Islamist Militancy in a Pre- and Post-Saleh Yemen
By Reva Bhalla
Nearly three months have passed since the Yemeni capital, Sanaa, first saw mass demonstrations against Yemeni President Ali Abdullah Saleh, but an exit from the current stalemate is still nowhere in sight. Saleh retains enough support to continue dictating the terms of his eventual political departure to an emboldened yet frustrated opposition. At the same time, the writ of his authority beyond the capital is dwindling, which is increasing the level of chaos and allowing various rebel groups to collect arms, recruit fighters and operate under dangerously few constraints.
The prospect of Saleh’s political struggle providing a boon to al Qaeda in the Arabian Peninsula (AQAP) is understandably producing anxiety in Washington, where U.S. officials have spent the past few months trying to envision what a post-Saleh Yemen would mean for U.S. counterterrorism efforts in the Arabian Peninsula.
While fending off opponents at home, Saleh and his followers have been relying on the “me or chaos” tactic abroad to hang onto power. Loyalists argue that the dismantling of the Saleh regime would fundamentally derail years of U.S. investment designed to elicit meaningful Yemeni cooperation against AQAP or, worse, result in a civil war that will provide AQAP with freedom to hone its skills. Emboldened by the recent unrest, a jihadist group called the Abyan-Aden Islamic Army launched a major raid on a weapons depot in Jaar in late March, leading a number of media outlets to speculate that the toppling of the Saleh regime would play directly into the hands of Yemen’s jihadists.
Meanwhile, the opposition has countered that the Yemeni jihadist threat is a perception engineered by Saleh to convince the West of the dangers of abandoning support for his regime. Opposition figures argue that Saleh’s policies are what led to the rise of AQAP in the first place and that the fall of his regime would provide the United States with a clean slate to address its counterterrorism concerns with new, non-Saleh-affiliated political allies. The reality is likely somewhere in between.
The Birth of Yemen’s Modern Jihadist Movement
The pervasiveness of radical Islamists in Yemen’s military and security apparatus is no secret, and it contributes to the staying power of al Qaeda and its offspring in the Arabian Peninsula. The root of the issue dates back to the Soviet-Afghan war, when Osama bin Laden, whose family hails from the Hadramawt region of the eastern Yemeni hinterland, commanded a small group of Arab volunteers under the leadership of Abdullah Azzam in the Islamist insurgency against the Soviets through the 1980s. Yemenis formed one of the largest contingents within bin Laden’s Arab volunteer force in Afghanistan, which meant that by 1989, a sizable number of battle-hardened Yemenis returned home looking for a new purpose.
They did not have to wait long. Leading the jihadist pack returning from Afghanistan was Tariq al Fadhli of the once-powerful al Fadhli tribe based in the southern Yemeni province of Abyan. Joining al Fadhli was Sheikh Abdul Majid al Zindani, the spiritual father of Yemen’s Salafi movement and one of the leaders of the conservative Islah party (now leading the political opposition against Saleh). The al Fadhli tribe had lost its lands to the Marxists of the Yemeni Socialist Party (YSP), which had ruled South Yemen with Soviet backing throughout the 1980s while North Yemen was ruled with Saudi backing. Al Fadhli, an opportunist who tends to downplay his previous interactions with bin Laden, returned to his homeland in 1989 (supposedly with funding from bin Laden) with a mission backed by North Yemen and Saudi Arabia to rid the south of Marxists. He and his group set up camp in the mountains of Saada province on the Saudi border and also established a training facility in Abyan province in South Yemen. Joining al Fadhli’s group were a few thousand Arabs from Syria, Egypt, Saudi Arabia and Jordan who had fought in Afghanistan and faced arrest or worse if they tried to return home.
When North and South Yemen unified in 1990 following the collapse of the Soviet Union, Yemen’s tribal Salafists, still trying to find their footing, were largely pushed aside as the southern Marxists became part of the new Republic of Yemen, albeit as subjugated partners to the north. Many within the Islamist militant movement shifted their focus to foreign targets — with an eye on the United States — and rapidly made their mark in December 1992, when two hotels were bombed in the southern city of Aden, where U.S. soldiers taking part in Operation Restore Hope in Somalia were lodged (though no Americans were killed in the attack). A rocket attack against the U.S. Embassy in January 1993 was also attempted and failed. Though he denied involvement in the hotel attacks, al Fadhli and many of his jihadist compatriots were thrown in jail on charges of orchestrating the hotel bombings as well as the assassination of one of the YSP’s political leaders.
But as tensions intensified between the north and the south in the early 1990s, so did the utility of Yemen’s Islamist militants. Yemeni President Ali Abdullah Saleh brokered a deal in 1993 with al Fadhli in which the militant leader was released from jail and freed of all charges in exchange for his assistance in defeating the southern socialists, who were now waging a civil war against the north. Saleh’s plan worked. The southern socialists were defeated and stripped of much of their land and fortunes, while the jihadists who made Saleh’s victory possible enjoyed the spoils of war. Al Fadhli, in particular, ended up becoming a member of Saleh’s political inner circle. In tribal custom, he also had his sister marry Brig. Gen. Ali Mohsen al-Ahmar, a member of the president’s Sanhan tribe in the influential Hashid confederation and now commander of Yemen’s northwestern military division and 1st Armored Brigade. (Mohsen, known for his heavily Islamist leanings, has been leading the political standoff against Saleh ever since his high-profile defection from the regime March 24.)
The Old Guard Rises and Falls
Saleh’s co-opting of Yemen’s Islamist militants had profound implications for the country’s terrorism profile. Islamists of varying ideological intensities were rewarded with positions throughout the Yemeni security and intelligence apparatus, with a heavy concentration in the Political Security Organization (PSO), a state security and intelligence agency. The PSO exists separately from the Ministry of Interior and is supposed to answer directly to the president, but it has long operated autonomously and is believed to have been behind a number of large-scale jailbreaks, political assassinations and militant operations in the country. While the leadership of the PSO under Ghaleb al Ghamesh has maintained its loyalty to Saleh, the loyalty of the organization as a whole to the president is highly questionable.
Many within the military-intelligence-security apparatus who fought in the 1994 civil war to defeat South Yemen and formed a base of support around Saleh’s presidency made up what is now considered the “old guard” in Yemen. Interspersed within the old guard were the mujahideen fighters returning from Afghanistan. Leading the old guard within the military has been none other than Mohsen, who, after years of standing by Saleh’s side, has emerged in the past month as the president’s most formidable challenger. Mohsen, whose uncle was married to Saleh’s mother in her second marriage, was a stalwart ally of Saleh throughout the 1990s. He played an instrumental role in protecting Saleh from coup attempts early on in his political reign and led the North Yemen army to victory against the south in the 1994 civil war. Mohsen was duly rewarded with ample military funding and control over Saada, al-Hudaydah, Hajja, Amran and Mahwit, surpassing the influence of the governors in these provinces.
While the 1990s were the golden years for Mohsen, the 21st century brought with it an array of challenges for the Islamist sympathizers in the old guard. Following the 2000 bombing of the USS Cole, Saleh came under enormous pressure from the United States to crack down on al Qaeda operatives and their protectors in Yemen, both within and beyond the bounds of the state. Fearful of the political backlash that would result from U.S. unilateral military action in Yemen and tempted by large amounts of counterterrorism aid being channeled from Washington, Saleh began devising a strategy to gradually marginalize the increasingly problematic old guard.
These were not the only factors driving Saleh’s decision, however. Saleh knew he had to prepare a succession plan, and he preferred to see the next generation of Saleh men at the helm. Anticipating the challenge he would face from powerful figures like Mohsen and his allies, Saleh shrewdly created new and distinct security agencies for selected family members to run under the tutelage of the United States with the those agencies run by formidable members of the old guard. Thus the “new guard” was born.
The Rise of Saleh’s Second-Generation New Guard
Over the course of the past decade, Saleh has made a series of appointments to mark the ascendancy of the new guard. Most important, his son and preferred successor, Ahmed Ali Saleh, became head of the elite Republican Guard (roughly 30,000-plus men) and Special Operations Forces. Ahmad replaced Saleh’s half-brother, Ali Saleh al-Ahmar, as chief of the Republican Guard, but Saleh made sure to appease Ali by making him Yemen’s defense attache in Washington, followed by appointing him to the highly influential post of chief of staff of the supreme commander of the Armed Forces and supervisor to the Republican Guard.
