Hamid Karzai

NATO is winning most battles in Afghanistan, but the international community is losing the war.That has consequences far beyond Afghanistan if the U.S., Europe and its friends don't change course fast. The dangers include deepening of regional instability that engulfs nuclear- tipped Pakistan, spreading global terrorism and the declining relevance of the North Atlantic Treaty Organization, the most- effective security alliance we have.

So as the U.S. enters a crucial phase in the process of picking presidential candidates, voters should think about which nominee would have the skills to deal with a distant place like Afghanistan. When the U.S. beauty contest is over, the winner will fail in office if he or she can't manage the sorts of challenges posed by Afghanistan.

The country defies military solution, yet needs more skilled soldiers and civilian rebuilders. It necessitates both urgent action and long-term commitment -- in this case, at least 10 years. The job can't be done without regional solutions, but that requires dealing with a hostile Iran and providing tougher love to allied leaders such as Pakistan's Pervez Musharraf and Afghanistan's Hamid Karzai, whose reluctance to tackle the most pressing of their problems stands in the way of success.

It will also take enormous diplomatic skill to forge consensus under a United Nations high commissioner to make sense of the disjointed relief and reconstruction work. There are 60 countries working inside the country, including some 37 that are providing troops.

Narco-Economy Grows

U.S. Secretary of State Condoleezza Rice is in London this week meeting with U.K. Prime Minister Gordon Brown and Foreign Secretary David Miliband trying to find a new candidate for super-envoy to coordinate the efforts after Karzai vetoed Paddy Ashdown, a man whose skills were proven in the Balkans.

Meanwhile, Karzai's failing reach throughout the country, rampant official corruption and insufficient international resolve has left Afghanistan with a dysfunctional judicial system and police force. That makes it all but impossible to stop the spreading narco-economy that fuels the reinvigorated insurgency.

There is some good news: Afghanis have put into place one of the most progressive constitutions in the Islamic world. More than 10 million people have voted in the nation's free presidential elections, and 2 million girls who until recently were banned from schools are now getting an education. It is also encouraging that the foreign troops operating in Afghanistan were invited and remain popular with most Afghanis, a striking exception in the country's history.

Terror Transfers

Yet the situation is worsening. Afghanistan now accounts for 93 percent of the world's opium production, and the illicit- drug industry makes up some 40 percent of Afghanistan's $8 billion economy.

Suicide bombings and the use of improvised explosive devices have soared, underscoring a probable transfer of technology and tactics from Iraq to Afghanistan. The Taliban has regrouped and re-energized after a period of weakness up to 2005, forming what Admiral Michael Mullen, the chairman of the Joint Chiefs, has called a ``classic growing insurgency.''

Meanwhile, allied countries dither over the number of troops they will send and what they would be allowed to do. Defense ministers will meet in Lithuania this week to consider an appeal to add 7,500 soldiers to the 40,000 already there. Canada is threatening to pull out 2,500 troops if they don't get reinforcements, and the U.S. wants Germany to send additional forces to the restive south from their safer northern bases.

A new report by the Atlantic Council (the organization I run) was one of three introduced in Congress last week by Democratic Senator John Kerry and Republican Senator Norm Coleman, underscoring an emerging bipartisan consensus.

Civilians Needed

First, the report sizes up what's needed for corrective action, stressing that the situation won't wait for a new administration.

Second, the international community, which is doing so much for Karzai, must insist on a super-envoy to coordinate efforts in Afghanistan. NATO will suffer if Afghanistan fails, but only civilian efforts can bring success.

What must follow is a comprehensive plan of military and civilian steps under this individual -- including a regional conference that includes India, Iran, Pakistan and even the Shanghai Cooperation Organization, of which Russia and China are members, bringing that organization into its first talks with NATO. Without that, we can't deal with Pakistan's terrorist breeding grounds or cut off border routes for the drug trade.

