The Christian Science Monitor has reported that Pakistan  arrested half of the Afghan Taliban leadership in recent days.  See link.  Speculation abounds about the timing of the crackdown and whether it was related to Pakistan seeking a more direct role in the Afghan peace negotiations.  To me the speed at which the Taliban leadership is being rounded up raises the question why this was not possible in the past eight years or even in the last couple of years when Pakistan itself became the target of the fundamentalist terror it midwifed.  Pakistan’s future actions will show just how serious it is in tackling the threat, or whether this is merely the latest gambit in the new Great Game (see previous blog post).

Also, unclear is the extent the lack of leadership affects the Taliban’s military operations.  It should make it harder to coordinate joint attacks, but there are enough lower level commanders with guns and experience to continue fighting.  Similar decapitations of the leadership among the Pakistani branch of the Taliban appear to have lead to militants training their guns at each other as they jockey for power.  Whether and to what extent the pattern repeats itself here remains to be seen.

For now, this should be a boost to the American surge.  But good news in Aghanistan seems to be accompanied by bad.  As usual it comes from the man supposed to provide the good governance essential for a lasting peace.  In recent days Hamid Karzai has tried to pack Afghanistan’s impartial election commission with his cronies, deepened his ties to the corrupt warlords and once again pandered to the fundamentalist fringe by weakening constitutional protections for female representation in parliament. See here, here and here.  Some things never change.

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The last few weeks have seen an uptick in right wing carping about the Obama administration’s allegedly weakness in fighting terror (in large part based on increasing discredited facts about the arrest and interrogation of the underpants bomber and their refusal to torture him).  As signs of the silly season of the silly season are this piece by vocal torture supporter Marc Thiessen that the Obama administration is too darn successful in killing terrorists and is thereby costing us valuable intelligence.  Dick Cheney emerged from his coven to lob his usual broad sides at the administration.

Then came the news of the arrest of Mullah Abdul Ghani Baradar in Karachi.  See link. Mullah Baradar is second in influence to Mullah Omar and coordinates the old Afghan Taliban’s military operations.  See link.  The arrest complicates the Taliban’s military response to the surge and is an opportunity to be exploited.  The administration is also drawing kudos for keeping quiet about the arrest while intelligence leads against the Taliban in Karachi were pursued.

The fact that this arrest occurred in Karachi shows how the drone campaign is affecting Taliban operations.  Pakistan’s commercial capital has seen an influx of Pashtuns of late and an uptick in violence (beyond the usual round of blood letting between the native Sindhis and the Muhajirs – Muslims who emigrated from India after partition).

The arrest has raised hopes that Pakistan is finally co-operating fully in the fight against the Taliban.  But not everyone is convinced.  Juan Cole in the link above speculates that the violence triggered by the Taliban starting to relocate to Karachi forced the Pakistanis to act.  Others have speculated that it is a cynical attempt to insert Pakistan into the talks with the Taliban.  See link.  I have been harsh in my evaluation of Pakistan’s Janus-faced cooperation in the past, but for now I will defer comments until events play themselves out.

I will also allow my sliver of hope for Afghanistan to widen, slightly.

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Tiny Iceland drew unflattering world attention last year when its overheated real estate bubble burst sending the nation perilously close to bankruptcy.  It was back in the news this week for a presidential veto that infuriated the United Kingdom and the Netherlands which is reflected in the pious declarations by the British papers.

The brouhaha started with the collapse of a subsidiary of an Iceland bank Landsbanki called Icesave that offered deposits in the Netherlands and the United Kingdom.  The key question is whether the government of Iceland was supposed to back all depositor funds beyond the amounts covered by the Icelandic Depositors’ and Investors’ Guarantee Fund set up under European Economic Area rules.  The legal case on whether Iceland’s tax payers are required to back up the deposit fund is shaky as well and not expressly required by the EU.  Even the Dutch have acknowledged that the deposit fund was not intended to cover a systemic collapse as happened with Iceland’s financial system.  Even in the United States where the FDIC covers only up to $100,000 of deposits, the deposit insurance fund simply does not have the wherewithal to bail out an entire banking system.

