that projects regarded as folly will not be backed but operations and investments with a strong business model will be.
Today will mark the first key test of whether Dubai will default on its estimated $88 billion debt pile, when interest payments of about $138 million on a $2 billion bond issue by Jebel Ali Free Zone Authority, a unit of Dubai World, become due.

I think many people consider most of Dubai "folly".

The Mathematics of Global Warming By Peter Landesman

The Mathematics of Global Warming
By Peter Landesman

Commentary from Agence Global - November 30, 2009

The Dubai Crisis by Patrick Seale
The world has been far too quick to suggest that the glossy city-state of Dubai is about to go bankrupt. This is far too gloomy a prediction. Dubai will undoubtedly weather the storm.

From Biblical to Poker Principles by Rami G. Khouri
We should not respond to Netanyahu’s proposals with only another round of passive Arab rejectionism. We need to get out of the ambiguous biblical epics and move into the definitive world of poker.

Turkey, the Kurds and Israel by Patrick Seale
Turkey is thinking creatively and actively about how to resolve its internal problems and improve its external relations, while Israel seems stuck in a sterile and outdated mindset.

Monarchs, Mosques and Markets by Rami G. Khouri
The triad of monarchy, market and mosque is not new. It represents the Arab order from the ancient period before Byzantium and also from the early and middle Islamic eras. What is new is the emerging centrality of the Arab citizen.

Is Obama Failing in Afghanistan, the Middle East, and Iran? by Patrick Seale
Obama’s cautious, conciliatory approach has all too often seemed like dithering -- even at times like a failure of nerve -- especially in Afghanistan, the Middle East, and Iran.

Hope for Palestinian-Lebanese Relations by Rami G. Khouri
For the first time in many decades, Palestinians and Lebanese seem to agree on the critical areas that matter to both of them. The new Lebanese government would do well to put high on its agenda the issue of Palestinian-Lebanese relations.

We're All Michiganders Now

We're All Michiganders Now
Reihan Salam, Forbes, November 30, 2009
How to save the United States from becoming a coast-to-coast Rust Belt.

Fed 'reform' we don't want

Fed 'reform' we don't want
Robert J. Samuelson, Washington Post, November 30, 2009
Bipartisan threats against the institution that saved America from depression.



"The only ones who are spending the money and time translating Jihad literature are the Western intelligence services," wrote Islamic radical Anwar al-Awlaki, "and too bad, they would not be willing to share it with you." ("Born in U.S., a Radical Cleric Inspires Terror" by Scott Shane, New York Times, November 19).

In fact, a growing number of websites offer jihadist literature and sermons in English. But it is true that U.S. intelligence maintains a prolific translation activity focused on Islamic extremist literature, and that most of the resulting translations are not intended for public distribution.

The DNI Open Source Center recently translated an Indonesian anthology of four short stories about aspiring young jihadists entitled "Wind From Paradise" (pdf). The stories describe how their protagonists came to take part in jihadist campaigns in Afghanistan, Thailand, and Chechnya, and the ensuing "martyrdom" that they or their fellows found there.

It is not a particularly rewarding collection, on any level-- esthetic, theological or political. But the narrators and their stories have several characteristic features that may be worth pointing out.

Remarkably, their primary conflicts seem to be those of adolescence. Their Islam is not concerned with the divine will as much as it is with themselves and their own unruly passions. ("I drowned all my feelings by reading the Koran slowly," one says. "So a feeling of happiness and relief runs through my whole body," writes another. "I also have the feeling that the guilt that has plagued me all this time has now been uprooted.")

But above all, the stories portray jihad as an appropriate, even noble response to external oppression by the non-Muslim world. ("The mujahidin had to fight against the Christian United States, which wanted to control and dominate Afghanistan." The Western enemy mercilessly abuses prisoners, "but no matter how cruelly they interrogated and tortured him, [he] kept quiet.")

The logic of jihad is predicated on the victimization of Muslims by infidel forces, the stories repeatedly insist. ("So now he was defending his Muslim brothers who had been so cruelly oppressed.") The oppression of Muslims by other Muslims is beyond the narrators' ken. So is the possibility of confronting oppression by non-violent political means, except perhaps through the propagation of stories like these.

The translated stories have not been approved for public release. Rather improbably, their "authorized use is for national security purposes of the United States Government only." But a copy was obtained by Secrecy News. See "Indonesia: Translation of Jihadist Book 'Wind From Paradise'," Open Source Center, 1 March 2009.

An Empire at Risk

An Empire at Risk

We won the cold war and weathered 9/11. But now economic weakness is endangering our global power.

by Niall Ferguson

We must get ready for a weak-dollar world By Jeffrey Garten

We must get ready for a weak-dollar world

By Jeffrey Garten

Financial Times: November 30 2009

The two most significant structural consequences of the recent financial debacle are the massive deficits and debts of the US and the shift of economic power from west to east. There is only one effective way for governments to address the combined impact of both: press for a sea change in currency relationships, especially a permanently and greatly weakened dollar.

The roots of this situation are well known. The American budget deficit of this past fiscal year reached 10 per cent of gross domestic product, the largest since the aftermath of the second world war. Meanwhile, the net external debt of the US nearly tripled last year to $3,500bn and it is projected to increase by nearly $1,000bn every year for the next decade. All this underestimates the problems of a country where unfunded liabilities for baby boomer entitlements are in the stratosphere, infrastructure deterioration is scandalous and many large states are out of money. To close the gaps, taxes would have to be raised to sky-high levels and spending brutally slashed. It would take a miracle if America’s political system – one rife with vicious partisanship and riddled with well-financed special interests – could do either, let alone both.

Washington will therefore have little choice but to take the time-honoured course for big-time debtors: print more dollars, devalue the currency and service debt in ever cheaper greenbacks. In other words, the US will have to camouflage a slow-motion default because politically it is the easiest way out.

There is another factor pushing America towards a weaker dollar: lacking the domestic consumer demand that came with the unrestrained credit of the past 15 years, the US is desperate to find buyers abroad, especially in emerging markets where the middle class is growing and infrastructure requirements are soaring. A cheaper dollar could make US products and services more competitive.

Meanwhile, in the coming decade, the big emerging markets of Asia will be growing twice as fast as the US and three times faster than the European Union. By 2020, China, India, Indonesia, Korea and Vietnam together could generate more wealth than the the US, Japan and the EU combined. China, India, and South Korea have all been amassing dollar reserves and will be looking to reduce them. While imports into leading industrial countries have slowed, intra-Asian trade is booming and need not be financed only in dollars. The bottom line: Asian currencies are likely to strengthen against the dollar.

