“Unlike the Americans, we don’t have an exit strategy from Iraq” — Iraqi Vice-President Abd al-Mahdi.
Is this the real American strategy vis Iran? I don’t know, but it makes a lot more sense than the criticism I read every day. Real foreign policy is so much more complex than imagined by the MSM:
But delving beneath the surface of this objective, three strands of a more interesting and hopeful strategy begin to emerge in conversations with Middle Eastern analysts and politicians.
Start with the premise that Washington is indeed being tough on Iran to strengthen the internal opposition to the confrontational policies of President Mahmoud Ahmadinejad. The purpose is not necessarily to trigger the removal of Ahmadinejad, but rather to shatter Tehran’s grandiose delusions of regional hegemony and bring Iran into negotiations from a position of relative weakness, rather than its perceived strength.
Three strands of policy are now being directed to achieving this internal shift in Iranian politics. The first is the US effort to reduce the fighting in Iraq — or failing that, at least to mount a show of strength against the Iranian-backed Shia militias and to remind Tehran that Washington retains its capacity to deploy overwhelming military force.
The second is the US sabre-rattling over Iran’s nuclear program, especially the semi-public threats of Israeli bombing, perhaps even with tactical nuclear weapons. The White House’s announcement that two aircraft carrier battle groups will move to the Gulf within a month or so are clearly a reminder that Washington still has plenty of firepower to attack Iran directly or to back Israeli bombing — and also to protect international oil shipments through the Gulf against Iranian retaliation.
These deployments and public warnings do not necessarily suggest an attack on Iran is likely but rather that the US wants Iran to realise it is playing for very high stakes in its confrontation with the West.
The third strand of Washington’s Iranian policy is less visible, but may well turn out to be more important. The idea is to thwart Iran’s threatened hegemony with an economic pincer movement consisting of financial diplomacy on one side and energy policy on the other.
The main responsibility for this strand of policy rests not with the US or Israel but with the third member of the unlikely new anti-Iranian alliance: Saudi Arabia.
…In a significant statement this month, Saudi Oil Minister Ali al-Naimi opposed Iranian calls for production cuts to halt the decline in oil prices. Naimi’s pronouncement was cast as a technical matter unconnected with politics, but it seemed to confirm private warnings by King Abdullah that his country would try everything to thwart Iran’s hegemony in Iraq and the region, whether by military intervention or more subtle economic means.
This policy was spelt out with surprising precision by senior Saudi security adviser Nawaf Obaid in an article in The Washington Post: “King Abdullah may decide to strangle Iranian funding of the Iraqi militias through oil policy. If Saudi Arabia boosted production and cut the price of oil in half, the kingdom could still finance its current spending. But it would be devastating to Iran, which is facing economic difficulties even with today’s high prices.
“The result would be to limit Tehran’s ability to continue funnelling hundreds of millions a year to the Shia militias in Iraq and elsewhere.”
This article attracted huge attention in the Middle East and Washington, but was hardly noticed in the financial markets and business community.
Michael B. Oren is the author of the definitive history of the modern Middle East: Six Days of War: June 1967 and the Making of the Modern Middle East, and of the just-published Power, Faith, and Fantasy: America in the Middle East: 1776 to the Present [which is on my reading list].
Oren, together with Shalem Center compatriot Yossi Klein Halevi, has authored the best analysis I’ve seen on Israel and Iran titled Israel’s worst nightmare. At 4,000 words this is not a short op-ed, but rather a draft chapter for the next history of the Middle East. I think this is about as close to the truth as you are likely to come – unless you work for the Mossad:
The first reports from military intelligence about an Iranian nuclear program reached the desk of Yitzhak Rabin shortly after he became prime minister in May 1992. Rabin’s conclusion was unequivocal: Only a nuclear Iran, he told aides, could pose an existential threat to which Israel would have no credible response. But, when he tried to warn the Clinton administration, he met with incredulity. The CIA’s assessment — which wouldn’t change until 1998 — was that Iran’s nuclear program was civilian, not military. Israeli security officials felt that the CIA’s judgment was influenced by internal U.S. politics and privately referred to the agency as the “CPIA” — “P” for “politicized.”
