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“Decisive Storm” Blows Over

Once upon a time big military operations were given obscure names so the enemy wouldn’t guess what the plan was. The German plan for the invasion of France in 1940 was called “Fall Gelb” (Case Yellow); the American counter-attack in the Korean War that recovered Seoul was “Operation Chromite”. But then the PR guys got their hands on it.

By the 21st century we were getting dramatic titles like “Desert Storm” (the 1991 Gulf war), and then aspirational ones like “Operation Iraqi Freedom”. So it was only natural, when Saudi Arabia decided to bomb the Houthi rebels who had taken over most of Yemen, to name the operation “Decisive Storm”. That sounds nice and decisive, and stormy too.

And when the Saudi military spokesman, Brig-Gen Ahmed al-Asiri, announced on Tuesday that Saudi Arabia was calling the bombing campaign off after one month and 2,415 bombing sorties, he naturally claimed that it had been a decisive victory. The bombing had destroyed 80 percent of the Houthis’ “transport lines” (colloquially known as “roads”), and they had also knocked out all of the rebels’ ballistic missiles.

Ballistic missiles? Yes, the Houthis had captured a base outside Sana’a that was home to some Scud B ground-to-ground missiles (range 300 km., vintage 1965), although they might not actually fly after half a century of Yemeni-style maintenance, and they could barely reach the country’s own borders if they did.

Anyway, the Saudi Arabian Air Force took them out, so we can all rest easier now. A Saudi billionaire has even promised to give each of the 100 Saudi pilots involved in the bombing campaign a Bentley (sort of a down-market Rolls-Royce) in gratitude for their efforts.

Moreover, said General al-Amiri, the Houthi militia is no longer in a position to harm civilians. He didn’t actually say so, but you would assume from the context and his manner that Yemen is now at peace, and the Houthis have all gone home to their own tribal territory in the north of Yemen, and Yemen’s legitimate president is safely back in Sana’a, the capital.

What’s that? The legitimate president is still in exile in Saudi Arabia? And the Houthis haven’t gone home either? They still control most of Yemen right down to Aden. And the remainder of the country is now ruled by Al Qaeda in the Arabian Peninsula, except for the bits run by its even nastier Islamist rival, ISIS. How is that a victory?

Have some pity for poor General al-Asiri. He had to say something positive; he works for the government. But the one scene that defines the event was a television studio in Sana’a where a Yemeni news anchor was running a clip of Asiri’s speech. When the anchor comes back on the screen and picks up his script, he can’t say anything. He’s trying to, but he’s corpsing.

He giggles, he snorts, he fans himself with his script, he puts his head on the desk, he completely loses it. And then the people behind the camera start laughing too. This is known in PR-speak as “abject failure”. When you are trying to convince your audience that your bankruptcy was actually a canny tactical move, you do not want them to collapse in hysterical laughter.

What can have possessed Saudi Arabia to launch this foredoomed aerial campaign, and rope in practically every other Sunni Arab state to send a few planes along to help? Mostly, it was simple paranoia. The Saudi Arabian authorities have convinced themselves that the “Shias” (by which they usually mean Iran) are on the offensive, and gobbling up any Arab territories where they can find fellow Shias. The Houthis are Shias. Q.E.D.

There was a lot of talk about Iran supplying arms to the Houthis at the start of the bombing campaign, and the Saudis managed to get almost every other Sunni Arab counry to send a couple of planes along to help. At the end of it, General al-Asiri didn’t mention the Iranians at all. Maybe they all went home (although it would be hard to leave with all the airports shut and the coast under naval blockade). Or maybe they were never there.

Bigger countries have made bigger mistakes and paid quite small prices: the United States invasion of Iraq, for example. Saudi Arabia won’t pay a big price either, for it appears that the grown-ups in Riyadh have intervened after a month and turned the military machine off. No follow-up ground invasion, just a smooth transition to “Operation Restore Hope”, the humanitarian aid they would have provided after they’d won, if they had won.

Saudi Arabia is well out of it, and as outcomes go, it’s less bad than many. Just a bit of advice. Stop using those American-style names for operations. When the United States started using them is when it started fighting dumb wars, and losing them.

