The choice for Obama lies on the road to Jerusalem

[The Israeli-Palestinian conflict] is the issue that more than any other shapes attitudes in the [Middle East] towards the US. On almost everything else, probably the best the incoming president can hope for is to damp the fires. A deal between Israel and the Palestinians would change the game.

Yet here Mr Obama has promised least. True, he has made the right noises about throwing his authority behind a two-state solution. There is talk of the appointment of a special US envoy to take a permanent seat at the negotiating table. As yet, however, Mr Obama has given little sign that he is ready to invest the energy and political capital to broker a deal.

You can see why. The Annapolis process, the belated effort by the Bush administration to secure an accord, has gone nowhere slowly. This week the outgoing administration all but abandoned hopes of progress before Mr Bush leaves the White House.

Tony Blair, the United Nations’ special envoy to the region, displayed all his trademark optimism by insisting that a “platform” was in place for a final settlement. We have heard that one before.

The polls suggest that the Israeli elections are unlikely to deliver a coalition with the authority to strike a land-for-peace bargain with the Palestinians. Benjamin Netanyahu, the hawkish Likud leader, may emerge as prime minister. During his last spell in office Mr Netanyahu sought to derail the Oslo accords. I have heard it said that the one meeting that went badly during Mr Obama’s tour of the Middle East and Europe this year was his encounter with Mr Netanyahu.

For their part, the Palestinians remain divided in spite of the best efforts of Egyptian mediation. Hamas has so far refused to offer the recognition of Israel demanded by the international community. In the absence of a committed interlocutor on the Israeli side, it is hard to see what would prompt Fatah and Hamas to settle their differences.

So why should Mr Obama risk his reputation in such a cause? The answer comes in several parts.

The early years of his presidency will be his best, and quite possibly the last, chance to broker a two-state solution. Facts on the ground – demography, the West Bank barrier, Israeli settlements across swaths of the West Bank, Palestinian radicalism in Gaza – are steadily undermining the bargain that would give Israel security and the Palestinians a state.

For all the formidable obstacles to an agreement, Mr Obama’s heritage and the nature of his victory has bestowed as much authority among Israelis, Palestinians and in the wider Arab world as any US president can ever expect. This precious political capital will diminish over time.

A serious and even-handed effort to promote peace between Israel and the Palestinians would disarm the most serious charge against US policy in the region: that everything it does is rooted in double standards.

A deal would not settle all the problems and conflicts. Nor, of itself, would it repair the relationship between the west and much of the Islamic world. Al-Qaeda and its affiliates would find plenty of other reasons to attack America. Yet the creation of a Palestinian state would change profoundly the dynamics of the Middle East. It would make possible much that now seems beyond all reasonable reach.

Brokering such an accord would be tough and thankless. Mr Obama might well fail in the attempt. But there lies the existential choice for Mr Bush’s successor. Does he want to patch things up? Or does he want to redraw the strategic map of the Middle East and thereby set a new direction for America’s role in the world? That, in the final analysis, is what will mark out the difference between a competent and a transformational presidency. [continued…]

Settlers who long to leave the West Bank

Surrounded by hostility, living on land most of the world wants turned over to Palestinians for a state, they meet quietly in Jewish settlements like this one, plotting the future. But these besieged West Bank settlers, widely viewed as an obstacle to peace, want only one surprising thing: to get out.

While the vast majority of settlers vow never to abandon the heart of the historic Jewish homeland — these ancient and starkly beautiful hills whose biblical names are Judea and Samaria — thousands of other settlers say they want to move back to within the pre-1967 borders of Israel.

They say the West Bank settlement enterprise — at least that part beyond the barrier of wall and fence Israel has been building — is doomed and their lives are at risk. Many say something else as well: The Israeli occupation of land claimed by the Palestinians is wrong and they want no part of it. But their houses are worthless, and they are stuck. They want help. [continued…]

Islamists continue advance through Somalia

Islamist militias in Somalia on Thursday continued their steady and surprisingly uncontested march toward the capital, Mogadishu, capturing a small town on the outskirts of the city.

Several dozen Islamist fighters poured into Elasha Biyaha, which is 11 miles southwest of Mogadishu, after government-allied militias fled. No shots were fired, but residents feared it was only a matter of time.

“Many people are now on the verge of fleeing,” said Yusuf Abdi Nur, a shopkeeper in Elasha Biyaha.

