Monday, May 2, 2016

Jordan Feeling Syrian War's Strain

Five years of conflict next door have made things tougher for Amman.


By Seth J. Frantzman
The National Interest
May 2, 2016


Awad Hajjara has known ten tour-guide colleagues that left Jordan in recent years. Many others have given up the profession to take other jobs. In a country where tour-guide licenses take years of study to obtain, it is symbolic of a larger problem. Tourism to this small Middle Eastern country has fallen by eighty percent in recent years, says Hajjara. Since the Arab spring, tourists are reticent to come. Fearful of what is happening in Iraq and Syria, they are staying away, even though Jordan remains a peaceful country with a robust military and strong tradition of stability.

Irbid in northern Jordan is the city center of the second most populous governorate, with around 1.7 million people. Since the Syrian civil war broke out in March of 2011, this city and nearby Ramtha on the border with Syria have been on the frontline of a massive exodus of Syrian refugees from southern Syria. The UNHCR estimates that 642,000 Syrian refugees in Jordan today, but the overall number of Syrians is thought to be around 1.2 million. For a country of 6.7 million Jordanian citizens, this refugee crises has been a transformative experience. Many Jordanians will point out that the country accepted hundreds of thousands of refugees from Iraq during the years of turmoil that began in the 1990s and continue to today. In 1948 Jordan hosted, and then provided citizenship to, hundreds of thousands of Palestinian refugees.

Many of the Syrian refugees that came to Jordan initially ended up in Zaatari refugee camp, the fourth largest refugee camp in the world, and the largest in the Middle East. This once-massive sprawling tent city eventually set down semi-permanent roots in a bleak desert landscape thirty miles east of Irbid. In 2013 the UNHCR had two hundred thousand registered refugees living at the facility in tents. Three years later, that number has declined to seventy-nine thousand. The tents have become caravans. Gavin White, the UNHCR External Relations officer at the camp, describes how water delivered by trucks is now running through pipes and the people have electricity. Handouts are done by coupon on debit cards so refugees can shop at a local market in the camp. Jordan has streamlined the process by which refugees can leave. In short, what was a humanitarian emergency has become a need to move towards a sustainable humanitarian model, White says. Towards that end, he recently met with a group at the Al al-Bayt University in Mafraq that is partnering with Microsoft to create a program for IT training that would involve both Syrians and Jordanians.

The struggle Jordan and its Syrian refugees face is what the future holds. Many refugees say that when they first fled in 2013, during the height of the crises, they thought they would return soon and that the Bashar al-Assad regime would fall. However, in the fall of 2015 Assad was bolstered by Russian intervention and the increasingly realization among the international community that Islamic State posed a major threat. In February a ceasefire came into effect between the Assad regime and almost one hundred different rebel groups. Groups such as Islamic State and Jabhat al-Nusra were not included in the ceasefire.

This has brought a temporary quiet to the border area of Jordan and Syria. Most refugees fled from the province of Daraa that borders Jordan. Locals say that not so long ago they suffered rocket fire from across the border and could see the fighting during the night. Houses shook from Russian bombing in Syria. But Syrians see little chance of return. This situation also affects children. According to White, around twenty percent of the people in Zaatari are under the age of five. UNHCR estimated last year that 57 percent were under age eighteen. While their parents used to dream concretely of return, the children are increasingly part of a lost generation, even if aid groups and others work hard to save them from that future. Formerly, children born here have a right to Syrian citizenship, not Jordanian. That requires making their way to the embassy in Amman and applying for citizenship from the same regime the parents fled. Privately some Syrians say that although they receive their birth certificates and documents from local hospitals, they would rather register their children with a local tribal leader or wait for conditions to change. Some refugees are seeking a new life elsewhere, accepting resettlement options in the United States and Canada. But without a coordinated effort, six hundred thousand people have nowhere to go.

This puts a strain on the Jordanian economy. Young Jordanians say they lack opportunity and that wages are low at around 250 dinars a month for entry-level positions. Petrol is now as high as $2 a gallon in a country where it used to be forty cents before the 2003 invasion of Iraq. Locals say meat in northern Jordan has tripled in cost as imports from Syria dried up. Syrians compete for jobs with Jordanians, complain some locals, when refugees are willing to work in a black market economy. This also drives up rental and home prices in the urban areas where many refugees live.

Jordanians describe economic burdens as far greater threats than terrorism. An eleven-hour gun battle in Irbid against an ISIS cell on March 1 led to seven terrorists killed by security forces. In November of last year a man killed five people, including two American contractors, in a shooting at a security training site in Jordan. The motive for that killing remains unclear. And in April an office of the Muslim Brotherhood in Amman was closed by police, according to Al-Arabiya.

It is clear the Kingdom takes terrorist threats extremely seriously, with a highly trained intelligence service and police checkpoints in certain areas. Posters of Sandhurst-trained King Abdullah II in military fatigues are not uncommon. There is a communal sense among many Jordanians that while their army and security can ferret out ISIS or extremists that might try to infiltrate among refugees or others, that the small country needs support from the West, particularly for its economy and youth, for it to remain in the stable state it currently enjoys in a Middle East that is in the heart of a maelstrom.


Article Link to the National Interest:

Dershowitz: The Holocaust: Many Villains, Few heroes

It is important to calibrate the responsibility of those who played very different roles in the Holocaust. This is a daunting task, but it must be undertaken if future genocides are to be deterred.


By Alan Dershowitz 
The Jerusalem Post
May 3, 2016


As we commemorate the 70th anniversary of the Nuremberg trials, at which selected Nazi leaders were placed in the dock, we must ask some disturbing questions about those who were never tried for their complicity in the world’s worst genocide. It would have been impossible to carry out the mass murder of so many people without the complicity of so many governments, groups, and individuals. Perhaps there were too many guilty parties to put them all on trial, but it is not too late to hold the guilty morally accountable for what they did and failed to do.

To be sure, the guiltiest individuals were the Nazi leaders who directly planned and implemented the final solution. Their goal was to in gather Jews from all over the world in order to kill them and to destroy what they regarded as the “Jewish race.” They came very close to succeeding, wiping out nearly all of Europe’s Jews in a relatively brief period of time. These Nazi leaders had the help of many “willing executioners,” both in Germany and in the countries under its control. Among the worst culprits were individual Lithuanians, Latvians, Hungarians, Slovakians, Poles, Ukrainians, and others.

