War With Iran?

A potential catastrophe is brewing in the Persian Gulf. Both the United States and Iran are taking steps that the other side views as aggressive and threatening and responding in kind. By any sober analysis both the United States and Iran would suffer enormous damage if things spiral out of control and a large scale military conflict erupted.

In the worst case, the United States would launch a massive aerial bombardment of Iran designed to destroy their nuclear infrastructure, which would, most likely, both fail to neutralize all the sites and cause immense harm to Iran's infrastructure and already faltering economy. Iran's most obvious strategy would be to try to stop oil shipments through the Strait of Hormuz. [for more than you might want to know about the Strait, click here.]  Since the U.S. is less dependent on imported oil than Europe, Japan, or China, the loss of oil from the Middle East would not cripple the U.S. economy but it would cause a spike in gasoline  prices and have a substantial negative impact on our major trading partners.  Iran has close working relationships with a number of groups throughout the Middle East, from Hezbollah in Lebanon to a variety of forces in Iraq and various factions in the Gulf States and elsewhere.  The standard American view that Iran controls these groups is probably a gross over estimation, but Iran does have the capacity to inspire its allies to attack American forces and interests in several countries and also threaten Israel.

While I think both sides understand that a major military exchange would be the worst possible outcome, there are three crucial dynamics that create the potential for escalation to spiral out of control.

1.)      First, each country’s decision making is influenced by hawks sees the other as an implacable enemy who desires their destruction. 

Decision makers at the highest level of government are very much like you and me when it comes to understanding history.  What matters is not a careful time line, detailed description and nuanced discussion of events, complete with alternative explanations, but general impressions.  The Iranian regime tends to see Iran as initially a victim of Western Imperialism and then a beacon of resistance.  America and Britain toppled a democratic Iranian regime in 1952 and imposed their puppet Shah; the glorious 1979 revolution created the modern Islamic Republic, liberating Iran from foreigners and giving the world an ideology and living example of freedom from Western capitalist domination. 

From the U.S. perspective, the 1979 revolution replaced a friendly regime with a bunch of religious fanatics who loved to chant “Death to America”, called us the “Great Satan”, are sworn to the annihilation of Israel, and are constantly trying to foment turmoil and rebellion across the Middle East. 

If a belief that a burning desire to destroy you lies at the very core of another country’s policies, you will be powerfully predisposed to interpret whatever they do or say in the worst possible light. 

2) The second pernicious dynamic is each side’s belief that its actions are a measured and appropriate response to the provocative and dangerous actions of the other.

 

 From Iran’s perspective, the current confrontation began when the U.S. pulled out of the nuclear agreement and tried to destroy Iran’s economy by blocking its access to global oil markets.  Then the U.S. publicly backed Saudi Arabia’s newly aggressive foreign policy whose centerpiece is an attempt to isolate Iran and attack its friends and Allies in the Middle East.  

Iran responded by increasing work on medium range ballistic missiles, supporting the Syrian regime, strengthening its ties to friendly militas in countries like Iraq and Lebanon and supporting the rebels after Saudi Arabia intervened in the civil war in Yemen.  

After withdrawing from the Paris nuclear accord, the United States has crippled the Iranian economy with sanctions, escalated its extreme anti-Iranian rhetoric and begun to build up its military forces in the Gulf.  The Iranian response has been to look to Europe to keep its promise to develop a system that would allow the major oil companies to purchase Iran crude and European companies to do business with Iran without being punished by the U.S. for violating America’s unilateral sanctions on Iran. 

The biggest obstacle is the fact that the global financial system ultimately rests very heavily on the U.S. dollar.  Not only are most transactions priced in dollars but most transactions use U.S. banking institutions, either directly or indirectly, to complete the deal.  U.S. sanctions foreclose access to U.S.. financial institutions.  The second stumbling block is a fear that a European company doing business with Iran will have its U.S. operations penalized or curtailed by the U.S. Treasury Department..

 The European Union promised last year to develop an alternative financing mechanism for Iranian business but that has not been fully implemented.  Iran’s most recent moves, the attack on two tankers in the Strait of Hormuz* and the threat to withdraw from the nuclear deal within a week can be understood from Tehran’s perspective as a modest reminder that shipping lanes are vulnerable and a much more pointed demand that the EU moves very rapidly to keep its promise.

*I am assuming that Iran was the source of the mines attached to the two tankers. The reluctance of our major European allies to accept the U.S. assertion of Iranian culpability says less, I think, about the likelihood of Iranian involvement and much more about the level of mistrust of the Trump administration and its intentions.

From the U.S. view, the original nuclear deal was fatally flawed because it did not permanently prevent Iran from developing nuclear weapons and it did not stop Iran’s promotion of terrorism and other “nefarious activities.” Syria, Iraq, Yemen, Lebanon: wherever you look the Iranians are stirring up trouble and backing some pretty bad actors.  The recent small increase (a few thousand) troops is in direct response to what the U.S. says are credible threats to American citizens and interests.  

3.)   The third vicious dynamic is a feeling of helplessness.  

Aside from a few super hawks, no one in either government wants things to escalate to a major military clash.  But since each side firmly believes that it has no choice but to react to the hostile and threatening actions of the other, it is the other side that must back down and stop making things worse.  If only the U.S. (or Iran) would change its course, then Iran (or the U.S.) could stand down.

