A puzzling scenario? UNITAS exercises in Peru

Last weekend the UNITAS naval exercises between the US and several South American navies, including 1300 from Argentina, Brazil, Colombia, Ecuador, Mexico, Paraguay, Peru and Uruguay, and soldiers from Canada, came to an end. This regional event is designed to develop marine training and encourage regional cooperation. It has been going on since 1960, although the format has changed in that time. In its early years it consisted of a series of bilateral training between the US navy as it visited individual South American states. Today it has expanded into a multilateral event, sometimes including allies from outside the hemisphere; Britain, Germany and Spain have previously taken part.

What is intriguing were the limited details that the American military Southern Command, SOUTHCOM, has provided of the final ‘peacekeeping exercise scenario’ that the various participants will do to test their previous training. According to a recent email bulletin from Resumen Latinoamericano (a portal where regional journalists investigate and publish stories that do not make the mainstream media), that scenario took place last week about 25km north of Lima and had as its aim military recovery of a hypothetical country in a state of chaos following a coup.

SOUTHCOM’s reticence and Resumen Latinoamericano’s details are especially interesting given the experience of coups in the region and the current state of current affairs. First, the content of such a scenario seems unconnected with reality Although it was hypothetical, there are relatively few cases of coups in the region that have left the country in a state of social, political – and indeed, military – disorder. In the region’s recent history (at least as long as the UNITAS exercises have been running) almost all coups have occurred as a result of coalition between civilian elites and the armed forces. From Brazil in 1964 to Argentina, Chile and Uruguay in the 1970s, coups occurred during a period of social and political instability. Moreover, after they took place, order – albeit of a repressive kind – was restored.

Even Honduras in 2009 broadly followed this pattern: the former president Manuel Zelaya proved a controversial character, building up suspicion on the side of the opposition. This led to the Zelaya’s loss of legislative support and a growing political instability following his decision to hold a referendum as a means of breaking the deadlock. The disconnection between the politicians and society was exacerbated by Zelaya’s base being mainly among the social movements. But failing to take account of the disaffection among his rivals, Zelaya did not fully appreciate the risk he faced, which culminated in an alliance between the opposition and elements which launched the coup. Following this removal what isolated protests occurred were quickly shut down, as the coup’s leaders exerted political control.

By contrast, the only case that accords with the scenario adopted during the UNITAS exercise would be that of Venezuela in 2002. In that instance the coup was not achieved with a strong and unified coalition between civilians and military. Rather the key coup plotters were drawn from the country’s social, political and economic elite. In the days following Chavez’s removal the country was in a state of disorder, with no clear lines of authority. While the coup plotters claimed to be in charge – and received swift US backing – the majority of the armed forces held back, refusing to place their support behind them.

Could the case of Venezuela have provided the basis for this scenario then? If so this relates to the second point about the recently finished UNITAS exercise. Last week Venezuela broke off diplomatic relations with its neighbour after the Colombian ambassador and Washington said there was a case to answer regarding Venezuelan support (tacit or otherwise) for FARC guerrillas in its territory. On Sunday (25 July) Chavez ratcheted up the tension by linking the Colombian claims with US interests and announcing that he would stop oil exports to the US if Colombia attacked.

However, if this scenario is indeed designed to address a situation like that between Venezuela and Colombia, at least two points need to be addressed. First, it is not entirely clear that the scenario accurately reflects the current crisis. It was designed to address an internal collapse of order (a coup) rather than a threat from outside (a conflict between states). While external factors have contributed to the internal destabilisation of countries (the CIA’s subversion against Allende in Chile springs to mind), most coups have been driven by domestic actors. Moreover, it is hard to see any weakness in Chavez’s position at present. There is no widespread social instability which is needed for elite mobilisation against the government; a coup does not appear on the cards in Venezuela at this time.