The tense but bloodless capture of Elasha Biyaha was a carbon copy of what happened in Merka, a strategic port town, on Wednesday, when hundreds of heavily armed Islamist militants took over the town after government-allied troops beat a hasty retreat. [continued…]

Editor’s Comment — Somalia represents one of the most glaring failures of the war on terrorism. In the name of opposing terrorism, the Bush administration helped undermine the first sign of stability that had appeared in that grief stricken state in over a decade — the prospect of the end of civil war was of no inherent value in the eyes of Washington if Somalia’s government was going to be Islamist. But the result of opposing the Islamic Courts Union was to strengthen the more extreme wing, the Shabab.

Just before the election, Nicholas Kristof wrote in the New York Times:

    During the cold war, the American ideological fear of communism led us to mistake every muddle-headed leftist for a Soviet pawn. Our myopia helped lead to catastrophe in Vietnam.

    In the same way today, an exaggerated fear of “Islamofascism” elides a complex reality and leads us to overreact and damage our own interests. Perhaps the best example is one of the least-known failures in Bush administration foreign policy: Somalia.

    Today, Somalia is the world’s greatest humanitarian disaster, worse even than Darfur or Congo. The crisis has complex roots, and Somali warlords bear primary blame. But Bush administration paranoia about Islamic radicals contributed to the disaster.

    Somalia has been in chaos for many years, but in 2006 an umbrella movement called the Islamic Courts Union seemed close to uniting the country. The movement included both moderates and extremists, but it constituted the best hope for putting Somalia together again. Somalis were ecstatic at the prospect of having a functional government again.

    Bush administration officials, however, were aghast at the rise of an Islamist movement that they feared would be uncooperative in the war on terror. So they gave Ethiopia, a longtime rival in the region, the green light to invade, and Somalia’s best hope for peace collapsed.

    “A movement that looked as if it might end this long national nightmare was derailed, in part because of American and Ethiopian actions,” said Ken Menkhaus, a Somalia expert at Davidson College. As a result, Islamic militancy and anti-Americanism have surged, partly because Somalis blame Washington for the brutality of the Ethiopian occupiers.

    “There’s a level of anti-Americanism in Somalia today like nothing I’ve seen over the last 20 years,” Professor Menkhaus said. “Somalis are furious with us for backing the Ethiopian intervention and occupation, provoking this huge humanitarian crisis.”

    Patrick Duplat, an expert on Somalia at Refugees International, the Washington-based advocacy group, says that during his last visit to Somalia, earlier this year, a local mosque was calling for jihad against America — something he had never heard when he lived peacefully in Somalia during the rise of the Islamic Courts Union.

    “The situation has dramatically taken a turn for the worse,” he said. “The U.S. chose a very confrontational route early on. Who knows what would have happened if the U.S. had reached out to moderates? But that might have averted the disaster we’re in today.”

    The greatest catastrophe is the one endured by ordinary Somalis who now must watch their children starve. But America’s own strategic interests have also been gravely damaged.

    The only winner has been Islamic militancy. That’s probably the core reason why Al Qaeda militants prefer a McCain presidency: four more years of blindness to nuance in the Muslim world would be a tragedy for Americans and virtually everyone else, but a boon for radical groups trying to recruit suicide bombers.

CIA chief says Qaeda is extending its reach

Even as Al Qaeda strengthens its hub in the Pakistani mountains, its leaders are building closer ties to regional militant groups in order to launch attacks in Africa and Europe and on the Arabian Peninsula, the director of the Central Intelligence Agency said Thursday.

The director, Michael V. Hayden, identified North Africa and Somalia as places where Qaeda leaders were using partnerships to establish new bases. Elsewhere, Mr. Hayden said, Al Qaeda was “strengthening” in Yemen, and he added that veterans of the fighting in Iraq and Afghanistan had moved there, possibly to stage attacks against the government of Saudi Arabia.

He said the “bleed out” from the wars in Iraq and Afghanistan also extended to North Africa, raising concern that the countries there could be used to stage attacks into Europe. Mr. Hayden delivered his report in a speech to the Atlantic Council of the United States in Washington, and it offered a mixed assessment of Al Qaeda’s ability to wage a global jihad.