Then came the British overreaction that still has Iceland’s citizens seething.  When Iceland agreed to cover domestic depositors, it did not cover foreign deposits (it had not agreed to do so before the crisis in any case).  The British and Dutch stepped in to cover the deposits of their nationals.  Next Gordon Brown’s government misused anti-terrorism statutes to freeze all Iceland assets in the United Kingdom, probably the first time such action has been taken against a NATO ally, sending Iceland’s reeling economy into a tailspin and even bringing down another totally unrelated Iceland bank.  Next the IMF was used to bully Iceland to pay up.  British and Dutch grandstanding on the subject is weakened by the fact that their banks benefited from the same loose passporting rules to establish foreign subsidiaries that Icesave employed.  It is hard to imagine that they would have done what they are asking Iceland to do with respect to foreign accounts in the event of a systemic collapse.

The repayment plan forced down by the IMF is  about 5 billion dollars, chump change for Britain and the Netherlands but 40% of Iceland’s GDP and about $18,000 per citizen.  Iceland’s ability to pay is doubtful as well.  Seething from Gordon Brown’s use of terrorism statutes, the Icelandic public overwhelmingly oppose the plan and deluged the President with requests to veto it.  The President obliged and the veto now sends the plan to a public referendum where it is almost certain to fail.

As a matter of policy, it is not really clear why a government should back all deposit accounts.  It seems an invitation to moral hazard and can cripple an economy in a financial crisis like Iceland’s, particularly when (as noted in the article linked earlier) the legal arguments are shaky.  Gordon Brown’s overreaction made it harder for Iceland to pay back this debt and it is not clear why the United Kingdom should not be penalized for its disgraceful misuse of anti-terrorism statutes and the collateral harm they caused to Iceland’s economy.  Given the small size of the loan by British standards and the financial stress a long term ally was under, Gordon Brown should have resisted the temptation to flex his muscles for domestic opinion and tried to work out a deal.  Instead he made a bad situation worse and now threatens Iceland with financial isolation.

The legal principle employed by the British and the Dutch is a dangerous one too.  Evidently now the taxpayers of the country of formation have to bear the burden of the obligations of a corporation abroad.  Its time for cooler heads to prevail and pull the British and Dutch back from their overreaction and threats to financially ruin a NATO ally.

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The New York Times has a an interesting read about Pakistan’s unwillingness to take on its pet Afghan militant as part of its posturing for a post American Afghan future.  After riding the militant tiger and finding it hard to get off Pakistan is not yet willing to learn its lessons from the past.  Instead as many observers including this blog have noted, it remains steeped in denial and paranoia about Indian intentions in Afghanistan.  It is much easier to engage in tit for tat blame of India (with no real evidence presented) rather than face up to the mess they have made of their country.  While the Pakistani establishment fiddles, its country burns.

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After an unexpected hiatus from blogging activities, kick starting the first post of the week with some thoughts on events that would have merited longer posts at the time.

• I liked the general tenor of Barack Obama’s speech but was amused to see some of the blinders come off on the left and the right as a result.  Liberals unhappy about the decision on Afghanistan saw the president expound a doctrine of just war which in some ways could have been delivered by George W. Bush. Conservatives who had convinced themselves that Obama was a weak anti-war liberal seem to have heard for the first time that the President does not rule out war (they seem to have forgotten his comment in the campaign that he was only against “stupid wars” (though he left may argue that the Afghan escalation IS a stupid war).  Time will tell whether the “Obama Doctrine” fares better than the “Bush Doctrine.”  With its understanding of the limitations of American power, it does have a greater chance of success.
• The Indian government dropped a bombshell with the creation of a new state.  Will discuss the virtues and pitfalls of smaller states in the Indian constitutional context later this week, but words cannot describe how badly the decision making process was bungled.  First the government gave in to emotional blackmail of a hunger strike, then nobody seems to have discussed the decision with the local government and laid the groundwork, and the critical question of who gets Hyderabad still remains unanswered.  The abrupt decision making process has also suddenly brought to the forefront demands for at least 9 new states.  Before the virtues of these demands are assessed, first the Indian government deserves brickbats for sheer incompetence.
• The Iranian regime returns Shirin Ebadi’s Nobel peace prize medal.  Previous blog here.
• One of the two Chicago men arrested for planning a terrorist attack in Denmark seems to be singing about his involvement in the 26/11 Mumbai attacks.  Not surprisingly, India wants him extradited.