A much cheaper dollar is a sad development for the US, even though it is inevitable. It will make the US poorer, since Americans will pay higher prices for everything they buy from abroad – clothes, computers, cars, toys, food, you name it. It will make the US military presence abroad more expensive, since the cost of contractors and local suppliers will escalate in dollar terms. It will slow imports, removing competition that is essential to hold down the general price level in America, thereby making inflation more likely. It will send the wrong price signals for a country that prides itself on creating sophisticated, highly valuable products, for a low dollar will encourage producers to compete on price more than quality. It will diminish the political influence and prestige that the US has had while the dollar has been king.

Moreover, the US dollar has been at the heart of the global economy for well over half a century. Its demise, if not smooth and gradual – hardly certain – could lead to an era of competitive devaluations and other mercantilist trade policies.

An alternative to a global monetary system that has been centred on the dollar is now imperative. That means a multi-currency framework including the euro, the yen, the renminbi and significant issuance of an IMF-backed currency called “special drawing rights”. This regime will take time to devise, but it should start now.

That is why Tim Geithner, US Treasury secretary, should invite his colleagues in the UK, eurozone, Japan and China to meet secretly, perhaps between Christmas and New Year, to start discussions out of the public spotlight (to avoid spooking markets). The big question: what kind of monetary system will best serve the world given deep-seated changes in the balance of economic power, and what process can be followed to develop it?

Since the late 1980s I have believed that a strong dollar was in the US and world interest. Now, however, the context has fundamentally changed. The issue is no longer whether the dollar is in long-term decline but which of two options will be taken. Should Washington and other capitals calmly and deliberately manage the transition to a new era, or, by default, should they let the market do it, with the risk of massive financial disturbances. Today, governments have a choice. Soon they may not.

The writer is the Juan Trippe professor of international trade and finance at theYale School of Management
Copyright The Financial Times Limited 2009.

The Web Discloses Inconvenient Climate Truths The world cannot trust scientists who abuse their power.

The Web Discloses Inconvenient Climate Truths
The world cannot trust scientists who abuse their power.

For anyone who doubts the power of the Internet to shine light on darkness, the news of the month is how digital technology helped uncover a secretive group of scientists who suppressed data, froze others out of the debate, and flouted freedom-of-information laws. Their behavior was brought to light when more than 1,000 emails,and some 3,500 additional files were published online, many of which boasted about how they suppressed hard questions about their data.

This unseemly business reveals another flaw. Why are scholars who review papers allowed to remain anonymous? Reforming scientists and lawmakers might put the question more concretely: How many of the anonymous reviewers who spiked skeptical scientific papers over the years are the people who wrote these emails detailing how they abused peer review to block contrary evidence?

Science was one of the first disciplines to insist on transparency in order to foster competition in data and ideas. In the case of global warming, transparency is better late than never, as policy makers now have the chance to review the facts. Facing up to high-profile flaws is hard for any profession, but honest scientists will cheer how in our digital era eventually the truth will out, and will accept that no scientific hypothesis can be viewed as sacred or can be proved in secret.

Why Kennedy Said No to Vietnam Combat Troops William Pfaff

Why Kennedy Said No to Vietnam Combat Troops
William Pfaff

Paris, November 24, 2009 – The pressure that has been on Barack Obama
with respect to reinforcement of the war in Afghanistan resembles
that placed on John F. Kennedy to send American combat troops to
Vietnam during the eighteen months before his assassination.

Kennedy made an early decision which displeased most of his own staff
as well as much of the Washington press and political establishment.
It was not to send combat forces. He did not waver. The controversy
continued, but he was able to contain it by leaving the matter open
to debate while doing the strict minimum necessary to appease his
aides, nearly all of whom were for sending troops.

He counted on the fact that one of the most effective ways to take a
decision is to postpone it until it no longer is relevant. This is
what Barack Obama has been able to do until now, while the evolution
of political events in Afghanistan and Pakistan has steadily reduced
the public pressure on him brought by the Pentagon and a revived and
militarized American right.

Next Tuesday, when the President speaks to the country, one will
learn his response to the demand for dramatic escalation that has
been issued by Generals David Patraeus and Stanley McCrystal, the
Pentagon adviser David Kilcullen, and certain rejuvenated Neo-
conservatives and others from the last administration determined to
pursue the “long war” for what they see as permanent American global
politico-military domination.

There is a lesson in the past. Before leaving office, President
Dwight Eisenhower warned John F. Kennedy of the pitfalls before him
in the entire area of Southeast Asia. Eisenhower recalled that in
1954, when France asked for U.S. intervention in support of the
French troops besieged at Dienbienphu, he had refused the request
because he could not accept without congressional approval and an
indication of British support. At one meeting with his staff he had
said that “without allies and associates,” military intervention
would be the act of “an adventurer, like Genghis Kahn.”

He also said that he had been elected in 1952 to end one war in Asia,
in Korea, which might have become a total war with China, at a time
when the United States had both allies and a UN mandate. He “was in
no mood to provoke another one in Indochina….”

The new President Kennedy sought the advice of another eminent
American soldier. He invited Douglas MacArthur to Washington.
According to Robert Kennedy’s account, MacArthur said that it would
“be foolish to fight on the Asiatic continent,” and that “the
future... should be determined at the diplomatic table.” JFK’s aide,
Kenneth O’Donnell, has added that MacArthur said to Kennedy that
“there was no end to Asia and even if we poured a million American
infantry soldiers into that continent, we would still find ourselves
outnumbered on every side.”

General Maxwell Taylor, Kennedy’s military advisor, said that
MacArthur “made a hell of an impression on the president,” adding
that when presented with further proposals from the Pentagon for
military intervention, Kennedy would say, “well, now, you gentlemen,
you go back and convince General MacArthur, and I’ll be convinced.”
Taylor said, “none of us would undertook the task.”

President Kennedy remained adamant. He was determined not to send
American combat troops to Vietnam. In his first formal meeting on
Southeast Asia, in January 1961, he had asked some of the same
questions that today have been asked about reinforcement of the War
in “AfPak.” If the situation is as serious as it is said to be,
Kennedy asked, what good was a policy of training troops and national
police who would not be available for many months?

McGeorge Bundy noted in 1961 that President Kennedy asked another
question that remains pertinent concerning Afghanistan and Pakistan
today: “whether the situation was not basically one of politics and

The conclusion of Gordon M. Goldstein’s recent book (“Lessons in
Disaster”), which makes use of McGeorge Bundy’s contemporary papers
and his drafts for the collaborative memoir he and Goldstein had
begun before Bundy’s death in 1996, is that Kennedy’s determination
at the time of his assassination was to withdraw American advisors
from Vietnam.

Bundy had favored intervention. He was one of the winners of the
argument – or so it seemed – when he was one of those most
influential in convincing the new President Lyndon Johnson to go to
war in 1964, a war that would continue for another nine years.

Among the papers from that period which Gordon Goldstein has used in
his book is a memo from Bundy to Lyndon Johnson on May 4 1967. This
said to the president, “The fact that South Vietnam has not been
lost, and is not going to be lost, is a fact of truly massive
importance in the history of Asia, the Pacific and the United States.”

