Flying Under the Radar: An Overlooked Benefit of Public-Private Partnerships

March 3, 2011

by Soon Kyu Choi

In January 2008, four officials representing the Ministry of Public Health (MoPH) of the Democratic People’s Republic of North Korea (DPRK) visited tuberculosis (TB) facilities in the San Francisco Bay Area with financial sponsorship from Stanford University. MoPH representatives met with Stanford University TB specialists to request assistance in funding, building and operating a modern TB reference laboratory in the North Korean capital, Pyongyang. This initial meeting became the start of a strong partnership amongst Stanford Bay Area TB Consortium (Stanford/BATC), the Nuclear Threat Initiative/ Global Health and Security Initiative (NTI/Global Health and Security Initiative), Christian Friends of Korea (CFK), and the DPRK’s MoPH. “Engaging North Korea on Mutual Interests in Tuberculosis Control,” presented by Dr. Sharon Perry at the Korean Economic Institute in Washington D.C. in February 2011, outlines the process and results of this successful partnership and project.

World Health Organization (WHO) ranks North Korea seventh or eighth in the WHO designated 22 high-burden countries. It has the highest incidence rate of TB outside of Sub-Saharan Africa and is a major threat to its neighbors, South Korea and China. According to Dr. Perry and her co-authors, the TB situation in NK is especially dangerous for three reasons. One, it is in diplomatic isolation—ineligible of receiving basic health sector development funds from the World Bank, International Monetary Fund, and Asia Development Bank. Furthermore, international and bilateral aid programs have increasing withdrawn funding in accordance with aggressive North Korean behavior. Two, the North Korean health care system is based on the Soviet Union system of centralized administration and sanatorium care. This system deteriorated in the face of economic conditions and ultimately, greatly contributing to the spread of multi-resistant TB in former Soviet Union countries. A similar scenario is likely happening in North Korea. Finally, inaccurate reporting, food shortages and other infectious diseases, such as measles, are contributing to a population with weakened immune systems.

In October 2010, the DPRK opened its first TB laboratory to the public. The lab would provide quality assurance and culture and drug-susceptibility testing of TB. On a more macro-level, the lab fills an important “blind spot” for TB control in Northeast Asia and emphasizes the critical role that public-private partnerships can play in a vacuum of diplomatic relations. Public-private partnerships are gaining importance both within the U.S. and abroad as nonprofits, government, and private agencies are learning that collaboration and cooperation can be a powerful approach to tackling complex issues and projects.

Much of the literature on public-private partnerships focuses on the importance of communication, leadership, goal setting, funding, capacity, and other functions of the collaborating organizations. These are indeed important components to a successful partnership. The partnership above was successful because it had the right people and organizations, sufficient funding, and strong communication and a long-term commitment from all partners involved to the singular goal to building a TB lab in North Korea. The literature also stresses the benefits of public-private partnerships, mainly the ability to bring together different resources and approaches to problems.

This case study brings another benefit of public-private partnerships to light: the ability to fly under the radar to deliver necessary humanitarian aid to countries operating outside the international political and economic system. It also introduces the idea that diplomatic and official relations are not a necessary precondition for individuals and organizations to become active players in international issues they are passionate about. This characteristic broadens the realm of goals and activities for public-private partnerships, and should continue to be explored both within developed and developing countries.


Has Multiculturalism in America Failed?

February 24, 2011

by Christopher Lin

Sometime during the week of March 7, 2011, the House Committee on Homeland Security will hold hearings examining whether Muslim Americans are becoming radicalized and pose a threat to the nation’s security. Civil rights groups are worried that the hearings will turn into a political witch-hunt, akin to the anti-communist investigations conducted during the Cold War. As political leaders the world over begin to decry the “failure” of multiculturalism, one wonders if the United States will also begin to doubt the benefits of its pluralistic society. While “American culture” may be difficult to fully define, attempting to do so is an inherently political exercise; the fear is that the hearings will leave Muslim Americans increasingly ostracized.

The hearings follow on the heels of several domestic attacks involving Muslim Americans. A report by the Congressional Research Service entitled “American Jihadist Terrorism: Combating a Complex Threat” notes that between May 2009 and November 2010, “arrests were made for 22 ‘homegrown,’ jihadist-inspired terrorist plots by American citizens or legal permanent residents of the United States.” Two of the plots resulted in attacks, producing 14 deaths. However, between the 9/11 attacks through May 2009, there were only 21 such plots with two attacks (1). The rise in the number of attacks in the past two years may have provided greater impetus to the hearings, and kept the issue in the minds of members of Congress.

High-level politicians in other countries have also begun to focus on the perceived domestic dangers of radicalized Muslims. In October last year, German Chancellor Angela Merkel said, “the approach [to build] a multicultural [society] and to live side-by-side and to enjoy each other…has failed, utterly failed.”(2) While Merkel was speaking about immigrants as a whole, with Germany’s large Turkish population and Hamburg’s history with radicalized Muslims, focusing specifically on Muslim immigrants and the children of Muslim immigrants offers German politicians an easy target for mobilizing xenophobic anger to the polls. Here in the United States, congressional lawmakers and  local elected officials may believe they can benefit from stirring up the same anti-Islamic passions, especially if they represent constituencies devoid or containing a very small minority of Muslims.

In a speech in January 2011, Baroness Sayeeda Warsi, co-chairman of the ruling Conservative Party in England, noted the growing acceptance of Islamophobia in today’s society: “Indeed, it seems to me that Islamophobia has now crossed the threshold of middle-class respectability [….] For far too many people, Islamophobia is seen as a legitimate – even commendable – thing. You could even say that Islamophobia has now passed the dinner-table-test.”(3) The fear is that in the United States, the upcoming House hearings will serve to further legitimize Islamophobia, alienating Muslims even more in the minds of many Americans.

Congressman Peter King (R-NY), chairman of the House Homeland Security Committee, has been the focus of criticism for those worried that the hearing will degenerate into attacks on the patriotism of Muslim Americans. King represents a solidly-Republican district in an area surrounded by Democratic-controlled districts.(4)  As an outspoken critic of how the Muslim community has responded in the wake of the 9/11 attacks, King’s relationship with Muslim Americans throughout the country (including those within and near his own district) has been fraught with tension.

On February 1, 2011, the organization Muslim Advocates, representing a coalition of 51 “community organizations and groups concerned about civil and human rights and national security,” wrote a letter to House Speaker John Boehner and Minority Leader Nancy Pelosi objecting to the upcoming House hearings (5). On the same day, the ranking member on the House Homeland Security Committee, Bennie G. Thompson (D-MS), wrote a letter to Chairman King arguing that the scope of the hearings should be expanded beyond just Muslim Americans. In the letter, Thompson notes that a Department of Homeland Security poll of state law enforcement agencies showed that “there are a variety of domestic extremist groups more prevalent in the United States than Islamic extremists, including neo-Nazis, environmental extremists, anti-tax groups, and others.” For example, while Islamic extremist groups were named a threat in 31 states, neo-Nazi groups were cited as a serious threat in 46 states (6). This is why many Muslim Americans and their supporters have viewed Chairman King’s hearings as a mere witch-hunt; the threat from radicalized Americans extends far beyond the threat of jihadists. While Chairman King may feel that the greatest threat is from Muslim Americans, critics view the threat as far more diverse, and believe that focusing on Muslims is purely a product of prejudice.