The priority within that plan must be a stepped-up counter- narcotics effort. There is no perfect fix, but any plan will require the Afghan government and the international community to embrace an approach that combines development and enforcement.

`Classic Mistake'

In some regions, it may make sense to buy the crop. In others, where cooperation is lacking, eradication could be the right approach. In all cases, one has to target distributors and laboratories and clean up the courts and police.

Kerry put it best last week: ``Today we risk repeating the classic mistake that dooms many counterinsurgencies: a failure to appreciate the difference between tactical success and a winning strategy. The fatal consequence, all too familiar to those of us who lived through Vietnam, is that you can win every battle, but fail to win the war.''

 

Frederick Kempe is president and CEO of the Atlantic CouncilOriginally published 5 February 2008 by  Bloomberg News. Reprinted with permission.

Soverign Wealth Funds

It's good and bad that the issue of sovereign wealth funds has entered the U.S. presidential debate.

What's positive is that the candidates have the chance to educate the American electorate during a moment of mounting economic gloom -- and while people are paying attention -- about the increased role that foreign capital plays in creating U.S. jobs and growth.

While they are at it, the candidates might also tell voters that without SWF investments of almost $70 billion in financial institutions over the past few weeks the banking crisis, stock- market retreat and risk of recession would be much worse.

Unfortunately, the bad side of SWFs entering the electoral debate is more likely: a further spread of ill-informed, protectionist populism that wins votes and boosts television ratings, but doesn't wake up Americans to the greater danger that these funds might shun U.S. markets.

``The U.S. can benefit from these flows generally and in regard to financial institutions at the moment in particular,'' says Robert M. Kimmitt, the deputy secretary of the Treasury. He says the benefit of SWFs is ``they have been patient, long-term investors who are essentially placing a bet now even though the expected return will come in a number of years.''

For the uninitiated, SWFs, of which there are about 40, are giant pools of capital controlled by governments and invested in private markets. For all the attention they get, they are just one of four sovereign investment sources that include international currency reserves, state-owned enterprises and public-pension funds.

Growth Rate

It's their growth curve that has won global attention, and they are poised to quadruple in value from $3 trillion now to $12 trillion by 2015, equal to the capitalization of the Standard & Poor's 500 Index. Morgan Stanley predicts the funds will have assets of $28 trillion by 2022, more than double the size of the U.S. economy today. That ensures their investment decisions will move markets and shape the financial system.

An important article by Treasury's Kimmitt in the newest issue of Foreign Affairs lays out a policy approach that boils down to this: voluntary multilateral agreements that ensure the West resists protectionism while the SWFs get more transparent and don't let politics drive their investments.

Such a reasonable approach won't be easy in a political season.

`Hat in Hand'

In last week's U.S. Democratic presidential debate, moderator Brian Williams of the NBC Nightly News put his question this way to Senator Hillary Clinton: ``Citigroup and Merrill Lynch have both gone overseas, as some put it, hat in hand, looking for $20 billion in investment to stay afloat.'' He noted the potential saviors included Saudi Prince Alwaleed bin Talal, whose money former New York Mayor Rudolph Giuliani turned down after Sept. 11. ``Does this strike you as fundamentally wrong, that much foreign ownership of American flagship brands?'' he asked.

In his follow-up question to John Edwards he noted that one of those bailing out U.S. banks was the Kuwaiti government, ``afloat itself today, as you know, thanks to the blood, sweat and tears of American soldiers.'' It was as if he were suggesting Kuwait, in return for U.S. intervention that rescued the country from Saddam Hussein in 1991, should invest somewhere other than America.

The three candidates explained that SWF growth resulted from high energy prices and Asian trade surpluses, but then dodged any helpful ideas for dealing with the results.