STOP PRESS: On Wednesday, the Saudis started bombing again, but just a bit, they said. Oh, well…
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To shorten to 725 words, omit paragraphs 5 and 11. (“Anyway…efforts”; and “There was…there”)

The End of the BRICs

“The only function of economic forecasting is to make astrology look respectable,” said John Kenneth Galbraith, the wisest American economist of his generation. (“A paltry honour,” he would have murmured.) But you still can’t resist wondering when the Chinese economy will be bigger than the US economy – or the Brazilian bigger than the British, or the Turkish bigger than the Italian – as if it were some kind of horse race.

The latest document to tackle these questions is “The World in 2050″, drawn up by HSBC bank, which ranks the world’s hundred biggest economies as they are now, and as (it thinks) they will be in 2050. It contains the usual little surprises, like a prediction that per capita incomes in the Philippines and Indonesia, now roughly the same, will diverge so fast that the average Filipino will have twice the income of the average Indonesian by 2050.

The Venezuelan economy will only triple in size, but Peru’s economy will grow eightfold. Per capita income will double-and-a-bit in Nigeria; in Ethiopia it will grow sixfold. Bangladesh powers past Pakistan, with a per capita income in 2050 that’s half again as big as Pakistan’s. (It’s only two-thirds of Pakistan’s at the moment.) And so on and so forth: local phenomena mostly of interest to local people.

But what’s happening at the top of the list is of interest to everybody. That’s where the great powers all live, with the BRICs nipping at their heels. Or rather, some of the BRICs are nipping at their heels, and some are not. That’s the big news.

We owe the concept of the BRICs to Jim O’Neill, who came up with it almost fifteen years ago when he was head of economics at Goldman Sachs. He was the first to realise that some big, poor countries were growing so fast economically that they would overtake the established great powers in a matter of decades.

The really impressive performers were Brazil, Russia, India and China, so he just called them the BRICs – and pointed out that at current growth rates the Chinese economy would be bigger than that of the United States by the 2040s. We’re quite familiar with that kind of prediction today, but at the time it was shocking (especially to Americans), and the term BRIC has become firmly entrenched in the language. Just in time for HSBC to spoil it.

By now the BRICs are formally the BRICS (with a capital S added for South Africa), . But the South African economy is only in the group out of courtesy, because you couldn’t leave Africa out altogether. It’s much smaller than any of the others and growing very slowly, so you can safely leave it out of the calculations altogether.

China is performing roughly as expected, and by 2050 its economy will be around 10 percent bigger than that of the United States. (Per capita income, of course, is a different matter, and even then China’s will be only a third of America’s.) India will come next, but with an economy only one-third as big as China or the United States
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But the other BRICs practically vanish from view. Brazil hasn’t even overtaken Britain by 2050, despite having three times as many people. And Russia’s performance is downright embarrassing: its economy barely doubles in the next 35 years, and it ends up smaller than Spain’s. So six of the top ten countries in the 2050 list are already there today, and the world isn’t going to look so dramatically different at all.

Now, predictions like this are open to all sorts of criticism. China’s growth rate has consistently been two or three percentage points higher than India’s for several decades. Project that to 2050, and China ends up far ahead of India. But China’s growth rate is falling, and India’s may even overtake it this year.

India will almost certainly grow faster in the long run, because it has a young, rapidly growing labour force and China does not. There’s enough time for that to change the pecking order radically by 2050.

The recent performance of the economy obviously affects the long-range forecast more than it should, so Russia drops down the list and Mexico goes soaring up. Five years ago it would have been the other way around, and yet there’s no reason to believe that the fundamental strengths of either economy have changed.

And then there are the “Black Swans”, events like the Sarajevo assassination that tumbled the world into the First World War and invalidated all existing assumptions about the economic future. Not to mention the disasters that you know are coming, like catastrophic climate change – but leave out of your calculations anyway, because you don’t know how to quantify them and don’t know when they will arrive even to the nearest decade.

All that said, some sketchy notion of what the future may bring is better than no idea whatever. And the basic idea behind the BRICs is still sound: the centre of gravity of the world economy is moving south and east.
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To shorten to 725 words, omit paragraphs 3, 7 and 12. (“The Venezuelan…people”; “By now….altogether”, and “The recent…changed”)

The Middle East: Iran is Back

“This (Arab) nation, in its darkest hour, has never faced a challenge to its existence and a threat to its identity like the one it’s facing now,” said General Abdel Fattah al-Sisi, now the ruler of Egypt.