There were some heroes among these groups and they are justly remembered and honored. But the number of villains far exceeded the number of heroes. Then there were the guilty governments that cooperated and helped facilitate the deportations and round-ups. The French government deported more Jews than the Nazi’s demanded. Other governments, including those of Norway, Holland, Austria, Hungry, also helped the Nazis achieve their genocidal goal. Bulgaria, on the other hand, declined to cooperate with the Nazi genocide and its small Jewish population was saved.

There were also the countries that refused to accept Jews who might have escaped the Nazi’s had they been permitted to enter. These countries include the United States, Canada, and many other potential places of asylum that shut their doors. In the United States and Canada too, there were heroes who pressed their leaders to do more, but for the most part they failed.

Many Arab and Muslim leaders also played ignoble roles, siding with the Nazi’s and conducting their own pogroms against local Jews. The leading villain in this regard was the Grand Mufti of Jerusalem who joined Hitler in Berlin and played a hands-on role in sending Jews to their deaths and in keeping the doors of Palestine closed to Jewish refugees.

Could more have been done by Britain and the United States to end the genocide? Could they have bombed the rail lines to Auschwitz and other death camps? These are complex questions that have been asked but not satisfactorily answered since 1945.

There were also the actions of those who pardoned and commuted the sentences of Nazis convicted at Nuremberg, and those who helped Nazis escape prosecution after the war ended. That list too is long and disturbing.

The Nuremberg trials, by focusing narrowly on Nazi leaders and their direct henchmen, implicitly exculpated those who played important, but less direct, roles by their actions and inactions. By their nature, courts are limited in what they can do to bring to justice large numbers of individuals who belong on a wide continuum of legal and moral guilt. But historians, philosophers, jurists and ordinary citizens are not so limited. We may point fingers of blame at all who deserve to be blamed, whether or not they were placed on trial at Nuremberg, or at subsequent legal proceedings.

There will never be perfect justice for those who helped carry out the Holocaust. Most of the guilty escaped prosecution, lived happy lives and died in their beds, surrounded by loving family members. West Germany prospered as a result of the Marshal Plan and many German industrialists, who had benefitted from slave labor, continued to benefit as a result of the perceived needs of the Cold War. The scales of justice remain out of balance. Perhaps this helps to explain why more than 6 million people have been murdered in preventable genocides -- in Cambodia, Rwanda, Darfur and other placed -- since the world pledged “never again."

There is, of course, the risk that by blaming all, we blame none. It is important to calibrate the responsibility of those who played very different roles in the Holocaust. This is a daunting task, but it must be undertaken if future genocides are to be deterred.


Article Link to the Jerusalem Post:

The Holocaust: Many villains, few heroes

U.S. Decline Is Campaign Hype, Not Reality

By Albert R. Hunt
The Bloomberg View
May 2, 2016


As in any U.S. national election without an incumbent president, the candidates are painting a not very pretty picture: The country is "going to hell," bluntly asserts the Republican front-runner Donald Trump.

The Democratic challenger, Senator Bernie Sanders, isn't much kinder and even Hillary Clinton is starting to focus more on challenges than successes.

To many voters the message is: The economy is terrible, the social fabric is disintegrating and America is losing respect around the world.

Certainly, problems abound. The recovery from the 2008-09 recession has been uneven and is characterized by widening income inequality; wages for the average working family have stagnated for decades; racial tensions in some places have worsened, suicide rates are up, terrorism is on the rise, Russia and China are threatening and the political system is dysfunctional.

But that is hardly the whole or even the dominant story. Politics aside, there is more good news than bad.

For all the inequities, no Western economy has recovered from the recession as well as the U.S. The unemployment rate has been cut in half, with 14 million jobs added over the past six years.

Most other indices are encouraging: Consumer confidence has risen and the housing market has basically recovered. Budget deficits have plummeted, there's less reliance on foreign oil than any time in almost three decades, and the health care overhaul has had more positive consequences than negative ones.

Still, wages are only starting to creep up. While the federal government is frozen, more than one-third of states have boosted their minimum wage. Wages should be a focus of the presidential campaign, and vows such as breaking up the banks or slapping big tariffs on Chinese imports are distractions.

There is progress on the cultural and social fronts, too. Bitter divides remain, but Americans have become more tolerant. Although some politicians still pander to racial prejudices, young people are more open.

The same is true of sexual orientation. Ten years ago, same-sex marriage, even some basic gay rights, was an explosive issue; today, there is wide and growing acceptance.

There are encouraging developments on issues emphasized by conservatives. There are only about half as many abortions as 30 years ago. Teenage pregnancies have plummeted. The Centers for Disease Control and Prevention reported last week that the birthrate among American teenagers has fallen to a historic low. This continues a quarter-century of improvement; especially important to experts is that the sharpest drops have been among Hispanic and black teenagers.

And there is good news on crime. Both the murder rate and overall violent crime rate have been cut almost in half since the 1980s. There's bipartisan consensus to try to do something about the outrageously high incarceration levels, particularly for blacks. There is a chance that even this do-nothing Congress might pass measures.

The world is a dangerous place, but it's not as threatening to the U.S. as it was 10 years ago when two wars raged. There is slow progress in the fight against the Islamic state, though future terrorist acts are inevitable and the danger will remain for years.

Critics claim that President Vladimir Putin of Russia has consistently outmaneuvered President Barack Obama. Yet Russia is more isolated today and subject to economic sanctions. And Putin's Syrian involvement could become a quagmire. China is more important and has been more aggressive in Asia, but its internal political and economic problems dwarf those of the U.S.

To be sure, many of the problems articulated in the campaign are real. The next president faces a host of economic, national security and social challenges.

But pessimists still should answer two questions: If the goal is to make America great again, what era should we aspire to return to? And is there any country whose hand you would rather have?


Article Link to the Bloomberg View:

Obamacare's November Surprise

Health plans hit by Obamacare losses could raise rates just weeks before the election.


By Paul Demko
Politico
May 2, 2016


The last thing Democrats want to contend with just a week before the 2016 presidential election is an outcry over double-digit insurance hikes as millions of Americans begin signing up for Obamacare.

But that looks increasingly likely as health plans socked by Obamacare losses look to regain their financial footing by raising rates.

Just a week after the nation’s largest insurer, UnitedHealth Group, pulled out of most Obamacare exchanges because it anticipates $650 million in losses this year, Aetna’s CEO said Thursday that his company expects to break even, but legislative fixes are needed to make the marketplace sustainable.

“I think a lot of insurance carriers expected red ink, but they didn’t expect this much red ink,” said Greg Scott, who oversees Deloitte’s health plans practice. "... A number of carriers need double-digit increases.”