Second, it is not apparent why a military solution would be the favoured response by either the US or its South American allies to a coup/attack. Recent examples show a preference for diplomatic over military solutions. There has not been a war between countries since 1995 (between Ecuador and Peru) which resulted in Argentine, Brazilian, Chilean and American mediation. More recently, measures have been taken to discourage coups both before and after the event. Honduras, for example, was suspended from both regional and sub-regional organisations, such as the Organisation of American States and the Central American Integration System, following its coup. By contrast in 2008 a potential coup in Bolivia was headed off through a common UNASUR statement in support for the country’s president, Evo Morales.

In sum then, the current bad state of affairs between Venezuela and Ecuador on the one hand and the uncertain objectives of the UNITAS peacekeeping scenario on the other may seem purely coincidental. Yet it does raise wider questions about the nature of both internal and external conflict in South America, from social and political instability on the one hand and civilian-military relations and the forms of post-coup control on the other. It invites consideration of the value of such training exercises. Should they be entirely hypothetical and ungrounded in reality? Or, if they were more related to the real world, could that fuel both the general public suspicion of US motives and rhetoric of leaders like Chavez?

Guy Burton is a research associate for the Latin America International Affairs Programme at the LSE Ideas Centre.

A new low for Colombian-Venezuelan relations?

Relations between Colombia and Venezuela appear to have hit a new low. Diplomatic relations between the two countries were severed by Venezuela’s government following the Colombia ambassador’s presentation before the OAS last Thursday (22 July) that Venezuela ‘tolerates’ up to 1500 FARC guerrillas on its side of the border. On Friday the Venezuelan defence minister, Carlos Mata said that Venezuela was prepared to use force if Colombian troops attempted to cross the border.

Much of the roots of the current crisis may be found in outgoing Colombian President Alvaro Uribe’s policies against the FARC and the other main rebel group, the ELN. Elected in 2002, Uribe promised to take a hard line against both. The US, which has placed both groups on its list of terrorist organisations, has supported Uribe in this regard, providing his government with significant amounts of foreign aid and military assistance.

As a result of this pressure, both groups have been largely weakened, both in terms of numbers and resources. At the same time it has encouraged them to seek sanctuary in the less controlled border regions of Venezuela and Ecuador. Added to this have been a series of allegations from the Colombian side that, since the early 2000s, the FARC has had close links with Venezuela’s president, Hugo Chavez, including financial assistance. The most notable claim in this regard followed a Colombian cross-border raid into Ecuador in 2008 where a FARC unit was killed and a laptop recovered in which data relating to Venezuelan support was found.

The Colombians have demanded an international mission to inspect the sites it claims are being used by the FARC. The US State Department has echoed its ally, not only saying that the allegations are serious, but being especially critical of Venezuela’s response. However, following the Colombians' presentation and demand, the OAS secretary general, Jose Miguel Insulza, said that this was not possible without Venezuela acquiescence. This suggests that the demand is therefore a non-starter.

Instead there are currently moves to shift the forum for discussion of the issue away from the OAS and towards UNASUR. Ecuadorian president and president tempore of UNASUR, Rafael Correa, has asked its chair, Nestor Kirchner, to meet with Presidents Hugo Chavez of Venezuela and Alvaro Uribe of Colombia, as well as the Colombian president-elect, Juan Manuel Santos.

The purpose of using UNASUR is designed to exclude Washington. As an organisation comprised of only South American countries, the aim of Ecuador and its ally Venezuela is to limit the involvement and intervention of third parties such as Washington. In 2008 the organisation sidelined the US by providing a forum to discourage a potential coup against Bolivian president Evo Morales. In addition, last year Venezuela used UNASUR as a forum to isolate Colombia over its decision to expand the use of its military bases with the US. It may well see UNASUR’s involvement as a way to draw support for itself against Colombia’s claims – which will be weakened by the absence of a regional ally.

The timing of Kirchner’s visit is significant in this regard. He is scheduled to meet with Chavez, Uribe and Santos in two weeks, around the time of Santos’s inauguration. Not only have tensions between the Venezuelan and Colombian leaders been political (Uribe a right-winger and Chavez a self-styled 21st century socialist), but there is strong personal antipathy between the two; the language used by them has been antagonistic to say the least.