He drew a contrast between what he described as growing Islamic radicalism in places like Somalia and what he said had been the “strategic defeat” of Al Qaeda in Mesopotamia — the network’s affiliate group in Iraq. [continued…]

Editor’s Comment — Al Qaeda is as strong as the policies of the Bush administration helped make it. If Hayden had not been such a willing party to the administration’s strategic and tactical mistakes he might now have the honesty and humility to acknowledge that America will soon be free from the threat posed by its greatest security liability — the current administration. And had the director of the CIA a broader mind he might also acknowledge that the threats posed to America by climate change and economic turmoil, dwarf those posed by a few thousand violent fundamentalists.

The worst is not behind us

It is useful, at this juncture, to stand back and survey the economic landscape–both as it is now, and as it has been in recent months. So here is a summary of many of the points that I have made for the last few months on the outlook for the U.S. and global economy, as well as for financial markets:

–The U.S. will experience its most severe recession since World War II, much worse and longer and deeper than even the 1974-1975 and 1980-1982 recessions. The recession will continue until at least the end of 2009 for a cumulative gross domestic product drop of over 4%; the unemployment rate will likely reach 9%. The U.S. consumer is shopped-out, saving less and debt-burdened: This will be the worst consumer recession in decades.

–The prospect of a short and shallow six- to eight-month V-shaped recession is out of the window; a U-shaped 18- to 24-month recession is now a certainty, and the probability of a worse, multi-year L-shaped recession (as in Japan in the 1990s) is still small but rising. Even if the economy were to exit a recession by the end of 2009, the recovery could be so weak because of the impairment of the financial system and the credit mechanism that it may feel like a recession even if the economy is technically out of the recession.

–Obama will inherit an economic and financial mess worse than anything the U.S. has faced in decades: the most severe recession in 50 years; the worst financial and banking crisis since the Great Depression; a ballooning fiscal deficit that may be as high as a trillion dollars in 2009 and 2010; a huge current account deficit; a financial system that is in a severe crisis and where deleveraging is still occurring at a very rapid pace, thus causing a worsening of the credit crunch; a household sector where millions of households are insolvent, into negative equity territory and on the verge of losing their homes; a serious risk of deflation as the slack in goods, labor and commodity markets becomes deeper; the risk that we will end in a deflationary liquidity trap as the Fed is fast approaching the zero-bound constraint for the Fed funds rate; the risk of a severe debt deflation as the real value of nominal liabilities will rise, given price deflation, while the value of financial assets is still plunging. [continued…]

Depression economics returns

The economic news, in case you haven’t noticed, keeps getting worse. Bad as it is, however, I don’t expect another Great Depression. In fact, we probably won’t see the unemployment rate match its post-Depression peak of 10.7 percent, reached in 1982 (although I wish I was sure about that).

We are already, however, well into the realm of what I call depression economics. By that I mean a state of affairs like that of the 1930s in which the usual tools of economic policy — above all, the Federal Reserve’s ability to pump up the economy by cutting interest rates — have lost all traction. When depression economics prevails, the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly….

To pull us out of this downward spiral, the federal government will have to provide economic stimulus in the form of higher spending and greater aid to those in distress — and the stimulus plan won’t come soon enough or be strong enough unless politicians and economic officials are able to transcend several conventional prejudices.

One of these prejudices is the fear of red ink. In normal times, it’s good to worry about the budget deficit — and fiscal responsibility is a virtue we’ll need to relearn as soon as this crisis is past. When depression economics prevails, however, this virtue becomes a vice. F.D.R.’s premature attempt to balance the budget in 1937 almost destroyed the New Deal.

Another prejudice is the belief that policy should move cautiously. In normal times, this makes sense: you shouldn’t make big changes in policy until it’s clear they’re needed. Under current conditions, however, caution is risky, because big changes for the worse are already happening, and any delay in acting raises the chance of a deeper economic disaster. The policy response should be as well-crafted as possible, but time is of the essence.

Finally, in normal times modesty and prudence in policy goals are good things. Under current conditions, however, it’s much better to err on the side of doing too much than on the side of doing too little. The risk, if the stimulus plan turns out to be more than needed, is that the economy might overheat, leading to inflation — but the Federal Reserve can always head off that threat by raising interest rates. On the other hand, if the stimulus plan is too small there’s nothing the Fed can do to make up for the shortfall. So when depression economics prevails, prudence is folly. [continued…]

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