And you wanted to say: Not the Crusades? Not the Mongol invasion? Not even the European conquest of the entire Arab world between 1830 and 1920? You really think the gravest threat ever to Arab existence and identity is a bunch of tribal warriors in Yemen?

Sisi was addressing the Arab League summit in Cairo last week that created a new pan-Arab military force to confront this threat, so overheated rhetoric was standard issue, but still…. The air forces of Saudi Arabia and its Gulf neighbours are blasting Yemen from the air, and there is talk of Saudi Arabian, Egyptian and even Pakistani troops invading on the ground, but it all smells more of panic than of strategic calculation.

The panic is due to the fact that the status quo that has prevailed in the Middle East since approximately 1980 is at an end. Iran is back, and there is great dismay in the palaces of Riyadh – especially because it was Saudi Arabia’s great friend and ally, the United States, who finally set Iran free.

It was the agreement in Lausanne last Thursday between Iran and the group of 5+1 (the United States, Russia, China, Britain, France and Germany) that marked the end of the status quo. It was about ending the various trade embargoes against Iran in return for ten to fifteen years of strict controls on Iran’s nuclear power programme, but it will also let Iran out of the jail it has been confined to since the 1979 revolution.

Initially that revolution was quite scary for Iran’s Arab neighbours, because Iran’s example in overthrowing the local pro-Western ruler and taking a stronger stand against Israel was very popular in the Arab street. The solution was to paint Iran as a crazy terrorist state and isolate it as much as possible from the rest of the region.

The other tactic that the conservative Arab states deployed was to stress the religious gulf between Iran (which is 90 percent Shia) and the Arab countries (whose people are at least 85 percent Sunni). The doctrinal differences are real, but they do not normally make ordinary people see one another as natural enemies unless somebody (like state propaganda) works hard at it.

Those measures worked for twenty years, assisted by some really stupid Iranian actions like holding US embassy personnel hostage for 444 days, but by the end of the 20th century they were losing credibility. What saved the “quarantine” policy in 2002 was the discovery that Tehran had been working on nuclear weapons design.

The work was a revival of research that had been started during the US-backed Iraqi invasion of Iran in 1980-88 (when Saddam Hussein certainly was working on nuclear weapons), and was shut down afterwards. It was restarted in 1998, almost certainly in response to the nuclear weapons tests by Pakistan, Iran’s eastern neighbour. It was Iran being stupid again, but it was probably never about Israel.

The alleged Iranian nuclear threat provided the basis for another decade and more of political quarantine and trade embargoes that have crippled Iran economically and isolated it politically. All that came to a sudden end last week with the agreement in principle in Lausanne (unless the Saudi Arabian and Israeli lobbies in Washington manage to torpedo the deal in the next few months).

Iran has about the same population and GDP as Egypt, the biggest Arab country by far, but it is far closer both to the Arab Gulf states and to the Sunni-Shia battlegrounds in Iraq and Syria (both of whose governments are closely linked to Tehran). That’s what Sisi was really talking about when he spoke of an existential threat to Arab existence and identity. However, he’s still talking through his hat.

Arab existence and identity are nowhere at risk, and Iran has no need to paint the Sunni Arab countries as enemies. The Iranian regime may be losing its support among the young (or maybe not), but it has absolutely no need to inoculate them against the attraction of Arab political systems and foreign policies by promoting an Arab-Iranian confrontation. They hold no attraction whatever for young Iranians.

As for the notion that the Houthi militia that now controls most of Yemen is really an Iranian tool (which is the main justification for the military intervention there), it is nonsense. The Houthis, like the Iranians, are Shias, but they have their own local interests to protect, and Iran has no plausible reason to want some sort of strategic foothold in Yemen. It is a safe bet that there is not now even a single armed Iranian in Yemen.