Consequently, it would not be too surprising if, following Kirchner’s visit, some jointly agreed communiqué was drafted between Chavez and Santos following the latter’s inauguration. This would probably involve a general agreement to cooperate on matters of regional security and fight against terrorism without specifying the FARC by name or making any clear demands on either side. This would probably then be followed by Chavez restoring full diplomatic relations with Colombia. That would make him look not only generous, but also highlight his ‘victory’ over Uribe, by not only having outlasted his foe but also preparing the ground for a better dialogue with his successor. Indeed, some commentators, including Michael Shifter of the Inter-American Dialogue and Jimena Blanco of the Latin American Newsletters suggest that matters should improve between the two countries, given Santos’s greater pragmatism.

However, without a clear Venezuelan statement or action regarding its position with the FARC, the underlying causes of this current spat will remain unresolved; namely Colombia’s more active policy against the guerrillas and Venezuela’s ambiguous relationship to them. As I have already pointed out in a previous post, Santos is as conservative and committed to the hardline policy against the guerrillas as his former boss. Indeed, it was Santos who oversaw the extension of the military base agreement with the US that Caracas was so incensed by last year. So while Colombian-Venezuelan relations in the first few days of a Santos presidency will no doubt appear generally positive in contrast to the previous period, this is unlikely to last – even if the confrontation becomes less personally abusive than before.

Guy Burton is a research associate for the Latin America International Affairs Programme at the LSE Ideas Centre.

The Lebanese Civil War: 20 Years Later

By Hannes Baumann

There is a temptation to emphasise the constants of instability when analysing Lebanese politics: divisive sectarianism, spill-over of regional conflicts, and clientelism. The political crisis of 2005 to 2008 with its outbursts of violence seemed to confirm the impression that nothing much has changed since the Lebanese Civil War of 1975-1990. Yet the focus on seemingly static features of Lebanese politics does not explain the timing of crises and obscures the significant social and economic changes of the last twenty years.

The country is divided into several Christian (primarily Maronite and Greek Orthodox) and Muslim sects (primarily Shi’i, Sunni, and Druze). The civil war was largely fought by sectarian militias. However, references to sectarianism leave several wartime phenomena unexplained: the timing of the outbreak of war, the significant role of non-sectarian militias, and intra-sectarian fighting. Confessional conflict often obscured larger international or economic conflicts. Sectarianism has continued to dominate post-war politics. The Taif Accord of 1989, which became the basis of the post-war political settlement, perpetuated the constitutional system under which politicians are first and foremost the representatives of “their” sect: The president (always a Maronite) lost some of his prerogatives to the prime minister (Sunni) and the speaker of parliament (Shi’i). Until now, sectarian violence perpetrated during the Civil War provides an arsenal of “memories” that leaders can mobilise at moments of political turmoil. However, sectarianism alone still cannot explain conflict dynamics. When sectarian conflict turned “hot” again between 2005 and 2008, the main fault line ran along the Sunni-Shi’i divide, while the Christian community was politically divided. This confounded post-war academic speculation that had focused on the likelihood of renewed Christian-Muslim conflict.

Lebanon has remained an arena for regional struggles. The Syrian-Israeli conflict, in particular, has shaped Lebanese politics. The endgame of the Civil War 1989-90 represented an acceptance by the US and its regional ally Saudi Arabia of Syrian dominance in Lebanon. Damascus was given free rein to marginalise its opponents in Lebanon, who were deprived of meaningful international sponsors. In turn, Syria reoriented its policy toward the West, joining the first US-led war against Iraq in 1991, and engaging in a peace process with the Jewish state. Meanwhile, Israeli occupation of South Lebanon persisted. The relative concord between Israel and Syria over Lebanon ended in 2000, when peace negotiations broke down and Israel withdrew from Lebanon. A more assertive US Middle East policy and the assassination of former Lebanese Prime Minister Rafiq Hariri in 2005 resulted in a period of American and European pressure to stop Syrian meddling in its neighbour’s politics. Opponents of Syrian tutelage returned to Lebanon’s political scene. Damascus was forced to withdraw its troops from the neighbouring country. A period of domestic tension between “pro-Syrian” and “anti-Syrian” sectarian coalitions followed, as well as an Israeli war with Lebanon in 2006. Following an outbreak of violence in 2008, the US, Europe, and the “moderate” Arab states realised that Syria could not be defeated. Once international pressure subsided, Lebanon’s rival factions came to an agreement to share power in a government of national unity.