The president also appointed his nephews — the sons of his brother Muhammad Abdullah Saleh (now deceased) — to key positions. Yahya became chief of staff of the Central Security Forces and Counter-Terrorism Unit (roughly 50,000 plus); Tariq was made commander of the Special Guard, which effectively falls under the authority of Ahmed’s Republican Guard; and Ammar became principal duty director of the National Security Bureau (NSB). Moreover, nearly all of Saleh’s sons, cousins and nephews are evenly distributed throughout the Republican Guard.
Each of these agencies received a substantial amount of money as U.S. financial aid to Yemen increased from $5 million in 2006 to $155 million in 2010. This was expected to rise to $1 billion or more over the next several years, but Washington froze the first installment in February when the protests broke out. Ahmed’s Republican Guard and Special Operations Forces worked closely with U.S. military trainers in trying to develop an elite fighting force along the lines of Jordan’s U.S.-trained Fursan al Haq (Knights of Justice). The creation of the mostly U.S.-financed NSB in 2002 to collect domestic intelligence was also part of a broader attempt by Saleh to reform all security agencies to counter the heavy jihadist penetration of the PSO.
Meanwhile, Mohsen watched nervously as his power base flattened under the weight of the second-generation Saleh men. One by one, Mohsen’s close old-guard allies were replaced: In 2007, Saleh sacked Gen. Al Thaneen, commander of the Republican Guard in Taiz. In 2008, Brig. Gen. Mujahid Gushaim replaced Ali Sayani, the head of military intelligence (Ali Sayani’s brother, Abdulmalik, Yemen’s former defense minister, was one of the first generals to declare support for the revolt against Saleh). The same year, Gen. Al Thahiri al Shadadi was replaced by Brig Gen. Mohammed al Magdashi as commander of the Central Division; Saleh then appointed his personal bodyguard, Brig. Gen. Aziz Mulfi, as chief of staff of the 27th mechanized brigade in Hadramawt. Finally, in early 2011, Saleh sacked Brig. Gen. Abdullah Al Gadhi, commander of Al Anad Base that lies on the axis of Aden in the south and commander of the 201st mechanized brigade. As commander of the northwestern division, Mohsen had been kept busy by an al-Houthi rebellion that ignited in 2004, and he became a convenient scapegoat for Saleh when the al-Houthis rose up again in 2009 and began seizing territory, leading to a rare Saudi military intervention in Yemen’s northern Saada province.
Using the distraction and intensity of the al-Houthi rebellion to weaken Mohsen and his forces, Saleh attempted to move the headquarters of Mohsen’s 1st Armored Brigade from Sanaa to Amran just north of the capital and ordered the transfer of heavy equipment from Mohsen’s forces to the Republican Guard. While Saleh’s son and nephews were on the receiving end of millions of dollars of U.S. financial aid to fight AQAP, Mohsen and his allies were left on the sidelines as the old-guard institutions were branded as untrustworthy and thus unworthy of U.S. financing. Mohsen also claims Saleh tried to have him killed at least six times. One such episode, revealed in a WikiLeaks cable dated February 2010, describes how the Saleh government allegedly provided Saudi military commanders with the coordinates of Mohsen’s headquarters when Saudi forces were launching airstrikes on the al-Houthis. The Saudis aborted the strike when they sensed something was wrong with the information they were receiving from the Yemeni government.
Toward the end of 2010, with the old guard sufficiently weakened, Saleh was feeling relatively confident that he would be able to see through his plans to abolish presidential term limits and pave the way for his son to take power. What Saleh didn’t anticipate was the viral effect of the North African uprisings and the opportunity they would present to Mohsen and his allies to take revenge and, more important, make a comeback.
An Old Guard Revival?
Mohsen, 66 years old, is a patient and calculating man. When thousands of Yemenis took to the streets of Sanaa in late March to protest against the regime, his 1st Armored Brigade, based just a short distance from the University of Sanaa entrance where the protesters were concentrated, deliberately stood back while the CSF and Republican Guard took the heat for increasingly violent crackdowns. In many ways, Mohsen attempted to emulate Egyptian Field Marshal Mohamed Hussein Tantawi in having his forces stand between the CSF and the protesters, acting as a protector of the pro-democracy demonstrators in hopes of making his way to the presidential palace with the people’s backing. Mohsen continues to carry a high level of respect among the Islamist-leaning old guard and, just as critically, maintains a strong relationship with the Saudi royals.
Following his March 24 defection, a number of high-profile military, political and tribal defections followed. Standing in league with Mohsen is the politically ambitious Sheikh Hamid al-Ahmar, one of the 10 sons of the late Abdullah bin Hussein al-Ahmar, who ruled the Hashid confederation as the most powerful tribal chieftain in the country and was also a prominent leader of the Islah political party. (Saleh’s Sanhaan tribe is part of the Hashid confederation as well.) Hamid is a wealthy businessman and vocal leader of the Islah party, which dominates the Joint Meeting Parties (JMP), an opposition coalition. The sheikh who, like Mohsen, has a close relationship with the Saudi royals, has ambitions to replace Saleh and has been responsible for a wave of defections from within the ruling General People’s Congress, nearly all of which can be traced back to his family tree. In an illustration of Hamid’s strategic alliance with Mohsen, Hamid holds the position of lieutenant colonel in the 1st Armored Brigade. This is a purely honorary position but provides Hamid with a military permit to expand his contingent of body guards, the numbers of which of recently swelled to at least 100.
Together, Mohsen and Sheikh Hamid have a great deal of influence in Yemen to challenge Saleh, but still not enough to drive him out of office by force. Mohsen’s forces have been gradually trying to encroach on Sanaa from their base in the northern outskirts of the capital, but forces loyal to Saleh in Sanaa continue to outman and outgun the rebel forces.
Hence the current stalemate. Yemen does not have the luxury of a clean, geographic split between pro-regime and anti-regime forces, as is the case in Libya. In its infinite complexity, the country is divided along tribal, family, military and business lines, so its political future is difficult to chart. A single family, army unit, village or tribe will have members pledging loyalty to either Saleh or the revolution, providing the president with just enough staying power to deflect opposition demands and drag out the political crisis.
Washington’s Yemen Problem
The question of whether Saleh stays or goes is not the main topic of current debate. Nearly every party to the conflict, including the various opposition groups, Saudi Arabia, the United States and even Saleh himself, understand that the Yemeni president’s 33-year political reign will end soon. The real sticking point has to do with those family members surrounding Saleh and whether they, too, will be brought down with the president in a true regime change.
This is where the United States finds itself in a particularly uncomfortable spot. Yemen’s opposition, a hodgepodge movement including everything from northern Islamists to southern socialists, are mostly only united by a collective aim to dismantle the Saleh regime, including the second-generation Saleh new guard that has come to dominate the country’s security-military-intelligence apparatus with heavy U.S.-backing.
The system is far from perfect, and counterterrorism efforts in Yemen continue to frustrate U.S. authorities. However, Saleh’s security reforms over the past several years and the tutelage the U.S. military has been able to provide to these select agencies have been viewed as a significant sign of progress by the United States, and that progress could now be coming under threat.
Mohsen and his allies are looking to reclaim their lost influence and absorb the new-guard entities in an entirely new security set-up. For example, the opposition is demanding that the Republican Guard and Special Forces be absorbed into the army, which would operate under a general loyal to Mohsen (Mohsen himself claims he would step down as part of a deal in which Saleh also resigns, but he would be expected to assume a kingmaker status), that the CSF and CTU paramilitary agencies be stripped of their autonomy and operationally come under the Ministry of Interior and that the newly created NSB come under the PSO. Such changes would be tantamount to unraveling the past decade of U.S. counterterrorism investment in Yemen that was designed explicitly to raise a new generation of security officials who could hold their own against the Islamist-leaning old guard. This is not to say that Mohsen and his allies would completely obstruct U.S. counterterrorism efforts. Many within the old guard, eager for U.S. financial aid and opposed to U.S. unilateral military action in Yemen, are likely to veer toward pragmatism in dealing with Washington. That said, Mohsen’s reputation for protecting jihadists operating in Yemen and his poor standing with Washington would add much distrust to an already complicated U.S.-Yemeni relationship.
Given its counterterrorism concerns and the large amount of U.S. financial aid flowing into Yemen in recent years, Washington undoubtedly has a stake in Yemen’s political transition, but it is unclear how much influence it will be able to exert in trying to shape a post-Saleh government. The United States lacks the tribal relationships, historical presence and trust to deal effectively with a resurgent old guard seeking vengeance amid growing chaos.