In some ways, the turmoil is not surprising: Under the health law, plans are unable to choose who to insure, or how much to charge them based on their medical history. As a result, many plans enrolled a larger proportion of sicker people than they bargained for. But some of those losses were also a function of political wrangling after Republican lawmakers blocked payments that were supposed to help insurers get through the difficult first years.

The timing, though, is bad news for Democrats. Proposed rate hikes are just starting to dribble out, setting up a battle over health insurance costs in a tumultuous presidential election year that will decide the fate of Obamacare.

And the headlines are likely to keep coming right up to Election Day since many consumers won’t see actual rates until the insurance marketplaces open Nov. 1 — a week before they go to the polls.

“Any reports of premium increases will immediately become talking points on the campaign trail,” said Larry Levitt, senior vice president for special initiatives at the nonprofit Kaiser Family Foundation. “We’re in an election where the very future of the law will be debated.”

Indeed, Republicans are already pouncing on UnitedHealth's decision as proof the law is unworkable. “You’re seeing the beginning of the so-called insurance death spiral," Sen. John Barrasso (R-Wyo.) said last week.

Democrats say they will mount a vigorous defense of a law that has provided 20 million people with coverage — and point to Republicans' failure to propose any coherent alternative to Obamacare.

"The Republicans will try to make Clinton own the higher prices, but the problem is that Republicans have no alternative or answer," said Anna Greenberg, a Democratic pollster. "They are in the position of taking away insurance if they repeal Obamacare.”

More turbulence ahead

The consensus among insurance experts is that the Obamacare shakeout isn’t fatal — that is, not unless political leaders decide to make it so. Many insurers — including Anthem, with Blue Cross Blue Shield plans in 14 states, and Centene, the nation’s largest Medicaid insurer — remain committed to the Obamacare marketplaces despite their dismal financial performance.

Aetna CEO Mark Bertolini, who has roughly 900,000 exchange customers, reiterated the company’s commitment to the exchanges even as he called for changes to how they are organized on a call with shareholders.

“We haven’t been able to touch this product because of the politics,” Bertolini said, noting that Congress routinely tweaks other health care programs. “But if we get to that point, we believe we are in a very good place to make this a sustainable program.”

But no one denies there will be continued turbulence — or that that won’t create consumer backlash that could be politically damaging.

Average rate hikes have been modest in the past despite apocalyptic predictions: premiums increased by an average of 8 percent this year, according to an administration analysis. That report "debunks the myth" that Obamacare customers experienced double-digit rate hikes, said Department of Health and Human Services spokesman Ben Wakana.

But there are reasons to think the next round may be different.

Blue Cross and Blue Shield plans, which dominate many state exchanges, saw profits plummet by 75 percent between 2013 and 2015, according to an analysis by A.M. Best Co. A chief reason for the financial woes: “the intensity of losses in the exchange segment.”

Health Care Service Corporation, which operates Blue plans in five states, dropped out of New Mexico’s exchange for this year after regulators refused to approve rate hikes as big as the company sought. In Texas, Illinois and two other states where HCSC does business, medical costs for individual customers exceeded premiums by more than $1.3 billion last year.

Just over half of the 23 nonprofit startups seeded with Obamacare loan dollars have collapsed after hemorrhaging red ink. The 11 surviving plans continue to struggle, with more than $400 million in combined losses last year.

“I have to raise prices because I have to assume the worst,” said Martin Hickey, CEO of New Mexico Health Connections, one of the surviving co-ops, which expects to increase prices by roughly a third for 2017. “Whether it stabilizes or not, we can’t take the risk.”

Even New York-based Oscar, the much ballyhooed, tech-savvy startup bankrolled with billions in venture capital dollar, is sputtering. Medical costs for Oscar’s individual customers in New York, where it has the most customers, outstripped premiums by nearly 50 percent last year, according to financial filings.

“In some cases the hole is getting deeper rather than getting better,” said Deloitte’s Scott.

One big reason is lower-than-expected enrollment of younger, often healthier people who balance the costs of those who require more costly care. Roughly 12.7 million Americans signed up for Obamacare plans during the most recent open enrollment period. That’s far below the 22 million projected by the Congressional Budget Office, and it’s certain to decline as some drop out.

“The pool is far less healthy than we forecast,” said Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina, which says it lost $400 million on its exchange business during the first two years and is weighing whether to compete for Obamacare customers in 2017. “That’s an issue not just here in North Carolina, but all over. … We need more healthy people in the pool.”

'Not enough of a hammer'

There’s a growing realization the financial penalty for failing to obtain coverage is an insufficient cudgel to convince younger Americans to enroll. The fee for 2016 is $695, or 2.5 percent of income, whichever is higher. Just 28 percent of HealthCare.gov customers for 2016 were between the ages of 18 and 34, significantly below the 35 percent threshold typically considered necessary for a balanced marketplace.

“It wasn’t enough of a hammer,” said Kevin Fitzgerald, an insurance lawyer with Foley & Lardner. “You need a lot of healthy people to sign up to make the numbers work. Obviously that didn’t happen.”

Insurers have also been hurt by problems with programs designed to protect them if they drew a large share of sicker customers. Most notably, a pool designed to mitigate heavy losses delivered only 12.6 percent of anticipated payments after Republicans inserted a provision into a budget deal requiring the program be budget neutral. That created a $2.5 billion blow to insurers. Many of the co-ops blamed their demise on the lack of that funding.

Health plans also complain that Obamacare’s enrollment rules are too loose, allowing people to wait until they need medical care to sign up for coverage, and then to halt payments once they’ve received treatment.

The Obama administration is addressing some of these concerns: It has eliminated some reasons Obamacare customers can use to sign up outside the standard enrollment season. And it plans to require proof from exchange customers that they’re eligible to sign up outside the normal window because, say, they've moved or had a kid, which are among the most common reasons.

But health plan officials say more needs to be done to stabilize the markets, for instance, by giving them greater flexibility to sell different kinds of policies.

“We have real concerns about the next year or two based on the experience so far,” said Ceci Connolly, CEO of the Alliance of Community Health Plans, which represents 22 plans. “Even for our members that are getting close to breaking even on this, they say that it’s a really challenging and unpredictable environment.”

Most health plans remain optimistic the markets will eventually stabilize. Security Health Plan, which does business in 41 Wisconsin counties, attracted three times as many exchange customers as anticipated during its first year of Obamacare business.

“Was it a financial winner? No,” said John Kelly, the health plan’s chief marketing and operations officer. “We expected to take losses and we did.”