The controversy goes to the heart of the dual-role that our elected officials play: they are both representatives and delegates. While elected to carry out the specific wishes of their constituents (the representative role), they are also trusted to make decisions that will benefit the community as a whole (as delegates). This latter role is especially important concerning issues that were not foreseen or require greater specialized knowledge. Therefore, representatives and senators not only seek direction from their constituents but provide direction in return, however subtly. Prejudice that is given voice by elected officials becomes self-reinforcing; it is further “legitimized” through legislation like the anti-Chinese laws in the late 19th and early 20th centuries. Prejudice then receives “the government’s stamp of approval”; it becomes more difficult to expunge from society.

On February 5, 2011, British Prime Minister David Cameron delivered a speech at the Munich Security Conference in which he attacked the concept of multiculturalism. In the speech, Cameron suggested that part of the root which fuels Islamic radicalism is the crisis of identity engendered by multiculturalism: “Under the doctrine of state multiculturalism, we have encouraged different cultures to live separate lives, apart from each other and the mainstream. We have failed to provide a vision of society to which they feel they want to belong”(7). Yet this is the great irony; how will Muslim Americans feel part of the mainstream when our political leaders continue to assert that they are not? The issue of cooperation with authorities is a serious concern. In the past, other subsections of American society have been accused of the same (such as the African-American community). Those who feel singled out by the authorities will not assist them. Law enforcement officials are often the most visible arms of the government, and a refusal to cooperate with them reflects a greater protest of government authority as a whole. Hopefully, the upcoming hearings will not reinforce this alienation. As political leaders the world over attack multiculturalism, it is time for the United States to confront its own views head-on.

References:
1. Jerome P. Bjelopera and Mark A. Randol. American Jihadist Terrorism- Combating a Complex Threat. U.S. Congressional Research Service, Washington D.C. 7 Dec. 2010. LexisNexis® Congressional Research Digital Collection. Web. p. 2. 2 Feb. 2011.

2. “Merkel says German multicultural society has failed.” BBC News, London, England. 17 Oct. 2010. Bbc.co.uk. Web. 3 Feb. 2011. <http://www.bbc.co.uk/news/world-europe-11559451&gt;.

3. “Baroness Warsi Speech: Bigotry against faith.” University of Leicester, Leicester, England. 20 Jan. 2011 Www2.le.ac.uk. Web. 4 Feb. 2011. <http://www2.le.ac.uk/offices/press/media-centre/baroness-warsi-speech/sayeeda-warsi-delivers-2011-university-of-leicester-sir-sigmund-sternberg-lecture-1&gt;.

4. “New York 3rd District Race Profile- Election 2010.” New York Times, New York. 12 Dec. 2010. Elections.nytimes.com. Web. 4 Feb. 2011. <http://elections.nytimes.com/2010/house/new-york/3&gt;.

5. “Coalition Ltr re King Hearings, 2-1-11.” Muslim Advocates, Washington D.C. 1 Feb. 2011. Muslimadvocates.org. Web. 5 Feb. 2011. <http://www.muslimadvocates.org/Coalition%20Ltr%20re%20King%20hearings%2C%202-1-11.pdf&gt;

6. “Letter to Chairman King.” House Committee on Homeland Security: Democrats, Washington D.C. 1 Feb. 2011. Chsdemocrats.house.gov. Web. 5 Feb. 2011. <http://chsdemocrats.house.gov/SiteDocuments/20110201170912-79822.pdf&gt;.

7. “PM’s speech at Munich Security Conference.” Prime Minister’s Office, London, England. 5 Feb. 2011. Number10.gov.uk. Web. 5 Feb. 2011. <http://www.number10.gov.uk/news/speeches-and-transcripts/2011/02/pms-speech-at-munich-security-conference-60293&gt;.


A Call for Innovation: Maintaining America’s “Software” While Pooling Global Talent

February 22, 2011

by Elizabeth Laferriere

In the State of the Union address President Barack Obama challenged his countrymen to “out-innovate” the rest of the world and “make America the best place on Earth to do business.” His emotive rhetoric appealed to the perception of America’s entrepreneurial spirit: “what we can do – what America does better than anyone else – is spark the creativity and imagination of our people.” While some of his statements bordered on an exceptionalism of questionable accuracy, the proclamation reignited an intelligent debate regarding innovation.

The U.S. should endorse job-generating policies that incentivize entrepreneurship and attract the world’s brightest minds to study here, create here, and market here.

Innovation: A Loaded Concept

Some excellent dissections, past and present, have refigured the commanding notion that innovation is restricted to science and technology (see Innovation Isn’t About Math and Roger Martin’s “integrative thinking”). To some innovation might not necessarily facilitate job growth – it may simply define the materializing of new, transformative ideas. Unfortunately, that challenging question is worthy of much more space than this commentary can provide.

Instead the brief analysis will contemplate innovation as defined by inventiveness fixed with opportunity for job growth. In the global sense, it equates with competition that leads to jobs, rising standards of living, shrinking deficits, and the power to project authority on the global scene (Prestowitz, FP).

In December 2010 unemployment stood at 9.4% – stubbornly high in the wake of 2008’s global crisis (Bureau of Labor Statistics). In an era and country where innovation has allowed capital to become increasingly cheap relative to labor, companies are turning to “creative destruction”: destroying employment opportunities in the short-term through innovative utilization of technology (i.e., self-service kiosks)(Cooper). The competition to “squeeze out” productivity gains is contributing to stymied job recovery and growth (Businessweek, 2004). Since labor accounts for two-thirds the cost of creating a product, and in an environment with soaring employee benefits, most employers today associate greater labor productivity with survival and hire on a need-only basis.

Who, then, and what can create jobs if these large companies cannot? Sure, the Bureau of Labor Statistics reported some growth in hospitality and leisure in December 2010. But what sector has demonstrated sustainable promise?

Thomas Friedman responds in his column (2010): good jobs come from start-ups not bailouts. He cites a Kauffman Foundation discovery that between 1980-2005 virtually all net new jobs in the U.S. were created by firms under five years old. These small start-ups currently employ more scientists and engineers than do large companies, and more than universities and federal labs combined (Segal).

Small, innovative companies flourish in the U.S. not because of some inherent American mind-set, but because of free market democracy, a culture emphatic of risk-taking, strong intellectual property protection, and institutions that enable the smooth connection between the idea and market (Segal). Still the most vital factor in this system is the innovator herself. And who creates these start-ups that have consistently produced jobs? Intelligent, inspired entrepreneurs. Increasing the pool of American entrepreneurs is feasible, and important, but might require a generation for education reform and investment to make an impact.

Does another pool of able and willing entrepreneurs exist? Certainly. A 2007 Duke study found that there was at least one immigrant co-founder in 25.3 percent of all engineering and technology companies and in 2005 alone these companies generated more than $52 billion and created just under 450,000 jobs (Wadhwa). Thousands of promising foreign students study in American universities while one million scientists and engineers work here on H-1B temporary visas (Friedman). U.S. businesses use this visa program to employ foreign workers with technical expertise such as programmers and engineers.

Yet far too many educated and skilled migrants are being turned away. In 2008 163,000 H-1B applications were filed for the 65,000 visas in the H-1B lottery; many qualified applicants were turned down. More return home disparaged by inflexible visa regulations which make it incredibly challenging for workers to achieve permanent residency (Wadhwa). Several experts have argued persuasively that skilled migrants who start businesses and hire Americans should be given a green card (see Friedman, Segal). I have yet to find a particularly overwhelming counterargument.

On top of easing visa restrictions, the U.S. needs to recognize its actual global advantage in innovation for what it is, and not fall prey to demagogic, non-substantive conceptualizations of Americans as inherently innovative. Segal argues that what determines U.S. competitiveness in the “global ideas” market is not its labor force size or funds (hardware), but the strength of the system which molds and protects the visionary ideas from start to finish (software)(Segal).

Incentivizing migrant-led start-ups: now that’s innovative.