The real heavyweight in Yemen is Saudi Arabia. The Saudi royals have long viewed their southern neighbor as a constant source of instability in the kingdom. Whether the threat to the monarchy emanating from Yemen drew its roots from Nasserism, Marxism or radical Islamism, Riyadh deliberated worked to keep the Yemeni state weak while buying loyalties across the Yemeni tribal landscape. Saudi Arabia shares the U.S. concern over Yemeni instability providing a boon to AQAP. The Saudi royals, who are reviled by a large segment of Saudi-born jihadists in AQAP operating from Yemen, are a logical target for AQAP attacks that carry sufficient strategic weight to shake the oil markets and the royal regime, especially given the current climate of unrest in the region. Moreover, Saudi Arabia does not want to deal with a dramatic increase in the already regular spillover of refugees, smugglers and illegal workers from Yemen should civil war ensue.
At the same time, Saudi Arabia and the United States may not entirely see eye to eye in how to manage the jihadist threat in Yemen. The Saudis have maintained close linkages with a number of influential Islamist members within the old guard, including Mohsen and jihadists like al Fadhli, who broke off his alliance with Saleh in 2009 to lead the Southern Movement against the regime. The Saudis are also more prone to rely on their jihadist allies from time to time in trying to snuff out more immediate threats to Saudi interests.
For example, Saudi Arabia’s current concern regarding Yemen centers not on the future of Yemen’s counterterrorism capabilities but on the al-Houthi rebels in the north, who have wasted little time in exploiting Sanaa’s distractions to expand their territorial claims in Saada province. The al-Houthis belong to the Zaydi sect, considered an offshoot of Shiite Islam and heretical by Wahhabi standards. Riyadh fears Houthi unrest in Yemen’s north could stir unrest in Saudi Arabia’s southern provinces of Najran and Jizan, which are home to the Ismailis, also an offshoot of Shiite Islam. Ismaili unrest in the south could then embolden Shia in Saudi Arabia’s oil-rich Eastern Province, who have already been engaged in demonstrations, albeit small ones, against the Saudi monarchy with heavy Iranian encouragement. Deputy AQAP leader Saad Ali al Shihri’s declaration of war against the al-Houthi rebels on Jan. 28 may have surprised many, but it also seemed to play to the Saudi agenda in channeling jihadist efforts toward the al-Houthi threat.
The United States has a Yemen problem that it cannot avoid, but it also has very few tools with which to manage or solve it. For now, the stalemate provides Washington with the time to sort out alternatives to the second-generation Saleh relatives, but that time also comes at a cost. The longer this political crisis drags on, the more Saleh will narrow his focus to holding onto Sanaa, while leaving the rest of the country for the al-Houthis, the southern socialists and the jihadists to fight over. The United States can take some comfort in the fact that AQAP’s poor track record of innovative yet failed attacks has kept the group in the terrorist minor leagues. With enough time, resources and sympathizers in the government and security apparatus, however, AQAP could find itself in a more comfortable spot in a post-Saleh scenario, likely to the detriment of U.S. counterterrorism efforts in the Arabian Peninsula.
The Divided States
The Divided States of Europe
By Marko Papic
Europe continues to be engulfed by economic crisis. 
The global focus returns to Athens on June 28 as Greek parliamentarians debate austerity measures imposed on them by eurozone partners. If the Greeks vote down these measures, Athens will not receive its second bailout, which could create an even worse crisis in Europe and the world.
It is important to understand that the crisis is not fundamentally about Greece or even about the indebtedness of the entire currency bloc. After all, Greece represents only 2.5 percent of the eurozone’s gross domestic product (GDP), and the bloc’s fiscal numbers are not that bad when looked at in the aggregate. Its overall deficit and debt figures are in a better shape than those of the United States — the U.S. budget deficit stood at 10.6 percent of GDP in 2010, compared to 6.4 percent for the European Union — yet the focus continues to be on Europe.
That is because the real crisis is the more fundamental question of how the European continent is to be ruled in the 21st century. Europe has emerged from its subservience during the Cold War, when it was the geopolitical chessboard for the Soviet Union and the United States. It won its independence by default as the superpowers retreated: Russia withdrawing to its Soviet sphere of influence and the United States switching its focus to the Middle East after 9/11. Since the 1990s, Europe has dabbled with institutional reform but has left the fundamental question of political integration off the table, even as it integrated economically. This is ultimately the source of the current sovereign debt crisis, the lack of political oversight over economic integration gone wrong.
The eurozone’s economic crisis brought this question of Europe’s political fate into focus, but it is a recurring issue. Roughly every 100 years, Europe confronts this dilemma. The Continent suffers from overpopulation — of nations, not people. Europe has the largest concentration of independent nation-states per square foot than any other continent. While Africa is larger and has more countries, no continent has as many rich and relatively powerful countries as Europe does. This is because, geographically, the Continent is riddled with features that prevent the formation of a single political entity. Mountain ranges, peninsulas and islands limit the ability of large powers to dominate or conquer the smaller ones. No single river forms a unifying river valley that can dominate the rest of the Continent. The Danube comes close, but it drains into the practically landlocked Black Sea, the only exit from which is another practically landlocked sea, the Mediterranean. This limits Europe’s ability to produce an independent entity capable of global power projection.
However, Europe does have plenty of rivers, convenient transportation routes and well-sheltered harbors. This allows for capital generation at a number of points on the Continent, such as Vienna, Paris, London, Frankfurt, Rotterdam, Milan, Turin and Hamburg. Thus, while large armies have trouble physically pushing through the Continent and subverting various nations under one rule, ideas, capital, goods and services do not. This makes Europe rich (the Continent has at least the equivalent GDP of the United States, and it could be larger depending how one calculates it).
What makes Europe rich, however, also makes it fragmented. The current political and security architectures of Europe — the European Union and NATO — were encouraged by the United States in order to unify the Continent so that it could present a somewhat united front against the Soviet Union. They did not grow organically out of the Continent. This is a problem because Moscow is no longer a threat for all European countries, Germany and France see Russia as a business partner and European states are facing their first true challenge to Continental governance, with fragmentation and suspicion returning in full force. Closer unification and the creation of some sort of United States of Europe seems like the obvious solution to the problems posed by the eurozone sovereign debt crisis — although the eurozone’s problems are many and not easily solved just by integration, and Europe’s geography and history favor fragmentation.
Confederation of Europe
The European Union is a confederation of states that outsources day-to-day management of many policy spheres to a bureaucratic arm (the European Commission) and monetary policy to the European Central Bank. The important policy issues, such as defense, foreign policy and taxation, remain the sole prerogatives of the states. The states still meet in various formats to deal with these problems. Solutions to the Greek, Irish and Portuguese fiscal problems are agreed upon by all eurozone states on an ad hoc basis, as is participation in the Libyan military campaign within the context of the European Union. Every important decision requires that the states meet and reach a mutually acceptable solution, often producing non-optimal outcomes that are products of compromise.
The best analogy for the contemporary European Union is found not in European history but in American history. This is the period between the successful Revolutionary War in 1783 and the ratification of the U.S. Constitution in 1788. Within that five-year period, the United States was governed by a set of laws drawn up in the Articles of the Confederation. The country had no executive, no government, no real army and no foreign policy. States retained their own armies and many had minor coastal navies. They conducted foreign and trade policy independent of the wishes of the Continental Congress, a supranational body that had less power than even the European Parliament of today (this despite Article VI of the Articles of Confederation, which stipulated that states would not be able to conduct independent foreign policy without the consent of Congress). Congress was supposed to raise funds from the states to fund such things as a Continental Army, pay benefits to the veterans of the Revolutionary War and pay back loans that European powers gave Americans during the war against the British. States, however, refused to give Congress money, and there was nothing anybody could do about it. Congress was forced to print money, causing the Confederation’s currency to become worthless.
With such a loose confederation set-up, the costs of the Revolutionary War were ultimately unbearable for the fledgling nation. The reality of the international system, which pitted the new nation against aggressive European powers looking to subvert America’s independence, soon engulfed the ideals of states’ independence and limited government. Social, economic and security burdens proved too great for individual states to contain and a powerless Congress to address.
Nothing brought this reality home more than a rebellion in Western Massachusetts led by Daniel Shays in 1787. Shays’ Rebellion was, at its heart, an economic crisis. Burdened by European lenders calling for repayment of America’s war debt, the states’ economies collapsed and with them the livelihoods of many rural farmers, many of whom were veterans of the Revolutionary War who had been promised benefits. Austerity measures — often in the form of land confiscation — were imposed on the rural poor to pay off the European creditors. Shays’ Rebellion was put down without the help of the Continental Congress essentially by a local Massachusetts militia acting without any real federal oversight. The rebellion was defeated, but America’s impotence was apparent for all to see, both foreign and domestic.