Multiplying Problems

What they should have said was:

-- Our economic problems will multiply without foreign investment and our continued openness toward it. International purchases of Treasuries not only help finance our national debt, but foreign-owned businesses employ some 5 percent of the U.S. workforce and account for almost 6 percent of output, 20 percent of U.S. exports, and 10 percent of all U.S. investment in plant and equipment. Beyond that, overseas companies pay wages 30 percent higher on average than their U.S. counterparts.

-- SWFs are another sign of the dramatic structural shift sweeping the global economy that we can shape but not reverse. The U.S. share of world output will continue to decline, as will its portion of annual global growth. And that's for the best as billions of people embrace capitalism and global markets. If we can keep attracting foreign capital and access global markets, we'll continue to lead.

-- We still must press for global policy responses to avoid abuse. Unilateral action won't work, whether by us or our European friends. We should push for voluntary multilateral agreements that already are in the works.

Drafting Rules

For countries receiving foreign government-controlled investment, the Organization for Economic Cooperation and Development is working to codify best practices that would keep the West's investment regimes open while treating all investors equally.

The International Monetary Fund, with help from the World Bank, is drafting a best practices regimen for SWFs that would increase transparency, accountability and public disclosure. ``Even long-standing SWFs are aware that the increase in the number and size of these funds has, rightly or wrongly, raised reputational issues for them,'' Kimmitt says.

It's a simple deal, really: The West resists protectionist temptations and the new SWFs resist political ones. Executing it will be the hard part, and U.S. presidential politics probably won't help.

 

Frederick Kempe is president and CEO of the Atlantic CouncilOriginally published 22 January 2008 by  Bloomberg News. Reprinted with permission.

White House Winner Must Play New Game Overseas

When ­American voters get in one of thei­r "change" moods, as demonstrated by the galloping fever for Democratic presidential contender Barack ­Obama, they discount the value of foreign-policy experience in their candidates.

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Two months ago I suggested that, amid the Bush administration's focus on Iraq's present dangers and Iran's future perils, Pakistan was most likely to produce a so- called black-swan event.

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Travel south from Kiev along the arbored R-12 highway and you will see perhaps the most public symbols of Ukraine's rampant corruption: a wide array of luxurious estates that have sprung up in Koncha-Zaspa, a leafy suburb of the capital. Many of these multimillion-dollar homes belong to senior state officials with only modest salaries. Investigative journalists have compiled evidence suggesting quite a few of these mansions were bought with ill-gotten gains. This prompted President Viktor Yushchenko to demand in August that the public servants explain how they came to possess such lavish accommodations. But at the time his political opponents from the Party of Regions still ran the government, and they responded to his call for accountability with stony silence.

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Bush administration officials have been engaged in a quiet debate about how eagerly to seize a chance to improve French-U.S. relations during President Nicolas Sarkozy's Washington visit, which started yesterday.

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There's plenty of blame to go around for the most-irresponsible, self-defeating and short-sighted congressional foreign policy action of this year.

Start with Nancy Pelosi, the top Democrat in the U.S. House of Representatives, President George W. Bush and the Turks themselves.

The issue in question is last week's decision by the House Foreign Affairs Committee to approve a non-binding resolution to brand the Ottoman Empire's 1915 mass killing of Armenians as genocide. The measure now moves toward a full House vote. If approved, it will send Turkey, the U.S.'s most-important Muslim ally, into an anti-American frenzy.

The panel's sanction was a triumph of domestic politics over geopolitics. The measure was pushed by a California Democrat from a constituency with a large and well-heeled Armenian-American base, and it was backed by Pelosi. In the view of State Department officials who are picking up the pieces, she is more concerned with representing San Francisco than the national interest.

Bush tried to thwart the measure with a campaign involving his father and even former President Bill Clinton, but it was yet another ``surge'' that was too late and without sufficient firepower to make a lasting difference. Most of his effort came in the few days between a phone call from Turkish Prime Minister Recep Erdogan and the Friday before the Wednesday, Oct. 10 vote.

For their part, Turkish leaders over the years have dodged, banned or prosecuted voices at home who suggested genocide was at play.