For further conversation on skilled migration and the innovation debate, see my forthcoming article on American “software” and global competition and consider the following:

Fallows, James, and Lane Wallace. “Innovation Isn’t About Math.” The Atlantic, TheAtlantic.com. 28 Jan. 2011. Web. 14 Feb. 2011. <http://www.theatlantic.com/national/archive/2011/01/innovation-isnt-about-math/70402/&gt;.

Friedman, Thomas. “Start-Ups, Not Bailouts.” New York Times. 3 Apr. 2010. Web. 14 Feb. 2011. <http://www.nytimes.com/2010/04/04/opinion/04friedman.html&gt;.

Kurlantzick, Joshua A. “The Asian Century? Not Quite Yet.” Council on Foreign Relations. Jan. 2011. Web. 14 Feb. 2011. <http://www.cfr.org/publication/23794/asian_century_not_quite_yet.html&gt;.

Prestowitz, Clyde. “Will Obama Make America Competitive?” Foreign Policy. 26 Jan. 2011. Web. 14 Feb. 2011. <http://blog.foreignpolicy.com/posts/2011/01/26/prestowitz_will_obama_make_america_competitive&gt;.

Rothkopf, David. “The Myth of the Innovation Nation.” Foreign Policy. 5 Jan. 2011. Web. 14 Feb. 2011. <http://rothkopf.foreignpolicy.com/posts/2011/01/25/the_myth_of_the_innovation_nation&gt;.

Segal, Adam. Advantage: How American Innovation Can Overcome the Asian Challenge. New York: W. W. Norton, 2011. Print.

*This book has just been published and while I have not had a chance to read it myself, I would highly recommend taking a look.

Segal, Adam. “The Great Invention Race.” Foreign Policy. 25 Jan. 2011. Web. 14 Feb. 2011. <http://www.foreignpolicy.com/articles/2011/01/27/the_great_invention_race&gt;.

“USCIS Runs Random Selection Process for H-1Bs.” US Citizenship and Immigration Services. 13 Apr. 2007. Web. 14 Feb. 2011.

<http://www.uscis.gov/files/pressrelease/H1Bfy08CapUpdate041307.pdf&gt;.

Wadhwa, Vivek. “Chinese and Indian Entrepreneurs Are Eating America’s Lunch.” Foreign Policy. 28 Dec. 2010. Web. 14 Feb. 2011. <http://www.foreignpolicy.com/articles/2010/12/28/chinese_and_indian_entrepreneurs_are_eating_americas_lunch&gt;.

Wadhwa, Vivek, AnnaLee Saxenian, Ben Rissing, and Gary Gereffi. “America’s New Immigrant Entrepreneurs.” Duke School of Engineering, UC Berkeley School of Information, 4 Jan. 2007. Web. 14 Feb. 2011. <http://people.ischool.berkeley.edu/~anno/Papers/Americas_new_immigrant_entrepreneurs_I.pdf&gt;.

Wadhwa, Vivek, Una Kim De Vitton, and Gary Gereffi. “How the Disciple became the Guru.” Rep. Duke School of Engineering, Harvard Law School and the Kauffman Foundation, July 2008. Web. 14 Feb. 2011. <http://www.nga.org/Files/pdf/0808WDPGURU.PDF&gt;.


Interview with Alice Rivlin

February 17, 2011

by Ryan Greenfield and Chris Schreck

Alice Rivlin is currently a senior fellow at the Brookings Institution and a visiting professor at the Georgetown Public Policy Institute. Formerly Chair of the Congressional Budget Office during the ‘70’s and ‘80’s, Director of the Office of Management and Budget under President Clinton, and Vice Chair of the Federal Reserve Board, Rivlin was asked to join President Obama’s debt and deficit commission. The commission’s findings were released in December 2010. Rivlin also contributed to an additional proposal to address the nation’s debt as co-chair of the Bipartisan Policy Center’s Debt Reduction Task Force. The Georgetown Public Policy Institute spoke with Alice Rivlin to hear in greater detail how she envisions reforming the federal government to make it fiscally sustainable.

GPPR: Right off the bat, thanks for all the work you’ve done coming up with solutions for the deficit and debt. As young people especially, we’re certainly appreciative.

AR: Yes, you’re the people who are going to benefit.

GPPR: Generally speaking, what kinds of things did you hope to accomplish by serving on the debt commissions?

AR: I actually agreed to serve with my old friend, Pete Domenici, the former senator from New Mexico and chair the Bipartisan Policy’s debt reduction group, before I knew about the President’s commission. I agreed to do that because I feel really strongly that the rising debt is a threat to our future prosperity. We have to get on top of it, and only a bipartisan coalition can do that. Now clearly, it’s got to be done by the political process, but we thought that a bipartisan group of leaders who have cared about the budget in the past could show that a bipartisan solution was possible- that a group of people could work on this thing and find some things that they could agree on. So that was the genesis of the bipartisan commission.

Subsequent to that, the President asked if I would serve on the national commission, and I thought first, “How can I do both? It will be too much work.” Then I thought, “Why not?” If it’s alright with the White House and the Bipartisan Policy Center, I’ll do both. I was the only overlap, so I was kind of a bridge between to the two.

GPPR: And if the President asks you…

GPPR: How immediate is this fiscal problem? Do you think that in the near future it could crowd out private investment, lead to higher interest rates, and at what point do we get to a sustainable deficit and debt burden?

AR: Well, we don’t know. What we do know is that the federal budget is on an unsustainable course now. Federal spending is projected to rise considerably faster than the economy can possibly grow. Revenues grow at about the same rate as the economy grows at any set of tax rates. So, if you have the spending growing faster than the economy and revenues growing at about the same rate, obviously you’ve got a problem. You’ve got a growing wedge between spending and revenues. These numbers are very large. Nobody knows exactly how long we’ll be able to go on borrowing money, but the idea that we can borrow more and more money every year without consequences does not seem right.

So what could the consequences be? They could clearly be loss of the confidence of our creditors, which would be very serious. We borrow about half of our debt overseas. The Chinese, the Japanese, and the oil rich countries have been accumulating an enormous amount of American debt. Now they’ve been willing to do that over the years, and Treasury securities have been regarded as the safest assets in the world. But in a sense, that has been a false paradise for the United States because it has led us to believe we can just go on borrowing forever at low interest rates. There will come a time, we don’t know exactly when, when that is no longer true. I think the example of the European countries has shown us that when people lose confidence in a government’s credit, they lose it very rapidly, and the consequences are dire. If there were a loss of confidence in US Treasuries, then interest rates would spike, possibly to a very high level, and the dollar would plummet on world markets. That would cause enormous disruption to the United States economy. Some people fear inflation as a consequence. I am more worried that it would be a major new recession, probably worse than the one we are just pulling out of. Nobody knows exactly when that could happen. What we do know for certain is this can’t go on this way, and once we get to the tipping point, it is too late to take action.

GPPR: The new development was that the President’s commission was unable to get the 14 votes that would have transferred it over to Congress, who was willing to consider it as a broad package.

AR: I think there’s been much too much focus on these 14 votes. It is press mythology. It’s true that the executive order said that with 14 votes it would go to the floor for a vote, but that suggests that it would be a legislative package. This report is not a legislative package. I think there was little significance to the 14 votes. It did get a majority- it got 11 out of 18. But I think even more importantly, it got very considerable support in broad outline, even from people who didn’t vote for it.

Some said they were certainly aware of the urgency of the problem, they supported the main outlines, but they couldn’t support one piece or some other piece. I read the response in the commission itself, and also to some extent in the rest of the congress, as broadly supportive, rather than negative.

GPPR: How do you think that, in spite of not reaching an arbitrary level of support, your proposals will be taken into the legislative process and considered in the near to mid future?