An economic crisis, domestic insecurity and constant fear of a British counterattack — Britain had not demobilized forts it held on the U.S. side of the Great Lakes — impressed upon the independent-minded states that a “more perfect union” was necessary. Thus the United States of America, as we know it today, was formed. States gave up their rights to conduct foreign policy, to set trade policies independent of each other and to withhold funds from the federal government. The United States set up an executive branch with powers to wage war and conduct foreign policy, as well as a legislature that could no longer be ignored. In 1794, the government’s response to the so-called Whiskey Rebellion in western Pennsylvania showed the strength of the federal arrangement, in stark contrast to the Continental Congress’ handling of Shays’ Rebellion. Washington dispatched an army of more than 10,000 men to suppress a few hundred distillers refusing to pay a new whiskey tax to fund the national debt, thereby sending a clear message of the new government’s overwhelming fiscal, political and military power.
When examining the evolution of the American Confederation into the United States of America, one can find many parallels with the European Union, among others a weak center, independent states, economic crisis and over-indebtedness. The most substantial difference between the United States in the late 18th century and Europe in the 21st century is the level of external threat. In 1787, Shays’ Rebellion impressed upon many Americans — particularly George Washington, who was irked by the crisis — just how weak the country was. If a band of farmers could threaten one of the strongest states in the union, what would the British forces still garrisoned on American soil and in Quebec to the north be able to do? States could independently muddle through the economic crisis, but they could not prevent a British counterattack or protect their merchant fleet against Barbary pirates. America could not survive another such mishap and such a wanton display of military and political impotence.
To America’s advantage, the states all shared similar geography as well as similar culture and language. Although they had different economic policies and interests, all of them ultimately depended upon seaborne Atlantic trade. The threat that such trade would be choked off by a superior naval force — or even by North African pirates — was a clear and present danger. The threat of British counterattack from the north may not have been an existential threat to the southern states, but they realized that if New York, Massachusetts and Pennsylvania were lost, the South might preserve some nominal independence but would quickly revert to de facto colonial status.
In Europe, there is no such clarity of what constitutes a threat. Even though there is a general sense — at least among the governing elites — that Europeans share economic interests, it is very clear that their security interests are not complementary. There is no agreed-upon perception of an external threat. For Central European states that only recently became European Union and NATO members, Russia still poses a threat. They have asked NATO (and even the European Union) to refocus on the European continent and for the alliance to reassure them of its commitment to their security. In return, they have seen France selling advanced helicopter carriers to Russia and Germany building an advanced military training center in Russia.
The Regionalization of Europe
The eurozone crisis — which is engulfing EU member states using the euro but is symbolically important for the entire European Union — is therefore a crisis of trust. Do the current political and security arrangements in Europe — the European Union and NATO — capture the right mix of nation-state interests? Do the member states of those organizations truly feel that they share the same fundamental fate? Are they willing, as the American colonies were at the end of the 18th century, to give up their independence in order to create a common front against political, economic and security concerns? And if the answer to these questions is no, then what are the alternative arrangements that do capture complementary nation-state interests?
On the security front, we already have our answer: the regionalization of European security organizations. NATO has ceased to effectively respond to the national security interests of European states. Germany and France have pursued an accommodationist attitude toward Russia, to the chagrin of the Baltic states and Central Europe. As a response, these Central European states have begun to arrange alternatives. The four Central European states that make up the regional Visegrad Group — Poland, the Czech Republic, Slovakia and Hungary — have used the forum as the mold in which to create a Central European battle group. Baltic states, threatened by Russia’s general resurgence, have looked to expand military and security cooperation with the Nordic countries, with Lithuania set to join the Nordic Battlegroup, of which Estonia is already a member. France and the United Kingdom have decided to enhance cooperation with an expansive military agreement at the end of 2010, and London has also expressed an interest in becoming close to the developing Baltic-Nordic cooperative military ventures.
Regionalization is currently most evident in security matters, but it is only a matter of time before it begins to manifest itself in political and economic matters as well. For example, German Chancellor Angela Merkel has been forthcoming about wanting Poland and the Czech Republic to speed up their efforts to enter the eurozone. Recently, both indicated that they had cooled on the idea of eurozone entry. The decision, of course, has a lot to do with the euro being in a state of crisis, but we cannot underestimate the underlying sense in Warsaw that Berlin is not committed to Poland’s security. Central Europeans may not currently be in the eurozone (save for Estonia, Slovenia and Slovakia), but the future of the eurozone is intertwined in its appeal to the rest of Europe as both an economic and political bloc. All EU member states are contractually obligated to enter the eurozone (save for Denmark and the United Kingdom, which negotiated opt-outs). From Germany’s perspective, membership of the Czech Republic and Poland is more important than that of peripheral Europe. Germany’s trade with Poland and the Czech Republic alone is greater than its trade with Spain, Greece, Ireland and Portugal combined.
The security regionalization of Europe is not a good sign for the future of the eurozone. A monetary union cannot be grafted onto security disunion, especially if the solution to the eurozone crisis becomes more integration. Warsaw is not going to give Berlin veto power over its budget spending if the two are not in agreement over what constitutes a security threat. This argument may seem simple, and it is cogent precisely because it is. Taxation is one of the most basic forms of state sovereignty, and one does not share it with countries that do not share one’s political, economic and security fate.
This goes for any country, not just Poland. If the solution to the eurozone crisis is greater integration, then the interests of the integrating states have to be closely aligned on more than just economic matters. The U.S. example from the late 18th century is particularly instructive, as one could make a cogent argument that American states had more divergent economic interests than European states do today, and yet their security concerns brought them together. In fact, the moment the external threat diminished in the mid-19th century due to Europe’s exhaustion from the Napoleonic Wars, American unity was shaken by the Civil War. America’s economic and cultural bifurcation, which existed even during the Revolutionary War, erupted in conflagration the moment the external threat was removed.
The bottom line is that Europeans have to agree on more than just a 3 percent budget-deficit threshold as the foundation for closer integration. Control over budgets goes to the very heart of sovereignty, and European nations will not give up that control unless they know their security and political interests will be taken seriously by their neighbors.
Europe’s Spheres of Influence
We therefore see Europe evolving into a set of regionalized groupings. These organizations may have different ideas about security and economic matters, one country may even belong to more than one grouping, but for the most part membership will largely be based on location on the Continent. This will not happen overnight. Germany, France and other core economies have a vested interest in preserving the eurozone in its current form for the short term — perhaps as long as another decade — since the economic contagion from Greece is an existential concern for the moment. In the long term, however, regional organizations of like-minded blocs is the path that seems to be evolving in Europe, especially if Germany decides that its relationship with core eurozone countries and Central Europe is more important than its relationship with the periphery.
We can separate the blocs into four main fledgling groupings, which are not mutually exclusive, as a sort of model to depict the evolving relationships among countries in Europe:
- The German sphere of influence (Germany, Austria, the Netherlands, Belgium, Luxembourg, Czech Republic, Hungary, Croatia, Switzerland, Slovenia, Slovakia and Finland): These core eurozone economies are not disadvantaged by Germany’s competitiveness, or they depend on German trade for economic benefit, and they are not inherently threatened by Germany’s evolving relationship with Russia. Due to its isolation from the rest of Europe and proximity to Russia, Finland is not thrilled about Russia’s resurgence, but occasionally it prefers Germany’s careful accommodative approach to the aggressive approach of neighboring Sweden or Poland. Hungary, the Czech Republic and Slovakia are the most concerned about the Russia-Germany relationship, but not to the extent that Poland and the Baltic states are, and they may decide to remain in the German sphere of influence for economic reasons.
- The Nordic regional bloc (Sweden, Norway, Finland, Denmark, Iceland, Estonia, Lithuania and Latvia): These mostly non-eurozone states generally see Russia’s resurgence in a negative light. The Baltic states are seen as part of the Nordic sphere of influence (especially Sweden’s), which leads to problems with Russia. Germany is an important trade partner, but it is also seen as overbearing and as a competitor. Finland straddles this group and the German sphere of influence, depending on the issue.