So what will happen?  

I want to present an optimistic view based on three plausible assumptions.

1)      The U.S. government is deeply divided between hawks and doves. The Iranian government may also be divided.

National Security advisor John Bolton, Secretary of State Mike Pompeo and several prominent Republican Senators epitomize the “implacable enemy” view that the Iranian regime must be overthrown sooner or later.  They are strongly supported by Israel, Saudi Arabia and the Gulf States whose current stance is pretty close to “I’ll hold your coat while you go beat them up.”

But President Trump is, clearly opposed to a full scale war with Iran, as is a significant portion of the foreign policy establishment (yes, “the Blob” is back.)  Bolton, Pompeo and other major White House decision makers have reportedly been given detailed and sober briefings on the enormous costs and consequences of a full scale war with Iran. Ironically, Trump’s often criticized tendency to replace the assessments of national intelligence agencies with his own gut feelings is an important restraining force in this situation.  The Defense Department is adamant that Iran deliberately shot down a U.S. multi-million dollar drone in international air space in a provocative violation of international law; President Trump says it was an Iranian “mistake” and not a major escalation.

The Iranian political system is convoluted and opaque.  While it is clear that Ayatollah Ali Khamenei, the Supreme Leader, is the highest authority and the Council of Experts is the next most significant body, there are two parallel governmental organizations making military policy and day to day decisions.  The formal government features an elected legislature and President and the usual bureaus and offices, including the military.  At the same time, the Islamic Revolutionary Guards Corps is technically a branch of the military but has become a functionally autonomous body with a complex of businesses and factories that is capable of acting on its own.  The IRGC, either under orders from the top or a unit acting on its own, is quite capable of shooting down a U.S. drone without the prior knowledge, let alone approval, of the civilian government.  

2)       Both sides so far have shown a certain amount of restraint. 

So far the American response to Iranian moves such as attacking oil tankers and shooting down a drone has been muted:  Sending more troops to the region and threatening rhetoric is far milder than launching a punitive air strike.  President Trump’s very public cancellation of an air strike on Iran to avoid casualties at the very least avoids escalation and may mark the beginning of a de-escalation spiral.  Iran’s announcement that they could have shot down a U.S. reconnaissance plane but chose not to may also be a small step back from the brink.  Of course, the danger of disastrous miscalculation remains and there is always the possibility that we are in the same situation as the person who fell off a 30 story building and when someone on the 2^nd floor called out “How are you doing?” the answer was, “so far, so good!” 

The fact that the American government and, I think, the Iranian side, are both divided on how evil and/or rational the adversary is good news … and bad news.  The good news is that it opens up the possibility of cooler heads prevailing and finding a way out of the immediate conflict; the bad news is that the hawkish rhetoric and actions of the hard liners on either side will be taken as representing the “real” position.  

3)      While clearly there’s a sense that if only the other side would back off this confrontation could be resolved, there also seems to be a sense on both sides that they can control the situation and there are options.  

Both sides have long term, non-negotiable demands (the U.S. insistence that there is some sort of iron clad guarantee that Iran will never develop nuclear weapons; the Iranian insistence that the U.S. end its campaign of economic coercion and rejoin the 2015 Paris Agreement), neither has laid out a specific challenge that the other must meet in the immediate future.  There is a potential path to a resolution that might be little more than a gradual easing of tension.

It seems fair to say that the recent history of U.S.-Iranian relations began when the U.S. walked away from the nuclear accord and adopted a policy of highly coercive measures to force Iran to renegotiate.  A reliance on threats and punishments to force someone to do what you want is the basic definition of a compellance strategy.  It may be useful to devote a future blog to a more conceptual discussion of compellance, deterrence and persuasion as strategies.  It may not take six months to get around to it …

Strait of Hormuz

The Strait of Hormuz is the narrow passageway between the Persian** Gulf and the Indian Ocean.  Iran, Iraq, the United Arab Emirates and Saudi Arabia all rely on ocean-going oil tankers to export around 35% of the global supply of natural gas and 20% of the world’s oil supply.  At its narrowest point, the Strait is 21 miles wide.  But that is deceptive; the 20 to 30 ships using the Strait each day are confined to two two mile wide transit lanes separated by a 2 mile “median strip.”  

**Saudi Arabia, Oman, Bahrain, Kuwait, Qatar, the UAE and all the members of the Gulf Cooperation Council wish to point out that the waterway is really The Gulf of Oman and their official government maps prove it!

The bad news is that it’s easy to use small speed boats to attach mines to boats or stay onshore and fire artillery shells or launch rockets.  The good news is that modern oil tankers are built with double hulls and sealed compartments to minimize the chances of an oil spill which makes them very difficult to sink. 

During the protracted Iraq-Iran War of the 1980’s Iraq initiated attacks on tankers carrying crude from Iran and over time Iran retaliated with attacks on ships leaving Iraqi ports.  The attacks hit only a small proportion of the tanker fleet and had a comparatively small effect on the global economy as other members of OPEC increased production to make up for the loss.  A major factor suppressing the damage and controlling the level of violence was the use of the U.S. Navy to escort ships in the Gulf. 