AR: I think lots of different ways. The first is the President. The President has got to send a budget to Congress in February, and he’s got to have a position on deficit reduction. I don’t know how he will approach that, but he certainly has to look at the various deficit reduction options- the President’s own commission, the Domenici-Rivlin group, other groups that are putting forth proposals- and make up his mind what he would like to put in his budget. His budget will be a negotiating position. He won’t necessarily put in his bottom line. He’ll put in an opening bid, and then the negotiation with Congress will start.

The other decision point is the budget resolution. That’s done by the Congressional budget committees, and that will reflect the budget committee’s views of what ought to be done. Then there are all the other committees. They have narrower jurisdiction, but I think the tax proposals will receive some consideration in the tax writing committees. The proposals for discretionary spending freezes will be discussed in the appropriations committees, and so forth. Social Security goes to Ways and Means and Finance. There won’t necessarily be action on Social Security, but I actually think there might. I think it’s one of the easier things to deal with, and might command a majority across the parties.

GPPR: With the new Congress, there is split control, with Republicans controlling the House and Democrats continuing to control The White House and the Senate. Are you optimistic about being able to reach consensus on some of these issues? Do you fear that there will be gridlock?

AR: I don’t know. I lived through this once before. I was President Clinton’s budget director when the Democrats lost control of the House in 1994 going into 1995. That was very contentious, but eventually things got done. The Republican leadership, led by Speaker Gingrich, made a mistake, actually. They refused to vote a budget and closed down the government twice. They thought that would be popular in the country. I don’t know what they were thinking. All of a sudden they had people deluging them with phone calls- “I can’t get my passport renewed. I can’t get my student loan. I can’t take my kids to the National Park.” It was a real outpouring of realization that the government does things people like to have done. The public in general blamed the Congress. I think that was the miscalculation that Gingrich made. He thought they would blame the President, but they didn’t. I don’t think that the new leadership in the Congress will make that mistake again. Mr. Boehner was there at the time, and I think he probably realizes that was not a good move. After we lived through that, which took about a year, things settled down a bit. I wouldn’t call it consensus, but things did get done. Negotiations occurred. Budgets got passed. Welfare reform got passed. It wasn’t that people agreed on everything. It was more that they had to do something.

The President actually very skillfully used the veto and the threat of vetoes as a tool. When there was an appropriations bill that the Clinton administration didn’t like, the President’s office, the Office of Management and Budget, would issue a veto threat. The low level threat would say, “If you don’t change this, the secretary of X, the director of OMB, or both, will recommend that he veto.” Sometimes, when the administration really didn’t like it, we’d say, “The President will veto.” That was a very strong threat, and of course if they didn’t do it, he would have to veto. But sometimes he did. He vetoed the welfare reform twice before it passed, and it wasn’t that he wasn’t for welfare reform. He had indeed initiated welfare reform. But he felt that the provisions were too punitive, and the provisions for training and childcare were not sufficiently generous. So basically he kept vetoing until he got what he wanted, or he got something acceptable. In a situation like that nobody gets what they want. But it was not gridlock. It wasn’t friendly either, but it wasn’t gridlock.

GPPR: One difference between then and now is that the economy was certainly better in the 1990s. Some people have made the argument that the near term might be too early to start either raising taxes or cutting spending due to the weakness of the economy. What do you think about that argument?

AR: That’s absolutely right, and this is a fragile economy. Employment has been growing for quite a long time now but very slowly. We can’t afford to derail the recovery. I favor a payroll tax holiday, which I think would stimulate the economy up front, but at the same time, I favor putting in place deficit reduction measures. The people who say we can’t even think about it until the economy recovers don’t understand what a threat to the recovery this overhang of uncertainty about a debt crisis is.

So I have favored for quite a while, but more so every day, doing two things at once: stimulating the economy to keep the recovery going and putting into place deficit reduction measures that you phase in gradually over time. You enact them now so that people know you are serious, and our creditors know we’re serious. I think that will actually help the recovery. It doesn’t damage it. Now, not everybody agrees with that. I think we need to take these two kinds of seemingly contradictory actions at the same time legislatively, but the deficit reduction measures phase in very slowly. That’s true anyway because most of the things that you need to do to reduce the deficit over the long term take time. They have to take time to phase in, particularly anything you do with entitlements- and also with taxes. You can’t rewrite the tax code overnight.

GPPR: The Federal Reserve projection is that we’ll still be at 9% unemployment through 2011 and possibly 8% through 2012. If the recovery is weaker than that, are there ways to alter course? Are there other stimulus measures besides a payroll tax holiday that you support?

AR: Oh, there are certainly other possibilities for stimulus, but I don’t think delaying the deficit reduction is the right thing to do. I think the chance that we might have a debt crisis in the next several years is not zero. I don’t know exactly what it is, but it’s certainly not zero; if we delay and delay, the probability goes up. So, I don’t think we can afford to take that chance.

GPPR: There has recently been a proposal to cut the size of the federal workforce and to freeze pay for federal employees. Do you think these measures risk making public service less attractive to talented people? Federal employees already make less than their equivalents in the private sector, and it doesn’t appear that there will be a reduction in the amount of work being done by the federal government in the coming years.

AR: Well, I am worried about the quality of the future workforce because I think we have a lot retirements coming up. In the federal government there’s sort of a bulge. It’s the baby boom phenomenon reflected in the federal workforce. But I think freezing federal pay, which is what’s on the table at the moment, is a perfectly sensible idea right now.  Federal workers of comparable education level may not make as much money, but they don’t bear as much risk. They have much more secure jobs. What’s happened over the last few years is that federal pay, because it has built in cost of living and other kinds of increases, has gone up faster than private sector pay has. So, it does seem to me appropriate right now to have a federal pay freeze. It doesn’t mean you can’t be promoted. If you do good work, you’ll get a higher level job. But I think freezing federal pay is a reasonable thing to do right now. It’s also symbolic. People think the private sector shouldn’t be asked to sacrifice unless the government itself is willing to sacrifice, and freezing federal pay is a symbol of that.

GPPR: I’d like to switch gears to some questions about the tax provisions of the President’s deficit commission. If I understand correctly, the crux of the changes would be to lower tax rates but get rid of most of the deductions and tax expenditures that a lot of people get. Particularly on the home mortgage interest deduction and turning that into a 12% credit, is there a risk to doing that while the housing market is still weak?

AR: Oh, there are risks in all of these things, but having a mortgage interest deduction turned into a credit is a very good thing to do as a matter of tax policy. The current deduction benefits upper income people much more than lower or middle income people. People who don’t itemize, which is most people, don’t get any benefit at all, and people who pay higher marginal rates get more benefit than people who pay lower marginal rates. Now that’s crazy. This is the moment to turn that around, whether you phase it out or have it apply only to new mortgages rather existing mortgages, which is what I presume you would do. It’s time to get rid of some of this unfairness in the tax code, and I would argue that this is a good moment to do it because we just demonstrated that we have built too many high-end houses. One of the reasons we did that was that the tax code was so favorable to upper income people who wanted to buy houses. We have too many big houses now.

GPPR: Generally, reducing rates and getting rid of reductions is a great way to increase the economic efficiency of the tax code because you don’t have money being channeled in unproductive ways. But is there evidence that the marginal tax rate needs to be lowered in addition to getting rid of deductions? Is there evidence that tax rates are stifling growth in some way right now?