- Visegrad-plus (Poland, Czech Republic, Slovakia, Hungary, Romania and Bulgaria): At the moment, the Visegrad Group members belong to different spheres of influence. The Czech Republic, Slovakia and Hungary do not feel as exposed to Russia’s resurgence as Poland or Romania do. But they also are not completely satisfied with Germany’s attitude toward Russia. Poland is not strong enough to lead this group economically the way Sweden dominates the Nordic bloc. Other than security cooperation, the Visegrad countries have little to offer each other at the moment. Poland intends to change that by lobbying for more funding for new EU member states in the next six months of its EU presidency. That still does not constitute economic leadership.
- Mediterranean Europe (Italy, Spain, Portugal, Greece, Cyprus and Malta): These are Europe’s peripheral states. Their security concerns are unique due to their exposure to illegal immigration via routes through Turkey and North Africa. Geographically, these countries are isolated from the main trade routes and lack the capital-generating centers of northern Europe, save for Italy’s Po River Valley (which in many ways does not belong to this group but could be thought of as a separate entity that could be seen as part of the German sphere of influence). These economies therefore face similar problems of over-indebtedness and lack of competitiveness. The question is, who would lead?
And then there are France and the United Kingdom. These countries do not really belong to any bloc. This is London’s traditional posture with regard to continental Europe, although it has recently begun to establish a relationship with the Nordic-Baltic group. France, meanwhile, could be considered part of the German sphere of influence. Paris is attempting to hold onto its leadership role in the eurozone and is revamping its labor-market rules and social benefits to sustain its connection to the German-dominated currency bloc, a painful process. However, France traditionally is also a Mediterranean country and has considered Central European alliances in order to surround Germany. It also recently entered into a new bilateral military relationship with the United Kingdom, in part as a hedge against its close relationship with Germany. If France decides to exit its partnership with Germany, it could quickly gain control of its normal sphere of influence in the Mediterranean, probably with enthusiastic backing from a host of other powers such as the United States and the United Kingdom. In fact, its discussion of a Mediterranean Union was a political hedge, an insurance policy, for exactly such a future.
The Price of Regional Hegemony
The alternative to the regionalization of Europe is clear German leadership that underwrites — economically and politically — greater European integration. If Berlin can overcome the anti-euro populism that is feeding on bailout fatigue in the eurozone core, it could continue to support the periphery and prove its commitment to the eurozone and the European Union. Germany is also trying to show Central Europe that its relationship with Russia is a net positive by using its negotiations with Moscow over Moldova as an example of German political clout.
Central Europeans, however, are already putting Germany’s leadership and commitment to the test. Poland assumes the EU presidency July 1 and has made the union’s commitment to increase funding for new EU member states, as well as EU defense cooperation, its main initiatives. Both policies are a test for Germany and an offer for it to reverse the ongoing security regionalization. If Berlin says no to new money for the newer EU member states — at stake is the union’s cohesion-policy funding, which in the 2007-2013 budget period totaled 177 billion euros — and no to EU-wide security/defense arrangements, then Warsaw, Prague and other Central European capitals have their answer. The question is whether Germany is serious about being a leader of Europe and paying the price to be the hegemon of a united Europe, which would not only mean funding bailouts but also standing up to Russia. If it places its relationship with Russia over its alliance with Central Europe, then it will be difficult for Central Europeans to follow Berlin. This will mean that the regionalization of Europe’s security architecture — via the Visegrad Group and Nordic-Baltic battle groups — makes sense. It will also mean that Central Europeans will have to find new ways to draw the United States into the region for security.
Common security perception is about states understanding that they share the same fate. American states understood this at the end of the 18th century, which is why they gave up their independence, setting the United States on the path toward superpower status. Europeans — at least at present — do not see their situation (or the world) in the same light. Bailouts are enacted not because Greeks share the same fate as Germans but because German bankers share the same fate as German taxpayers. This is a sign that integration has progressed to a point where economic fate is shared, but this is an inadequate baseline on which to build a common political union.
Bailing out Greece is seen as an affront to the German taxpayer, even though that same German taxpayer has benefited disproportionally from the eurozone’s creation. The German government understands the benefits of preserving the eurozone — which is why it continues bailing out the peripheral countries — but there has been no national debate in Germany to explain this logic to the populace. Germany is still waiting to have an open conversation with itself about its role and its future, and especially what price it is willing to pay for regional hegemony and remaining relevant in a world fast becoming dominated by powers capable of harnessing the resources of entire continents.
Without a coherent understanding in Europe that its states all share the same fate, the Greek crisis has little chance of being Europe’s Shays’ Rebellion, triggering deeper unification. Instead of a United States of Europe, its fate will be ongoing regionalization.
The Seattle Plot
The Seattle Plot: Jihadists Shifting Away From Civilian Targets?
By Scott Stewart
On June 22 in a Seattle warehouse, Abu Khalid Abdul-Latif pulled an unloaded M16 rifle to his shoulder, aimed it, and pulled the trigger repeatedly as he imagined himself gunning down young U.S. military recruits. His longtime friend Walli Mujahidh did likewise with an identical rifle, assuming a kneeling position as he engaged his notional targets. The two men had come to the warehouse with another man to inspect the firearms the latter had purchased with money Abdul-Latif had provided him. The rifles and a small number of hand grenades were to be used in an upcoming mission: an attack on a U.S. Military Entrance Processing Station (MEPS) in an industrial area south of downtown Seattle.
After confirming that the rifles were capable of automatic fire and discussing the capacity of the magazines they had purchased, the men placed the rifles back into a storage bag intending to transport them to a temporary cache location. As they prepared to leave the warehouse, they were suddenly swarmed by a large number of FBI agents and other law enforcement officers and quickly arrested. Their plan to conduct a terrorist attack inside the United States had been discovered when the man they had invited to join their plot (the man who had allegedly purchased the weapons for them) reported the plot to the Seattle Police Department, which in turn reported it to the FBI. According to the federal criminal complaint filed in the case, the third unidentified man had an extensive criminal record and had known Abdul-Latif for several years, but he had not been willing to undertake such a terrorist attack.
While the behavior of Abdul-Latif and Mujahidh in this plot demonstrates that they were amateur “wannabe” jihadists rather than seasoned terrorist operatives, their plot could have ended very differently if they had found a kindred spirit in the man they approached for help instead of someone who turned them into the authorities. This case also illustrates some important trends in jihadist terrorism that we have been watching for the past few years as well as a possible shift in mindset within the jihadist movement.
Trends
First, Abu-Khalid Abdul-Latif and Walli Mujahidh, both American converts to Islam, are prime examples of what we refer to as grassroots jihadists. They are individuals who were inspired by the al Qaeda movement but who had no known connection to the al Qaeda core or one of its franchise groups. In late 2009, in response to the success of the U.S. government and its allies in preventing jihadist attacks in the West, al Qaeda in the Arabian Peninsula (AQAP) began a campaign to encourage jihadists living in the West to conduct simple attacks using readily available items, rather than travel abroad for military and terrorism training with jihadist groups. After successes such as the November 2009 Fort Hood shooting, this theme of encouraging grassroots attacks was adopted by the core al Qaeda group.
While the grassroots approach does present a challenge to law enforcement and intelligence agencies in that attackers can seemingly appear out of nowhere with no prior warning, the paradox presented by grassroots operatives is that they are also far less skilled than trained terrorist operatives. In other words, while they are hard to detect, they frequently lack the skill to conduct large, complex attacks and frequently make mistakes that expose them to detection in smaller plots.
And that is what we saw in the Seattle plot. Abdul-Latif had originally wanted to hit U.S. Joint Base Lewis-McChord (formerly known as Fort Lewis and McChord Air Force Base), which is located some 70 kilometers (44 miles) south of Seattle, but later decided against that plan since he considered the military base to be too hardened a target. While Abdul-Latif and Mujahidh were amateurs, they seem to have reached a reasonable assessment of their own abilities and which targets were beyond their abilities to strike.
Another trend we noted in this case was that the attack plan called for the use of firearms and hand grenades in an armed assault, rather than the use of an improvised explosive device (IED). There have been a number of botched IED attacks, such as the May 2010 Times Square attack and Najibullah Zazi’s plot to attack the New York subway system.
These were some of the failures that caused jihadist leaders such as AQAP’s Nasir al-Wahayshi to encourage grassroots jihadists to undertake simple attacks. Indeed, the most successful jihadist attacks in the West in recent years, such as the Fort Hood shooting, the June 2009 attack on a military recruitment center in Little Rock, Ark., and the March 2011 attack on U.S. troops at a civilian airport in Frankfurt, Germany, involved the use of firearms rather than IEDs. When combined with the thwarted plot in New York in May 2011, these incidents support the trend we identified in May 2010 of grassroots jihadist conducting more armed assaults and fewer attacks involving IEDs.