Looking back at the memo, nearly 30 years after he had written it in
triumph, he noted on it, for Goldstein to read and quote, “McGB all wrong”.

What was not wrong was that the decision Bundy had urged Johnson to
take was indeed a decision of massive importance, as will be the
decision Barack Obama announces next week.

© Copyright 2009 by Tribune Media Services International. All Rights

Emerging Market Focus - Dubai: after the plunge

Emerging Market Focus
November 27, 2009

Dubai: after the plunge


> Concerns about Dubai's potentially crippling default on enormous debts to global creditors have rattled investor confidence across the oil-exporting Gulf region.

> Dubai's reputation has been impacted in a major way and it will be difficult for the emirate to recover from the negative backlash in the medium to long term.

> However, we believe that Abu Dhabi will come to the rescue.. ..but like all rescues it would have a price. In that case it may well be first of all a political price.

> Abu Dhabi is bound to suffer from the contagion from Dubai for the short term, but we expect the UAE capital will be in a position to overcome any risk profile pressure.

> Credit quality deterioration simply is not an issue in Saudi Arabia, Abu Dhabi and Qatar and we expect that in the short term, investors will calm down and begin to differentiate between “good” and “bad” bets in the Gulf region.

Assessing the regional fallout of Dubai's credit disaster

Concerns about Dubai's potentially crippling default on enormous debts to global creditors have rattled investor confidence across the oil-exporting Gulf region, prompting corporate issuers in the region to postpone or cancel bond issuances (e.g. Gulf Investment Bank) in the wake of the news.

We estimate Dubai's debt upward of $80 billion. At the heart of the issue is whether state-run Dubai World, which holds more than $50 billion in liabilities, will be able to pay back its creditors. The conglomerate that runs flagship Dubai companies such as DP World, asked banks this week for a “standstill” agreement as it negotiates to extend maturities of debt, including the $3.52 billion in Islamic bonds due next month from Nakheel, the famed palm tree island developer. The bond at the centre of Dubai's restructuring efforts, the December 2009 Islamic bond from Nakheel, has lost a third of its value since the announcement, the price having collapsed to 72 points from 111 beforehand.

Dubai's announcement, which happened on Wednesday, sent shockwaves through European equity markets on fears that many banks could face massive writedowns on Dubai debt. Currency and bond markets across the globe were also exposed to developments that have become the source of the biggest destruction of confidence in Dubai's history. To make matters more interesting the ports operator, DP World announced that it will be excluded from the debt standstill and restructuring of Dubai World and its subsidiaries. The company, the world's fourth-largest ports operator, is 77% owned by Dubai World. DP World is considered the best asset within Dubai World. We think this move is clearly to differentiate the good assets of Dubai from the bad ones, and DP World is a good asset.

Credit default swaps across the region rose, including in Saudi Arabia, Qatar and Abu Dhabi which, unlike Dubai, hold rich hydrocarbon reserves. Dubai's five-year CDS spreads are at three-month highs and there is further upside risk. Dubai, with sparse oil reserves, built its fortunes on real estate and financial services in recent years, borrowing heavily to finance megaprojects including three man-made islands shaped as palm fronds.

Regional bond sales have been impacted as spreads have widened. Gulf Investment Bank, owned by the Saudi Arabian Monetary Agency (SAMA) and the Public Investment Fund of Saudi Arabia, have decided to postpone the dollar bond sale. We are informed that other corporates in the region were preparing to tap the international bond market. We think that there will be a temporary lull but renewed activity will begin in the first quarter of 2010 as risk is readjusted for the entire region.

Credit quality deterioration simply is not an issue in Saudi Arabia, Abu Dhabi and Qatar and we expect that in the short term, investors will calm down and begin to differentiate between “good” and “bad” bets in the Gulf region. The Dubai debt debacle comes shortly after Qatar, the world's top exporter of liquefied natural gas, sold $7 billion in bonds this month, subscribed mainly by investors in the United States and the United Kingdom. Orders for the bond issue, described as the largest by an emerging-market government, topped $28 billion – underpinning the genuine faith many international investors have in the region.

We think that in the future, global investors will need to differentiate between those Gulf economies that are debt-burdened and those whose leverage levels are incredibly low by global standards. Saudi Arabia, the world's biggest oil exporter, has among the lowest levels of public debt in the G20, with domestic debt levels at 13.4% of GDP last year, compared with 81% in India and 50% in the United States. It also holds enormous foreign assets of SR1.46 trillion at the end of October, most of which is invested in low-risk, liquid investments.

Differentiating regional risk profiles

In view of these nuances, the region is often wrongly sold to the world as uniform when in fact the six states comprising the Gulf Cooperation Council (GCC) followed very different development models. Even within the UAE, Dubai and capital Abu Dhabi – holder of the majority of the state's crude oil reserves – had followed two extremely different development paths this decade. Dubai built its economy using high leverage, with revenue streams that were tenuous. Dubai's volatile real estate and services sectors did well during the boom years but fell victim to the global financial crisis, which triggered a slump in asset values, especially real estate. It should not be ignored that Dubai was above all an interesting real estate play which benefited the early entrants but turned out to be a bubble that burst. This approach differs heavily from Abu Dhabi, which was bringing in hundreds of billions of dollars in surpluses during this decade's oil boom, but investing it in a more calculated, moderate pace that has mainly avoided the creation of asset bubbles. Despite the real estate development story in Abu Dhabi the authorities did not permit the development of a bubble. Dubai is now in a bind as its debt is more than nine time its 2008 revenues. That pattern is unsustainable.

Once the dust settles, we believe that there will be a flight to quality, with foreign funds favouring Saudi Arabia, Qatar and Abu Dhabi. Abu Dhabi is bound to suffer from the contagion from Dubai for the short term, but we expect the UAE capital will be in a position to overcome any risk profile pressure. Abu Dhabi controls 90% of the UAE's oil reserves which are the fourth largest in the world. Despite the global financial crisis, the Abu Dhabi Investment Fund is one of the world's largest sovereign wealth funds. Clearly, we think Abu Dhabi's investment program and low key leadership offers reasonable reassurances about the country's direction to avoid far fewer excesses.

The fate and handling of Dubai's sovereign risk is impacting the way international markets perceive GCC sovereign risk. The Saad-Algosaibi debt default saga in Saudi Arabia, while shaking the credibility of regional borrowers, did not bring lending to Saudi entities in general to a halt. Rather, the situation forced creditors to reassess the risks involved with lending to different entities and categorise them accordingly. Corporates that are showing signs of transparency will begin to reap the benefits of finance from within the region and outside. However, state entities will continue to receive the bulk of trust from international lenders. In a similar way, Dubai's debt problems will compel creditors to re-categorize sovereign risk. Dubai entities will have to work hard to bring back confidence in the state-enterprise model of Dubai which was based on high leverage and constraint income.