The indifference in Washington helped persuade Rabin that Israel needed to begin preparing for an eventual preemptive strike, so he ordered the purchase of long-range bombers capable of reaching Iran. And he made a fateful political decision: He reversed his ambivalence toward negotiating with the PLO and endorsed unofficial talks being conducted between Israeli left-wingers and PLO officials. Rabin’s justification for this about-face was that Israel needed to neutralize what he defined as its “inner circle of threat” — the enemies along its borders — in order to focus on the coming confrontation with Iran, the far more dangerous “outer circle of threat.” Rabin’s strategy, then, was the exact opposite of the approach recently recommended by the Iraq Study Group: Where James Baker and Lee Hamilton want to engage Iran — even at the cost of downplaying its nuclear ambitions — in order to solve crises in the Arab world, Rabin wanted to make peace with the Arab world in order to prevent, at all costs, a nuclear Iran.
Now, more than a decade later, the worst-case scenario envisioned by Rabin is rapidly approaching. According to Israeli intelligence, Iran will be able to produce a nuclear bomb as soon as 2009. In Washington, fear is growing that either Israel or the Bush administration plans to order strikes against Iran. In Israel, however, there is fear of a different kind. Israelis worry not that the West will act rashly, but that it will fail to act at all. And, while strategists here differ over the relative efficacy of sanctions or a military strike, nearly everyone agrees on this point: Israel cannot live with a nuclear Iran.
Freshman senator Coburn did more than any other pol to corral runaway pork. He’s that rare politician that puts his job on the line to do what is right.
Tom Coburn doesn’t care about the midterm elections. Sure, he’s a senator. Sure, he’s a Republican. And sure, that means his party lost control of both houses of Congress last fall and will be out of power until at least 2009. But what difference does that make to Coburn?
“I don’t think it matters,†he said on a warm day in December, sitting in his office on the first floor of the Russell Senate building as the annual session came to a close. “It will be my first time in the minority party, but I’ve been in the minority the whole time I’ve been here.â€
For Coburn, it’s a minority of one. Since his arrival in Washington, D.C., two years ago, no other senator has paved a more solitary path, butting heads with nearly every member of his own party and most of the opposition. In fact, as the Republican majority has run aground on fiscal issues over the past few years—racking up unprecedented deficits and a soaring national debt while the Democrats mostly kept out of the way—Coburn has often seemed like an opposition party unto himself. In April, for example, he tackled nineteen highly questionable expenses that his colleagues had slipped into the budget at the last minute—money that no branch of government had requested, which would directly benefit Senate campaign supporters. In September, he teamed up with Barack Obama to expose federal waste by putting the national budget on a public Web site—a prospect so alarming to some senators that two of them tried to kill it anonymously. And in December, as his Republican colleagues began cleaning out their offices to make room for the new Democratic leadership, Coburn fired a parting shot: Using legislative procedures, he blocked the GOP from finishing its annual business and pushed many of the most important budgetary decisions for incoming Democrats to make in the New Year.
But Coburn makes no apology for challenging his own party. “The American people want change,†he said with a shrug. “I think they’re wise to want change. The Republicans didn’t do what they said they were going to do. They deserve the wrath of the voters.â€
Needless to say, none of this has exactly endeared Coburn to his fellow Republicans. When I asked John McCain, one of Coburn’s few supporters in the Senate, how the GOP has received Coburn, he laughed. “I call him Miss Congeniality,†he said. “A lot of people think he’s a straight-arrow, humorless guy.†Other Republicans were even less charitable. As a senior staffer in the Senate Republican leadership put it, “You know he’s nuts, right?â€
But for many of Coburn’s colleagues, what is most surprising is not that he has become a thorn in the party’s side; it’s the issue with which he has made his mark. Back in 2004, when Coburn was first running for Senate, fiscal prudence wasn’t supposed to be his issue. In fact, the last thing anybody expected him to become was a voice of restraint in a body of excess. If anything, Coburn was the one known for his excesses, for making pronouncements so outrageous, so far from the mainstream, that at times he seemed like a cartoon of the fanatical right—declaring his own Senate race “the battle of good versus evil,†calling for “the death penalty for abortionists,†and suggesting that the country was under attack by a secret gay conspiracy that had “infiltrated the very centers of power in every area across this country.†Back in 2004, Tom Coburn was the last man anybody expected to rise above politics and try to lead us back to common sense.