But the losses weren’t significant enough to pose a threat to the nonprofit plan’s stability, and it expects to get better at assessing the costs of its Obamacare customers with each year.

“We are not leaving our markets,” Kelly said. “We are committed to these communities we serve.”


Article Link to Politico:

Obamacare's November surprise

Monday, May 2, Morning Global Market Roundup: Tokyo Slide Keeps Mood Downbeat

By Patrick Graham
Reuters
May 2, 2016


A 3 percent plunge in the Tokyo stock exchange and falls in European banking shares added to a gloomy global financial mood on Monday, pushing oil prices lower and the dollar to an 18-month low against the yen.

With trading thinned out by holidays in London and many Asian economies, a solid read of manufacturing sentiment in Germany drove the Frankfurt stock exchange around 1 percent higher. .GDAXI

That also helped France's CAC 40 .FCHI gain almost half a percent. But elsewhere the picture showed more of the concern over banking, poor economic growth and over-inflated asset prices that has gripped financial markets for much of this year.

Brent crude fell more than 1 percent LCOc1 to $46.78 a barrel while the European banking index .SX7E lost 0.6 percent. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.3 percent.

The yen, which tends to gain when Japanese and global market investors get worried about growth, reached 106.14 yen per dollar in early Asian trade before steadying on the day.

Last week was the yen's best since the 2008 financial crisis, thanks largely to a Bank of Japan policy meeting that gave no hint of further efforts to stimulate a long-moribund economy with more outright money-printing.

"A lot of people are still talking about Japan," said Thu Lan Nguyen, a strategist with Germany's Commerzbank.

"The BOJ are creating the impression that they will always react too late to deflationary risks. Now that they have disappointed, I think it would take something really new to change the market's mind on the yen."

Adding to the subdued sentiment, a survey released on Sunday showed that activity in China's manufacturing sector expanded for the second month in a row in April but only marginally, raising doubts about the sustainability of a recent pick-up in the economy.

Australian shares fell 0.2 percent after disappointing results from Westpac Banking Corp (WBC.AX).

Australia's central bank board will meet for a policy review on Tuesday and is widely expected to keep its cash rate at a record low of 2.0 percent, though some economists expect a cut.

Markets in Hong Kong, China, Taiwan, Singapore and Malaysia were closed on Monday. Japan is in the middle of its Golden Week series of holidays and markets there will be closed on Tuesday, Wednesday and Thursday of this week.

Investors have also turned broadly negative on the dollar in the past two months, worried that the U.S. Federal Reserve will be unable to raise interest rates this year. A fall to a 6-1/2 month low of $1.1484 against the euro EUR= bode ill for the run-in to payrolls data on Friday. The dollar index of its strength against a basket of six rival currencies, fell 0.2 percent to 92.899 .DXY.

"The start of the new month does not mean a new trend. The technical tone of the dollar is weak," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note to clients.

"The Federal Reserve acknowledges the continued improvement in the labor market. The problem is that it has not translated to stronger consumption, and business investment remains soft."


Article Link to Reuters:

Sanders: 'It will be a contested convention'

By Daniel Strauss
Politico
May 2, 2016

Bernie Sanders predicted Sunday that Hillary Clinton would not win enough pledged delegates to claim the nomination ahead of the Democratic convention in Philadelphia, and he delivered his most forceful call yet for superdelegates in states he's won to consider throwing their support to him.

Speaking at the National Press Club in Washington, D.C., the Vermont senator argued that Clinton "will need superdelegates to take her over the top at the convention in Philadelphia. In other words, it will be a contested convention."

Sanders said that in the states where he handily defeated Clinton, superdelegates who aren't supporting him should reconsider aligning themselves with the will of voters of those states.

"In the state of Washington, we won that caucus with almost 73 percent of the vote there — 73 percent of the vote. In anybody's opinion, that is a massive landslide. But at this point Secretary Clinton has 10 superdelegates from the state of Washington, we have zero," Sanders said, offering an example of a state where he won the popular vote but did not collect any superdelegates. "I would ask the superdelegates from the state of Washington to respect the wishes from the people in their state and the votes they have cast."

Sanders' comments came just ahead of Tuesday’s Indiana primary, as his path to the nomination has become even more narrow due to recent defeats. The campaign recently laid off a large number of staff members in states that have voted.

Clinton currently has 1,645 delegates and 520 superdelegates, while Sanders has 1,318 delegates and 39 superdelegates. In total, 2,383 delegates are needed to win the Democratic nomination.

Sanders conceded that it wouldn't be easy for him to close the margin, but he said he would continue fighting.

"For us to win the majority of pledged delegates, we need to win 710 out of the remaining 1083," Sanders said. "That is 65 percent. That is, admittedly, a tough road to climb, but not an impossible one. And we intend to fight for every vote and delegate remaining."


Article Link to Politico:

Sanders: 'It will be a contested convention'

The Giant Al Qaeda Defeat That No One’s Talking About

With little notice, the Saudis and UAE knocked out a key Al Qaeda stronghold in Yemen.


By Michael Morell
Politico
May 02, 2016


Something significant and positive just happened in the Middle East, and most Americans are not aware of it. The United Arab Emirates, under the banner of a Saudi-led coalition, late last month delivered a major blow to the most lethal Al Qaeda group on the planet—Al Qaeda in the Arabian Peninsula (AQAP), the primary Islamic extremist group operating in Yemen.

The Sunni Gulf states are often painted in the Western media as shying away from a fight, not being capable of a fight and not willing to deal with terrorists and extremists in their midst. The UAE operation in Yemen proved that none of these characterizations are true of Abu Dhabi.

AQAP has long been, and still is, a threat to the American homeland. The past three attempted terrorist attacks in the United States by an outside group were conducted by AQAP—the 2009 attempt to bring down an airliner flying to Detroit by the so-called underwear bomber, the 2010 attempt to bring down U.S.-flagged cargo planes flying from the Middle East to the United States by hiding bombs in printer cartridges, and the 2011 plot to bring down a civilian airliner flying to the United States with a sophisticated suicide vest containing no metallic parts.

These plots resulted from the extensive safe haven that AQAP then enjoyed in Yemen. In 2012 and 2013, military operations by the Yemeni government, supported by U.S. counterterrorism operations, eliminated that safe haven and removed numerous AQAP leaders from the battlefield. But a civil war in Yemen that began in 2014 created a power vacuum that gave AQAP new life. Early last year, the group seized a large amount of territory, garnered thousands of new recruits, acquired caches of weapons and raised new revenues.