If there is anything we have learned so far from the global financial crisis is that leverage and debt without a strong revenue base cannot sustain an economy. We find Saudi Arabia to be leading the pack in terms of sovereign strength despite the corporate saga that lingers. Moreover, Saudi Arabia and Abu Dhabi never witnessed the real estate excesses that have punished Dubai in the past year.

There was never a real estate bubble in Saudi Arabia and if anything the property market is severely undersupplied. The government has made sure to pay down government debt during the boom years and budgetary spending has been counter-cyclical – careful during periods of high oil prices and aggressive during cycles of depressed oil prices.

We view Qatar as being equally strong as a sovereign, with a solid revenue base to back up its expansion. The excesses witnessed in the property sector were far more contained and used far less leverage, with most, if not all was locally generated. Hence we see very little risk that Qatar can generate going forward.

After the dust settles: what's next for Dubai

Dubai's reputation has been impacted in a major way and it will be difficult for the emirate to recover from the negative backlash in the medium to long term. The lack of transparency surrounding how the emirate plans to pay back debts reaching maturity has compounded investors' perception of risk. Until the Dubai World announcement, investors had expected Abu Dhabi would provide Dubai with adequate funds to pay back its creditors. Just an hour before the debt restructuring news, Dubai announced it had sold $5 billion in bonds to two banks in Abu Dhabi in which the government holds substantial stakes. But the government quickly clarified these funds had nothing to do with the Dubai World debt restructuring.

Earlier this year, the UAE central bank, based in the UAE capital, subscribed for $10 billion in Dubai sovereign bonds, a portion of which went toward enabling state-linked developers pay outstanding dues to contractors. That move eased investor worries about a potential default by Dubai, but also raised questions about what Abu Dhabi would demand in return. The two emirates, although being part of the same federation, are run by separate ruling families.

The entire debt repayment scenario has now been thrown into question. The Nakheel bond is, after all, the most high-profile of Dubai's debts and was regarded by many as a litmus test for how effectively Dubai – and Abu Dhabi – would treat maturing debts. Markets, puzzled about why the $5 billion raised by Dubai this week was not going to Nakheel bond creditors, will be watching for news on how the debt restructuring develops and what conditions Abu Dhabi could set for providing funds to pay outstanding loans.

Dubai ruler Sheikh Mohammed bin Rashid Al-Maktoum, also prime minister of the UAE, removed this month key executives who helped shape modern Dubai, including replacing the governor of the Dubai International Financial Centre, Omar bin Sulaiman, and removing the chairmen of Emaar Properties, Dubai World and Dubai Holding from the board of the Investment Corporate of Dubai, a body charged with managing the emirate's wealth. At the newly reshuffled board of ICD, two of the ruler's sons were brought in as directors. The change of guard will have to be tested and the results and management style would be watched closely by the international investor community. Moreover, the larger question of succession would be kept at the back of the international investors' minds.

There has been little public announcement about the conditions attached to Abu Dhabi aid to Dubai and what level of autonomy the emirate would have to forego in exchange for the financial bailout. We believe that in the end, Abu Dhabi will be willing and able to provide adequate funds to enable Dubai to meet its debt obligations. We are not of the view that Abu Dhabi wants to have a “sick cousin” that would jeopardize the well-being of the Federation. Abu Dhabi wants to see Dubai's economy return to a healthier state as many Abu-Dhabi based businessmen have invested in the property sector and the economy of Dubai at large. Abu Dhabi will have three avenues to pursue: pay, buy and bail out. This funding, however, will come at a cost not measured in money. Politics in this region is more powerful than simple monetary transactions. But in the end, Dubai will not be able to cover its debts on its own and the de-leveraging process could last not a few months but a few years.

Bailing out Dubai could be good for the Federation but nothing is for free. Will Abu Dhabi ask for additional control over Dubai? Will this make Dubai less autonomous? As there is no free lunch and all services have to be paid back the price that Dubai might have to pay back to Abu Dhabi is some of its autonomy. Dubai would have to yield to the conditions of its rich neighbour in order to save face among global creditors. It is very difficult for Dubai not to prevent Abu Dhabi from gaining additional influence, both at the level of the Federation as well as bilaterally. And the Dubai leadership's language has changed and become more supportive of the Federation. The most vivid of all was the comments of Dubai's ruler who said in earlier in November that people who speculated about relations between Dubai and Abu Dhabi should “shut up,” at an investors' conference in Dubai. The ruling lines of both emirates are “the same family, not only that but the same tribe, the Bani Yas tribe,” he said. They “ruled many many tribes in the Arabian Peninsula for hundreds and hundreds of years.” It is important to note that it was only in 1996 that Dubai integrated its armed forces into the UAE's military command. The sense of Dubai's autonomy was also evidenced after the UAE's establishment in 1971 where there were border check points, for many years, between Abu Dhabi and Dubai even if both were part of the Federation.

Dubai's economy, meanwhile, is poised to face another backlash from the debt troubles, which are likely to shake investor confidence in its real estate sector once again and send prices that have already halved in the last year down further. Although Dubai's property developers, controlled by the state, are trying to control real estate prices by holding back the release of additional apartment units onto the market it could be that prices could very well depreciate further. The emirate could also be forced to introduce further delays to infrastructure projects currently in the pipeline.

We think that Abu Dhabi plays a key role in supporting debt-ridden Dubai. Dubai's leveraged property play has come to an abrupt and crashing end. Going forward Dubai needs to show resolve but also willingness to admit to greater transparency. Dubai also needed to better time the announcement of its the debt restructuring. Dubai is in dire straits and Abu Dhabi will come to the rescue but like all rescues it would have a price. As for the international investor base, it should become apparent to them that Dubai is not core of the GCC and there is far greater depth to the region that remains untapped.

John Sfakianakis, Chief Economist BSF - Credit Agricole Group

The views expressed in this report accurately reflect the personal views of the undersigned analyst(s). In addition, the undersigned analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report.

John Sfakianakis

Calyon - Credit Agricole CIB

Sunday, November 29, 2009

Tajik Grip on Afghan Army Signals New Ethnic War By Gareth Porter*

Tajik Grip on Afghan Army Signals New Ethnic War
By Gareth Porter*

WASHINGTON, Nov 28 (IPS) - Contrary to the official portrayal of the Afghan National Army (ANA) as ethnically balanced, the latest data from U.S. sources reveal that the Tajik minority now accounts for far more of its troops than the Pashtuns, the country's largest ethnic group.

The massive shift in the ethnic composition of ANA troops in recent years is leading to another civil war between the Pashtuns and a Tajik-led anti-Pashtun ethnic coalition similar to the one that followed the fall of the Soviet-supported regime in 1992, according to some observers.

Tajik domination of the ANA feeds Pashtun resentment over the control of the country's security institutions by their ethnic rivals, while Tajiks increasingly regard the Pashtun population as aligned with the Taliban.