The distribution of wealth has remained highly unequal but Lebanon’s economic structure has changed fundamentally since the pre-war era. Before 1975, Lebanon’s banks acted as financial intermediaries between the Arab Gulf and Western financial markets. This benefited a small commercial-financial bourgeoisie which was closely networked with the pre-war political elite. During the war, Lebanon lost its role as the Arabs’ banker, eventually suffering financial collapse in the 1980s. New economic and political actors emerged from this structural shift: a new contractor bourgeoisie of Lebanese exiles who had made their money abroad – especially in the Gulf – began looking for investment opportunities. The prime example was the businessman Rafiq Hariri, who rose from humble origins in Lebanon to serve as a major contractor to the Saudi King in the 1970s and 1980s. The wealth and political backing Hariri received in the Kingdom launched him on a political career in Lebanon, serving as Prime Minister in 1992-98 and in 2000-04. Former militia leaders were seeking investment opportunities for the illicit gains they had made during the Civil War, while the remnants of the pre-war bourgeoisie were trying to cling to their status. All of these actors were looking for new mechanisms of wealth creation, not least to finance patronage to their sectarian clientele. Members of the Syrian regime also appropriated their share of post-war wealth.

The post-war economy was built on a compromise: a boom in reconstruction and finance benefited primarily the new contractor bourgeoisie, while the former militia leaders used “service ministries” as patronage sources (e.g. education, health, or regional reconstruction funds). This system was prone to crises because it was fuelled by prolific government borrowing from Lebanese commercial banks. The high-interest borrowing plunged the country into debt but also transferred wealth to a small number of investors believed to be closely networked to – if not congruent with – the political elite. Government debt at 148% of GDP in 2009 was one of the highest in the world, while debt servicing accounted for 44% of government expenditure. Since 2002, Lebanon has relied on a helping hand from international donors to avert renewed financial collapse. Saudi Arabia, in particular, gained great leverage over Lebanon’s political economy as the de-facto guarantor of the country’s debt. Efforts to cut the spending of the “service ministries” or to privatise state-owned utilities and telecoms have led to tension with the former militia leaders, whose access to patronage sources depends on state largesse.

Twenty years after the end of the civil war, Lebanon still faces strong crisis tendencies. It is not enough to strike the right “sectarian balance” because sectarianism itself distorts Lebanese politics. Rising regional tension between Iran and Israel is likely to reverberate within Lebanon. Recent Israeli accusations of Syrian smuggling of Scud missiles to Hizbollah have stoked fears of another war. Although financial collapse has so far been averted, it remains a possibility. Despite the current calm, Lebanon remains at the brink.

Hannes Baumann is a PhD student at the School of Oriental and African Studies (SOAS) and focuses on Lebanon.

Shifting Sands is the blog of the Middle East International Affairs Programme at LSE IDEAS, analysing current events in the Middle East and contributing to the ongoing deliberations over policy prescriptions.

Amber Holewinski, Editor

2009, A Crisis Year: Foreign Investment in Latin America

Since the early 1980s, foreign investment has become the main source of foreign capital for developing and least-developed countries. With the drastic reduction of bank loans, direct and portfolio investment are the most important alternatives to fund public and private needs of capital. Foreign investment is particularly important for least-developed countries and small developing countries. As a consequence, growth and development in many regions of the world depend on foreign capital, and any shortage could have detrimental consequences. Unfortunately, the economic crisis that started in 2008 seems to be contracting the total amount of FDI; particularly this seems to be the case in Latin America, as has been reflected in the latest report of the Economic Commission for Latin America and the Caribbean. This brief article aims to analyse this report and its implications for the region.