LinkedIn has raised another $13M!
I was wondering how they were going to monetize this professionals’ social networking site. Is this part of the answer?
And another service that is already being tested quietly called LinkedIn Experts will be rolled out more broadly. It is a way to tap into LinkedIn’s knowledgebase (i.e, the social version of a database). Here’s how it works, accordig to Rabois:
It allows an investment fund or researchers to ask us to find the five top experts in a field. We will contact them. You chat with the expert for an hour for $500, and we keep half of it.
Perhaps LinkedIn should adopt a new slogan: Making connections pay.
“Amazon’s in the business of managing complexity,” says Amazon director John Doerr of the venture firm Kleiner Perkins Caufield & Byers. “There’s no other e-commerce player that does that.”
I think Amazon’s remarketing of its internal systems is a masterstroke – though it may well take five years for the bottom line impact to be obvious.
… More importantly, some venture capitalists have noticed, and they’re encouraging their startups to consider using Amazon services to save money and get to market faster. “Amazon is becoming a very interesting company,” says Crosslink Capital general partner Peter Rip. “They’re taking their store in the sky and unbundling it.”
If I were an Amazon director, for sure I wouldn’t look forward to fighting a competitor who has built the defining instrastructure like Bezos has done”:
…Like most computer networks, Amazon’s uses as little as 10% of its capacity at any one time just to leave room for occasional spikes. It’s the same story in the company’s distribution centers. Keeping them humming at higher capacity means they operate more efficiently, besides giving customers a much broader selection of products. And the more stuff Amazon ships, both its own inventory or others’, the better deals it can cut with shippers.
But there’s much more at stake for Bezos than making a few extra bucks selling services that his online store is already providing for itself. This is nothing less than a bid to lead the next wave of the Internet. A dozen years in the making, the economy that has grown up with the Internet by most accounts remains in its infancy. And leadership of that burgeoning economy remains up for grabs.
Google and Microsoft, in particular, are each angling to be the Net’s kingpins: Just as Microsoft ruled the PC world (and its profits) with Windows software, so Google and Microsoft want to build what techies call the “platform” for the Web–the powerful layer of basic services on top of which everyone else builds their Web sites. “Amazon’s a pretty serious dark horse” in that race, says Internet visionary Tim O’Reilly, CEO of tech publisher O’Reilly Media Inc. “Jeff really understands that if he doesn’t become a platform player, he’s at the mercy of those who do.”
Bezos believes he has identified a unique Amazonian edge: Like no other Internet or computer company today, the e-retailer is in a position to apply the efficiencies of the Net to tangible and corporeal assets like products and people. Bezos envisions embedding the tasks of product distribution and knowledge work right into the flow of more automated business processes such as order taking and payment processing. For instance, a new service called Fulfillment by Amazon lets small and midsize businesses send their inventory to Amazon warehouses. Then when a customer places an order, Amazon gets an automated signal to ship it out–no muss, no fuss, no servers or software or garages full of stuff. “Amazon’s in the business of managing complexity,” says Amazon director John Doerr of the venture firm Kleiner Perkins Caufield & Byers. “There’s no other e-commerce player that does that.”
…The result was that Amazon made it much faster and easier to add new Web site features. Small, fast-moving groups of five to eight Amazon employees now could go hog wild with new ideas, such as customer discussion boards on each product page and software to play music and videos on the site. Since then these “two-pizza teams,” which Bezos calls them because each team can be fed with two large pies, have become Amazon’s prime innovation engines. “There’s a huge value in this small, nimble team approach,” says tech consultant and author John Hagel III. “But you can’t do that without this kind of computer architecture.”
For a detailed look at how a smallish web company is saving big money while ramping up their use of Amazon’s online storage component, S3, see this commentary from SmugMug CEO Don MacAskill. That doesn’t directly tell you how Amazon makes money at this. But it certainly illuminates the market that Amazon is addressing.
“Not required are engineers, pipelines, epidemiologists, or microbiologists,” says Kamen. “You don’t need any -ologists. You don’t need any building permits, bribery, or bureaucracies.”