If the United States could send troops into Iraq in 2003 in the delusionary belief that Saddam Hussein had weapons of mass destruction, then Saudi Arabia can believe that it is fighting Iranians in Yemen now. No country has a monopoly on stupidity, and Riyadh will probably have ample opportunity to regret its mistake.
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To shorten to 725 words, omit paragraphs 2, 7 and 9. (“And you…Yemen”; “The other…at it; and “The work…Israel”)

The “Oil War”

“Did you know there’s an oil war? And the war has an objective: to destroy Russia,” said Venezuelan President Nicolas Maduro in a live television speech last week. “It’s a strategically planned war … also aimed at Venezuela, to try and destroy our revolution and cause an economic collapse.” It’s the United States that has started the war, Maduro said, and its strategy was to flood the market with shale oil and collapse the price.

Russia’s President Vladimir Putin agrees. “We all see the lowering of oil prices.” he said recently. “There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.” The evil Americans are at it again. They’re fiendishly clever, you know.

We are hearing this kind of talk a lot these days, especially from countries that have been hit hard by the crash in the oil price. Last Thursday Brent crude hit $55 per barrel, precisely half the price it was selling for last June. The Obama administration’s announcement last week that it is preparing to allow the export of some US oil to foreign markets may send it even lower. (US crude oil exports have been banned since 1973.)

When the oil price collapses, countries that depend very heavily on oil exports to make ends meet are obviously going to get hurt. President Putin, who has let Russia get itself into a position where more than half its budget revenue comes from oil and gas sales (some estimates go as high as 80 percent) is in deep trouble: the value of the rouble has halved, and the economy has already slipped into recession.

Venezuela, where government spending is certainly more than 50 percent dependent on oil exports, is in even deeper trouble – and, like Putin in Russia, President Maduro of Venezuela sees this as the result of an American plot. Various commentators in the West have taken up the chorus, and the conspiracy theory is taking root all over the developing world.

So let us consider whether there really is an “oil war”. The accusation is that the United States is deliberately “flooding the market” with shale oil, that is, with oil that has only become available because of the fracking techniques that have become widespread, especially in the US, over the past decade. Moreover, Washington is doing this for political purposes, not just because it makes economic sense for the United States to behave like this.

In order to believe this conspiracy theory, however, you really have to think that a rational US government, acting in its own best economic interests, would do the opposite: suppress the fracking techniques and keep American oil production low, in order to keep its imports up and the oil price high. But why on earth would it want to do that?
You will note that I am going along with the notion (a necessary part of the conspiracy theory) that all important business decisions in the United States are ultimately made by the US government. That is ridiculous, of course, but we don’t need to refute this delusion in order to settle the question at hand, so let it pass.

Hydraulic fracturing (“fracking”) as a means of recovering gas and oil, particularly from shale formations, has its roots in early attempts dating back as far as 1947, but it was the development of cheap and reliable techniques for horizontal drilling in the late 1980s that slowly began to transform the US oil industry.

By 2012, over a million fracking operations had been performed in US wells – but in 2012, last year’s events in Ukraine were unforeseen and the United States and Russia were still on relatively good terms. Many oil-exporting countries were worried by the prospect that rising US oil and gas production would shrink American imports and thereby cut their own profits, but it was still seen as a supply-and-demand problem, not a strategic manoeuvre.

The operators wanted to make a profit, and Washington liked the idea that rising US domestic oil production might end the country’s dependence on imported oil from unstable places so much that it gave tax breaks and even some direct subsidies to the companies developing the fracking techniques. But that’s no more than what any other government of an oil-producing country would have done.

So did the US develop fracking to hurt its enemies? The dates just don’t work for Russia: fracking was already making US production soar years before Washington started to see Moscow as an enemy. As for Venezuela, it continues to be the fourth-largest exporter of oil to the United States, at a time when the glut of oil on the market would let Washington cut Venezuela out of the supply chain entirely.

And Barack Obama is not opening the flood-gates for massive American oil exports that will make the oil price fall even lower. The US still imports a lot of oil, and will go on doing so for years. He has only authorised the export of a particular kind of ultra-light oil that is in over-supply on the domestic market: only about one million barrels of it, with actual exports not starting until next August.

If this is a conspiracy, it’s a remarkably slow-moving one.
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To shorten to 725 words, omit paragraphs 8, 9 and 12. (“You…industry”; and “The operators…done”)