The leadership of the army has been primarily Tajik since the ANA was organised in 2002, and Tajiks have been overrepresented in the officer corps from the beginning. But the original troop composition of the ANA was relatively well-balanced ethnically.

Gen. Karl Eikenberry, then chief of the Office of Military Cooperation-Afghanistan, issued guidelines in 2003 to ensure ethnic balance in the ANA, according to Chris Mason, who was a member of the Afghanistan Inter-agency Operations Group from 2003 to 2005. Eikenberry acted after then Defence Minister Marshall Mohammed Qasim Fahim had packed the first group of ANA recruits to be trained with Tajiks.

The Eikenberry guidelines called for 38 percent of the troops to be Pashtun, 25 percent Tajiks, 19 percent Hazaras and eight percent Uzbek.

Since then U.S. officials have continued to put out figures indicating that the ethnic balance in the ANA was in line with the Eikenberry guidelines. As recently as 2008, the RAND Corporation was given data showing that 40 percent of the enlisted men in the ANA were Pashtun and that Tajiks accounted for less than 30 percent.

The latest report of the Special Inspector General for Afghanistan Reconstruction, issued Oct. 30, shows that Tajiks, which represent 25 percent of the population, now account for 41 percent of all ANA troops who have been trained, and that only 30 percent of the ANA trainees are now Pashtuns.

A key reason for the predominance of Tajik troops is that the ANA began to have serious problems recruiting troops in the rural areas of Kandahar and Helmand provinces by mid-2007.

At least in the Pashtun province of Zabul, the percentage of Pashtuns in the ANA has now been reduced to a minimum. In Zabul province, U.S. officers embedded in one of the kandaks (battalions) reported earlier this year that they believed only about five percent of the troops in the entire brigade are Pashtuns, according to a report by Army Times correspondent Sean D. Naylor published in the Armed Forces Journal last July.

The brigade commander in Zabul is a Tajik.

Meanwhile, Tajiks have maintained a firm grip on the command structure of the ANA. . Marshall Fahim put commanders from the Tajik-controlled Northern Alliance in key positions within the Ministry of Defence as well as the ANA command.

Mason recalled that the United States thought it had an agreement with President Hamid Karzai under which the command structure of the ANA would be reorganised on the basis of ethnic balance, starting with the top 25 positions.

But Karzai never acted on the agreement, Mason said.

Even after Fahim was stripped of his government and military positions by Karzai in 2004, his appointee as ANA chief of staff, Gen. Bismullah Khan, remained as head of the army. Tajiks have continued to occupy the bulk of the positions in the Ministry of Defence.

A United Nations official in Kabul estimated that, as of spring 2008, no less than 70 percent of all kandaks were commanded by Tajiks, as reported by Italian scholar Antonio Giustozzi.

Even in overwhelmingly Pashtun Zabul province, there are only two Pashtun kandak commanders out of a total of six, Matthew Hoh, the senior U.S. civilian in Zabul until he submitted his resignation in September in protest against the war, told IPS in an interview.

Mason views the process by which the ANA is coming to be seen as an increasingly Tajik institution as making a civil war between the Pashtuns and the Tajiks and other ethnic minorities virtually inevitable.

"I believe the elements of a civil war are in play," Mason told IPS.

Mason said the refusal of Pashtuns in the south and east to join the ANA is part of a "self-reinforcing spiral". The more Dari, the language spoken by Tajiks, becomes the de facto language of the ANA, said Mason, the more Pashtuns will see it as an alien institution.

"The warlords have already started rearming," said Mason.

Although the United States "has done as good a job as it could have" in trying to make the ANA mirror the broader society, Mason said, it can only "attenuate" rather than prevent such a war in the future, even with a larger troop presence.

Hoh believes a civil war between the Pashtuns and a Tajik-led alliance of ethnic groups has already begun but could get much worse. "It is already bad now," he said, but unless U.S. policy changes, "we could see a return of the civil war of the 1990s." To avoid that outcome would require putting priority on political reconciliation in order to "integrate all elements of society into the Afghan government and security forces", said Hoh. That, in turn, would require an international framework, probably involving the United Nations, he said.

Hoh recalled a scene he witnessed in Zabul suggesting that Tajik commanders view the ANA as belonging to the Tajik-led Northern Alliance. At an Afghan independence day event at a military base Aug. 19, attended by hundreds of ANA and national police, the large photograph adorning the wall was not of President Karzai but of the Tajik commander of the entire Northern Alliance, Ahmed Shah Massoud, who was assassinated by al Qaeda two days before the 9/11 attacks.

The previous civil war between Pashtun and Tajik-led armies was triggered by the disappearance in 1992 of the national army of the Soviet-supported Najibullah regime, which had maintained a tenuous balance between the two major ethnic groups.

The collapse of the Najibullah regime and its army was followed immediately by fierce fighting between the Northern Alliance, which had gotten to Kabul first, and the forces of the Pashtun warlord Gulbuddin Hekmatyar, who had previously been allied with the non-Pashtun mujahedeen against the Soviet-backed regime.

In a sign that Tajik commanders don't trust Pashtuns in the south and east, the Tajik senior ANA officer in Zabul, Maj. Gen. Jamaluddin Sayed, dismissed the locally recruited national police in the province as being under Taliban influence and called for recruitment of police from outside the province.

"If we recruit ANP [Afghan National Police] people from Zabul province, probably they have some relationship with the Taliban," Jamaluddin told Army Times reporter Naylor.

*Gareth Porter is an investigative historian and journalist specialising in U.S. national security policy. The paperback edition of his latest book, "Perils of Dominance: Imbalance of Power and the Road to War in Vietnam", was published in 2006.


Saturday, November 28, 2009

A New Alliance The Mumbai attacks should strengthen the bonds tying India and the United States together. BY MANIK V. SURI

A New Alliance
The Mumbai attacks should strengthen the bonds tying India and the United States together.

Last Nov. 26, a year ago this week, I sat huddled with my family in a hotel room in Mumbai, India, planning our escape from the terrorists we believed were roaming the building. My parents had flown to India's financial capital during the Thanksgiving holiday to visit me while I was working there. We were in our room at the J.W. Marriott when live news began showing armed militants striking a series of targets across the city, including the main train station, a major hospital, a popular café, and two of its most upscale hotels.

The anniversary of the Mumbai terrorist attacks serves as a reminder that the front lines in the "war on terror" lie not only in New York and Washington, DC, but as far afield as Karachi and Mumbai. The 10 attackers who perpetrated the heinous acts were members of Lashkar-e-Taiba (LeT), a Pakistani Islamic extremist group responsible for several previous attacks across India. Subsequent investigations revealed that the attacks were planned and directed by LeT militants within Pakistan. While Pakistan denies any official involvement, the 11/26 attacks were a clarion call that the United States should take a stronger stance toward Pakistan's military and intelligence services in cracking down on Islamic fundamentalist groups that promote violence - not only directed at the United States but against India as well. Furthermore, the Mumbai attacks highlight the need to promote closer cooperation between the United States and India in combating terrorism in the region.