Yet the House resolution can only produce a nationalist backlash that will make it harder for those, such as Nobel laureate Orhan Pamuk, who have called for a more open historical accounting in a Turkey aspiring to European Union membership.

Modern Turkey

Turkish resistance to the prevailing global view that the Ottoman government tried to exterminate its Armenian population is a testimony to the tensions inside modern Turkey. Mustafa Kemal Ataturk aggressively forged the state from the remains of the Ottoman Empire 84 years ago and forced aside ethnic, tribal and religious identity to create Turkish civil society.

The House resolution thus is an outside intervention into a painful and long-repressed family debate, a match tossed into brew made more combustible by the country's rising religiosity and nationalism.

President Clinton was able to prevent a similar resolution from reaching a House vote during his administration through weeks of intense lobbying and ultimately by convincing then- Majority Leader Dennis Hastert that passage would endanger American lives. Pelosi said Bush hasn't made a similar effort.

Iraq Preoccupation

It was another example of an administration that has been so preoccupied with Iraq for so long that it misses the need for preemptive political action to contain rising dangers -- and this one will have considerable reverberations in Iraq.

Those who think this vote is about setting historic facts right aren't paying attention to the present. What we're dealing with isn't some rogue, failed state housing sworn enemies but Turkey, the only Muslim country in NATO, a potential European Union country and the most-important front-line state in the struggle against Islamist extremists. It is the West's leading bridge to and democratic model for the Mideast.

It also is the country through which 90 percent of cargo passes for U.S. and allied troops in Iraq. At the very least, U.S. logistical problems will increase.

Diminishing Restraint

More dangerously, Turkish restraint may diminish in dealing with Kurdish militant threats from northern Iraq. Turkey's top military man, General Yasar Buyukanit, spoke bluntly in the Milliyet newspaper on Oct. 15, when he said the U.S. had ``shot itself in the foot'' with the resolution. He also faulted the U.S. for not doing more to help Turkey clamp down on Kurdish separatists in northern Iraq.

The Turkish military has been pressing its leadership for the right to cross the Iraqi border to attack rebels in the Kurdistan Workers Party (PKK) and it symbolically stepped up shelling over the weekend.

Passage of the resolution and insufficient U.S. help against the PKK will remove much of Washington's leverage to keep Turkey in check. In the worst case, U.S. and Turkish troops might even end up inadvertently standing muzzle-to-muzzle. It is that danger and others that prompted the U.S. to dispatch Undersecretary of Defense Eric Edelman and senior State Department official Dan Fried to Turkey late last week.

Needed Steps

So what to do now?

Pelosi should follow in the steps of Hastert and keep the resolution off the calendar for a vote. Bush should make the call she's been waiting for, and also provide help to the Turks against Kurdish militants. That would be sufficient to quiet the Turkish military and placate the Turkish public.

For its own part, Turkish leaders should appeal for calm to their citizens, reminding them that their long-term interests are best served in a close relationship with the U.S. It should tell them that the U.S. Congress may be the wrong place to deal with Ottoman-Armenian history, but they must follow through on their call this year for a joint international commission to review the events using long-closed Turkish state archives.

That may be far too reasonable a course to expect in these unreasonable times. Yet the stakes are too high and the risks too great for a failure.

Originally published by Bloomberg News. Republished with permission.