In the civil war, the Saudi-led coalition has been fighting on the side of the internationally recognized government of Yemen and its president, Abd Rabbu Mansour Hadi. The coalition is fighting against an Iranian-backed Yemeni militant group called the Houthis that had swept across the country in 2014, capturing the capital, Sanaa, in September 2014. The focus of the coalition has been fighting the Houthis, but over the past five months it has quietly turned its attention to the growing threat of AQAP, culminating in last month’s major operation.

On the weekend of April 23-24, the Emirati military, with the support of the Yemeni military and local Yemeni tribes, seized from AQAP the strategically important city of Mukalla and the surrounding area. Mukalla, Yemen’s fifth-largest city, hosts the country’s second largest port—from which AQAP was earning substantial revenues by taxing the shipment of goods there. The city was to be the center of AQAP’s Islamic emirate in Yemen. Its loss is a major blow to AQAP. It is the equivalent of the Islamic State losing Mosul or Raqqa.

The military operation was well planned and executed. The Emiratis worked with local Yemeni tribes to secure their support for the operation, and the Emiratis trained a cadre of Yemeni soldiers to assist in the operation. The attack itself involved choreographed air, naval and ground operations. The operation, which some thought would take weeks, took only days. And now the coalition is shifting to operations to ensure that AQAP cannot return—to include the establishment of good governance in the area. It is a textbook solution of dealing with terrorist groups that hold territory.

Degrading AQAP was in the interests of the Saudis and the Emiratis. The two countries are the primary targets of AQAP in the region. But the degradation of the group is also in the national security interests of the United States since the homeland remains target No. 1 for AQAP outside the region.

Thus, the implications of the Emirati operation are significant. It is the kind of military capability and willingness to act against terrorists that should become a model for other countries in the region. It is the kind of action that the United States should support—both with tangible assistance and public statements. And, it is the approach to dealing with terrorists holding territory that will work against other extremist groups, including the Islamic State, winning the support of local tribes, training local Sunni forces to take the fight to the enemy, and fighting ourselves where necessary.


Article Link to Politico:

The Giant Al Qaeda Defeat That No One’s Talking About

Obama’s Gradual Iraq War

New chaos in Baghdad shows the perils of his anti-ISIS strategy.


Review and Outlook
The Wall Street Journal
May 1, 2016


The Obama Administration has been touting its military progress against Islamic State, to the extent of counting the ISIS dead and predicting victory by next year. Well, maybe not. The latest political turmoil in Baghdad is throwing that timeline into doubt and again highlights the risks of President Obama’s policy of gradual escalation.

Shiite protesters occupied the parliament in Baghdad on the weekend, underscoring the open sectarian tensions in Iraq. Prime Minister Haider al-Abadi ordered the arrest of the protesters, who are loyal to Shiite cleric Moqtada al-Sadr, but the Prime Minister’s hold on power is weak. Iran-backed militias now dominate the Shiite-majority areas of Iraq, while the Kurds run their northern territory and the Sunnis are trying to survive the Islamic State onslaught in the West.

The U.S. has run its anti-ISIS strategy through Mr. Abadi, and last week Vice President Joe Biden made a surprise visit to Baghdad to shore him up. The Shiite riots followed. If Mr. Abadi falls, or is too weak to mediate among the country’s Kurdish, Shiite and Sunni factions, the campaign against Islamic State will falter more than it already has.

The embarrassing failure of Mr. Biden’s trip underscores the folly of Mr. Obama’s decision to withdraw all U.S. troops in Iraq at the end of 2011. The withdrawal weakened American political leverage to almost nothing in Baghdad, making Iran the biggest foreign influence. Mr. Biden’s diplomatic fly-ins are no substitute for the consistent presence that 5,000 or 10,000 U.S. troops could have provided.

The U.S. could have helped Mr. Abadi enormously by leading a rapid campaign to oust ISIS from its Iraq territory. But nearly two years after ISIS took Mosul, and 20 months since Mr. Obama announced his strategy to degrade and destroy the Sunni caliphate, the terrorists still control much of Iraq.

Iraq’s political disorder deserves some of the blame, but so does Mr. Obama’s policy of gradual escalation. The nearby timetable chronicles the President’s bit-by-bit troop buildup as he begrudgingly agrees to the U.S. military’s requests for more firepower. Mr. Obama has been at pains to tell the American people that he’s no George W. Bush fighting another war in Iraq, but that’s what he’s doing.

His scale is smaller and is taking place by degrees, but he’s already built up a brigade-size force with most Americans barely noticing. The Pentagon’s 4,097 troop cap doesn’t capture the real deployments because troops rotated in on a temporary basis don’t count.

Members of Congress say Mr. Obama is rotating troops through Iraq to make the U.S. troop commitment appear to be smaller than it really is. He’s done this in spite of his repeated claims that the fight against ISIS would “not involve American combat troops fighting on foreign soil.”

Some of our readers will recall how similar this is to the gradual escalation that political leaders used to disguise America’s growing commitment to Vietnam in the 1960s. In a letter to Defense Secretary Ash Carter this month, Sen. John McCain noted that, “as a young military officer, I bore witness to the failed policy of gradual escalation that ultimately led to our nation’s defeat in the Vietnam War.” Mr. McCain says he now fears that “this administration’s grudging incrementalism” in Iraq “risks another slow, grinding failure.”

This gradualism has already had tremendous political and security costs. ISIS has had nearly two years to recruit young terrorists and it has been able to establish new outposts in Libya and Afghanistan. It has used the refugee flow from Syria to spread terror in Turkey, Egypt, Europe and even the U.S. mainland. And now we can see the delay has given more time and opportunity for anti-American forces in Iraq to try to topple Mr. Abadi.

On present trend Mr. Obama will not have defeated ISIS by the time he leaves office, and most of the Middle East will be in turmoil. The next President will inherit the mess, but without much of a plan to do better. Hillary Clinton says she favors Mr. Obama’s strategy and Donald Trump promises to destroy ISIS, but without saying how or even being clear about whether he’d use ground troops. Good luck on Jan. 20, 2017.


Article Link to the Wall Street Journal:

We Ignore Venezuela’s Imminent Implosion At Our Peril

By Jackson Diehl
The Washington Post
May 2, 2016


The encouraging news from Latin America is that the leftist populists who for 15 years undermined the region’s democratic institutions and wrecked its economies are being pushed out — not by coups and juntas, but by democratic and constitutional means. Cristina Fernández de Kirchner of Argentina is already gone, vanquished in a presidential election, and Brazil’s Dilma Rousseff is likely to be impeached in the coming days.