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What a difference from the Musharraf years, when the former Pakistani dictator peddled his b.s. and nobody in Washington bothered to check him.  However, by the end even the Bush administration lost patience with him starting covert drone attacks and looking the other way when street protests forced him into exile.  After years of ignoring the problem the Obama administration is essentially throwing down the gauntlet.  One of the concerns with the Afghanistan surge was that the Taliban could execute a strategic retreat to its Pakistani hideouts.  Now Pakistan evidently faces the choice of dealing with insurgents in its territory of having American drones do the job.

Neither option is particularly palatable to Pakistan.  Reeling from a wave of terrorist attacks, a move against the Afghan Taliban could make the situation worse.  On the other hand, its bruised national pride will find it hard to bear expanded American strikes inside its territory.  Another concern is that the civilian government already weakened by a pending court challenge to its legitimacy may not survive.  However, the real power in Pakistan belongs to the Army-ISI nexus.  While presenting them with stark choices, the administration has tried hard not to alienate them.

President Obama’s Afghanistan speech did not spend too much attention on Pakistan.  However, Pakistan is the key to resolving the military portion of the Afghanistan problem.  The Taliban’s safe havens that have existed with relative impunity over the past decade and beyond have to go if the Afghan surge is to have any success.

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An interesting read from Time on how a legal loophole allows the United States to maintain nuclear weapons in Europe which in a nightmare scenario could allow Dutch, Belgian, Italian and German pilots to engage in nuclear war.  These bombs are not militarily necessary and are politically unpopular in the host countries.  However, they are justified on political grounds to bind the NATO allies together and even more ludicrously (particularly since one of the problems with NATO is the defense spending cuts by the Europeans after the Cold War) to prevent a nuclear arms race on the continent.  It is also the type of legal parsing that hurts American credibility when it tries to prevent other countries from acquiring the bomb.

Preventing the spread of nuclear weapons was a difficult task to begin with before additional complications were added into the picture.  The NPT’s arbitrary time line dividing nuclear and non-nuclear powers does not help (and was a big reason why India refused to sign the treaty in the first place).  Then you have the tacit understanding that Israel has nuclear weapons but will never be criticized for it because they are deemed essential for its survival.  Countries like Japan are widely believed to have the knowledge necessary to produce nuclear weapons on a moments notice (which is what some observers believe Iran is really after).  And then the Bush administration muddled the picture further with talk of developing tactical nuclear devices.

It is not hard to see why conspiracy theorists come to the conclusion that non-proliferation is really designed to divide the world into permanent nuclear haves and have-nots with special rules applied to countries in American favor.

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Barack Obama’s speech yesterday threw no surprises. (Transcript here).   More troops are headed to Afghanistan (see previous post here) which has caused heartburn on the left.  There are assurances that this is not an indefinite mission and troops are supposed to start coming back by 2011 which has caused conniptions on the right.  There have been the expected harrumphs about fighting corruption and getting the Afghans ready to step up when the Americans leave (original post on Afghanistan from this blog here).

What is unclear whether this is feasible.  If the Afghan army is still a figment of imagination (previous post here) and the Karzai government remains as incompetent (both very likely scenarios) will the United States really start withdrawing to the chorus from Republicans that Obama “lost” Afghanistan?  Hopefully the answer is yes, because the prospect of an American withdrawal may be the only way to jolt the Afghan government to action.

What happens if the Taliban withdraws to its safe havens in Quetta?  Will Pakistan, which only reluctantly turned its guns on its homegrown Taliban, start another fight inside its western border in a province (Baluchistan) already brimming  on the verge of open rebellion?

What about the various NATO allies who have started withdrawing their troops?  Obama’s address noted that Al Qaeda’s attacks had targeted them as well.  Will that be sufficient to overcome the war weariness in those countries? Germany’s top general and deputy defense minister were forced to resign last week over a botched air strike and there are calls for a German withdrawal by 2011.

A successful solution is not entirely in American hands and relies a great deal on lady luck (and on wobbly Pakistan doing its bit).  Obama’s speech was a sober and realistic appraisal of the situation on the ground, but perhaps too optimistic (as such speeches always are) about success in the future (See Juan Cole’s take here).  The “success” of the Iraqi surge may have raised hopes of similar success in Afghanistan, but these are two entirely different societies with very different problems.  The future in Afghanistan remains murky.