While oil from the Gulf is a smaller proportion of global supply than it was 35 years ago, Iran has a much larger and more sophisticated military capability than it did back then and could most likely damage a significant portion of the tanker traffic.  The impact on global markets and the world’s economies may be more influenced by fears and uncertainty about the future than the physical disruption in supply.

In Praise of Trump's Gut

In the last few weeks President Trump has taken steps to fulfill one of his campaign promises, to extricate America from "endless" wars. He has heralded the major progress his special envoy to Afghanistan has made in talks with the Taliban to pave the way for the U.S. to leave Afghanistan. The reaction from observers both within and outside the administration made it clear that he did not consult the military or foreign policy professionals but, apparently, has relied on his gut instincts.

Since I think the war in Afghanistan is unwinnable and I do not think our departure will mean the return of the horrors of the Taliban regime of 20 years ago, I think this is a good decision. I also think it may represent the first small step away from the militarized policy that has marked America's relationship with both the Middle East and Africa since 2001.

The immediate response to the terrorist attacks of September 11 was, as Shakespeare would have it, "Cry havoc and let slip the dogs of war!" The rhetoric from President Bush and his administration and Congress's Joint resolution of September 14 authoring the use of the military force against those responsible for the attacks and any "associated forces" has led to almost two decades of open-ended "war on terror"* and given unchallenged primacy to the national security establishment's++ definition of American interests in the Middle East and Africa.

*President Obama did try to retire the phase and was blasted by hawkish critics. But a major factor in his administration's faltering and tepid response to the emerging tragedy of civil war in Syria was the desire to find groups to support whose rhetoric and ideology had no trace of political Islam, because so many national security "experts" equate every expression of political Islam with "terrorism."

++ the senior military officers, civilian scholars and analysts with a particular interest in military affairs who can be found at the upper levels of the Pentagon and often move between universities or research institutions and governmental positions. Their shared world view emphasizes detecting and countering threats to the U.S.

A major consequence of the preeminence of the emphasis on security is that the U.S. Central Command has become far more powerful in shaping policy toward countries in the Middle East than the diplomats and officials in the State Department. President Obama created the Africa Command to coordinate the U.S. military involvement in Africa and fight terrorism in North Africa, the Sahara, and countries like Kenya and Nigeria. Not only has that meant the Defense Department's definition of U.S. interests has overshadowed an emphasis economic, political and social development goals in those countries but it has also colored America's approach to the entire continent. This has given China even more opportunities for economic involvement in sub-Saharan Africa.

There are two fundamental problems with the ascendance of the national security perspective over the other dimensions of international relations. The first is an institutional bias toward seeing threats. Any profession trains its practitioners to be very sensitive to specific problems. For example, police officers are trained to look for potential crime, medical professionals are trained to look for disease, and Political Scientists tend to see everything as political. National security experts consider the most important aspect of every other country in the world is whether they are a direct threat to the United States, an ally against threatening states or largely irrelevant.

If you think Iran is a major threat to the United States and Saudi Arabia is, after Israel, the most important counter to Iran in the Middle East, then human rights, treatment of women or foreign workers, even the execution of a journalist are of secondary importance.

The second fundamental problem with the national security emphasis is that it emphasizes a restricted set of tools for dealing with the world. The military and civilian defense intellectuals dress the primacy of hard power over soft power. "Hard power" refers to resources that can be used for coercion (do it my way or you'll be sorry) or deterrence (if you do that you'll be sorry) while "soft power" refers to resources, particularly intangible resources, like prestige or admiration for a country's culture or technology, that can be used to persuade. From a national security perspective, sophisticated jet fighters really matter; a commitment to human rights and democracy is somewhat beside the point.

I do not think that one's gut is a reliable guide to coping with complex problems and it is usually oblivious to the devils lurking in the details. If my stomach hurts I prefer the physician who asks about symptoms and runs some tests before making a diagnosis to the non-physician who wanders by and says his gut tells him I've got an ulcer. If it's gut versus judgment based on expertise, I'll go with informed judgment.

But, just as even a blind hog can find an acorn some of the time, the gut can be right. And in the case of Afghanistan, I think Trump's gut trumps expertise.

Turning a Corner ... In a Circular Maze?

As another fighting season draws to a close in Afghanistan, there are several interesting developments that suggest this winter might see some significant changes that could be precursors to a negotiated end to U.S. involvement. Among the straws in the wind:

Despite the presence of some 15,000 U.S. troops and last year's announcement of (yet another) bold, new strategy, the Taliban by all accounts controls more Afghan territory than at any time since 2002;

The 18th American commander* in this longest war was inaugurated;

*that is, commander of NATO forces ... we tend to forget that Article 5 of the NATO treaty (pledging mutual support in case of attack) was invoked for the only time in history after the September 11 attacks and 17 NATO members have had troops on the ground and suffered casualties since 2001.

President Trump, when he has paid attention to Afghanistan, (he has tweeted six times more often about NFL players and the anthem) has said he just wants to bring the troops home;

The U.S. State Department has not denied Taliban claims that there have been direct talks between the two sides (despite official policy that we'll talk to the Taliban only when the Afghan government is part of the meetings;

Reliable journalists have reported that the Taliban has moderated its behavior in territory that it controls, no longer enforcing a harshly repressive version of Shari law, but emphasizing effective governance, efficient provision of basic services, and stringent anti-bribery and corruption measures;

The newly appointed special envoy to Afghanistan, Zalmay Khalilzad, said in an NPR interview that the items the United States has demanded as preconditions for talks for the past 17 years were now "end points" in negotiations.