Dean Kamen, the engineer who invented the Segway, has invented two devices, each about the size of a washing machine that can provide much-needed power and clean water in rural villages.
He’s been joined by Iqbal Quadir, the founder of Grameen Phone, the largest cell phone company in Bangladesh. Last year, Quadir took prototypes of Kamen’s power machines to two villages in his home country for a six-month field trial. That trial, which ended last September, sold Quadir on the technology.
Still, even if some of the technical challenges have been solved (“I know the technology works and I’d fall on my sword to prove it,” insists Kamen), the economic challenges still loom.
Kamen’s goal is to produce machines that cost $1,000 to $2,000 each. That’s a far cry from the $100,000 that each hand-machined prototype cost to build.
Quadir is going to try and see if the machines can be produced economically by a factory in Bangladesh. If the numbers work out, not only does he think that distributing them in a decentralized fashion will be good business — he also thinks it will be good public policy. Instead of putting up a 500-megawatt power plant in a developing country, he argues, it would be much better to place 500,000 one-kilowatt power plants in villages all over the place, because then you would create 500,000 entrepreneurs.
“Isn’t that better for democracy?” Quadir asks. “We see a shortage of democracy in the world, and we are surprised. If you strengthen the economic hands of people, you will foster real democracy.”
Water and sanitation ranked #6 in the 2004 Copenhagen Consensus – primarily because the usual large-scale infrastructure is so expensive. That equation would change dramatically if the Kamen technology can be mass-manufactured at anything like the $2,000/unit level, then operated by local entrepreneurs. I.e., there is essentially no infrastructure [big engineering], nor administration overhead.
For more technical details see MIT Technology Review:
But the generator project can’t go anywhere until Kamen and Quadir find a manufacturer to produce the device. “It’s very hard to get big companies to start putting serious money toward tooling a product when they are not sure that the ultimate purchaser has the resources and wherewithal to pay for the product,” Kamen says.
The cell phone program, says Quadir, was successful in part because cheap handsets were already being produced in large quantities. Kamen hopes that the encouraging results of trial in Bangladesh may help convince companies to invest.
Large-scale programs designed to bring water to millions at a time depend on building extensive infrastructure. The advantage of Kamen’s generator and water purifier, he argues, is their flexibility. They can be carried into remote villages by just two people. And the generator can run on any local fuel available.
The design concept behind the water purifier, like the Stirling engine, is nothing new: it works by heating and distilling water. What does make it unique is its efficiency — the generator reclaims about 98% of the heat normally lost in the distillation process and reuses it to distill more water, Kamen says.
Running continuously on a few hundred watts of power, a single purifier should provide enough water for a village of 100 people, Kamen estimates. And it can purify water from any source, regardless of what contaminants it might contain. That rules out the need for quality testing or specialized treatment.
The water purifier is called the “Slingshot” because It shoots the residual sludge back out a plastic tube [i.e., sewage sludge in the worst case application - Kamen says it will produce clean water from sewage].
It appears that Kamen has had a cold reception in Washington, reflecting the stranglehold the foreign aid industry has on policy:
Before Kamen met Quadir, he took his inventions to places like the United Nations and the World Bank, part of whose stated goals are to improve access to power and water in the world’s poorest nations. He says he met nothing but skepticism among the experts who told him there were much cheaper and better ways to make power and clean water. He describes these encounters as “the most chilling meetings I ever had in Washington.â€
During one such encounter, Kamen lost his cool and blurted out: “Okay, you’ve had 60 years and spent $1 trillion on these two issues. Can you point to the places where you are proud of the success you’ve had?†The meeting didn’t get much farther than that.
Says Kamen, “If you are going to wait for governments or NGOs [non-governmental organizations] to change the world, it is going to take another 60 years.â€
Jamal Saghir, the World Bank’s director of energy and water, says he is unaware of any meetings that might have taken place with Kamen. “We get a lot of requests from inventors to endorse their products,†says Saghir. “The World Bank does not support proprietary technology. We support developing country governments and empower them to make choices.â€
What Kamen is really railing against, though, is the conventional wisdom that governments need to build huge, centralized power plants or water sanitation facilities to economically address the problems at hand. That centralized approach might result in a lower cost per kilowatt or per clean liter of water, but it also requires a lot of capital, a lot of expertise, and a lot of pipes and wires.