AR: I think that the reason for doing both at the same time is largely political. You can’t get support for eliminating the tax expenditures unless you lower the rates. There’s some evidence that lower marginal rates are pro-growth. In the ranges that we’re in, it’s not overwhelming. After WWII, top bracket rates were over 90%. In the Reagan era, he brought the top bracket rates from 70% to 50%. That’s a lot. There certainly was evidence that the high marginal rates were leading to enormous efforts on the part of upper income people to shelter their income and to do relatively unproductive things with it, because of the tax advantages. It was wild. People who weren’t farmers were buying farms to get agricultural deductions. Movie production, for reasons I’ve forgotten, was a very popular thing to put your money in if you had a lot of it. Some of that went away after the Reagan tax cuts and the tax reform of 1986.

So, there’s evidence that high tax rates are kind of distortionary. I don’t think, personally, that bringing down the rates in the range that we’re now in will necessarily make much difference, but some people think it will. Certainly the advantage of fewer deductions and tax expenditures generally is simplification. There’s a huge industry devoted to helping people evade and avoid taxes. Those people could be more productively employed.

GPPR: Do you worry that some of these proposals could aggravate income inequality? The recent statistics are that income inequality is somewhere close to where it was just prior to the Great Depression. It seems like the top earners get a larger cut in their tax rate.

AR: In their rate, but not in the tax. It’s a more progressive tax than the existing system. So no, I’m not worried about that. Could one do all of this tax simplification and reduction of tax expenditures and retain a more steeply progressive tax structure? Yes, one could. And I would favor that if I thought it was politically feasible. But I don’t think that the proposals, either in the President’s commission or in the Domici-Rivlin proposal, make the income distribution less equal. They make it marginally more equal, but maybe not enough.

GPPR: So, the commissions did consider the redistributive impacts of the changes to the tax code.

AR: Oh yes. There are tables in both reports that show both of the new plans are slightly more progressive, but not very.

GPPR: You’ve spoken about how the proposal includes a tax revenue cap at 21% of GDP and how that might not be sustainable because of demographic changes like the baby boomers retiring.

AR:  Yes, I’ve expressed my opposition to that. I don’t even know how you’d enforce it. I think it was sort of symbolic. I think it’s neither feasible, nor desirable. Suppose we have a big boom and raise more revenue, what are you going to do about it?

GPPR: Generally when you tax you want to tax things that create negative externalities. I was wondering why things like a carbon tax or financial transactions tax, which would tax these systematic risks to the economy and environment, weren’t put into the proposal.

AR: Well, the President’s commission has an increase in the gas tax of fifteen cents. I would have preferred a carbon tax, and a larger one. There didn’t seem to be support for that. In the context of the Domenici-Rivlin committee, we had a lot of discussion about the carbon tax and a good deal of support for it. But we also had support for a broad based consumption tax. In the end we decided we shouldn’t do both. We decided that putting in two new taxes, in addition to the reform of the income tax, was sort of a bridge too far. We felt we should choose between the general consumption tax and the carbon tax. We chose the general consumption tax because it raises more money.

GPPR: And the financial transactions tax?

AR: A financial transactions tax is a funny thing. The argument against it is that it drives the transactions overseas and that if we want to have people trading in US venues, like the NYSE, that a transactions tax is not the way to go. On the other hand, they actually have a transactions tax in London, and London is still a major money center. So, I’m not sure where I come out on this. But in any case, it was not seriously considered in either group.

GPPR: You mentioned the consumption tax. Why do you think that’s an important element of tax reform? It raises a lot of revenue, but there are arguments that it is somewhat regressive.

AR: We combined it with a very progressive reform of the income tax. When I said that the tax package was progressive, it was including the income tax reform and the sales tax. Sales tax by itself is regressive, but in combination with a quite progressive income tax reform, I think it is a good thing to do. We’re the only major country in the world that doesn’t have one, and I think we’re going to need another revenue source. This reflects my belief that we’re actually going to have to have higher federal expenditures as the baby boomer generation retires. Hopefully the growth of medical care expenditures slows, but it’s not going to slow enough. That combination means that we need another source of revenue, and putting taxes on consumption, rather than on income, is I think more conducive to growth and competitiveness in world markets.

GPPR: You mentioned healthcare costs. Some people have said that is our deficit problem, and that the per beneficiary costs of Medicare and Medicaid are big drivers of the deficit.

AR: They’re bigger drivers than the age of the population, actually.

GPPR: Do you think there was a reluctance to take on healthcare explicitly in your commissions because of the divisive fight over healthcare reform earlier this year?

AR: Actually, we took on healthcare quite explicitly in both commissions. There are a considerable number of proposals. In Domenici-Rivlin, we actually had quite a drastic reform of Medicare, although phasing in in 2018 and beyond. That’s a shift of Medicare to a premium support program where Medicare beneficiaries would get a choice between staying in the fee-for-service Medicare or taking the subsidy and buying a healthcare plan on an organized exchange.  But in no case could the total federal subsidy go up faster than the GDP plus 1%. So you would hope that you are getting savings, both from the competition on the exchanges, and from capping the subsidy at a given level. It’s feasible to do that if the Congress will do that. It’s not feasible to cap fee-for-service Medicare because you don’t know what it’s going to cost. So this seems to us a good thing. It didn’t make it into the President’s plan. Rep. Ryan and I worked out a different version of premium support, which we proposed. I actually like the Domenici-Rivlin plan better than the Rivlin-Ryan, but they aren’t that different. But we didn’t get it into the main report. It survives as a pilot program for federal employees.

GPPR: Can you speak more about the premium support model in the Bipartisan Policy Center’s proposal? Is it means tested in any way?

AR: We didn’t means test it, but it would have to be risk adjusted. The health plan wouldn’t get a flat fee. They’d get a risk adjusted fee because clearly it’s more expensive to take care of someone who has serious chronic ailments than somebody who doesn’t, on the average.

GPPR: The sustainable growth rate (SGR) for physician services for Medicare, is phased out over time with the President’s commission.

AR: Yes, but they put in various things that will save the money instead of that.

GPPR: The thinking seemed to be that it wasn’t something we were sticking to anyway.

AR: Yes, but getting this out is a good thing, if you can find other ways of saving money.

GPPR: You mentioned earlier that you that there might be political will to reform Social Security. Can you talk a little bit about why you think that is the case and what reforms you envision taking place?

AR: Well, I may be being overoptimistic about this. But I think Social Security is relatively easy to reform, in the sense that there are a limited number of things you can do. Everybody knows what they are, and a compromise can be worked out that has some revenue increase and some long-term spending cut, preferably in a progressive manor. Both of the packages in these two plans do that. Now they’re different, but they aren’t that different. I think they are illustrations of the fact that this is a manageable problem. I think that more and more people recognize that. Now, some people have recognized it for a while. Back in the Bush administration, there was gridlock over the individual accounts. But that’s gone away. The Financial Crisis convinced almost everybody that carve-out accounts weren’t a good idea. On top of that, they’re very expensive. If you’re carving out some of the revenue, you have to replace what you’re losing. So, I think that’s gone away, and that creates an opportunity to tackle the Social Security problem and get it done. It would be very nice if we didn’t have to think about it again for 75 years. Even you guys wouldn’t have to deal with it.

GPPR: Is the question then less an issue of how to address it and more a question of how redistributive or progressive to make it?

AR: Well, that’s the policy question. The political question is how to convince people that it’s a good thing to do, to reassure young people that they will get their Social Security, and not get all the blow back from people who are already retired and who erroneously think that they’re not going to get their benefits. That’s a big communication problem, and the Social Security issue is very emotional. Most of us on the commission have been getting quite a lot of hate mail, which is totally irrational, because it is probably coming from people who are already retired, and they’re not going to lose their benefits. In fact, nobody is going to lose their benefits, but they would be adjusted in a moderate way fairly far in the future. So, I think it’s an education and communication problem.