In 2008, foreign investment to developing countries – including Latin America – reached its historical peak (ECLAC, Foreign Direct Investment in Latin America and the Caribbean 2009, p. 23) (The impact of China on these figures should not be underestimated, because this country alone accounts for 15.7 % of world FDI; see UNCTAD, World Investment Report 2009, pp. 247-249). While developed countries suffered a huge contraction in investment, developing countries performed very well in 2008. This resilience, nevertheless, was connected to three main factors: business planning, commodity prices and growth. Since many of this projects were already in progress – growth in the region being relatively higher than in the OECD membership – they were finally executed rather than cancelled. In addition, many undertakings were linked to natural resources, a sector that was booming before the crisis due to the increasing demand and prices. In 2009, this positive scenario faced a challenge posed by the political decision of developed countries to attract and preserve capital, especially through incentive packages. This change of attitude was followed by direct consequences resulting from the slowdown of the world economy: economic uncertainty and recession in the OECD countries, a decrease in commodity prices, and less growth in Latin America and the Caribbean.

As a consequence, FDI inflows into the region fell to USD 76.68 billion, down 42% from the record high in 2008 (ECLAC, p. 7). While all sectors contracted, natural resource projects suffered the most, particularly because of the already mentioned decline in demand and price. Foreign investment directed to provide services remained the most important importing sector and manufacturing projects regained the second place. This decrease affected projects aimed to provide local markets with goods and services (market seeking / serving investments), and efficiency seeking investments, which goal is to perform one or more functions in the production process at a given location and re-export the goods to other production facilities or the final markets. It is worth to remark that both before and after the crisis, the region does not perform well in attracting capital-intense foreign projects. In spite of the number of manufacturing projects, most of them continue to target low or medium technology functions. Investment in research and development remains particularly low (ECLAC, p. 10). This dynamic shows that foreign capital to the region has two main objectives. First, substantial inflows are directed to the provision of goods and services to the local markets, but mostly using technology and marketing techniques developed in other jurisdictions. Second, an increasing amount of flows, particularly from the U.S., are exploiting location advantages – such as lower salaries – to perform labour intense functions in Mexico, Central America and the Caribbean.

In terms of recipient countries, Mexico was the most affected country with 51% decrease of inward FDI flows, followed by Argentina (50%), Brazil (42%), the Caribbean (42%), Colombia (32%), Central America (32%), Peru (31%) and Chile (31%) (ECLAC, pp. 7-8). The most affected country was Venezuela with negative inflows of 3.105 billion, but this figure is mostly a result of the nationalisation process rather than the economic crisis. As expected, the most important recipients in absolute terms are basically the biggest economies (in GDP terms): Brazil, Chile, Mexico, Colombia, Argentina, Peru, Dominican Republic, Panama, Costa Rica and Uruguay (ECLAC, p. 66). Nevertheless, this does not tell much about the importance of foreign investment for each economy. When analysing the relationship between GDP and total FDI inflows, the ranking of major recipients is leaded by Chile, followed by Panama, Dominican Republic, Costa Rica, Peru, Uruguay and Colombia (ECLAC, p. 33). The GDP / FDI coefficient indicates the high ability of these countries to attract FDI, beyond the size of the host economy, but also shows some potential dependency on foreign savings. Regarding outward FDI inflows by Latin American and Caribbean countries, the three main capital exporting countries are Brazil, Mexico and Chile. The majority of these projects are located within the region. In 2009, however, this ascendant tendency suffered a sharp reduction of 69% compared to 2008. The reason for this decline is attributable to a net disinvestment of Brazil of around USD 10 billion (in 2008 it had invested for USD 20 billion) (ECLAC, p. 10-11). Both capital importers and exporters in the region seem to confirm the investment development path hypothesis advanced by John Dunning and Rajneesh Narula. According to this argument, countries would only attract few foreign investments until they reach a certain level of development. Later on, when they achieve higher positions in the developing ladder, they will also become capital exporter countries.