There’s a lengthy interview with Dean Kamen here, which includes discussion of the generator/purifier program:
On that note, one of your current projects is using a small Stirling engine to produce electricity and purify water. Engineers have long been mesmerized by the Stirling’s theoretical efficiency, but frustrated by their failure to realize that efficiency while managing issues of size, control, and cost. What are DEKA’s plans for the Stirling?
I have had a life-long fascination with Stirling engines and with thermodynamics generally. But as you say, the Stirling has been fascinating scientists and engineers for well over 100 years, yet it has never been a competitive solution to most problems versus other kinds of heat engines out there, like steam engines, internal combustion engines, and gas turbines. Stirling engines are big relative to their energy density, expensive, hard to manufacture, etc. In short, they cannot compete with the power generators that are already a part of the infrastructure in the U.S. and other industrialized countries. However, there are a lot of places in the developing world that are waiting, and will continue to wait, for a top-down approach to provide power. But there is no infrastructure in place, and it will probably take 20 years, 30 years, 50 years, or longer before centralized power and electricity will be available in these places–if it ever happens–for reasons that have nothing to do with engineering or technology. The obstacles are social, financial, and political, but they are not technological. Our goal is to use a bottom-up approach to instantly get people on to the ladder of technology, beginning with getting them electricity in their homes and villages. This enables them to take care of their basic needs, attain a better quality of life, and start creating wealth. We defined the problem: they need a generator that runs on any fuel, is very reliable and essentially maintenance free, is able to generate sufficient power for a small village, and is small enough so that a couple of people can carry it around. If we had an engine that could do all that, it would be a big deal. We realized that in developing world environments, the Stirling, despite a number of problems that had to be solved with it, could really be the core of a bottom-up way to build distributed point-of-use power generation throughout the world. It was as much an insight into the practical realities of the situation as it was about the second law of thermodynamics.
Finally, here’s some clever marketing “Segway inventor drinks his own pee“.
Technorati Tags: Foreign Aid
I wish the video for this talk was online! This is one of the Seminars on Long-term Thinking from Nov, 2006. Audio [MP3].
For this talk the founder and CEO of “Second Life,” Philip Rosedale, tried something new for him— a simultaneous demo and talk. His online avatar, “Philip Linden,” was on the screen showing things while the in-theater Philip Rosedale was conjecturing about what it all means. “This is a game of ‘Can I interest you more in what I’m saying than what’s going on on the screen?’”
60 years of foreign aid did nothing to alleviate poverty – it did the opposite, it empowered authority.
Don’t miss this interview with the co-founder of GrameenPhone, Iqbal Quadir [TED Talks video, also on audio].
Remarkable!
GrameenPhone, an innovative wireless operator offering services to poor rural villages in Bangladesh. In this talk, he explains the triple impact of bringing cel phone service to rural areas (connecting the village to the world, creating business opportunities, and generating over time a culture of entrepreneurship.) He also relates his personal “A-ha moment,” when he understood that “connectivity is productivity.” (Recorded July 2005 in Oxford, UK. Duration: 16:37)
Iabal Quadir is a Wharton alum. See the 2005 annual report [PDF].
Technorati Tags: Foreign Aid
…most of Africa’s problems are internal, not external, and concern domestic policies and institutions. Until those internal problems are addressed, no amount of Western assistance will bring Africa out of poverty. In fact, Western assistance could postpone much-needed reforms in the way that African countries are governed.
What happened to the US$ 600 billion of foreign aid poured into Africa since 1960 [2003 dollars]. Are African citizens better off or worse off? If you think foreign aid is a good idea [or not] you’ll want to review this short interview [MP3] with Ugandan economist Andrew Mwenda. I predict it will curl your hair.
Africa is the world’s poorest continent. Between 1974 and 2003, the per capita income in sub-Saharan Africa declined by 11 percent. Africa continues to trail the rest of the world on human development indicators including life expectancy; infant mortality; undernourishment; school enrollment; and the incidence of HIV/AIDS, malaria, and tuberculosis. The international aid lobby advocates more foreign aid and greater debt relief for Africa as solutions.