The tipping point is the place where the movement began in the late 1990s: Venezuela, a country of 30 million that despite holding the world’s largest oil reserves has descended into a dystopia where food, medicine, water and electric power are critically scarce. Riots and looting broke out in several blacked-out cities last week, forcing the deployment of troops. A nation that 35 years ago was the richest in Latin America is now appealing to its neighbors for humanitarian deliveries to prevent epidemics and hunger.

The regime that fostered this nightmare, headed by Hugo Chávez until his death in 2013, is on the way out: It cannot survive the economic crisis and mass discontent it has created. The question is whether the change will come relatively peacefully or through an upheaval that could turn Venezuela into a failed state and destabilize much of the region around it.

A democratic outcome seemed possible in December, when a coalition of opposition parties won two-thirds of the seats in the National Assembly. Rather than concede or negotiate, however, the Chavista government, now headed by President Nicolás Maduro, dug in. At its direction, a constitutional tribunal stacked with party hacks has issued annulments of every act by the new assembly, including an amnesty for scores of political prisoners.

Gangs of regime thugs now roam the streets on motorcycles and attack opposition gatherings. Meanwhile, the government is essentially shutting itself down: Last week Maduro ordered that state employees, who make up more than 30 percent of the workforce, would henceforth labor only two days a week, supposedly in order to save energy.

Remarkably, most of the Western hemisphere is studiously ignoring this meltdown. The Obama administration and Washington’s Latin America watchers are obsessed with the president’s pet project, the opening to Cuba. As it happens, the Castros turned Venezuela into a satellite state, seeding its security forces and intelligence services with agents. Yet now that it is decreasingly able to supply discounted oil to its revolutionary mentor, Venezuela appears to have become an afterthought even in Havana.

Last week a delegation of senior Venezuelan lawmakers traveled to Washington to make one more effort to call attention to their crisis. They had a simple message: “Venezuela will end with a political change, because there is no other possibility,” said Luis Florido, president of the National Assembly’s foreign affairs commission. “But the government will decide how this change happens.”

At the moment, the slim remaining hopes for a democratic solution rest on a constitutional provision allowing for a referendum to remove Maduro. The obstacles to its success are almost comically steep: The opposition must first persuade some 200,000 people to appear at a government office (now open two days a week) to vouch for their signatures on a petition, then collect the signatures of 20 percent of the electorate, or about 4 million people. If the referendum is held, the vote to remove Maduro would have to be higher than the total reported number of votes he received in his 2013 election.

All this has to happen in the next nine months if a new presidential election is to be triggered. Yet just extracting the necessary forms for the first petition from the regime-controlled electoral commission cost the opposition six weeks. On Wednesday, Venezuelans massively departed from their perpetual lines in front of grocery stores to sign the petitions — the opposition claimed it collected more than 1 million signatures in a day. But, said Carlos Vecchio, an exiled leader of the Voluntad Popular party, “The crisis is moving at 2,000 kilometers an hour, but the potential solution is going at 2 kilometers an hour.”

The Venezuelan lawmakers had some practical and specific requests for the Obama administration, starting with the public release of the names and alleged offenses of top Venezuelan officials included on a confidential U.S. sanctions list. They’d also like help finding the $300 billion to $400 billion they estimate has been stashed in foreign bank accounts by the Chavista elite; the money is desperately needed to import food and stave off a foreign debt default.

Most of all, however, Venezuelans hope for U.S. leadership in pushing Maduro to accept an election. Said Vecchio: “The moment has arrived when you can no longer ignore this. Because what happens in Venezuela is going to affect the whole region.”


Article Link to the Washington Post:

Can a Backlash Elect Trump?

By Jonathan S. Tobin
Commentary
May 2, 2016


We saw it before in Chicago in March and we’ll probably see it again and again in the coming months. On Friday, demonstrators tried to obstruct the entrance to the hotel where Donald Trump was to address the California Republican convention. In the end, Trump spoke anyway. But the pictures of him having to walk through a field and then climb an embankment in order to avoid the protesters resonated more than anything the GOP front-runner said at the event. In that moment, we got a glimpse of the level to which American politics has descended. With Republicans poised to nominate a candidate that has dog whistled to racists, the intolerant left has responded in the language it likes best, with attempts to suppress the free speech of an opponent.

Like the ugly scenes in Chicago when a Trump rally was canceled because of violence, the spectacle of the candidate having to run a gauntlet intended to silence him is a vivid commentary on the kind of passions that he has evoked. There should be no doubt that Trump is the main beneficiary of such displays. But the question is whether the dynamic that was electoral magic for him among Republicans is going to work as well in a general election.

It shouldn’t be necessary to state this but given the voter rage that has fueled Trump’s rise as well as the anger his campaign has generated it cannot be stated too strongly: Attempts to suppress political speech, even that of people that we find hateful, must be beyond the pale. Whatever one may think of Trump’s farcical policy pronouncements or his habit of signaling approval of hatred directed at immigrants and others, the political left’s continued effort to shut down the speech of others represents a dangerous trend in American politics.

Such intolerance is the keynote of liberal political speech these days. The call to limit the spending of money by independent groups or individuals expressing political opinions (which would affect liberals as much as it does conservatives) by overturning the Supreme Court’s Citizens United Decision is a standard applause line for both Hillary Clinton and Bernie Sanders. So, too, are policy pronouncements that reflect the zeal of the left to force persons of faith out of the public square or into silence on social issues. The “free speech for me but not thee” attitude that is on display when Trump’s opponents seek to stop his events is not just a street version of the battles over political correctness that take place on college campuses where students seek to silence anyone who “triggers” their dismay at hearing opposing opinions. It is also a reflection of the mainstream liberal political elite’s belief that anyone who transgresses against the orthodoxy of the left deserves not merely opposition or ridicule but silencing.

This is an essential fact about the current debate not just because such efforts are offensive to the spirit of democracy. It’s also important because the public revulsion against this spirit of political correctness is what has driven Trump’s rise to the top of the GOP standings. It is also the only factor that can provide even a theoretical scenario for his victory in November.