GPPR: The President’s commission includes a provision for increasing the retirement age but also including a hardship exemption for people who are unable to work beyond 62. Can you talk a little bit about what the criteria for a hardship exemption might be, and is there any risk that applying for one might be stigmatized?

AR: Well, I don’t know about the stigma. There’s certainly a risk for abuse. It’s comparable to the disability problem that we already have. Somebody has to make a judgment, “Is this person really too disabled to work in the kind of job that they actually could get?”  I think that’s difficult but not impossible. Another alternative, and this is what we did in the Domenici-Rivlin, is not to raise the retirement age, but instead to index the benefits so that they decline slightly as longevity increases. It accomplishes the same dollar goal, but it doesn’t force you to come to grips with this yes-or-no age problem.


The Individual Mandate and the Supreme Court

February 14, 2011

by Kathryn Bailey

Everyone seems to have an opinion on the health care reform law, and in particular the individual mandate to purchase health insurance. There are many different ways for people to structure their argument for or against the principle of the requirement. Some cite the moral imperative the United States has to provide health care for its entire population, as a modern, developed nation. Some people look at it from an economic perspective and reference data showing that insuring as many people as possible, adding currently underinsured, healthy, people to the risk pool to offset costs for those who truly cannot go without insurance. Others stick to partisan political rhetoric and simply say that the government should not intrude upon the personal decisions of Americans. These people counter the law in terms of broad principles that suggest a catastrophic loss of freedom.

However, after years of political wrangling and herding and untold costs in lobbying and legislating, the entire circus will likely come down to the opinion of one or two individuals. Setting aside debate over whether the mandate is strong enough (i.e. the penalties for not complying not being compelling enough), many policy experts agree that it is a starting point for bringing more Americans into the fold, especially the so-called “young invincibles” who do not participate in the system.

On January 31, Florida district court Judge Roger Vison held the individual mandate, and thus the entire health care reform law, unconstitutional. This brought the tally in federal courts to 2-2; two district judges have ruled against it, and two for it. The odds are strongly in favor of the constitutional question ending up in the Supreme Court sometime in the next year, again with the individual mandate being front and center.

Origin of the Mandate

Under the law, state-run health insurance exchanges must be operational by January 1, 2014. They are intended to provide a marketplace where individuals, small businesses and others can purchase health insurance policies. Everyone would be required to demonstrate evidence of coverage, either through an individual policy, employer provided coverage, or a government program. The federal government would assist those who cannot afford insurance with subsidies.

The concept of the individual mandate was originally conceived and promoted by Republicans. President Nixon was interested in the idea during the 1970’s, and was championed in the 1980’s by President George H.W. Bush. Under his proposal, individuals would be mandated to buy catastrophic health insurance. The cost of the policy would be adjusted or subsidized based on the individual’s income. The next Republican to push the concept was Bob Dole, in what essentially defined the anti-Clinton health reform campaign in the early 1990’s. It was brought back by Republican Governor Mitt Romney of Massachusetts and instituted in that state’s health reform overhaul. During the 2009-2010 health reform debates, it was a centerpiece of the bipartisan bill drafted by Senators Ron Wyden (D-OR) and Bob Bennett (R-UT).

The Basis of Vinson’s Ruling

All of this makes it incredibly ironic that as soon as it was clear that President Obama would be able to declare victory on this legislation, Republicans began taking down the individual mandate on the basis of it being an unconstitutional regulation of economic inactivity. This argument holds that the Commerce Clause of the Constitution gives Congress the authority to regulate economic activity, but not the absence of economic activity. In other words, if a person chooses not to buy insurance, their non-commercial activity is non-regulated.

The view of those in support of the mandate holds that even if individuals choose not to purchase an insurance policy, they are still participating in the health care economic market by virtue of the fact that they cannot choose whether or not to consume care throughout their lives. If the cost does not accrue to them personally, it is borne by the government and, in particular, the state. This reasoning was applied by California Attorney General Kamala Harris. She stated that the care of the 8 million uninsured Californians (nearly a quarter of those under age 65) ultimately comes at a huge cost to the state, saying that “[t]he bottom line is undeniable.”

Justice Kennedy

Conventional wisdom states that Justice Anthony Kennedy will likely be the swing vote in the Supreme Court. Experts seem to agree that it is difficult to determine with certainty how Justice Kennedy will vote, but there are a few clues. First, in 2005, Kennedy upheld a federal regulation of marijuana grown at home but never sold on the drug “market,” suggesting that noncommercial activity can be regulated. However, he may be sensitive to the fact that this could set a risky precedent; namely that if government is permitted to mandate individuals to take part in a private, commercial activity, this authority could be used to justify a requirement to purchase other types of insurance, gym memberships, or certain types of cars, under the auspices that doing so would decrease a burden on the government and general populace.

Louis Seidman, a professor of consititutional law at Georgetown University told the Washington Post that “[Kennedy] is likely to be affected by what the political atmosphere is at the time. It’s going to matter to him whether it looks like the whole law is a mess and needs to be put out of its misery, or whether it looks like it’s actually starting to work.”

Justice Scalia

Another view on how this case will play out in the Court is gaining currency. Some experts have expressed a view that the votes conservative members of the Supreme Court, such as Justice Antonin Scalia, should not be taken for granted. Scalia sided with the majority opinion in the 2005 marijuana case, which was in line with a broad interpretation of a commerce clause. In his concurring opinion, he said that not only did the legislative branch have the “power to regulate activities that have a substantial effect on interstate commerce,” but also it had the power to extend itself into “those measures necessary to make the interstate regulation effective.”

Conclusion

An op-ed in the New York Times endorsed the view that intellectually at least, conservative members of the court may have a difficult time finding leeway to disagree with the concept of a mandate in this case. The author, Laurence Tribe, believes that justices like Scalia will agree that the “distinction [between activity and inactivity] is illusory. Individuals who don’t purchase insurance they can afford have made a choice to take a free ride on the health care system.”

Continuing this logic, for the Supreme Court to decide against the constitutionality of the individual mandate, the majority would need to rule on the basis of politics. The individual mandate is certainly complicated issue with implications that may lead to more complicated issues, but perhaps it is not such an unclear one when the history of the court and faith in the justice system is taken into account.


The Newest Face of the Egyptian Revolution

February 10, 2011

by Amir Fouad

On February 7th, Google’s Middle East marketing director Wael Ghonim reemerged in Cairo after a twelve day disappearance. His moving televised interview a day later detailing his detention by the Egyptian authorities sent shock waves of emotion not only through Cairo’s Tahrir Square, but through the now global network of informed citizens who sympathize with the pro-democracy demonstrators in Egypt. And rightfully so. Mr Ghonim’s ordeal is the embodiment of everything the Egyptian people despise about their government. The regime’s reform-promising political declarations made during his detention underscore a double standard disappointingly echoed by the United States in the form of diplomatic equivocation.

Consider that Mr. Ghonim’s kidnapping occurred on January 27th, two days after the initial “Day of Anger”, but before President Hosni Mubarak had even bothered to address his discontented nation publicly. Mr Ghonim’s detention was a simple matter of business-as-usual for the Mubarak regime, a convenient manifestation of the decades old emergency law that also justified the water cannons, tear gas and bullets in the days that followed. This has been the political reality in Egypt for decades: step out of line and be crushed, as the galvanizing death of Khaled Saeed in June 2010 tragically highlighted.

Until these demonstrations began, this reality had been endured by all Egyptians. Young or old, muslim or christian, the aversion to state authority and the police for fear of what would happen if the wrong person were upset was something even I implicitly understood in my lifelong travels to the country. Political apathy was the norm. The State was simply too strong, the prospect of how resistance would be dealt with simply too dreadful to contemplate. How utterly inspiring it has been to see this fear wiped away and to see a new reality being written where no amount of fear-mongering or disingenuous political maneuvering or state-induced violence trumps the will of peaceful, freedom-seeking people.