Unfortunately, as the case of Uganda shows, foreign aid and debt relief can exacerbate Africa’s problems by postponing economic reforms and the emergence of a transparent and accountable government.
Uganda implemented significant economic reforms in the 1990s because of domestic economic and political factors. That progress led many observers to label Uganda as an economic success story and brought the country debt relief and an increase in foreign aid. But foreign aid, which makes up 50 percent of the Ugandan government’s budget, is providing the government with an independent source of “unearned†revenue. That allows the government to avoid accountability to Uganda’s citizens. Moreover, foreign aid enables the government to pay its bills without having to undertake further necessary economic reforms.
Similarly, debt relief to Uganda has had some unintended consequences. It has enabled the government to borrow still more money and remain highly indebted by significantly increasing its level of absolute debt. The country’s debt as a share of gross domestic product is still more than 50 percent. The government is wasting much of the new money on military equipment and political patronage. To promote democracy and accountability, the West should discontinue future aid flows.
For an in-depth look at Mwenda’s research, see this paper: Foreign Aid and the Weakening of Democratic Accountability in Uganda.
For India’s experience, see Foreign Aid and India: Financing the Leviathan State.
With a debate now raging over whether further foreign aid programs financed by U.S. taxpayers are justified in the post-Cold War era, a review of the development experience of the recipient of the largest amount of foreign aid is instructive. India has received more foreign aid than any other developing nation since the end of World War II–estimated at almost $55 billion since the beginning of its First Five-Year Plan in 1951.[1] It has long been an article of faith among development economists and policymakers that foreign aid is a necessary and central component of economic development, yet the record of Indian economic development since 1947 belies that view.
India has had one of the lowest rates of growth of all developing countries and remains one of the poorest countries in the world after almost 45 years of aid-financed, centrally planned development. Foreign aid has directly financed and sustained India’s centralized planning and control framework and thereby financed the growth of one of the noncommunist world’s largest and most inefficient public sectors. In 1988-89, 101 of the country’s 222 largest public-sector companies recorded losses and contributed to a federal deficit five times as large, in relative terms, as the U.S. budget deficit.[2]
Today, after nearly 45 years of planned economic development, India’s annual per capita income remains around $300. Almost 40 percent of Indians live below the official poverty line, and the absolute number of Indians in that category increased sharply between the late 1950s and the mid-1980s. In short, India is a paradigmatic case of the failure of government-sponsored aid; it stands as a dramatic testimonial to why such aid should go the way of the socialist development model it has bankrolled for decades.
Technorati Tags: Foreign Aid
This November 14, 2006 Cato Institute seminar was very interesting — exciting even, if you are interested in tax reform. The featured speaker was Ivan Miklos, Former Deputy Prime Minister and Minister of Finance, Slovakia.
Slovakia’s GDP growth for 2006, and projected for 2007 is about 7% — having converted to a no-goofy-special-exclusions flat tax regime in 2001. Personal, corporate and VAT tax rates are 19%. Dividends, real-estate capital gains and death taxes were all eliminated [not sure about finanical capital gains]. The unions fought the reform vigorously – claiming as usual it was all for the benefit of the rich. Wrong, wrong, wrong.
US politicians hate the flat tax as it eliminates their main vehicle for rewarding the special interests that fund their campaigns.
Simple, simple, simple. It works. But probably can never overcome the vested interests in the US.
Featuring Ivan Miklos, Former Deputy Prime Minister and Minister of Finance, Slovakia; with comments by Chris Edwards, Director of Tax Policy Studies, Cato Institute; and moderated by Marian Tupy, Policy Analyst, Center for Global Liberty and Prosperity, Cato Institute.
Since January 2004, Slovakia has had a flat tax on income, consumption, and corporate profits. Most other taxes and tax exemptions were eliminated. Other formerly, communist countries, including Estonia, Georgia, Latvia, Lithuania, Romania, Russia, Serbia, and Ukraine, have also adopted flat tax rates. Unfortunately, in the United States, where the idea of a flat tax originated, the tax code remains absurdly complicated and inefficient. Ivan Miklos will evaluate the performance of the new tax system and explain how the Slovak government overcame special interests opposed to reform. Chris Edwards will assess the chances for a meaningful tax reform in the United States.
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