The polls point to a historic disaster should the Republicans nominate Trump, who gets demolished in virtually all of the head-to-head matchup surveys against Hillary Clinton. Any optimism from the Trump camp and his apologists stems from a belief that a wave of white working-class voters will rise up to turn blue states red. There is little evidence that there are enough angry, white, blue-collar Democrats left in such states who haven’t already crossed over and voted against President Obama in the last two elections. But any hope that such a reserve can be tapped rests on a polarization of American society in which more whites will be driven to visceral anger against minorities and the left. The spectacle of the anti-Trump demonstration on Friday, in which some participants reportedly burned an American flag, seems designed to provoke such a reaction.

Resentment about such antics and the deadening hand of political correctness is a big part of why so many Republican voters applaud Trump’s outrageous comments rather than deploring them. Instead of undermining Trump’s appeal to GOP primary voters, the demonstrations lend a certain dubious credibility to his simplistic claims. So long as such crowds are trying to shut Trump up, Republicans are being distracted from the absurd contradictions in his speeches on foreign policy as well as the illogic that drives his protectionist creed. To the extent that the left continues its campaign against Trump, it will make him more popular among Republicans.

But the problem for a Trump-dominated GOP is that the changing nature of American demographics means there are finite limits on the extent of any anti-PC or street-violence backlash. Hispanics are a much larger segment of the electorate than ever and large majorities of young voters and women find Trump abhorrent. There simply aren’t enough angry white voters to elect a candidate who drives other mainstream Republicans to stay home and deny Hillary Clinton the turnout she needs. Under these circumstances, disgust at what Trump has wrought is bound to overwhelm resentment of the left’s intolerance.

Liberal intolerance has been Donald Trump’s lucky charm in GOP primaries. But though it will continue to fuel the passion of his core supporters, the notion that inflaming the passions of Americans in a way that will create more racial and ethnic divisions can actually elect Trump is misguided.


Article Link to Commentary:

Trump Vs. Clinton Means The Oligarchs Win

The real winners in election 2016 are going to be the new economy oligarchs who are among Clinton’s biggest donors.


By Joel Kotkin
The Daily Beast
May 2, 2016


This Presidential election may have been driven by populist fever in both parties, but at the end, the campaign has left the nation’s oligarchs in better position than ever. As Bernie Sanders now marches to his own inevitable defeat, leaving the real winners those oligarchs—notably in tech, media, urban real estate and on Wall Street—who are among Hillary Clinton’s most reliable supporters.

With either Ted Cruz, or , more likely, Donald Trump, as the GOP nominee, the emerging post-industrial ruling class will have little to no reason to even consider breaking with the Democrats. It’s already clear that companies such as Facebook consider it their duty to stop Trump, and there is a growing tendency among social media firms, including Twitter, to censor unpopular right-wing views.

Clinton, by outlasting Sanders, has done the oligarchs’ dirty work for them. As Greg Ferenstein, who has been surveying internet billionaires in the Bay Area, notes, the tech elite—much like media and Wall Street—have no sympathy for Sanders’s social democracy. After all, it’s much harder to become a mega-billionaire if tax rates for the wealthy soar; much better to show your commitment to things like gender equality, gay rights, climate change from the comfort of San Francisco or Manhattan luxury apartments or soaking in the hot-tub in Malibu, Boulder, the Hamptons, or Los Altos hills.

Clinton occasionally apes Sanders’s revolutionary rhetoric in decrying Wall Street and inequality, but this is hard to take too seriously. She and her husband, notes the Guardian, take advantage of the same Delaware tax shelters favored by the ultra rich, including Donald Trump.

Clinton angrily denounced the use of tax shelters revealed in the Panama Papers as “outrageous.” Yet the papers revealed that many key supporters of the Clinton Foundation—including Canadian mining magnate Frank Giusta and financier Sandy Weill—have all indulged in the much-dissed practice of hiding money overseas.

For decades, the Clintons have built their family political enterprise on contributions from the global ultra-rich; between their campaigns and the foundations, the couple has raised, according to The Washington Post, a cool $3 billion, at least a small portion of it coming from Donald Trump. The outrageous foundation fundraising, not to mention her famous Wall Street 20-minute-for-$250,000 speeches, should dissuade anyone from believing Clinton stands as a traditional populist.

A look at Clinton’s finances should tell us all we need to know. When Sanders attacked her for her Wall Street backers, she made a point of saying she had gotten more support from the teacher’s unions (who are arguably less heinous). Her campaign has now received more money (barely) from individuals in the securities and investment industry than in unionized teachers; the finance sector has forked over $21 million to the former Secretary the State, making it the largest source of her donations.

And this gap will likely grow as financiers reject Cruz, whose right-wing gold standard views can’t be popular on Wall Street, and Trump, who is totally unpredictable, something big money people generally do not like. With Jeb Bush out of the race, Clinton has emerged as the clear favorite of the financial moguls, with the exception of outliers like Carl Icahn, who have lined up behind Trump.

Clinton’s biggest individual backers also include a lot of entertainment and media figures. NBC Universal, News Corporation, Turner Broadcasting and Thomson Reuters are among more than a dozen media organizations that have made charitable contributions to the Clinton Foundation in recent years, the foundation’s records show.

Overall, four of her top 10 supporters in terms of contributions come from entertainment: Haim Saban, Jeffrey Katzenberg, Steven Spielberg, J.J. Abrams—while seven of the top 20 come from the world of hedge funds and investment banks. In April she raised a cool $15 million at two parties, one in San Francisco, the other in Los Angeles, hosted by George and Amal Clooney.

Clinton’s support base parallels the very changes in wealth accumulation that I spelled out recently in the Beast. Over the last three decades, an increasing share of billionaires have come from finance, tech and media. Oil, agribusiness and manufacturing may be backing the GOP, but these are all losing their market share of the nation’s billionaires.

Of course many younger people in entertainment have preferred Sanders by a huge margin, but some of their pop heroines—Lena Dunham, Demi Lovato, Katy Petty—have dutifully performed for Clinton, reflecting her stranglehold over the Hollywood establishment.

But the most important players in Clinton’s new gentry come from the tech world. Bill Clinton opened this spigot up in 1992, impressing such longtime Republicans as Hewlett Packard’s John Young and then-Apple President John Sculley enough to get their endorsements.

President Obama has deepened these ties, raising $2.4 million for his 2008 campaign and nearly $3.5 million dollars in his 2012 campaign. Tech companies, notably Google, have enjoyed extraordinary influence under Obama, particularly on crucial regulatory issues on telecommunication.

As in entertainment, many rank and file tech workers prefer Sanders, but Clinton has almost universal support among their bosses. Virtually all the leading tech titans—Google’s Eric Schmidt , Facebook’s Sheryl Sandberg, venture capitalist John Doerr, Qualcomm founder Irwin Jacobs, Box CEO Aaron Levie, and Tesla founder Elon Musk and Salesforce.com’s Marc Benioff—have embraced Clinton.