While Wael Ghonim sat blindfolded in a room – his friends, family and colleagues unaware of his location – the periodic, calculated proclamations of reform from the very people detaining him began. President Mubarak spoke of elections and security and the “legitimate rights of the people”. He spoke of new ministers and of constitutional amendments and of “national dialogue”. But he did not speak of Wael Ghonim or any of the other detainees under his regime’s custody – past or present – who were robbed of the human rights and rule of law enjoyed by so many others in the world and sought so fervently now by his people. After 30 years of autocratic, self-serving despotism, these proclamations – which are now coming less from an embattled Mubarak and more from his alleged torturer Vice President Omar Suleiman – have not a modicum of credibility.

The regime’s weakened footing due to international pressure and global media attention spared Mr Ghonim a fate of beatings and torture. Instead, he had been kidnapped for the prominent role he played in the online mobilization of the protests and the regime’s primary hope in questioning him was to ascertain who was leading the demonstrations. Surely if they could just identify the man behind the madness they could crush him too. Such a forceful example could be made of him to shock the masses back into their disciplined subservience. But no such leader existed and Mr Ghonim’s release by a faltering, uncertain regime now highlights even more the absurdity in the notion that this government guilty of corruption, kidnapping and brutality should be the one entrusted with nurturing the precious freedom that lies at Egypt’s fingertips.

The world is witnessing a truly grassroots push for democratic and human rights that by all accounts personifies the values and ideologies propagandized by the United States. But as the New York Times recently reported, “the United States, for now at least, is putting stability ahead of democratic ideals”, backing their longtime inside man, Omar Suleiman, who neither supports the abdication of President Mubarak nor the repeal of the emergency law nor the idea of democracy in Egypt. It is a predictable, depressing trend on the part of the US government that continues to neglect the grievances and hardships of ordinary people in favor of established realpolitik. It is a double standard not lost on Wael Ghonim or the Egyptian people who, having yet to see the fruition of their one simple demand after weeks of courageous revolution, know a thing or two about double standards and hypocrisy.

Citations and further reading

Al Jazeera Staff. “Live Blog Feb 8 – Egypt Protests.” Al Jazeera Blogs. Web. 08 Feb. 2011. <http://blogs.aljazeera.net/middle-east/2011/02/07/live-blog-feb-8-egypt-protests>.

“Full Text of Mubarak’s Speech – Middle East – Al Jazeera English.” AJE – Al Jazeera English. Web. 08 Feb. 2011. <http://english.aljazeera.net/news/middleeast/2011/02/20112221313603381.html>.

Hajjar, Lisa. “Suleiman: The CIA’s Man in Cairo – Opinion – Al Jazeera English.” AJE – Al Jazeera English. 07 Feb. 2011. Web. 08 Feb. 2011. <http://english.aljazeera.net/indepth/opinion/2011/02/201127114827382865.html>.

Brooks, David. “The Quest for Dignity.” NYTimes.com. The New York Times, 31 Jan. 2011. Web. 08 Feb. 2011. <http://www.nytimes.com/2011/02/01/opinion/01brooks.html?ref=davidbrooks>.

Cooper, Helene, and David E. Sanger. “In Egypt, U.S. Weighs Push for Change With Stability.” NYTimes.com. The New York Times, 07 Feb. 2011. Web. 08 Feb. 2011. <http://www.nytimes.com/2011/02/08/world/middleeast/08diplomacy.html?ref=helenecooper>.

Al Qassemi, Sultan. “Egypt and Zolm: The Road From Revolt to Change | Mideastposts.com | Mideastposts.com.” Mideastposts.com | The Authoritative Voice of Middle East Bloggers. Web. 08 Feb. 2011. <http://mideastposts.com/2011/02/08/egypt-and-zolm-the-road-from-revolt-to-change/>.


The Slow Checkmate on Iran

February 7, 2011

by Ryan B. Greer

This past December, The Economist published an opinion piece, “Playing Chess With Iran,” in which the author surmised that President Obama’s Iran strategy was more clever than his critics give him credit for (Economist 2010). Diplomacy, and how it addresses security threats like Iran’s nuclear program, is waged on many fronts and tends to be boiled down in mainstream public discourse to carrot-and-stick exchanges between the two parties; but there are always several moving pieces on the board, some rarely seem related to the overall objective but are integral to achieving objectives. As the West and other parties continue to dissuade Iran from pursuing nuclear weapons, judgments of progress should recognize the multifaceted nature of coaxing an adversary to their tipping point, rather than simply what the Obama administration says about Iran or whether opinions are changed in each iteration of the six-party talks. As the Iranian regime runs out of means to pursue nuclear weapons and support wanes amongst its people, it will become increasingly likely to open up to the demands of the U.S., from terminating its nuclear goals, to dropping support for terrorists and strengthening human rights.

After a second round of recent disarmament negotiations with Iran has proved fruitless, the President’s critics will no doubt rekindle their accusations of incompetence, whether it be related to his supposed “apology tour” abroad or soft approach to Iran itself. However, upon more scrutiny, it is clear that the administration’s approach has kept Iran’s most significant threat – its nuclear ambitions – from coming to fruition, while slowly lining up the other pieces on the chess board. From coalition-building to targeted sanctions, and from carrot-and-stick negotiations to (at least) tacit approval of tampering with Iran’s nuclear centrifuges, the Obama administration is lining up a tough and comprehensive diplomatic assault on Iran, and its results, though gradual, may prove significant.

Mainstream discussion of diplomatic pressure on Iran focuses on simplistic and direct approaches. For example, the six-party talks in December led to agreement only to hold more talks late last month, and as those negotiations fizzled out, the New York Times quoted a “senior Western diplomat” claiming that the point of the Istanbul negotiations was “to find out if Iran is serious” about negotiations, while another pointed out that “[e]very idea [the West] put[s] forward they find a reason not to take it up” (Erlanger 1/21/2011). The Iranian delegation declined to swap uranium for fuel rods for its Tehran reactor, allegedly because it can enrich its own uranium to power the plant (Erlanger 1/24/2011). While Tehran’s looking the West’s gift horse in the mouth will undoubtedly dominate the debate amongst pundits, more salient to global security is that the Iranian regime has come to the negotiating table twice in as many months, and are running out of options for defying the West unfettered.

A Coalition of the Eager

Iran’s reach may extend beyond its borders, but its more powerful enablers are gradually becoming more open to reigning it in.

At first glance, the recent visit by China’s President Hu Jintao appeared as simply an effort to boost trade relations and cool tensions between the two countries by offering deferential respect to the Chinese leader on American soil. But the visit itself began with a small private dinner whose attendees were not business leaders or members of the press to report handshaking between the leaders of the two superpowers; the dinner was for the presidents, a couple senior aides to Mr. Jintao, Secretary of State Hillary Clinton, and National Security Advisor Tom Donilon. Purportedly to discuss human rights and currency valuation, the dinner with the United States’ top diplomat and the national security advisor unlikely missed the opportunity to address the subject of Iran. Likewise, with Russia, coverage of President Medvedev’s trip to the U.S. may have been dominated by discussion of his trip to a local burger joint, but likely marked the start of pressure for ratification of the new START treaty, which Russia ratified last week. It seems more likely that the revised nuclear disarmament agreement was less a move symbolizing fear of a new Cold War, and more a headline for the international community: that nukes are a weapon of the past and states increasing their reserves will be under the watchful eye of two of the world’s biggest militaries. Russia may continue to deny any nefarious nuclear plans on Tehran’s part, but Foreign Minister Sergey Lavrov claimed that “Iran should comply with all the demands by the IAEA and the UN Security Council” (Interfax 1/25/2011). This implies that Russia is open to inspectors going into Iran to ensure only peaceful energy pursuits, but likewise implies that if inspectors find attempts to weaponize, or if Iran denies them access, Russia would be on board with U.S. actions to contain the rogue nation.