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Reacting to the recent IAEA censure, the Iranian regime has reacted with a show of petulance announcing 10 new uranium enrichment plants for uranium it does not have.  The IAEA vote was significant in that Iran got no support from countries it could rely on in the past including Russia, China, India and South Africa.  Even though Brazil has resisted joining the international chorus, more reactions like the one this Sunday could fritter away any goodwill Iran possesses for its legal position that even the Non Proliferation Treaty allows Iran to enrich uranium for civilian use.  However, the NPT requires transparency in Iranian actions which has not been forthcoming.  The Iranian reaction may also point to continuing tensions within the regime on how to proceed without losing face.  The question is whether this back and forth forces Russia and China to join in a meaningful sanctions regime (which is useless without them) and how soon, if ever, this happens.

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Barack Obama’s recent trip to China has received much criticism for its failure to achieve much of substance, giving a short-shrift to human rights issues and even raising a minor storm in India from an otherwise innocuous press release.  However, the trip may not have been entirely wasted.  Richard Wolfe notes that lost in the press coverage (and he charitably does not mention the American media’s obsession with Sarah Palin’s new ghost-written book) were agreements reached regarding emissions targets.  This along with talks held with Indian Prime Minister Manmohan Singh during his state visit last week (which also helped defuse the brouhaha over the joint statement with China) could help break the deadlock at the upcoming Copenhagen talks.

The Chinese visit may have also contributed to the China joining the recent censure of Iran by the IAEA.  The deliverables may not be as groundbreaking as previous presidential visits abroad but address two upcoming issues on the President’s foreign policy slate.  Success in Copenhagen could reaffirm the goodwill that exists for the administration on the ground in Europe.  Bringing India and China into any global agreement to cut emissions will blunt one of the major criticisms of the Kyoto Protocol.  Likewise any Chinese help on Iran is to be welcomed.  These are small steps at present, but they could lead to greater rewards down the road.

The request by Dubai World (the investment flagship for the emirate) for a debt standstill rocked global markets this week.  The latest fallout from the bursting of the real estate bubble brings with it contagion fears and questions about how deep the problems may go.

Dubai World also raises questions regarding “quasi-sovereign debt.”  Investors who previously relied on an “implied sovereign guarantee” for debt issues by these government owned ventures may want a stronger government guarantee in the future.  Government owned entities from South Africa to Russia may find it harder to borrow funds without a risk premium unless their governments explicitly guarantee the debts (relying on the fact that essentially insolvent countries like Iceland have also not stopped paying their debts).

In political terms this also strengthens the position of Abu Dhabi within the United Arab Emirates.  Until the real estate meltdown Dubai was positioning itself as the Hong Kong and Singapore (and with some of the ridiculous buildings coming up, Las Vegas) of the Middle East.  In the process it was upsetting the delicate power balance in the UAE.  With yet another bailout now needed, the more conservative Abu Dhabi will likely extract another pound of flesh to restrain the ambitions and presumptions of Dubai.

If it were needed, Dubai World is just another example of how intertwined the global financial system is and how problems on the other side of the world can have immediate impacts at home.

• George Gavrilis suggests a closer look at the resolution of the Tajik civil war for the type of state system that may eventually emerge in Afghanistan.  While it is an interesting thought, Tajikistan did not have the same ethnic and sectarian tensions Afghanistan did and nor was it a proxy playing grounds for its neighbors.
• Another look at the relative unknowns chosen as Europe’s President and Foreign Minister.
• How the fears of a swine flu epidemic may have been cynically used as a gambit in Ukraine’s presidential election.
• How Hezbollah has used a loophole in Shiite marriage law to satisfy the libido of its foot soldiers.
• Time for the gathering of the Muslim faithful in Mecca for another Hajj, this event being overshadowed by swine flu fears and the political drama from Iran.

The New York Times reviews rising resentment in France’s former West African colonies from the French embrace of corrupt and brutal dictators.  As with the American embrace of various banana republic dictators in Central and Latin America, this could ultimately be a self-defeating policy.  In the short run, France will benefit but could lose out in the long term due to the local instability it is generating and the backlash on the ground.