The 11/26 attacks lasted a mind-numbing 72 hours. The initial response consisted of a motley force of local Mumbai police lacking adequate body armor or night-vision equipment, carrying antiquated rifles and generally appearing confused and disorganized. After hours of bureaucratic hand-wringing, the National Security Guards, India's elite commando unit tasked with counter-terrorism response, were deployed. Their efforts were laudable though late. After a three-day siege, the hair-raising showdown on Nov. 29 led to the death of the remaining militants, albeit at significant human cost. Though news coverage initially reported gunfire at the J.W. Marriott, the hotel was never attacked and my family escaped unharmed. Many others did not: 138 Indians and 26 foreign nationals, including 6 Americans, were killed in the attacks.

Like Sept. 11, the Mumbai attacks were an assault on national symbols intended to deliver a political message of terror. They also powerfully demonstrate that extremist Muslims do not see their enemies as solely "American" or "Western." The United States represents a primary - but not the only - target in the fundamentalist jihad. India, which is equally threatened by the fanaticism unleashed in the Mumbai attacks, is an important potential ally in combating extremist Islamic terrorism. Historically estranged, the two secular democracies have enjoyed warming relations in the past decade. Both nations are promoting closer engagement on a range of issues, including the expansion of trade and investment, managing climate change, and sharing civilian nuclear technology.

Counterterrorism is one key area where the United States and India should push for broader and deeper cooperation. Initial efforts are promising. In 2000, the U.S.-India Counterterrorism Joint Working Group (CJWG) was established to coordinate strategies to fight global terrorism. These discussions deepened in the wake of 9/11. Yet they remain limited: the CJWG only meets once or twice a year and provides for dialogue between mid-level policymakers from both nations.

The United States should elevate this framework to include regular high-level official discussions between the two nations' national security, intelligence, and counterterrorism policymakers, as with other key allies such as Israel and the United Kingdom. This will signal to skeptical Indian officials the importance which U.S. officials place on this relationship. The United States should also take concrete steps to deepen its partnership with India by expanding intelligence sharing, providing equipment and technology, and imparting training through joint counterterrorism training exercises. Specific efforts should be made to expand cooperation on issues such as maritime security and cyber terrorism, where the initial groundwork has already been laid.

Indian officials may hesitate to admit it, but the shortcomings evident in India's response to the Mumbai attacks -- an overwhelmed intelligence network, inadequately prepared counterterrorism personnel, and fragmented administrative process -- highlight the benefit that closer partnership with the United States could provide for India. America could use India's help, too. In light of U.S. military involvement in Afghanistan and Pakistan, the United States stands to gain from Indian intelligence capabilities, linguistic resources, and cultural familiarity with the region. Learning from India's decades-long experience combating Islamist violence in the region will strengthen U.S. efforts to do so as well.

A key challenge will be Pakistan. U.S. policy toward India's western neighbor is complicated by the dangers posed by a regime that is weakening by the day. Mindful of this, the United States should nonetheless adopt a tougher stance with its allies in Pakistan concerning Islamic fundamentalist groups in that nation, particularly those that target India. It won't be easy or painless to pressure Pakistan's military and intelligence bureaus into changing their long-held strategy of coddling -- if not funding and organizing -- jihadist groups, but doing so is essential for building trust and deepening engagement with Indian officials across the border.

This Thanksgiving let us pray for the victims of terror and give thanks to those fighting to safeguard democratic values in the United States and abroad. Let us also resolve to seek out new allies in preventing such acts in the future.
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Manik V. Suri is a fellow at the University of Pennsylvania Center for the Advanced Study of India. He is currently writing a book on U.S.-India relations.

Friday, November 27, 2009

Obama: Profile in Courage, or Cave-In? By Ray McGovern

Obama: Profile in Courage, or Cave-In?

By Ray McGovern

The 46th anniversary of John Kennedy's assassination passed by last Sunday virtually unnoticed. The unfortunate thing is this: his legacy on Vietnam is so widely misunderstood that it is easy to miss the relevance of his decision making in the early Sixties to the dilemma faced by President Barack Obama today as he decides whether to stand up to-or cave in to-the Pentagon's plans for escalating another misbegotten war in Afghanistan. Continue

Afghanistan Is A "War Of National Resistance": Former CIA Agent By Robert Baer

Afghanistan Is A "War Of National Resistance": Former CIA Agent

By Robert Baer

"The people that want their country liberated from the West have nothing to do with Al Qaeda," Baer says. "They simply want us gone because we're foreigners, and they're rallying behind the Taliban because the Taliban are experienced, effective fighters." Continue

Soaring Unemployment and Double-dip Recession? Blame N.W.O. Larry By Mike Whitney

Soaring Unemployment and Double-dip Recession?
Blame N.W.O. Larry

By Mike Whitney

Summers assignment is to bring the broader economy to its knees; to crush big labor by keeping unemployment high, to force state and local and governments to privatize more public assets and services, and to generate as much human misery as possible. Continue

Thursday, November 26, 2009

Commentary: Net-centric Cassandras By ARNAUD DE BORCHGRAVE

Arnaud de Borchgrave does not seem to be in the Thanksgiving mood. Sobering stuff.

Commentary: Net-centric Cassandras

UPI Editor at Large

WASHINGTON, Nov. 24 (UPI) -- Reputable financial houses, as they are described online, are telling their clients how to prepare for potential "global collapse" over the next two years. France's Societe Generale, according to the London Daily Telegraph's chief investigative reporter, Ambrose Evans-Pritchard, is such a house that is now "mapping a strategy of defensive investments to avoid wealth destruction."

A 68-page report, headed by the bank's asset chief, Daniel Fernon, explores forthcoming dangers but does not forecast which of three possible outcomes of the ongoing crisis it sees coming. Under the gloomiest "Bear Case" scenario the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 per barrel in 2010 (but could shoot up to $200 or $300 if Israel were to bomb Iran's nuclear facilities).

Fernon writes governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105 percent of GDP in the United Kingdom, 125 percent in the United States and the European Union, and 270 percent in Japan. Thus, worldwide state debt would reach $45 trillion, up two and a half times in a decade.

Inflating debt away might be seen by some governments as the lesser of two evils. If so, says the forecaster, gold would go "up, and up, and up" as the only safe haven from "fiat paper money." Even if the U.S. savings rate stabilizes at 7 percent -- highly doubtful -- and all of it is used to pay down debt, it will take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.

Societe Generale advises "Bear" clients to sell the dollar short and to "short" cyclical equities such as technology, auto and travel to avoid being caught in the "inherent deflationary spiral." Fernon says his report has electrified clients on both sides of the Atlantic as "everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried."