The 2009 report by ECLAC is optimistic about the positive effect of FDI inflows on the recipient economies in the region. It does mention, however, that there is a stronger impact of FDI as a source of financing than as a transmitter of knowledge and technology. In this regard, the report concludes that FDI should be treated as part of a more “comprehensive development strategy” (ECLAC, p. 58). Positive externalities are not an automatic consequence of FDI; they depend on both the right public policy and a strong domestic private sector. For Latin America the remaining challenge is to attract more high value FDI that is related to more capital intense functions in the production process. This relates not only to research and development, but also to headquarter activities such as finance and marketing.

As the report puts it clear in the end, FDI continues to be the main source of capital for developing countries and any decline is therefore bad news (ECLAC, p. 64). The slowdown of the world economy makes efficient seeking investment less attractive, while market seeking and serving projects will be on hold until the region goes back to a growth path. As a final remark, it is necessary to remember that if developed countries actively seek to attract capital, this could further reduce the amount of investment in developing countries (UNCTAD, Assessing the impact of the current financial and economic crisis on global FDI flows, pp. 47-50). In fact, whenever developed countries required capital, the rest of the world suffered a consequent scarcity in their financing expectations (the post-war period and the 1980s are two examples). Presently, the world economy has changed and many emerging economies are also capital exporters, such as Brazil, Mexico and Chile. Yet, it is not clear whether they could take the lead as main investors in the region in case of a slowdown of extra-regional FDI. For the less developed economies in the region, this is a crucial question.

Nicolás Marcelo Perrone is a PhD Candidate at the London School of Economics and researcher at the Centre for Interdisciplinary Studies on Industrial and Economic Law in Buenos Aires.

Liberal Interventionism R.I.P.

While conducting fieldwork in Washington DC this summer, I was struck by the many complaints about President Obama’s lack of interest in pursuing liberal values abroad. “Those working in the ‘democracy sector’, haven’t seen many resources coming their way from this administration”, one critic told me in private. Others quibbled about Obama’s deafening silence on international human rights issues. Let alone the tsunami of TV commentators debating whether the President was keener on allegedly importing European-style big-government socialism rather than promoting, at home and abroad, America’s entrepreneurial spirit and free-market ethos.

Wondering whether these narrow policy complains reflected broader shifts in American strategic thinking, I turned to Obama’s newly released (May 2010) National Security Strategy (NSS) in search for clues. And I found them. Indeed, what I found was that America’s liberal interventionist grand strategic approach, which had come to define much of its foreign policy thinking and practice since the end of the Cold War, had all but faded. Roughly speaking, liberal interventionism is the belief that the active promotion of liberal values worldwide - such as free markets, human rights and democracy - are instrumental to maintaining international peace and stability and a vital U.S. security interest. Its advocates have generally proposed that the U.S. use its power to pursue and protect these values through direct intervention - even military if necessary - in the domestic affairs of foreign countries.

Take human rights and democracy promotion for example. At a close look of Obama’s NSS, riddled it is with the language of engagement, building cooperation and investing at home to renew American leadership, while impulses of intervening on humanitarian grounds or to spread liberty internationally seem to have gone. Compare Obama’s NSS, for example, with Bush’s 2002 NSS and Clinton’s 1998 NSS. One has to go to page 36, to have a hint of what Obama’s strategy to uphold “universal values” would be:

“The United States supports those who seek to exercise universal rights around the world. We promote our values above all by living them at home...America will not impose any system of government on another country…More than any other action that we have taken, the power of America’s example has helped spread freedom and democracy abroad.” (p.36)

Contrast this ‘exemplarist’ stance with Bush’s highly interventionist freedom agenda, which took center stage in his NSS. Indeed the document opened with the following lines:

“The United States possesses unprecedented - and unequaled - strength and influence in the world. Sustained by faith in the principles of liberty, and the value of a free society, this position comes with unparalleled responsibilities, obligations, and opportunity. The great strength of this nation must be used to promote a balance of power that favors freedom.” (p.1)

The 2002 NSS’ first key strategic objective was to “champion aspirations for human dignity” (i.e. democratic institutions and human rights). This logic then became a central ideological component in pursuing strategies of democracy promotion in the Middle East, build support in the run up to the war in Iraq as well as driving state-building activities in both Iraq and Afghanistan.