All this hardly means the end of the war but it may be the beginning of a long, tedious process that leads to a less violent future.

The Key Players

The United States

The U.S. is central to the future of Afghanistan. The Defense Department is deliberately vague about how many U.S. soldiers are in Afghanistan but the typical estimate is around 16,000. Since 2017, American troops have been deployed almost exclusively in cities providing training and assistance to the Afghan security forces. There is far less emphasis than in the past on U.S. troops playing an active role in combat, but it seems clear that in a crisis or major battle American soldiers play an active role. The United States is also the major source of foreign aid to the Afghan government.

The Government of Afghanistan

Both the executive and legislative branches of the government of Afghanistan were elected in 2014. The process was marred by claims of massive fraud and threats of violence by backers of major candidates and official figures were not immediately released. The resulting constitutional crisis was only resolved when then U.S. Secretary of State John Kerry brokered a power sharing arrangement between the two leading presidential candidates. Elections for a new parliament are being held this Fall and Presidential elections are scheduled for the spring. There is little reason to think they will be any less controversial.

The Afghan economy was close to total collapse when the U.S.-led coalition ousted the Taliban regime in 2001 and has recovered significantly since then. Nonetheless the government relies on foreign aid, much of it from the U.S., for about two-thirds of its revenue, which often means policies and projects reflect the priorities and preferences of foreign governmental and non-governmental aid donors. The most serious problem undermining the authority and legitimacy of the government is corruption. Transparency International, the most widely accepted organization measuring corruption around the world, ranks Afghanistan 177th (out of 180) and that includes everything from paying off the cop who stops you at random to siphoning off millions from foreign aid projects. Afghans also feel physically insecure as the government appears less able to defend rural villages and the Taliban continues suicide bombing attacks in Kabul and other cities.

The Taliban

The Taliban was one of several ethnically or regionally based groups who forced the USSR to withdraw from Afghanistan in the 1980's. The Taliban received significant help from Pakistan and the United States (via the CIA) because they were seen as effective anti-communist, anti-Soviet fighters. This put them in position to emerge as the dominant force in Afghanistan in the confusion and anarchy that followed the Soviet withdrawal. It quickly became clear that the Taliban was driven by an extremely regressive and repressive version of Islam rooted in rural tribal culture and spread by Saudi Arabia. Women were the most obvious victims of the regime, denied an education, prohibited from working, required to wear a burka any time they were outside the house, and legally reduced to being property of their husbands and male relatives. Men fared only slightly better. Committees for the Suppression of Vice and Promotion of Virtue, armed with whips and clubs, patrolled the streets of cities and towns to enforce the ban on music and dancing, punish anyone listening to foreign broadcast on the radio, assure that all men grew beards, and punish any other behavior they defined as "un-Islamic." The Taliban regime waged war on Afghan history and culture and earned international condemnation for violations of human rights. Hundreds of thousands of Afghans fled the country, usually ending up in refugee camps in Pakistan. The regime tolerated and enabled terrorist groups, notably Al Qaeda, to set up training camps and outposts in the country. The 9/11 terrorists were trained and the attacks were planned and organized by Osama bin Laden from Afghanistan. Few tears were shed when the United States led the way to ousting the regime at the end of 2001.

Since then the Taliban has waged an insurgent war against the government. The Taliban leadership and ordinary fighters can draw on almost 40 years of experience fighting modern armies and pushing them out of rural villages. But they lack the heavy weapons and air power to capture urban areas. More importantly, they lack a broad base of support in the country for two key reasons. First, the brutality and repression of the Taliban regime is still a vivid memory for those who lived through it and a frightening prospect for their children and grandchildren. Second, Afghan society remains deeply divided along ethnic lines. The old saying "I against my brothers, my brothers and I against my cousins, my cousins and I against the world" is still operative. The Taliban is almost an exclusively Pashtun organization; the other groups in Afghanistan tend to resent or resist the Pashtuns.

Pakistan

Pakistan's relationship to the various forces in Afghanistan is complex and multi-layered. During the war against the Soviet Union, the ISI (Inter-Services Intelligence unit, which is the CIA on steroids) was the major conduit for foreign assistance to the anti-Soviet forces. That let the ISI pick and choose among a variety of groups opposing the Soviets and ensure that they remained indebted to Pakistan after they evicted the USSR. The border between Pakistan and Afghanistan on maps of the region is an illusion: Pakistan is one color, Afghanistan another and there's a crisp black line dividing them. The border between Pakistan and Afghanistan on the ground is marked by checkpoints and official border crossings along the few roads in the region; for practical purposes it does not exist in the steep mountains and deep valleys. The international boundary runs through the middle of a large area dominated by the various tribes, clans and sub-groups of the Pashtun ethnicity. Independent Pakistan inherited all the headaches this area had caused the British while they ruled India. The Northwest Frontier Province is a region of fiercely independent traditional communities, resistant to change and outsiders. For the past 200 years Islam has provided the vocabulary and general principles that defines this world view.