Peter Morici, a professor at the University of Maryland's Business School and a prominent citizen of the Internet, says in his latest contribution, "Bigger than the budget deficit, America has a leadership gap. Despite last February's $787 billion stimulus package, the economic recovery is not creating jobs; unemployment is rising (34 million, including those whose benefits have expired, out of a workforce of 153.9 million); and the president and Congress offer little more than nostrums and platitudes."

Along with oil imports, cheap consumer goods from China account for nearly the entire trade gap, writes this former chief economist at the U.S. International Trade Commission. "China undervalues its currency to boost its U.S. sales, domestic employment and growth. Its economic miracle is engineered by Beijing buying hundreds of billions of U.S. dollars with freshly printed yuan, to keep the currency undervalued and Chinese products inexpensive in U.S. stores. Then China uses those dollars to buy U.S. Treasury securities." And President Obama, afraid China won't buy more U.S. debt, failed to challenge China on currency and trade during his visit there last week.

"The Republicans offer little more than tort reform … and the Democrats," concludes Morici, "fearful that unemployment, stagnant wages and their fiscal follies will result in big electoral losses in 2010, are cooking up another stimulus package. They will call it a … 'jobs initiative.' After both the Bush and Obama stimulus packages failed, it has few prospects of creating lasting jobs. All this calls to mind bread and circuses as in a declining Roman Empire. Those kept the crowds happy while the state was failing."

The conservative Financial Intelligence Report says dollar devaluation is a done deal. "Since taking office almost a year ago," FIR thunders, "the Obama administration has increased the monetary base by a staggering $10 trillion … and doubled the expected annual budget deficit to almost $2 trillion." The Financial Times' Martin Wolf, highly respected the world over, says shady trading activities destroyed the financial system. What Wolf regards as intolerable are huge rewards for those who have been rescued by the state and bear responsibility for the crisis in the first place. "Even more intolerable is that they have devastated the prospect of hundreds of millions of innocents all over the globe," he wrote.

Today's huge bank profits "are in large part the fruit of the free money provided by the central bank," says Wolf, and thus "the state is giving banks a license to print money. In 2006 Goldman Sachs earmarked $16.7 billion for year-end bonuses. One top trader was awarded $70 million (which he deemed insufficient given his superior talents and resigned). Hyper-bonuses are already back: GS's bonus pool at the end of 2009 was $20 billion.

The 1987 Oliver Stone movie "Wall Street," in which Michael Douglas plays Gordon Gekko, now on the lecture circuit as a published financial author after 14 years in the slammer for insider trading and security fraud, is being reprised as "Wall Street II." This time round the same sleazy track, Douglas, playing Gekko, fails in his attempt to warn people about the imminent fall of Wall Street. "Shakedown," the first novel for Wall Street insider Andie Ryan, with 20 years of experience in senior management in major firms, is thinly disguised fiction. "The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System" by former Wall Street Journal reporter Charles Gasparino is climbing the best-seller charts.

Gasparino argues the meltdown -- from 1,125 billionaires to 783 in a year -- is just the latest calamity in a 30-year pattern of executive excesses, unsustainable leverage and unreliable computer models -- and warns risk-takers could be doomed to repeat their errors. Because there is reluctance, bordering on paralysis, to concede what went wrong. And the ever widening gap between rich and poor in America is not seen as an inducement for social upheaval.

It was the criminal predatory lending scams for subprime mortgages in the United States in 2006 that ensnared the entire planet and triggered the worst financial and economic crisis since the Great Depression. The "back to square one" cliche springs to mind with the third-quarter delinquency rate now the highest since records were kept -- up from one in 14 mortgage holders in the last quarter of 2008 to one in seven, or 14 percent in mid-November.

Yet purchases of previously owned homes soared 10.1 percent in October. Go figure.

Pakistan tells US that new Afghanistan strategy has exposed its borders to militants

Pakistan tells US that new Afghanistan strategy has exposed its borders to militants

Jeremy Page, Zahid Hussain and Tom Coghlan

Pakistan has complained to the United States that the strategy in Afghanistan is allowing militants to cross the border more easily, hampering its army’s campaign against Islamists, The Times has learnt.

Pakistani army commanders say that Nato’s recent withdrawal of troops from outposts near the border is undermining the “hammer and anvil” strategy the US has advocated since 2001, whereby militants face Nato and Pakistani troops acting on both sides of the border.

The new policy has impaired the Pakistani army’s offensive against Taleban and al-Qaeda militants in South Waziristan and other tribal areas by allowing some to seek refuge in Afghanistan and others to return to Pakistan to join the fight, they say.

Taleban and anti-Taleban sources on both sides of the border have told The Times that militants have been returning from Afghanistan to Pakistan in the last month to fight in South Waziristan, where 30,000 government troops have been fighting insurgents since last month.

Pakistani commanders are also warning that US plans to send more troops to Afghanistan could drive militants into the southwestern region of Baluchistan while the Pakistani army is preoccupied with the northwest.

They raised the concerns with James Jones, President Obama’s National Security Adviser, when he visited Islamabad this month, according to Pakistani officials and Western diplomats. The US wants Pakistan to target militants in South and North Waziristan who cross the border to attack Nato forces in Afghanistan.

But Pakistan has yet to comply, largely because of its concerns about the new strategy introduced by General Stanley McChrystal. Last month the commander of all Nato forces in Afghanistan pulled troops out of remote outposts as part of a new counter-insurgency doctrine focusing on population centres.

The International Security Assistance Force (Isaf) confirmed that US troops had withdrawn from six frontier outposts, four in Nuristan province and two in Paktika — bordering Waziristan.

A senior Isaf official admitted the timing was unfortunate, but said that there was no evidence of greater militant activity around the border. “The border outpost decision predated the South Waziristan operation,” he said. “If it shows that we allow fighters to move freely in either direction, we would want to stop that. It is an unfortunate conjunction and it is easy to draw the wrong conclusions.”

Isaf insisted that the issue would not affect co-operation between US, Pakistani and Afghan forces, who set up a joint command centre near the Khyber Pass last year and plan to establish five more. Pakistani military officials agreed that the timing was coincidental, but said that the withdrawal was nonetheless hampering their efforts.

Pakistan’s army attacked militants in the Swat Valley in May before turning to South Waziristan last month. Mullah Jan Mohammed, a Taleban commander in Paktika, told The Timesthat Pakistani and other foreign militants there had meanwhile been crossing back into Pakistan. “There used to be lots in our area, but since the South Waziristan operation began, they have all returned to Pakistan,” he said.

Gulfam Hussain, the leader of a Shia anti-Taleban militia in the Pakistani tribal area of Kurram, which borders North Waziristan, also said that militants had been returning to Waziristan from Afghanistan. “It seems they’re going back to fight the Pakistani army,” he said.

Pakistan has been criticised by US officials for not deploying enough troops on its side of the border. Officials in Islamabad are now concerned that an increase in US troops in southern Afghanistan could destabilise Baluchistan, which is already home to a million Afghan refugees and a decades-long separatist insurgency.