In someways this mirrors the cynical Chinese attempt to lock up resources by dealing with kleptocrats and thugs across the world.  But even China (and Russia) are finding themselves the target of public ire.  In Iran it has lead to chants that routinely called for death to America and Israel, replaced with calls for death to Russia and China.  Russia in addition has an often ignored history of meddling in Iranian affairs for the last 200 years, generally to the detriment of Iranian territorial integrity and democracy.

Andrew Sullivan praises Barack Obama’s deliberative decision making in Afghanistan.  With no end in sight to the war, no Afghan army that can engage the Taliban and an incompetent and corrupt local partner, it is heartening to see that the decision is finally discussing an exit strategy.  In the short run, I think more troops will be sent to Afghanistan (the number 30,000 is being tossed around).  But with American troops already outnumbering the Taliban on the ground, this will not solve a problem that ultimately lacks a pure military solution. The Taliban can always retreat to their Pakistani refuge or melt back into the tribal heartland.The US could try securing the perimeter like the Soviets and does have the decided advantage that the people outside the urbanized zones are not all shooting at its soldiers.  But that leaves a lot of white areas on the map in the previous link from Matt Yglesias that local allies need to fill.  The corrupt thugs and kleptocrats in Kabul will be of no help in this.

Hugo Chavez appears to be beating the war drums to divert attention from his failures at home.  Its not clear what triggered the latest bellicose rhetoric from Latin America’s top blow hard, but its time Venezuelan voters gave him the message previously delivered by Spain’s King Juan Carlos (whose democratic credentials are far superior).

A follow up on a previous post.  There is yet more chatter that the Afghan Taliban led by Mullah Omar is trying to distance itself from the nihilistic campaign of Al Qaeda.  With the American ambassador in Kabul now joining the critics of an expanded military presence in Afghanistan and with Hamid Karzai showing no signs of mending his ways this could enable the United States to cut bait on the Afghan quagmire and focus primarily on Al Qaeda.  Aram Roston at The Nation has a disturbing account of how the webs of corruption in Afghanistan have the United States funding Taliban operations.  The more I read about this mess, the more I gravitate towards the camp wanting to stop wasting American lives and treasure to protect a bunch of corrupt and brutal thugs.

It appears that the peace deal in Honduras has collapsed due to the inability of the principals to trust each other.  With the existing Honduran constitution barring him from running again and with his original term set to expire the international community faces the question of whether to recognize the upcoming elections.  No side comes out of this mess smelling like roses, but there seems to be no reason to damage Honduran institutions further by propping up the expired term of President Zelaya.  For that to happen, the elections will have to be open, fair and free and certified by international monitors.

An analysis of the changing Franco-German relationship.  In someways the change is not too surprising.  Ever since the Treaty of Verdun in 843 AD unwittingly spawned the framework of Western Europe the two countries have had differing outlets for their energies.

Germany’s eyes have been drawn east for a 1,000 years.  The initial instincts starting with the defeat of the Polish King Boleslaw I Chrobry by the Emperor Henry II to the establishment of the Livonian and Teutonic Knights were expansionist.  That phase was brought to a crushing end by the newly created Polish-Lithuanian super state at the Battle of Grunwald (Tannenberg).  After dealing with internal religious strife for the next 200 years, Germany spent the century after the end of the Seven Years War keeping the newly emerged Russian giant on its door step happy and sated expansionist instincts at the expense of Poland.  The expansionist urge returned with a vengeance in the early 20th century.  The establishment of the iron curtain shut off the eastern outlet and forced Germany to look west, but with the end of the Cold War its not unnatural that the eastern flirtation resumes.  Of course. the expansionist urges today are economic.

When not nibbling away at the German border, French interests historically drew France into the Mediterranean orbit (particularly after the Crusades created a chain of Frankish states in what is now Lebanon and Israel).  But France has always had its western (and often rocky) relationship with England, the Auld alliance with Scotland and it midwifed the birth of the United States.

The historical patterns are not guaranteed to repeat themselves, but they do suggest that the support structure forged after World War II that enabled the two nations (one recovering from military humiliation and the other from annihilation) to regain their strength together may have run its course.  The impact on the creaky new European State will be interesting to observe.