The government of Pakistan is seen as a hostile alien force that would destroy the region's way of life, to be resisted just as much as the Soviet Union in the 1980's and the American led NATO forces today. Taliban forces continue to carry out bombings and assaults on government facilities inside Pakistan. While some elements of the Pakistan military try to pacify the tribal areas and disarm and disband the Taliban forces, other elements, especially the ISI, actively support and encourage the Taliban to concentrate on the battle against the foreigners in Afghanistan and avoid domestic targets.

Negotiations?

One reason to think that the recent events in Afghanistan do represent the first halting steps toward negotiations between these key players, is that there seems to be a general recognition that no one can win a military victory. After 17 plus years, it is pretty clear that the United States cannot defeat the Taliban on the battlefield. It also seems clear that the Afghan government has enough military strength and the Taliban is sufficiently unpopular in much of the country that the Taliban cannot win. This seems to be a classic "hurting stalemate," an unpleasant conflict situation in which neither side can realistically expect to prevail and get what it wants. The hope becomes that negotiations can lead to a result that is better than the unpleasant status quo.

If negotiations actually happen in the near future, they will be protracted and difficult. Much will depend on the American bottom line. Until recently the United States demanded that the Taliban renounce violence, break all ties with outside groups including Pakistan, Al Qaeda and other terrorist groups, and accept the Afghan constitution as preconditions to be met before any negotiations. Now the U.S. position is that those three conditions are to be the results of negotiations. Unstated but obvious is the American primary goal: an end to military involvement in Afghanistan.

Vietnam DejaVu?

There are some interesting parallels between Vietnam in the 1970's and Afghanistan today: an indigenous fighting force which sees itself as defending the homeland from foreign invaders, a local government dependent on American aid and riddled with corruption, and an external actor supporting the insurgent forces. There are some major differences as well. The biggest difference is that Afghanistan is not a crucial issue for Americans, dividing thew country and contributing to major social changes, which might make it easier for the United States to negotiate a low key exit. . Perhaps looking at how the Vietnam, war ended can give us some clues abut how Afghanistan might end.

The 1973 agreement between the United States and North Vietnam called for withdrawal of U.S. forces, an end to support for the Viet Cong from Hanoi, and negotiations between the Government of South Vietnam and the Viet Cong. The withdrawal began smoothly enough but ended in confusion and chaos as thousands of South Vietnamese who had worked with the U.S. realized they were going to be left behind. The North Vietnamese and Viet Cong forces continued to gain territory and entered Saigon on April 30, 1975 as the last American military and civilian personnel hurriedly evacuated.

One possible outcome in Afghanistan is that the United States and the Taliban agree to a U.S. military withdrawal (meaning the Taliban will not attack or hinder U.S. and NATO troops as they leave the country) and the Taliban agree that they will not permit terrorist groups to set up camps and training centers in Afghanistan. The Taliban and Afghan government agree to a cease fire allowing each side to maintain control of the territory it currently occupies and promise to hold elections for a new national government as soon as conditions allow.

This result would certainly appeal to any U.S. administration because it would allow the President to claim that he (some day she) had achieved the original 2001 goal of preventing Afghanistan being used as a haven and staging ground by terrorists and left the Afghan government with a well trained and equipped national army. This result would appeal to the Taliban because it gets the Americans out of the way and the Afghan army has not shown any significant ability to fight without a great deal of help from American or NATO forces. The Afghan government would not be happy with this settlement, but it, like the South Vietnamese government, would be unable to influence the bargain.

After the American withdrawal the most likely scenario is that the Taliban would quickly gain control of most of the country, as the Afghan army would crumble and melt away. Pakistan would experience a wave of refugees as westernized Afghans fled in fear of a harshly repressive Taliban regime and government officials and employees fled in fear of reprisals. The United States of the late 1970's allowed several hundred thousand Vietnamese refugees to make a new life here. The United States of the second decade of the 21st Century would not welcome several hundred thousand Afghan refugees.

The Art of the Deal?

“Jaw jaw jaw,” Winston Churchill once commented, “is better than war war war.” (Quote works better if, like Winston, you rhyme “jaw” and “war”) And that is certainly true in the case of North Korea and the United States. But sooner or later one hopes the jawing leads somewhere. Donald Trump and Kim Jung Un talking in Singapore is better than trash-tweeting or preparing for combat. But there are reasons why our hopes that the Trump-Kim Jung Un meeting in Singapore next month will result in a real, positive change on the Korean Peninsula may be dashed. There are reasons to be skeptical that the high profile, very public meeting will not go as well as the Trump administration hopes.

1) North Korea’s motives. The Trump administration and many American commentators are certain that the increasingly punitive economic sanctions initiated by the Obama administration and tightened by Trump have caused so much pain to the North Korean regime that it has decided that giving significant ground on its nuclear weapons program will hurt less than the status quo.

That plausible explanation looks a little different if one assumes that North Korea is no longer developing a nuclear capability but already has an arsenal of several nuclear warheads and both medium and intercontinental range missiles to deliver them. Perhaps the North Korean regime now feels confident enough in its status as a self-proclaimed nuclear power that it can try to trade largely meaningless concessions for real economic gains. The skeptic would point to the promised public destruction of a major nuclear test site as a case in point. From the North Korean perspective, why not stage a major media event with lots of explosions and excitement to get rid of a facility that is no longer needed and may be in danger of collapsing on itself anyway, and package it as a big concession?