So too there are few echoes in Obama’s strategy of anything like the Clinton era concept of “democratic enlargement”. Nor are there many openings for possible humanitarian interventions, which instead peppered the 1990s decade.  Clinton’s 1998 NSS also articulated a more explicit activist approach to “promoting democracy and human rights”, than Obama’s current one, explicitly indicating it as the third core objective of its national security strategy.

“We must sustain our efforts to press for political liberalization and respect for basic human rights worldwide, including in countries that continue to defy democratic advances.” (p.34)

On the economic front, as well, the self-confidence in the necessity of advancing a liberal economic order internationally has evaporated from the 2010 document. Out of the post-Cold War era administrations, Clinton’s was the one which most vigorously articulated a foreign policy vision around the universal expansion of markets. Indeed he appeared at times to elevate economic interests at the same level of more traditional national security concerns. Globalization was the word of the day, while key American priorities were to extend open markets and free trade worldwide alongside building and beefing-up international liberal economic arrangements such as NAFTA, APEC and the WTO. During the 1990s, The Bretton Woods organizations were also given a freer hand in their lending and in advocating for a markedly neoliberal approach to poverty reduction and economic growth.

Similarly bullish was Bush’s NSS about the need to intervene internationally to advance neoliberal economic policies. A stated objective in the 2002 NSS was to “ignite a new era of global economic growth through free markets and free trade”. The 2002 NSS also tied economic liberty to the President’s freedom agenda:

“A strong world economy enhances our national security by advancing prosperity and freedom in the rest of the world. Economic growth supported by free trade and free markets… reinforces the habits of liberty. We will promote economic growth and economic freedom beyond America’s shores.” (p.17)

Then contrast this cavalier attitude of previous decades towards liberal economic prescriptions with Obama’s call for more state-led fiscal stimulus during the latest G20 meeting in Canada. In parallel the 2010 NSS has few words to spare for the universal application of liberal economic principles. It instead concentrates primarily on the notion of rebuilding the domestic foundations for American ‘prosperity’, by:

“Strengthening education and human capital, enhancing science, technology and innovation, achieving a balanced and sustainable growth” (p.2).

I’ll leave it to more rigorous academic analysis than this simple blog post to try and explain why such a shift away from liberal interventionism has happened. One can simply speculate that both international structural and domestic forces are at play here. The slow end of unipolarity with the rise of regional powers along with the soft balancing of an international public opinion which has repercussions on how far national governments can support a highly interventionist American foreign policy, may be at work here. Also domestic forces within the US, such as the high economic, military and human costs of repeated and protracted foreign adventures, could have dampened passions for more of the same.  Furthermore, particular policies have been delegitimized given their partial or complete failures. For example, the realization that protecting human rights abroad through military means is hopeless when there is no functioning state, as in the case of Haiti and Somalia. Similarly, the realization has taken hold democracy isn’t built in a day, as neoconservatives hoped for in Iraq and Afghanistan, and requires a more sustained commitment than interventionists might have previously assumed. Likewise, the 2007-2008 financial cataclysm appears to have deflated enthusiasms for neoliberal economic recipes. Given this scenario, liberal interventionism, which has defined much of American foreign policy strategy for the past two decades, has now been put to rest. 

Gregorio Bettiza is a PhD candidate in International Relations and IDEAS Centre Stonex Scholar at the London School of Economics and Political Science.  He serves as Programme Assistant on the LSE IDEAS Transatlantic Programme.

Fire Under the Ashes: A Year After Iran’s Troubled Elections

By Adel Al Toraifi

As some analysts expected, the anniversary of the Iranian elections passed with neither huge protests in the streets nor any prominent events taking place. Except for some student arrests and an individual attack against the former presidential candidate Mehdi Karroubi, the Iranian regime proved that it is the master of the situation. This reality was made clear when leaders of the opposing green movement backed down from organizing protests days before the anniversary and instead apologized out of fear of security measures taken by the Iranian regime. Perceived as a serious weakness by their supporters, members of the opposition have decreased in number.