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In the past year, Russian President Vladimir Putin has morphed from a noisy irritant to the West who was reaching the end of his two-term limit to a swaggering antagonist who isn't going away. At least that's the view of senior Bush administration officials, who increasingly see Russia as a rising strategic challenge. They fear a serious and perhaps even dangerous showdown with Russia later this year over the independence of Kosovo as a breakaway Serbian province. It's just one of several explosive brewing disagreements. Putin's threat to retaliate by then declaring the Georgian region of Abkhazia to be independent may sound esoteric. Yet one senior official talks about the ugly events that may well follow: an Abkhaz ethnic cleansing of Georgians in the region, a Georgian military move to protect its minority, followed by armed Russian intervention and then Western retaliation of some kind. The best U.S. foreign policy minds don't believe Putin wants that sort of open conflict with the West, but they worry that in his current mood he may get it by overreaching. And unlike the floundering President George W. Bush, Putin is defying lame-duck status. He has deftly maneuvered the Russian political system so that March elections won't end his reign. Common Interests What's needed now, as U.S. Secretary of State Condoleezza Rice and Defense Secretary Robert Gates plan an October mission to Moscow, is a re-energized engagement on common U.S. and Russian interests: stopping the development of an Iranian nuclear bomb, fighting Islamist terrorism and perhaps reaching a deal that would allow them to work together on missile defense. The U.S. and Europe at the same time have to speak with a more determined voice with Russia on issues such as Kosovo and Georgia so that a miscalculation doesn't lead to an unwanted fight. The message has to be subtle but unmistakable: the West won't be bullied, but the door also is open to Russia's integration into the West, where its history and economic interest should naturally lead it. The trick will be to pull this off with Russian anti-U.S. sentiment at fever pitch, with high energy prices fueling growth and Putin smelling Bush's weakness like a Russian bloodhound. A senior official says that Russia's mood is reminiscent of the mid-1970s, when Soviet leader Leonid Brezhnev believed that post-Watergate America was vulnerable. The result was the Russian invasion of Afghanistan. Munich Speech The Bush administration's divisions about how best to deal with Russia have grown since Putin's speech at the Munich Security Conference early this year signaled the shift to a more aggressive policy. ``One country, the United States, has overstepped its boundaries in every way,'' he said. His surprised listeners chalked up the speech to Russian pre-election politics and Putin's need to articulate rising resentment over Russia's Cold War defeat and an aftermath that brought Western institutions such as the European Union and NATO to its borders. Since then, however, it appears the speech marked the beginning of Russian reassertion, pushing back on the changes of the 1990s that broke off the Baltics, the Caucases and Ukraine from the Soviet Union and ended its empire. Bush has urged restraint toward Russia. His point has been that the threat to the U.S. in the 21st century is Iran and radicalized Islam, not Russia. Yet a growing faction of U.S. officials believe giving Putin too much ground only encourages him to take more. These advocates of greater cooperation often wind up frustrated as areas of disagreement proliferate. Retaining Power Some U.S. officials figured Putin would be unable to maintain power after March elections and they thus could start anew. That has also changed. By naming the relative unknown Viktor Zubkov as prime minister earlier this month, followed by Putin's suggestions that Zubkov could run and win the presidency, he made clear term limits were little impediment to his ability to be the country's chief string-puller. Because the law only prevents successive terms and the prime minister's job may also be open to him, Putin's ability to hold power is virtually assured. In any case, resign yourself to many years of ``Putinism,'' the political and ideological system that Putin has spent eight years installing and which may have just as long a life in the 21st century as Stalinism had in the 20th. Putinism at Work Under this system, a strong and unaccountable executive holds power over a pliable media and subservient legislature, judiciary and regional and local political structures. Former and current state security officers -- once known as KGB but now FSB -- have custody of everything from Russia's nuclear weapons to its oil wells and natural-gas fields. In foreign affairs, Putinism is brash and muscular, wielding Russia's energy weapon more effectively than it ever did nuclear weapons in order to influence neighbors and entice friends. Yet diplomacy is about dealing with what exists. Putin is here to stay, as is Putinism. Now the U.S. and Europe must adjust and form a robust response. One must avoid needless fights. But the West can't compromise on the spread of democracy or Western institutions. These changes serve Moscow's long-term interests --if only the West can manage a host of escalating short-term dangers.

Frederick Kempe is president and CEO of the Atlantic CouncilOriginally published 24 September 2007 by  Bloomberg News. Reprinted with permission.