2) What is the bottom line? Typically when two nations bargain, each has prepared a maximum position and a “real” position – the minimum it will actually agree to. The maximum position may or may not be announced before negotiations begin; it is usually a major mistake to reveal your “real” position. But perhaps the United States has done just that. Secretary of State Mike Pompeo said on CBS Sunday Morning, What President Trump wants is to see the North Korean regime get rid of its nuclear weapons program is completely and in totality and in exchange for that, we are prepared to ensure that the North Korean people get the opportunity that they so richly deserve.” Add an insistence on inspection and verification, and that is probably very close to the United States’ maximum position, the starting point in the negotiations. BUT later on Fox’s Sunday morning talk show, he said “… make no mistake about it: America's interest here is preventing the risk that North Korea will launch a nuclear weapon into L.A. or Denver or to the very place we are sitting here this morning,...” That’s a much more modest goal that doesn't require complete disarmament but only abandoning long range missiles.

Based on what Secretary Pompeo and National Security Adviser John Bolton have said, the U.S. will initially offer promises that we won’t seek regime change and will encourage private investment in the North’s infrastructure.

Whatever Kim Jung Un expects to get out of the meeting with President Trump, it has to be a lot more than that. If a primary motive behind the North Korean nuclear program has always been to assure the survival of the regime by deterring an attack, it is hard to see why the Koreans would agree to abandon their program, especially in light of the U.S. pulling out of the Iranian nuclear deal (among other international agreements) and National Security adviser John Bolton’s reference last month to “the Libyan model.” Libya, like Iraq, dropped its nuclear program and then saw regime change. That’s Pyongyang’s nightmare, not an enticing offer. The core of North Korea’s juche ideology is self-reliant Marxist-Leninist-Kim Jung Un Thought, not American corporate capitalism. The Capitalist and The Militarist are bogeymen North Korean parents use to scare their kids into behaving.

The North Koreans have not said anything publicly about what they might want, either as bargaining ploy or “really.” We do know that in the past North Korea has sought formal recognition as a nuclear weapons state, significant increases in international aid in the form of food and oil, a treaty ending the Korean war, and withdrawal of U.S. forces from South Korea. We also know that North Korea has agreed in the past to “denuclearize” the Korean Peninsula but what that term means in Pyongyang is not necessarily the same thing Washington and Seoul think it means. And certainly North Korea would love to see the U.S. end military cooperation with South Korea, which would greatly increase North Korea’s leverage in any talks about reunification.

By the way, while we are constantly reminded that North Korea is “opaque” and “mysterious” and it is ever so hard to know what they are really up to, the United States must appear opaque and mysterious to Pyongyang. Top government officials like Bolton and Pompeo say one thing one day and walk it back the next, or even in the same interview. The White House responds to questions about officials’ statements by reiterating that President Trump is the best negotiator. If most American analysts find Trump unpredictable and prone to surprising reversals of position, imagine the difficult life of a North Korean “American” expert tasked with figuring out the American positions.

3) The bargaining about bargaining has already begun and it appears the United States is on the defensive. Negotiations are pretty obvious: people sitting at a table making formal proposals and counterproposals. Bargaining is a much broader concept. Bargaining begins long before formal negotiations, when the parties haggle over the terms and conditions of the negotiations (such as where and when, the shape of the table, who attends, etc.) and begin to signal what their positions might be.

Preliminary bargaining can also be a test of strength. “Strength” in bargaining is a measure of how much someone needs a deal. Any competent bargainer will do what President Trump has done: say that if the negotiation doesn’t go well, he will just get up and leave. Since threatening to pick up and go home is “Bargaining 101,” no one automatically believes it. When North Korea’s unexpectedly objected to the U.S.-South Korea joint military exercises and flatly rejected the notion the notion that they would have to completely dismantle their nuclear program just to get access to private American contractors, it seemingly rattled official Washington and cast a deep pall on the rosy propsects of the summit and the White House is busily back pedaling on the more extreme statements by Bolton and Pompeo. All the chatter about the summit not happening and how damaging that would be to the President after he has placed so much emphasis on how wonderful the meeting with Kim Jung Un will be would seem to indicate to the North Koreans that the United States really wants – perhaps even needs – the summit. There is little evidence to suggest that Kim will be chagrined or lose face if the summit doesn’t happen.

The resulting impression that the U.S. needs the summit more than North Korea clearly puts the North in a superior position. That probably means the United States will have to make more concessions than North Korea to reach an agreement.

4) Going it alone can be lonely. Beginning in 2003, the United States dealt with North Korea in a series of “Six Party” talks that included the U.S., North Korea, South Korea, Japan, China and Russia. That avoided giving North Korea the one on one meeting with the U.S. that Pyongyang had demanded for years, bringing North Korea’s supporters, China and Russia, to the table to put pressure on Pyongyang, and making sure the U.S. and its allies, Japan and South Korea, were on the same page. Those talks failed to stop North Korea from developing nuclear weapons, either because the negotiators were inept or because North Korea was so intent on developing the weapons that nothing would deter them.

But the alternative may not be any effective at bridging the chasm of hostility between the U.S. and North Korea. But it has already led the United States to reverse a long held policy of refusing a direct meeting with the North and it threatens to drive a wedge between the United States and South Korea and Japan, both of whom could find their interests ignored at the summit.

