Around the watercooler today: Decision time on Libya regime change; four crises that could sink the global economy; and successors to two global titans.
Gaddafi: Mission Creep or Regime Change?
Fareed Zakharia is as persuasive his arguments against the ongoing mission creep in Libya—but so is the Atlantic Council’s Walt Slocombe in explaining why the U.S. and its European and Arab friends must do far more to see Colonel Moammar Gaddafi from power. Read both and let me know which you find more convincing at fkempe@acus.org.
Zakaria recounts the—for him—troubling escalation in President Obama’s rhetoric from his more cautious language at the beginning of this episode to his stirring speech on Monday outlining the logic behind American involvement. The president’s deeper engagement was made all the clearer with leaked word that he had approved the use of CIA teams inside Libya to assess the anti-Gaddafi rebels following yesterday’s reports that al-Qaeda elements were involved. Zakaria argues that Obama now must either escalate his means or scale back his goals – and he prefers the latter.
Slocombe, on the other hand, argues convincingly that the UN-approved logic behind the operation—acting to protect the Libya population—won’t be satisfied until Gaddafi is gone. “Having struck at a king,” he argues, “NATO (and the U.S., and all the other nations that purport to support the effort) must – not literally kill him – but see him out of power. If that takes an even more robust military effort, so be it.”
It is too late for those who argued that the U.S. never should have got involved in the Libyan mess. We’re in. The irony is that now that the U.S. and its friends are involved, the national and global interests involved in our success have escalated considerably. In Libya, Slocombe argues, we either help along real political transformation in the Arab world and remove Gaddafi or we undermine that cause and leave the Libyan leader as a spoiler.
Energy and Recovery
Washington is buzzing with concern that a perfect storm of dangers that could threaten our fragile economic recovery is forming,
Alan S. Binder, the former vice chairman of the Federal Reserve, lists four in today’s Wall Street Journal: the Japanese disaster, the European sovereign debt crisis, the U.S. budget deficit, and the oil market.
For the moment, I worry most about the budget deficit and the oil crisis. As much as the threat of a government shutdown makes for a great media show, Binder is right that it would be a larger political than economic event as any shutdown would be brief. My larger concern is that investors around the world, watching our mess in Washington, are beginning to doubt whether the U.S. can come to terms with its problems–and that could have major consequences on the dollar and on markets.
As for oil prices, Mideast turmoil is far from over and the price of a barrel of oil has already risen by $20 to $105. Don’t rule out a surge to $150—which we saw during the summer of 2008—at some point along the way. That would be what economists call an “oil shock,” with all of its potential impact on inflation and economic growth.
Binder is surprisingly sanguine about these dangers to U.S. economic recovery. He gives the Japanese disaster only a 5% chance of derailing the economic recovery and the dangers of an oil shock only a 25% chance, noting that such energy price moves of late have had less global impact. One hopes that he’s right, but smart money should bet that the odds of dislocation in our current era of uncertainty are greater.
Rupert Murdoch and Warren Buffett
Nothing excites chatter around the global watercooler more than speculation around who will succeed the handful of larger-than-life personalities of the global economy.
In one day, News Corp chieftain Rupert Murdoch— one of the boldest and most creative entrepreneurs of our times—seems to have anointed his successor while Warren Buffett seems to have lost his. Murdoch (who is also an International Advisory Board member of the Atlantic Council) has promoted his son James and will move him to New York setting the stage for a gradual handoff of power at the $46 billion media group.
At Berkshire Hathaway, however, Warren Buffett’s heir apparent David Sokol has resigned. Everyone involved is at pains to insist that his abrupt departure had nothing to do with a Securities and Exchange Commission investigation of Lubrizol stock before recommending that Berkshire buy the specialty chemical company.
This week was a better one for Murdoch than Buffett.
Fred Kempe is president and CEO of the Atlantic Council. His latest book, Berlin 1961, will be available May 10.
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