Another interesting aspect of the Seattle case was that Abdul-Latif was an admirer of AQAP ideologue Anwar al-Awlaki. Unlike the Fort Hood case, where U.S. Army Maj. Nidal Malik Hasan had been in email contact with al-Awlaki, it does not appear that Abdul-Latif had been in contact with the AQAP preacher. However, from video statements and comments Abdul-Latif himself posted on the Internet, he appears to have had a high opinion of al-Awlaki and to have been influenced by his preaching. It does not appear that Abdul-Latif, who was known as Joseph Anthony Davis before his conversion to Islam, or Mujahidh, whose pre-conversion name was Frederick Domingue Jr., spoke Arabic. This underscores the importance of al-Awlaki’s role within AQAP as its primary spokesman to the English-speaking world and his mission of radicalizing English-speaking Muslims and encouraging them to conduct terrorist attacks in the West.
Vulnerabilities
Once again, in the Seattle case, the attack on the MEPS was not thwarted by some CIA source in Yemen, an intercept by the National Security Agency or an intentional FBI undercover operation. Rather, the attack was thwarted by a Muslim who was approached by Abdul-Latif and asked to participate in the attack. The man then went to the Seattle Police Department, which brought the man to the attention of the FBI. This is what we refer to as grassroots counterterrorism, that is, local cops and citizens bringing things to the attention of federal authorities. As the jihadist threat has become more diffuse and harder to detect, grassroots defenders have become an even more critical component of international counterterrorism efforts. This is especially true for Muslims, many of whom consider themselves engaged in a struggle to defend their faith (and their sons) from the threat of jihadism.
But, even if the third man had chosen to participate in the attack rather than report it to the authorities, the group would have been vulnerable to detection. First, there were the various statements Abdul-Latif made on the Internet in support of attacks against the United States. Second, any Muslim convert who chooses a name such as Mujahidh (holy warrior) for himself must certainly anticipate the possibility that it will bring him to the attention of the authorities. Abdul-Latif and Mujahidh were also somewhat cavalier in their telephone conversations, although those conversations do not appear to have brought them to the attention of the authorities.
Perhaps their most significant vulnerability to detection, aside from their desire to obtain automatic weapons and hand grenades, would have been their need to conduct preoperational surveillance of their intended target. After conducting some preliminary research using the Internet, Abdul-Latif quickly realized that they needed more detailed intelligence. He then briefly conducted physical surveillance of the exterior of the MEPS to see what it looked like in person. Despite the technological advances it represents, the Internet cannot replace the physical surveillance process, which is a critical requirement for terrorist planners. Indeed, after the external surveillance of the building, Abdul-Latif asked the informant to return to the building under a ruse in order to enter it and obtain a detailed floor plan of the facility for use in planning the attack.
In this case, the informant was able to obtain the information he needed from his FBI handlers, but had he been a genuine participant in the plot, he would have had to have exposed himself to detection by entering the MEPS facility after conducting surveillance of the building’s exterior. If some sort of surveillance detection program was in place, it likely would have flagged him as a person of interest for follow-up investigation, which could have led authorities back to the other conspirators in the attack.
A New Twist
One aspect of this plot that was different from many other recent plots was that Abdul-Latif insisted that he wanted to target the U.S. military and did not want to kill people he considered innocents. Certainly he had no problem with the idea of killing the armed civilian security guards at the MEPS — the plan called for the attackers to kill them first, or the unarmed still-civilian recruits being screened at the facility, then to kill as many other military personnel as possible before being neutralized by the responding authorities. However, even in the limited conversations documented in the federal criminal complaint, Abdul-Latif repeated several times that he did not want to kill innocents. This stands in stark contrast to the actions of previous attackers and plotters such as John Allen Mohammed, the so-called D.C. sniper, or Faisal Shahzad, who planned the failed Times Square attack.
Abdul-Latif’s reluctance to attack civilians may be a reflection of the debate we are seeing among jihadists in places like Afghanistan, Pakistan and even Algeria over the killing of those they consider innocents. This debate is also raging on many of the English-language jihadist message boards Abdul-Latif frequented. Most recently, this tension was seen in the defection of a Tehrik-i-Taliban Pakistan faction in Pakistan’s Kurram agency.
If this sentiment begins to take wider hold in the jihadist movement, and especially the English-speaking jihadist community in the West, it could have an impact on the target-selection process for future attacks by grassroots operatives in the West. It could also mean that commonly attacked targets such as subway systems, civilian aircraft, hotels and public spaces will be seen as less desirable than comparably soft military targets. Given the limitations of grassroots jihadists, and their tendency to focus on soft targets, such a shift would result in a much smaller universe of potential targets for such attacks — the softer military targets such as recruit-processing stations and troops in transit that have been targeted in recent months.
Removing some of the most vulnerable targets from the potential-target list is not something that militants do lightly. If this is indeed happening, it could be an indication that some important shifts are under way on the ideological battlefield and that jihadists may be concerned about losing their popular support. It is still too early to know if this is a trend and not merely the idiosyncrasy of one attack planner — and it is contrary to the target sets laid out in recent messages from AQAP and the al Qaeda core — but when viewed in light of the Little Rock, Fort Hood and Frankfurt shootings, it is definitely a concept worth further examination.
Rise of the Transfer State
Perhaps this is best thought of as the chart of the day, as I will not attempt to discuss its many implications or drivers. The following chart tracks the percentage of federal spending that is simply a direct transfer of income. Now we could debate whether all government spending is little more than a transfer of wealth, but let’s save that for another day. The chart shows a dramatic increase in the share of government that does not go to buying or producing anything, but simply takes the form of a check, increasing from around a third of federal spending to about two-thirds today.
There is one aspect of this trend which merits study in our current economic environment. While there is a wide range of estimates* for how much government spending adds (or subtracts from) overall economic activity – the so called “fiscal multiplier” - that multiplier is likely to differ for transfer payments versus the government purchase of goods and services. If government simply takes from A and gives to B, then the magnitude and sign (- or +) will depend on A’s marginal propensity to consume relatives to B’s, minus any resources A spends to avoid said transfer. This suggests to me that the multiplier for transfers is likely to be about zero, if not negative. Some of that transfer will be saved by the receiving party, while consumption will likely decline by the losing party.With direct government purchases of good and services, little, if any, of the initial spending will be saved. Hence it seems reasonable to believe that the multilpier for direct spending is higher than than for transfer payments, although it still may be less than one.
The point of all this is that the shift of federal spending towards transfer spending has likely reduced the fiscal multiplier, all else equal. As this is an empirical question, I would certainly be interested in knowing if anyone has tried to measure it.
Wednesday, June 29, 2011
Revisiting FDR and 'Unimagined Power': Echoes
Revisiting FDR and 'Unimagined Power': Echoes
He argues that FDR wasn't referring to government in this section -- that the president had moved on to matters of the spirit. The suggestion here is that my column made Roosevelt look more aggressive than he was. Mr. Ryan says "such distortions of people’s words are dishonest."
Here's my take. Roosevelt relished ambiguity, precisely because it allowed him to have it both ways. Indeed, you can hear FDR chuckling in the background when modern history buffs squabble over what he meant. That's what he wanted us to do. As my Bloomberg View colleague Jonathan Alter has noted in his book "The Defining Moment," Roosevelt once backed free trade and protectionism in the same speech. A distraught speechwriter, Ray Moley, pointed out that the principles were mutually exclusive. FDR blithely told the speechwriter to "weave them together."
But to the 1937 inaugural. Speechwriter Sam Rosenman notes in his memoir, "Working With Roosevelt," that this speech involved multiple drafts and contained more "work, corrections, inserts, substitutions and deletions by the President than any of the other speeches." Exactly what was intended by these changes, readers may judge for themselves: A copy of the relevant pages from two of those earlier drafts are posted here, courtesy of the Franklin D. Roosevelt Presidential Library and Museum in Hyde Park, New York.
But since Mr. Ryan's charges are so strong, it seems worthwhile to supply some more facts. Roosevelt had campaigned the prior fall vowing that he would escalate the fight against business if he won, promising that in him businessmen would find they had met "their master." Whoa.