4) Scaling Mt. Everest solo. Every expedition to the Himalayas relies on teams of Sherpas to carry the heavy baggage, set up base camps, and guide the climbers along the path. Most international negotiations are equally reliant on sherpas (the term of art for the diplomats involved in preparing meetings.) Most international meetings of heads of state or foreign ministers are well prepared ahead of time and usually the actual meetings are the venue for settling the most crucial and sensitive issues. And the principals in those meetings are typically very well briefed by their sherpa team and know quite well what is on the other side’s mind and what are the available options for reaching an agreement. If the meeting is between allies rather than adversaries, or a large international conference, the sherpas may have already drafted the final communique before the meetings begin and, aside from some editorial tweaks to the final document, the meeting itself is a largely symbolic photo op.

It is safe to assume that North Korean sherpas have been busily prepping for the Singapore summit and have provided Kim Jung Un and his closest advisers with their best estimate of the American positions and expectations, based on both intelligence sources and their personal experience with their American counterparts. But on the U.S. side the sherpa camp is pretty empty. Their is no United States Ambassador to South Korea so no one to cogently channel the expertise of the staff into preparation for the summit; the senior State Department officials with the most experience on Korean issues have left the Department; the National Security Council lacks members with substantive knowledge or experience in Korean affairs; and it is well known that Mr. Trump is not inclined to read complicated or extensive briefing papers. It is possible to summit Mt. Everest alone, even without oxygen bottles, but only the most extraordinarily experienced and fit climbers will try it.

5) Out on a limb.

I think the summit will take place because I think the United States has a lot to lose if it doesn’t and North Korea has nothing to lose if it does.

I think there will be a final agreement from the talks, with ringing platitudes about avoiding provocations and settling differences peacefully and peaceful reunification. There will not be a document outlining concrete, verifiable steps that both sides will take or any specific terms of Agreement.

I think both sides will claim a great propaganda victory and within the year we’ll be back into the exchange of colorful, inventive, threats and insults.

It’s T for tariffs, cuz they’re taxes, too

As the Trump administration unveils tariffs on China for various offenses and on steel and aluminum producers (except for the six or seven most important exporters to the U.S.) amid both cheers and worries about trade wars, it seems like a good time to review some of the basics of the global trade system that has been developed since World War II.

Old School.

In 1776, while there was some little disturbance going on in the colonies, Scots moral philosopher and economist Adam Smith published The Wealth of Nations, establishing the theoretical (and moral) foundations of capitalism. Smith argued that markets, not government direction, led to the most efficient and most moral outcomes both within a nation and in trade between nations. His classic example is the very proficient maker of pins and the equally skilled maker of hats. The pin man could make one or more hats to meet his needs and the hat man could make his own pins, but it is far more efficient and cheaper for the pin man to make a lot of pins and sell his extras to the hat man and others pining for pins and for the hat man to crank out those chapeaus and sell them to the pin man and other folks with cold heads. Result is more pins and more hats get produced and consumers get cheaper but higher quality products. For Adam Smith, it didn’t matter if the pin guy and the hat guy lived in the same country or not. If the pin guy can ship his pins across country or overseas and still sell them more cheaply than other producers, then everyone is better off, except the local pin maker who can’t compete with the foreign pin maker. Adam would advise him to up his game or find a different trade. Alternatively, the local pin maker could appeal to his government to tax those foreign imported pins to make his home grown pins a better deal.

By the middle of the 19^th Century, the major European countries had adopted Smith’s ideas to some extent for their national economies. But they were very protective of trade with their colonies. They were also very inclined to listen to their own business people and tax foreign goods to protect home grown products.

The high (or maybe low) water mark for the use of tariffs as a strategy for protecting domestic industries was reached in 1930 when the U.S. Congress enacted the Smoot-Hawley bill that tried to counter the effects of the Great Depression by dramatically reducing imports from other countries. When the major European economies enacted similar stiff tariffs on American goods, everyone ended up worse off. 1) The tariffs reduced foreign demand which meant manufacturers had excess production and no market so they cut wages or laid off workers, which made already weak economies even weaker. 2) The tariffs led to higher prices on goods that countries had to import because they did not produce them themselves and that also made weak economies weaker. The Smoot-Hawley tariffs did not cause the global Great Depression but they made it much worse than it would have been.

New School

The creation of a capitalist global market based on free trade was a critical component of the Breton Woods agreements that led to the creation of the institutions and organizations that promote cooperation and mange conflict in the modern world. The first step was the General Agreement on Trade and Tariffs (GATT) which sponsored a series of international conferences aimed at voluntary agreements on reducing or eliminating tariffs. While GATT conferences were generally successful at reducing tariffs across much of the world, it became clear that some countries were coming up with clever tactics for achieving the goal of making foreign imports more expensive without formally imposing tariffs.

Is It …?

There are three major tactics that some countries* have adopted to boost their exports or reduce their imports: dumping, subsidies, and Non-Tariff Barriers (NTBs). They all share two properties: they are not a direct measure, like a tariff that shows up on an invoice or price tag, and they are all ambiguous.

*No country believes that it is pulling a fast one with sneaky ways to discriminate against foreigners, but every country is sure that everybody else is doing it.