Closer to home, some of Iran’s neighbors may relish its support or even thrive from it, but others are more supportive of the West in private than their public face may suggest. In Lebanon, Hizbullah has effectively taken control of the government, a feat not easily accomplished without Iranian (and Syrian) support, which may lead the government’s next iteration to strike a partnership with Tehran that will make the West uneasy. However, other neighbors, even aside from Israel – the public face of Iran’s local quarrels – are increasingly concerned by Iran’s quest for nuclear enrichment. According to diplomatic cables obtained by the New York Times, the United Arab Emirates is fearful of Iran obtaining nuclear capabilities, Bahrain would like to see Iran’s enrichment terminated “by any means necessary,” and King Abdullah of Saudi Arabia implored the U.S. to use military strikes against Iran to “cut the head off the snake” (Colvin 2010). Arab counties with majority Muslim populations will give America’s struggle against Iran serious credibility, particularly with respect to building a local coalition that can isolate its influence.

Tehran’s Sacrificed Pawns

One salient outcome of President Obama’s global outreach effort was the acceptance – on a global scale – of last summer’s sanctions. Russia and China in particular have histories of dragging their feet to reprimand Tehran, but signed onto the UN sanctions passed in June to target the military and financial institutions alleged to be assisting in the nuclear enrichment process.

Sanctions are never perfect solutions to global security concerns: critics claim they harm populations not necessarily complicit in the nefarious acts they aim to punish, or else that they are skirted and dangerous behavior continues unfettered. However, contemporary sanctions (unlike the 1960 sanctions against Cuba, for example) tend to be targeted against only those perpetrating the human rights or security threats at bar; in the case of Iran, the focus is mainly on Iranian banks, members of the Revolutionary Guard, Iran’s Aerospace Industries Organization (AIO), and the Islamic Republic of Iran Shipping Lines (IRISL). In some cases, other countries may assist Iran in sanctions avoidance, as Jonathan Schanzer in his piece in The Atlantic alleges Egypt is doing through a joint financial institution (Schanzer 2010). In other cases, Iran works on its own, such as the Iranian regime’s “ongoing creation and use of new front companies, subsidiaries, affiliates, and other deceptive measures to protect IRISL and AIO and to advance its proliferation activities” (Treasury 2011). But every measure Iran takes to undermine U.S. sanctions, America answers through new designations and other enforcement mechanisms. Soon, the cost of avoidance will overtake the benefit.

Iran’s attempts to circumvent U.S. efforts and find itself a place in international commerce are a sign that the sanctions are working. Domestically, the regime pledged to end its energy subsidies and within a day of the announcement, gas prices went up 75%, suggesting that the plan could lead to crippling inflation (Economist 2011). Moreover, now that China has reduced its oil imports from Iran and global support for sanctions will prevent the benefits incumbent with membership in the international financial and commercial sectors, it is unlikely that domestic demand will be sufficient to keep domestic commodities markets afloat. The recent concern over energy subsidies and the willingness to come back to the negotiating table in regards to its nukes undoubtedly result from worry in Iran beyond uranium for its Tehran plant, but a culmination of global economic pressure that may not be the tipping point, but is substantial enough thorns in Iran’s side for it to reconsider its behavior.

The Trojan Horse… Er, Worm

Those prone to panic may be concerned at how slowly the chess match against Iran is proceeding, while the Islamic Republic is pursing nuclear capabilities. It is unclear where it came from, but a computer virus known as Stuxnet has infected the operating system at Iran’s Natanz nuclear facility, corrupting a fifth of the nuclear centrifuges and delaying Iran’s pursuit of nuclear capabilities; and repair of the damage will be difficult with sanctions that will prevent the import of related high-tech machinery. According to the New York Times, there is evidence suggesting the worm was a joint Israel-American project; and even if that is not the case, it is unlikely that either the Israelis or the Obama administration are going to offer Tehran a helping hand to fix their centrifuges; and Secretary Clinton has signaled that the worm may set Iran back several years (Broad et al. 2011). Complex enough that it will not be defeated any time soon, but gentle enough not to warrant reprisal, Stuxnet represents a new era of conflict: non-lethal, targeted, cyber attacks against only severe threats to global peace and security. Halting its enrichment not only reduces Iran’s bargaining power, but severely limits the threats to global security that it can create, freeing up time for the U.S. to slowly pursue coalition-building against a nuclear Iran.

Check…

If the U.S. can maintain global support for Iran’s disarmament while Iran’s most powerful bargaining chip is handcuffed and its economy falters, the six parties may be called back into session in the near future. None of the administration’s moves appear powerful enough to be the tipping point in changing Iran’s path, but it is gradually chipping away at Iran’s lifelines. If future negotiations include incentives more significant than energy assistance, and Iran has more to risk as it runs out of global partners, perhaps serious advancement can be made. Even if not, the international isolation may broaden public support for the movements seen after the last election to oust President Ahmadinejad; as with the public’s the ruling clerics’ patience with the (at least verbally) belligerent political leader can only last so long, and the next administration may be more open to negotiation. In the meantime, the Obama administration’s efforts have kept the rogue nation surrounded, while calmly sitting back and waiting for it to walk into a checkmate.

The views expressed in this article belong solely to the author and do not represent those of Georgetown University or any government entities. The author is a graduate student representing only himself and not any previous or current employers.

Sources Cited

William J. Broad, John Markoff, and David E. Sanger. “Israeli Test on Worm Called Crucial in Iran Nuclear Delay.” New York Times. 15 January 2011. http://www.nytimes.com/2011/01/16/world/middleeast/16stuxnet.html?pagewanted=1&_r=1&hp

Colvin, Ross. “’Cut off head of snake’ Saudis told U.S. on Iran.” Reuters. 29 November 2010. http://www.reuters.com/article/idUSTRE6AS02B20101129

“Playing Chess with Iran: One Game Barack Obama Has Not Yet Fumbled.” The Economist: Lexington. 9 December 2010. http://www.economist.com/node/17677840?story_id=17677840

“Iran’s Struggle: The regime tightens its belt and its fist.” The Economist. 13 January 2011. http://www.economist.com/node/17900396?story_id=17900396

Erlanger, Steven. “Little Progress Is Seen in Iran Talks.” New York Times. 21 January 2011. http://www.nytimes.com/2011/01/22/world/middleeast/22nuke.html?_r=2&hp

Erlanger, Steven. “Citing Options, Iran Rejects Uranium Deal, Diplomat Says.” New York Times. 24 January 2011. http://www.nytimes.com/2011/01/25/world/middleeast/25iran.html?ref=iran

“Russia Against Unilateral Sanctions On Iran, Foreign Minister Says.” Moscow Interfax in Russian. 25 January 2011. Obtained from Open Source Center.

Schanzer, Jonathan. “How Egypt Is Helping Iran to Circumvent Sanctions.” The Atlantic. 15 November 2010. http://www.theatlantic.com/international/archive/2010/11/how-egypt-is-helping-iran-to-circumvent-sanctions/66557/

U.S. Treasury Department. “Treasury Designation of Companies, Entities for Iran Sanctions.” Press Release. 13 January 2011. http://www.america.gov/st/texttrans-english/2011/January/20110114130747su0.9810908.html?CP.rss=true


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