Then he did win, in a landslide so historic it seemed Democrats would rule always and forever. Everyone, including those in his administration, therefore expected that laws even more radical than those of FDR's first term would be passed and signed. And those of the first term had already been disastrous for business: The National Recovery Act and the Public Utilities Holding Company Act, which strangled promising utilities, were just two examples. When you review the second inaugural speech, it helps to recall that context.
In the speech, FDR reminds the country that from the beginning the settlers in the New World realized that they must strengthen government. And he placed his own first term in that tradition: "Instinctively we recognized a deeper need -- the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization." Note the use of the word "instrument."
Then Roosevelt moves on to other topics, winding his way toward both the spiritual and political change the nation had already begun. He says that "using the new materials of social justice we have undertaken to erect on the old foundations a more enduring structure for the better use of future generations."
Then the president suggests that Americans have learned to think differently about economics. "In that purpose we have been helped by achievements of mind and spirit. Old truths have been relearned; untruths have been unlearned. We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays."
Roosevelt ends the paragraph by taking up the instrument image again. "We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world."
Mr. Ryan thinks Roosevelt is referring this time to an event purely spiritual in nature. But the case that Roosevelt has moved back to government -- that he means it is government that will have unimagined power -- is also strong. That’s because the word "instrument" has already been established in this speech as a governmental instrument. The lines that follow also suggest FDR’s instrument here is for action, not philosophizing.
"This new understanding undermines the old admiration of worldly success as such. We are beginning to abandon our tolerance of the abuse of power by those who betray for profit the elementary decencies of life. In this process evil things formerly accepted will not be so easily condoned."
Here FDR sounds like he's giving marching orders to his antitrust lawyers, not laying out the Sunday school curriculum.
A few moments later, Roosevelt utters the famous lines about "one third of a nation" being "ill clad, ill housed, ill nourished." (The FDR Library reports that Roosevelt seems to have made those ratios up, but never mind.) Roosevelt also talks about using America's "rediscovered ability to improve our economic order." Rediscovered ability means time for action.
Most importantly, what this speech is remembered for is that it did, in fact, foreshadow aggressive presidential action. Roosevelt soon launched his plan to pack the Supreme Court with justices friendly to his view, a level of executive intervention into the judiciary branch so egregious that his own party blocked it.
In short, Mr. Ryan's interpretation is possible. My interpretation -- that Roosevelt was talking about government -- is also possible. This is not a factual dispute.
Rule of Lawlessness
Rule of Lawlessness
Is the Age of Obama ushering in an Era of Thuggery by his left-wing supporters?Barack Obama has made clear his admiration of Saul Alinsky, the radical "father" of community organizing. Peter Slevin of the Washington Post wrote in 2007 that "Obama embraced many of Alinsky's tactics and recently said his years as an organizer gave him the best education of his life."
Alinsky, who died in 1971, was known for his belief that revolutionaries must stir up the downtrodden to become angry enough at their condition to demand its betterment. In his famous book Rules for Radicals, Alinsky acknowledged his debt to Lucifer, "the very first radical," who "rebelled against the establishment and did it so effectively that he at least won his own kingdom."
When it came to the best way to achieve revolution, Alinsky explictly argued for moral relativism in fighting the establishment: "In war the end justifies almost any means." Specifically, "the practical revolutionary will understand… [that] in action, one does not always enjoy the luxury of a decision that is consistent both with one's individual conscience and the good of mankind."
It appears that the left has decided to throw conscience aside and put the raw exercise of political power first. Consider three separate news stories that developed within the same week in late April:
• When Attorney General Eric Holder decided to no longer uphold the constitutionality of the 1996 Defense of Marriage Act, or DOMA, the U.S. House hired the Atlanta-based law firm of King and Spalding to defend it in court. The law defines marriage as between a man and a woman and says states aren't obliged to honor gay marriages recognized in other states.
But within days of being hired the firm dropped the House as a client, claiming the firm had failed in properly "vetting" the issue. Former Bush solicitor general Paul Clement, who had brought the case to King and Spalding, resigned from the firm in protest.
The real reason the case was dropped was the campaign launched by the Human Rights Campaign to "educate" (read: intimidate) the firm's clients about "King and Spalding's decision to promote discrimination." Never mind that like 84 other senators Vice President Joe Biden had voted for the bill. Or that Holder's old boss Bill Clinton signed it. Anyone who now touched the issue was to be branded a bigot. "Gay rights activists argue that DOMA is unconstitutional," notes San Francisco Chronicle columnist Debra Saunders. "If they're so sure, why are they trying to prevent good lawyers from defending it?"
• California Democratic leaders, frustrated by the refusal of Republican state legislators to go along with tax increases to close the state's $15.4 billion deficit, are threatening to focus budget cuts on the districts those Republicans represent.
"You don't want to pay for government, well then, you get less of it," Senate president pro tem Darrell Steinberg told reporters in late April. Steinberg echoed comments made by Treasurer Bill Lockyer, who told reporters that budget cuts should be targeted at the districts of lawmakers who oppose putting $11 billion in tax increases before the state's voters in a referendum.
"When it comes to kids or the vulnerable, I wouldn't want to make distinctions between who lives in a Democratic district and who lives in a Republican district, but when it comes to sort of basic services, convenience services that affect adults...I have an open mind," Steinberg told reporters.
A spokeswoman for Bob Dutton, the Senate's Republican leader, reacted quickly to the bully-boy tactics. "It only means Democrats are unwilling to stand up to public employee unions," said Jann Taber. "They'd rather cut services to Californians than fix bloated public employee pension systems. Clearly this isn't an attempt to craft a true bipartisan budget solution."
Local officials in districts represented by Republicans called the tactic completely counterproductive.
"That is shameless extortion," Butte County supervisor Larry Wahl told the Sacramento Bee.
"He's trying to get me to call [Assemblyman Dan] Logue and [state Sen.] Doug LaMalfa and say 'Raise our taxes.' I'm not going to do that."
That '90s Show
Feature
That '90s Show
Since the Republican victory in last year's elections was frequently compared to 1994, it was not terribly surprising that many observers expected the next two years to be a repeat of 1995-96. The conventional wisdom held that the resurgent Republicans would overreach, allowing an unpopular Democratic president a new lease on life and an improbable second term. The new Republican-controlled House would reprise the role of Newt Gingrich's revolutionaries, while Barack Obama replayed Bill Clinton.Six months into this new era of divided government, a rerun of the Seinfeld decade remains a plausible scenario. Conservative commentator and Republican campaign veteran Jim Pinkerton has gone so far as to argue that the "Tea Party-ized House" will make such an inviting target that Obama will emulate not Clinton but Harry Truman, running entirely against a "Do Nothing" Congress in 2012. But it is important to note that there are key differences between the 1990s and now.
First, no current Republican leader has emerged as a PR villain of Gingrich-like proportions. Polls show House Speaker John Boehner is becoming better known and less popular, but not to the point where his photo in a campaign commercial is a silver bullet for Democratic candidates. He isn't as given to bombastic pronouncements as Gingrich. Voters who pay only a modest amount of attention to politics are more likely to be familiar with his tears than his views or public remarks on controversial issues.
Senate Minority Leader Mitch McConnell has penetrated the public consciousness even less than Boehner, causing Democrats to look around for other congressional Republicans to demonize. Congresswoman Michele Bachmann of Minnesota is one target for liberals eager to relive their two-minute hate against Sarah Palin, but she has yet to acquire Palin's name identification. House Budget Committee chairman Paul Ryan has become another potential Gingrich figure, though his calm and cerebral manner might persuade Democrats to stick to demagoguery about his proposed spending cuts instead. No matter how it treats his 2012 budget proposal, Time will probably not run a holiday cover story comparing Ryan to the Grinch who stole Christmas.
While the Democrats' retention of the Senate has frustrated many conservative ambitions, it has also complicated any media narrative about right-wing control of Washington. Where Clinton seemed besieged by Republicans on all sides of Capitol Hill, nothing can reach Obama's desk without at least token bipartisan support. Tea Party senators like Rand Paul are as likely to be in opposition to legislation that emerges from the Senate as they are to be ramming conservative policy proposals down the president's throat. In their imagined sequel to the 1996 election, Democrats may need Newt Gingrich to play himself by running for president.
BUT THERE ARE a lot of similarities between then and now as well, and these commonalities have guided the major players in the 2011-12 political drama. When they entered into their initial budget confrontation with Obama, it was clear that whatever the Tea Party activists may have wanted, the Republican leadership was determined to avoid a government shutdown. Despite major changes in the media over the past 16 years, such as the rise of conservative-leaning Fox News, GOP leaders seemed convinced that a shutdown would play as badly for Republicans this year as it did in 1995. New York Times columnist Ross Douthat opined that Boehner "made it abundantly clear -- in word, deed, and especially body language -- that he wanted the government shut down about as much as Indiana Jones wants to be locked in a room full of cobras."