“The increase in number of US troops without a clear strategy will have a huge destabilising effect for the region,” said a senior Pakistani military official. “The influx of more refugees will be politically explosive.”

Pugnacious Netanyahu Pushes U.S. to Call for 1967 Borders
Pugnacious Netanyahu Pushes U.S. to Call for 1967 Borders

This is a guest note by Daniel Levy, who served as the lead Israeli drafter of the Geneva Initiative and directs the New America Foundation/Middle East Task Force .

Israeli Prime Minister Netanyahu announced yesterday his cabinet's decision, "To suspend new construction in Judea and Samaria." (Yes, they still call it Judea and Samaria).

The Obama Administration responded within hours with a statement released by Secretary of State Clinton followed by a press briefing from Special Envoy George Mitchell.

On the face of it, this was a step forward by the Israeli government, acknowledged and welcomed (though not blessed) by the US government, and a move that one hopes will facilitate Palestinian agreement to resume negotiations. But if one digs just a little bit deeper, it becomes very evident that it was nothing of the sort. Rather, today's events closed the first chapter in a game of dare being played out between the new leaderships in Washington and Jerusalem.

Today's statements appeared to be part of an elaborate and ongoing dance of suspicion between the two supposed allies.

During his first term as prime minister in the late 90's, Benjamin Netanyahu made an enemy of then US President Clinton and played the Republican congress against the Democrat president. This directly led to the collapse of Netanyahu's government and his fall from office. Judging by today, Netanyahu is keen for a repeat performance albeit under circumstances even less propitious for him politically. The response of the Obama team might be an interesting pointer as to where things might be headed on the peace front.

The Obama administration has been calling on Israel to make good on a settlement freeze commitment dating to the 2003 Bush-era Road Map (and, questionably to the 1993 Oslo DoP).

Netanyahu has been unwilling to do anything of the sort. He sought to codify a set of exemptions to a settlement freeze or in plainer English, guidelines for ongoing settlement expansion, and to have those blessed by Washington. The Obama team refused to become the first ever American government to formally authorize settlement expansion. That is the situation we have reached with today's announcement.

Netanyahu's cabinet clarified its so-called "settlement restraint" policy with today's decision (some have called it a "moratorium" or a "freeze" but as you will see shortly, it is nothing of the sort, and those words are an inappropriate description).

The only apparent restraint in the Israeli cabinet decision was to suspend issuing of new permits or beginning new construction in the West Bank for ten months. The less restrained side of the equation is this: 3000 units already under construction will continue; all public buildings and security infrastructure will continue to be built; no restrictions would apply to occupied East Jerusalem; and construction would resume after ten months.

Netanyahu also repeated the totally (meaningless) commitment of no new settlements or land confiscations (meaningless because since 1993, the official policy is no new settlements yet via expansion, new neighborhoods and outposts, the West Bank settler population has grown from 111,000 then to over 300,000 today, and because although the built-up area of settlements constitutes only 2% of West Bank land, double that amount is slated for growth, and a total of 40% comes under the Settlement Regional Councils, therefore land confiscation issue is a red herring).

While it is technically true that this "restraint" is a new Israeli commitment, its practical relevance is of very limited significance - building 3000 units in ten months neatly dovetails the regular annual settlement construction rates. Moreover, Netanyahu made sure to assertively mention all these caveats in today's announcement - in effect, poking the Obama administration, the international community, and the Palestinians in the eye.

While some claim this was a politically courageous act by Netanyahu, the real litmus test is easy to apply: Has this led to any shakiness, any crisis, any resignations in the most right wing coalition ever in Israel's history? The answer: absolutely not, and resignations in Israeli politics are about as rare as Turkeys on Thanksgiving.

Netanyahu's so-called "restraint package" was so minimalist that it kept his coalition happy while doing nothing to advance a genuine peace effort (Yes, there is some criticism from the far-right, and Netanyahu's supporters will point to it as proof of his bravery, but as I say, the real test is in his coalition - and there: not so much as a wobble).

The interesting development today, indeed the unprecedented development, was in the US response. Yes, Senator Mitchell did pro-forma explain why this is new, why this was progress from the Israeli government.

But the real American response came elsewhere, in Secretary Clinton and Envoy Mitchell's statements. They did not bless the Israeli non-freeze, explaining it fell short and that they expected more, and that "America does not accept the legitimacy of continued Israeli settlements". (Admittedly they could have explicitly said that after ten months and the 3000 units, their expectation was for not a single new home to be built, they didn't).

The new language came in Secretary Clinton's description of what American expects the outcome of negotiations to be - for an "independent and viable [Palestinian] state based on the 1967 lines". Senator Mitchell quoted Clinton in repeating the call for a Palestinian state "based on the 67 lines."

Every conflict and every situation has its own lingua franca. In the Israeli-Palestinian context, a state based on the 67 lines is the dog-whistle for what constitutes a real, no-B.S. two-state outcome. It is also language that the US has conspicuously avoided using - avoided that is until today.

Previous administrations would speak of UN Security Council Resolutions 242 and 338 (but those are interpreted differently by the Israelis and Palestinians); the Clinton Parameters of December 2000 suggested percentages on territory, but never mentioned the 67 lines; in June 2002, President Bush used the phrase, ending the "occupation that began in 1967."

That language was adopted in the 2003 Road Map and used verbatim by President Obama in his September United Nations General Assembly speech. It is language very much open to interpretation. The "1967 lines" language add a far greater degree of clarity - and, as such, is an anathema to the Greater Land of Israel, anti-peace forces (many of whom are represented in today's Israeli government).

Interestingly, Secretary Clinton had begun to play with this language during her recent Middle East trip but had never been so explicit - until today. It is true that this adoption of new language comes late (perhaps too late) in the process and will need to be backed up by more concrete steps. It is though progress.

So the subtext of what went on today - the Obama administration is beginning to up the ante, at least declaratively, in the signals it is sending in response to Netanyahu's stubbornness on settlements, and in setting the table for the next phase of its peace efforts.

The question of course is - what next?

Senator Mitchell gave some hints about that also. He suggested that the US was still pursuing a comprehensive peace effort and notably discussed Syria at some length. He briefly mentioned the option of resuming regional multilateral talks with Israel and various Arab states on issues such as water and energy at an appropriate time. Most interesting perhaps, Senator Mitchell explained that negotiations, "will proceed on a variety of tracks," and while he continued to push for the resumption of direct Israeli-Palestinian talks, he also spoke of parallel talks that the US would conduct with each of the parties.

This combination of back-to-back negotiations - US-Israel and US-Palestinians - combined with the reference to the 1967 lines may signpost the way out of the peace impasse. The US will need to elaborate and put flesh on the bones of its "based on the 1967 lines" parameter and then pursue a conversation, mostly with the Israeli side, on how to implement that, and if necessary go public with a plan and tie incentives/disincentives to its acceptance/rejection.

-- Daniel Levy