Dumping is the practice of selling something abroad for less than it costs in the home market. This can help an exporter out compete local producers. But determining when a product is cheaper abroad than at home is not as simple as comparing price tags. Figuring out the exchange rate between currencies is part of the puzzle, the presence or absence of different kinds of sales taxes comes into play, and often the exported product is somewhat different than the domestic version.

Subsidies can be direct, such as tax breaks or low interest loans; or indirect, such as benefits for workers, or help in arranging business deals. Many governments have an industrial policy under which some industries, particularly those that are likely to do much more business abroad than at home, are selected as potential winners and backed by direct and indirect government action. But governments subsidize all kinds of business in myriad ways and teasing out those cases where government subsidies are directly intended to tip the balance of trade can be maddening. For over two decades AIRBUS and Boeing, premier rivals in the international aircraft industry, battled over who was being unfairly subsidized. AIRBUS is owned by a consortium of European countries who provide tax breaks and incentives and worker training, which Boeing saw as unfair subsidies. Boeing gets tax breaks from several states, government insured loans for its defense businesses, and assistance from the U.S. State Department’s consular service abroad, all of which struck AIRBUS as a higher level of subsidy than it was getting. After repeated battles at the World Trade Organization that ended inconclusively, the two giants decided it was more cost effective to just call it a draw and stop investing so much in legal wrangling.

NTBs are anything a country does that seems to discriminate against foreign imports … at least in the eyes of the foreign business. But a reasonable requirement that applies to both foreign and domestic goods and reflects different health and safety laws or local customs isn’t a barrier to trade … is it? Japan, like the United States and everyone else, has a law requiring product labels to include where they came from. In the U.S. the label can be small and inconspicuous, like the little sticker on your banana or the tag on the back of your blouse. In Japan, especially for agricultural products, the country of origin label must be large and prominent. OK, but that very trivial fact has led to U.S. claims that it’s an NTB. Rice grown in California’s central valley and exported to Japan is genetically identical to rice plants grown in Japan. Nonetheless many Japanese say they can taste the difference. (I used this example in class one semester when there were three exchange students from Japan sitting the back row and they all nodded, “YES”) In part because Japanese rice growers are subsidized so heavily by the government to keep prices high, rice from California sells for less per kilo than Japanese grown rice. When the rice shop puts a large and prominent “grown in USA” sign on a bin of lower priced rice, it is effectively advertising that this cheap stuff is inferior. Part of the local culture, or a non-tariff barrier to trade?

European rules for determining that a soy bean is not a Genetically Modified Organism (and Europeans are far more skeptical of GMOs than Americans) are a lot more stringent that U.S. rules: You have to not only prove that the bean wasn’t grown from GMO seed, but that it could not have been pollinated by a GMO plant, or mixed with GMO beans during harvest or processing. European farms tend to be much smaller and less efficient than the large agribusiness operations in the Midwest that have made soy beans one of the big three American crops and are a major export commodity. Are the rules about GMOs, which in practice apply almost exclusively to American imports, reasonable health regulation or an underhanded way to keep U.S. farmers from flooding Europe with cheap soy beans?

WTO?

When it was clear that GATT and pledges to reduce tariffs had gone about as far as it could, the major economic powers, led by the U.S., developed the World Trade Organization. Through a series of major international conferences, the members of the WTO have adopted an elaborate set of rules governing barriers to trade, levels of subsidies, and anti-dumping provisions, as well protections for intellectual property rights. Equally important, the WTO has a dispute resolution mechanism. Members of the WTO are obliged to submit disputes to arbitration by an impartial panel of experts. Once the process is complete, members are obliged to live with the findings.

A major weakness of the WTO system, that it shares with most other international organizations, is that enforcement of decisions and judgments is left to national self help. If you win your case against another country, you are entitled to institute tariffs or other measures proportionate to the damage you have suffered. Most of the time that is quite enough and the losing side will change their policies. And sometimes it is not and the winner is left with little more than a moral victory.

USA Today

The United States has been the global leader in developing international organizations, rules and procedures to create a more orderly and cooperative world. The announcement of unilateral tariffs on steel and aluminum and later tariffs on Chinese exports marks another sharp break with some seventy years of progress away from international anarchy.

Contrary to the impression one might have gotten from White House pronouncements, it is not the case that nothing had been or was being done to counter violations of international trading rules, particularly in the case of China. When China joined the WTO in 2001 it was with some very specific stipulations about changes in economic and trade policies that must be made. Since then China has been the target of a number of complaints to the WTO and has lost most of those cases. I think it is fair to say that China still plays fast and loose with many of the rules and is less than scrupulous regarding other peoples’ intellectual property, but their behavior has markedly improved. In fact the United States is not alone in objecting to Chinese behavior in the global steel market and piracy of intellectual property. Even as the President announced the steel and aluminum tariffs the United States Trade Representative was meeting with his European Union counterparts to continue to develop a coordinated approach to convincing China to clean up its act.

The international system is much more organized and and international cooperation is much greater than it has ever been. Conflict gets our attention and can have immediate consequences. Cooperation leading to slow, incremental change is easy to overlook and its results can be taken for granted.

The greatest danger in disrupting the existing imperfect world order is that the result will be far worse. Aas Joni Mitchell sang, “don’t it always seem to go, you don’t know what you’ve got ‘till its gone”