Time magazine reviews Hillary’s performance at the State Department.  Tina Brown who previously tut-tutted that Barack Obama had essentially made Hillary don a burkha, changed her tune after the blunt press conference in Pakistan.  See previous post on the subject here.  With the presence of Joe Biden, Robert Gates and Susan Rice in the cabinet and not to mention the President’s own strong views on the importance of diplomacy, Hillary Clinton was never going to have carte blanche on foreign policy (and but for the scandal in New Mexico that kept former ambassador extraordinaire Bill Richardson out of the cabinet she would have had to contend with another foreign policy heavyweight).  However, the tensions within the administration so far have not spilled into the public.  As Tina Brown notes, she appears comfortable with where she is.  Even with an occasional gaffe like the one on Israeli settlements last week, she has largely stayed on message.  With the most challenging foreign policy atmosphere in a generation Barack Obama will need all the help he can get.

As noted earlier, there seems little enthusiasm to create a genuine European state which would require an even greater surrender of national sovereignty to Brussels.  The Economist on how the process to select the new President will lead to a noneity whose words will carry little weight.  But even if the Europeans choose a stronger personality for the Presidency and for Foreign Minister, the larger European countries are unlikely to kowtow to the missives from Brussels.  With such an inherently flawed structure, the whole debate seems an exercise in futility.

The Economist details the simmering tensions between China and India and the ongoing struggle to resolve the century long dispute over the McMahon Line.  Ever since India’s defeat in its 1962 war with China, the two countries have eyed each other warily.  Pakistan ever eager to seek a counterweight against India has latched on to the Chinese lifeline, while India during the Cold War veered towards the Soviet Union.  In recent years some American policymakers have sought out India as a counterweight to the emerging Chinese superpower.

None of this is in the long term interest of either country.  Both have restive minority regions and threats to their stability from regions that have not shared in their economic boom.  The dispute at present is also over a remote sparsely populated region which few Chinese or Indians have bothered to visit, but as the Economist notes is complicated by ties to Tibet.  Hopefully calmer heads will prevail and the countries will avoid a armed confrontation driven solely by notions of national pride.

David Ignatius on the Iranian regime’s need to keep America as the Great Satan to survive.  This is also why Barack Obama who is not as easily caricatured and demonized is an existential risk to the regime.  It also reflects the fundamental bankruptcy of the Iranian regime that at present can muster broader support by rallying people around the flag against a real or mythical enemy (Think Wag the Dog or Canadian Bacon).  Another reason why military strikes would be just the medicine the mullahs ordered.

Iran is hardly unique in this.  Ever since the creation of Bangladesh, the strongest glue holding Pakistan together (and used by its army to justify its expenditures) is reflexive anti-India sentiment.  In the United States the military-industrial complex has desperately searched for a new conventional threat to justify America’s obscene military spending, from talking up the Chinese military threat in the mid 1990s, to exaggerating the threat posed by the ramshackle militaries of Saddam Hussein’s Iraq and now Iran.  Sadly the tactic works all too often.

Kevin Drum on the practical limitations the United States has on sanctioning Iran.  With Iran repeatedly backtracking on the recent nuclear deal, recent opinion pieces have touted harsh sanctions to change the regime’s behavior.   The problem with sanctions in recent years from Burma to Zimbabwe has been their limited utility in changing behavior.  But, Iran is more tied into the world, economically and culturally, than either of those two rogue states.   A smart sanction regime could have some effect.  But that is feasible only if Russia and China go along with them.  At present that does not seem likely.

Time has an article up on the recent United States summons to the Sri Lankan army chief who is in the country visiting his daughters.  A lot of cloak and dagger stuff surrounding the meeting.  Interesting to learn that the general is a United States permanent resident, giving the United States some legal leverage over him.  As noted earlier, Sri Lanka needs to get its act together on its impending human catastrophe.  While there may be some defense for military actions to eliminate the LTTE, with each passing day the internment camps are harder to defend.

With the withdrawal of Abdullah Abdullah and the declaration of Hamid Karzai’s victory the United States is now stuck with him.  The usual congratulatory call from the American President appears to have been unusually terse.  In addition to cleaning up his act on all fronts, much also depends on how Karzai reaches out to his opponents.  To the extent any goodwill gestures are made, they will likely be the result of outside pressure.  I am not holding my breath on much improvement on the Afghan domestic front.