Some attribute reasons for the green movement's retreat to the success of the Iranian authorities backed particularly by the revolutionary guard and the Basij militia in the forced reelection of President Mahmoud Ahmadinejad. Also, a series of trials, sentences and executions against supporters of the opposition under the noses of its leaders—Rafsanjani, Mousavi, Khatami, and Karroubi—proved that opposition to the existing regime is still weak and ineffective in changing the situation in the Iranian political arena. In this context, the political analyst Reza Esfandiari commented in the Telegraph (12 June), "Despite the claims of a rigged poll, all of the available evidence indicates to [the election] being authentic and that a majority of Iranians support the current government.” He went on to say that "The failure of the Green (reformist) movement one year on is largely down to the fact that it could not draw among ordinary Iranians outside of the political elite and cosmopolitan social base."

However, others see that the apparent calm conceals much anger and internal congestion, or as The New York Times called it in a 12 June report, “fire under the ashes." The report indicates that the Supreme leader Ayatollah Khamenei and President Ahmadinejad may appear victorious at this stage, but many people in Iran today feel that—despite the apparent retreat of the green movement—underground opposition not directly associated with the movement is growing, and it is distinguishing itself from both the existing political regime and its opponents. If this is true, then the conservative and reformist parties have lost their chance to challenge the serious imbalance of power in the Iranian political system. In effect, the revolution that represented the people has become a regime that forcefully controls a youth nation that was born after the revolution.

While the neo-conservatives in Iran enjoy their victory over the internal opposition, Iran has become internationally isolated similar to the post-revolution years; the major countries passed a fourth package of sanctions with the concurrence of Iran's friends: Russia and China. Though the Iranian government appears negligent to these strategic losses, the country—according to some observers—may face major economic challenges domestically.

During 2007 and 2008, Iran gained significant income from its oil returns, and the peak of the oil prices ($150) helped the central government cover its gross expenditures in projects supporting the poor who, in fact, form the public base of President Ahmadinejad. However, Iran is facing an economic blockade that may harm its foreign trade. In 2008, Tehran's trade with its five biggest Asian trading partners reached about one billion dollars. The majority of Iran's exports go to countries such as the United Arab Emirates, Iraq and Afghanistan, but the value of this trade is likely to decrease to 2001 rates, less than $500 million, if these sanctions are implemented more strictly than before.

In his important book Forces of Fortune (2009), Vali Nasr argues, "The great battle for Iran's soul –and the future of the whole region – will be fought not over religion or sects, but over the freedom of trade and capitalism." Thus, the economic sanctions imposed on Iran will have significant consequences. Iran's gross domestic product, now, is similar to that of Massachusetts. Experts argue that Iran’s economic status prevents Iran from being a major player regionally, let alone confronting countries such as the United States or the European Union.

The neo-conservatives in Iran argue that acquiring nuclear technology – not necessarily possessing a nuclear weapons arsenal – is essentially a response to the foreign threats they face, and that the western countries, especially those in the region, will have to correct their stances and acknowledge Iran's status as a major country. It is true that reaching a nuclear capability may change the balance of power in the region. Nevertheless, it will change nothing in the balance of the internal dispute. Ray Takeyh (Guardians of the Revolution, 2009) points out that the extreme rightist policies of the Mullahs in coalition with the guards [Iranian Revolutionary Guard Corps] may have ensured their success in the regional conflict with the international community, but the domestic challenges might be the greatest threat to their existence in power. Eventually, failing to solve domestic problems was the main reason behind the fall of countries such as the Soviet Union.

The neo-conservatives may have succeeded in this round, but as a Persian proverb states, "Forgiveness hides a pleasure not found in revenge." It is a lesson they don’t realize clearly; Iran will never be as it was before, as anger and revenge are still burning under the ashes.

Adel Al Toraifi is a political analyst and researcher, based in London. His area of specialty is Saudi foreign policy and Iranian politics. Al Toraifi is a PhD candidate in the International Relations Department at LSE.

Shifting Sands is the blog of the Middle East International Affairs Programme at LSE IDEAS, analysing current events in the Middle East and contributing to the ongoing deliberations over policy prescriptions.

Amber Holewinski, Editor