Meanwhile, President Obama has forced himself to copy Clinton's triangulation strategy even though it manifestly runs counter to his ideological and temperamental inclinations. He signed a temporary extension of the Bush tax cuts for upper-income earners, although he clearly wasn't very happy about it. He reached a budget agreement with the House Republicans that cut at least some spending. (That time, Obama did pretend to be happy.) He fine-tuned his fiscal 2012 budget to appear more serious about deficit reduction in response to the Ryan plan. And Obama has quietly adopted most of George W. Bush's national security policies, down to launching another preventive war against a Muslim country and enlisting General David Petraeus -- the man who oversaw the surge in Iraq -- to run the country's intelligence apparatus.
Virtually all of these moves were bitterly unpopular with Obama's liberal base, and the current president is much less comfortable distancing himself from progressives than was Clinton. Obama was nominated in large part as a reaction against the Clintons' triangulating ways, a successful version of Howard Dean's 2004 presidential campaign. But changing political circumstances have led the president to embrace the Clintons' Democratic Leadership Council logic: he believes independents will reward at least the appearance of responsible behavior on fiscal policy and national defense while angry liberals will have nowhere else to go. Daily Kos visitors aren't going to vote for Mitt Romney.
Yet Clinton-era triangulation never made partisan attacks on Republicans less potent. In fact, because he was ceding substantive policy ground to the GOP on issues ranging from welfare reform to the capital gains tax, Clinton needed to sharpen the rhetorical distinctions between the parties, not dull them. So even as he ended up working with Republicans to balance the budget, he also promised to protect the country from their cuts -- real and imagined -- to Social Security, Medicare, Medicaid, education, and the environment. He challenged the Republicans to be fiscally responsible, and then punished them for it at the polls when they complied.
That's exactly what the Democrats hope to repeat this time around. House Republicans dodged a government shutdown by agreeing to a continuing resolution that to some extent fudged its $38.5 billion in spending reductions, but they have passed a budget that is breathtakingly honest about the scope of entitlement cuts that will be necessary to keep the federal tax burden from soaring past its postwar average of 18 to 20 percent of GDP. Where the Gingrich Republicans promised to grow Medicare more slowly, the Ryan Republicans want to partially privatize Medicare. While the Gingrich Republicans favored a smaller increase in Medicare recipients' benefits, the Ryan Republicans are actually cutting benefits (albeit on the theory that they can also cut costs).
WHAT HASN'T CHANGED at all is the standard Democratic talking point. In 1995, Republicans estimated that their Medicare reforms would save $270 billion while most estimates pegged their proposed tax cut at $245 billion. Naturally, Democrats argued that these figures proved Republicans were cutting Medicare benefits-even abolishing Medicare-in order to pay for tax cuts for the rich. "Finally we learn the truth about how the Republicans want to eliminate Medicare," warned one 1996 Clinton campaign ad. Dozens of other Democratic commercials in down-ballot races used similar scare tactics.
Ever strong believers in recycling, Democrats have dusted off their 1990s rhetoric and reused it in attacks on the Ryan plan. "Newt Gingrich has said Medicare should wither on the vine," intoned Rep. Jan Schakowsky (D-IL) "Well, this Republican budget would chop it down." Rep. Henry Waxman (D-CA) also took aim at Ryan's proposed block granting of Medicaid: "They use Medicaid as a piggy bank in order to avoid asking the people at the very top of our economic ladder, the very richest in our society, the highest income earners of millions of dollars or more, to avoid paying their fair share of taxes."
Higher-brow liberals have chimed in with similar talking points. Jonathan Chait writes in the New Republic that Ryan has consciously decided to "cut Medicare in order to cut taxes for the rich." Paul Krugman, writing in the New York Times, agrees "a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts." John Cassidy blogged for the New Yorker that the Republican budget "featured slashing reductions in domestic spending, more big tax cuts for the rich, and the conversion of Medicare to a voucher program." Cassidy concluded, "By spelling out what the Republicans would do to Medicare and Medicaid, [Ryan] may well have deprived his party of the White House for the foreseeable future."
That's exactly what the Democrats are betting. Concerns Republicans would cut Medicare certainly helped deprive them of the White House in 1996. Bob Dole ineffectually decried the Democrats' "Mediscare" tactics, but the then 73-year-old lost the 65 and over vote by 50 percent to 43 percent. Dole also failed to carry senior-heavy Florida, which had been the second-largest remaining weapon in the GOP's electoral vote arsenal just four years before.
Then as now, Republicans argued that they were not just cutting Medicare but "saving" the program by preventing its insolvency. And they had some advantages in the '90s that don't obtain now. The baby boomers were then in their peak earning years, not entering retirement. The economy was on the cusp of a high-tech boom, not coming off the Great Recession. The GOP's $500 per child tax credit was harder to characterize as a tax cut for the wealthy than lowering the top marginal tax rate to 25 percent.
Friedrich Hayek For President in 2012
Friedrich Hayek For President in 2012
But did anyone else catch this video of John Stossel on Bill O'Reilly, translating Ron Paul's views on Keynesian economic policy for him?
Perhaps it shouldn't have, but this clip completely shocked me.
Bill O'Reilly, a leading political commentator and conservative voice, is wholly unfamiliar with the man the United States bases its entire macroeconomic model off of! How much more so the average American voter!?!?
It's as if we've conceded Keynesian theory as de facto best practice and inarguable economics. Because of that, the current economic debate in this country is overly-simplified and, from a macro standpoint, entirely one-sided.
The 2008 Presidential campaign made Ron Paul a household name. The 2012 campaign needs to do the same for a man who's not running. His name is Friedrich Hayek.
A First Step To Sound Money
A First Step To Sound Money
If the idea strikes you as crazy, let us refer you to the legislation introduced today at the Senate by James DeMint, Rand Paul, and Michael Lee. It’s called the Sound Money Promotion Act, and The New York Sun is happy to lay claim to being the first newspaper to endorse it. The measure, as it is characterized in a press release posted by Senator DeMint, would remove the tax burden on gold and silver coins that have been declared legal tender by either the federal government or state governments.
On its face it might seem an odd bill. But looks at the hypothetical situation above from the opposite end of the telescope, so to speak. It seeks to block tax authorities from treating gold and silver coins as though they were mere commodities and start treating them, at least in tax law, as though they were what the Founders of America thought they were, which is money. Gold and silver coins are already treated this way, as legal tender, inside the state of Utah, whence Senator Lee was elected.
This is because Utah was the first state in our modern time to exercise its constitutional power to make gold and silver coins legal tender. It did so earlier this year, ahead of as many as a dozen states that are at various stages of looking in to the question of how to protect themselves against the collapse of the United States dollars that are being issued by the Federal Reserve. They are all being energized by the fact that the value of the dollar has collapsed to barely a fifth of what it was, if that, at the start of the 21st century.
One of the states considering making gold and silver coins legal tender is South Carolina. That was remarked on by Mr. DeMint, one of its senators at Washington, in introducing the bill. He attributed the dollar’s collapse in recent years to “the government’s reckless over-spending, continued bailouts, and the Federal Reserve’s easy money policy” and said that in addition to fiscal discipline the country would need “monetary discipline to restrain further destructive monetizing of our debt.” The legislation, he said, “would encourage wider adoption of sound money measures.”
The press release introduced by Senators DeMint, Lee, and Paul noted that Standard & Poor’s has recently downgraded America’s outlook to “negative” from “stable,” meaning, the senators asserted, “there is a one in three chance of an actual credit downgrade in the next two years.” They asserted that the Federal Reserve is now buying 70% of U.S. Treasuries, set to surpass the holdings of both Communist China and Japan combined.
How far the three senators will get with the Sound Money Protection Act is hard to say. Its implication — a recognition of gold and silver as the true constitutional money — is, in the current context, radical. But it's no more radical than the Founders, who, when they twice used the word “dollars” in the Constitution, were referring to a coin containing 371 ¼ grains of silver. They codified that as the definition of the dollar in the Coinage Act of 1792. They also referenced gold in the 1792 Act, with a value of 15 times that of silver. We are in a time when understanding the concept of constitutional money will point the way to the policies needed to steer our country out of its current difficulties.
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