What does all this money mean? Rather than act an avatar of change, like Sanders or even the unpredictable Trump, Clinton will likely govern as the emissary of our new economic elite. She seems certain to side, more than even President Obama, with patrons such as Google and Apple. For all her hawkish image, Clinton has not sided with the FBI or many senators in both parties in trying to rein in the tech firms’ reluctance to help in the investigation of the San Bernardino Islamist shooters.

The new oligarchy also does not have to worry much about too much financial scrutiny under a Hillary regime. After all, Bill Clinton pushed financial deregulation as much as any free-market Republican, and it was under him that Wall Street began to get chummier with the progressives. The late-in-the-day reforms on executive pay recently advanced by the Obama Administration will likely be subject to some delay or obfuscation. Capital gains rates—arguably among the biggest drivers of inequality and particularly tech fortunes—and tax shelters will likely remain untouched.

Clinton’s progressivism will be strongest on issues around gender, race and sexual orientation—that conveniently don’t threaten the financial interests of oligarchy. Green politics also works fine with many moguls, both in Silicon Valley and Wall Street, as subsidies and incentives for renewable fuels have provided pathways to even greater wealth.

Progressive reforms on immigration—likely imposed by executive order—will further help the tech oligarchs, who increasingly depend on H-1B visa holders, while filling the tap with a reliable supply of cheap service workers. As long as cheap technocoolies are included in reforms, Hillary, who has studiously avoided the H-1B issue, will seek to please both the oligarchs and the minority advocacy groups.

Less well served, one can assume, will be the very middle- and working-class voters who have tended toward both Trump and Sanders. Indeed they will find themselves with little protections against the “gig” economy, notably Uber, which has already gained close ties to the party by hiring top Obama aides, including former campaign manager David Plouffe. Cab drivers and hotel workers who may see their jobs threatened by the “gig” tech firms should not expect as much help from a Clinton Administration as they might have gotten from Sanders.

Even worse off will be those who work in energy development. Clinton has already crowed about wiping out coal jobs, perhaps sensing that places like West Virginia, Wyoming, and Montana appear permanently lost to the Democrats.

The confluence of power that underpins Clinton’s campaign should worry Americans of all political persuasions. The merging of the White House with fund-raising mania of Clintons threatens the integrity of all our institutions. Marrying media and money power should be particularly troubling. As the progressive site Common Dreams asks : “You May Hate Donald Trump. But Do You Want Facebook to Rig the Election Against Him?”

Of course, it is conceivable that Trump or Cruz could still pull an upset, but given their horrific negatives, even worse than Hillary’s, this seems unlikely. Instead next January will likely see a melding of influence, money and power not seen in the past century, as Clinton consolidates both near unanimous support of our emergent ruling class, and the media that they largely control. Rather than a right or left wing upheaval, this election will end up less a celebration of populism than the ultimate triumph of oligarchy.


Article Link to the Daily Beast:

Bill de Blasio's Horse Stable Stink

New York City’s mayor insists he’s just trying to do the right thing. The feds appear to have some questions about that.


By Josh Robin
The Daily Beast
May 2. 2016


Cities change. In New York for the past few centuries, two rare constants have been horse-drawn carriages and political corruption. Under Mayor Bill de Blasio, those two may be colliding.

Multiple law enforcement probes are swirling around the Democrat, but perhaps none more intriguing than the one starring ye olde buggies, popular with tourists in and around Central Park. To admirers, the carriage industry is a win-win-win: visitors get a quaint diversion; unionized drivers get a stable middle class living in the shadows of condos fetching eight figures; and animals get to work when their expensive upkeep could have relegated them to pasture (or worse).

To detractors, the equines are mistreated relics with no business in the asphalt jungle. De Blasio has been a vocal, insistent advocate for banning the horses even as most the mission appears increasingly quixotic: polls show most New Yorkers would prefer to keep them, and his fellow Democrats on the City Council rejected a ban in February despite fevered efforts from City Hall.

The Mayor vows to try again, but unlike his signature causes of fighting income inequality and implementing universal pre-kindergarten, I’m not sure where he truly stands—if banning horses is a matter of politics or principle for him.

Never much of a public animal rights activist, he got religion as a long-shot in the 2013 Democratic primary. In March 2010, he wasn’t a sponsor of legislation banning carriages; less than a year later, he had fervently signed on. In the meantime, he got thousands of dollars from a real estate developer who co-founded the anti-carriage group New Yorkers for Clean, Livable and Safe Streets (NYCLASS). Well more than a million dollars would follow—to de Blasio or, more importantly, to a shadowy group dedicated to sinking his top rival Christine Quinn.

Now, amid sprawling investigations that appear directed at City Hall, federal and local law enforcement have subpoenaed NYCLASS, along with top de Blasio advisors, including one who charged with shepherding the carriage ban through the Council. City Hall has denied wrongdoing; a spokesman says, without noting the contributions, that the Mayor’s “commitment to removing horse carriages from city streets is well-documented, far predating the start of this administration” . Investigators, including the crusading US Attorney Preet Bharara, are declining to comment but it appears what they are looking for a transgression older than Tammany Hall: pay-to-play politics for a pricey piece of Manhattan real estate.

“It has nothing to do with the horses—it never, ever was,” says carriage driver James McDaid. “We knew from the first day it was all about real estate.”

Real estate in the form of stables. Like the carriages they house, the stables appear as relics: stout brick buildings, spilling hay next to glassy apartment towers and blocking other lucrative investments from rising above where they stand.

McDaid, who hasn’t lost his County Donegal brogue, has been ferrying tourists for nearly three decades. In 2001, he and 12 fellow carriage owners pooled limited resources to buy a cooperative stable on West 52nd Street. It wasn’t cheap then, but it’s become vastly more valuable since as the Far West Side of Manhattan has become a boom town.

“All we ever wanted to do is go to work,” he said. “That’s why we had to buy that stable. It was very expensive property at the time—and nobody really had much at that time. And we all scrimped and scrapped and there’s a big mortgage to be carried there, and we’ve got a big staff. So the stable has been a success for us in the sense that it keeps our business driving. That’s the name of the game: keep the business alive.”

Stephen Nislick, the press-shy developer who made his fortune in parking garages and co-founded NYCLASS, has long sworn that his concern is for animals only. But documents I recently obtained through a Freedom of Information Request included a NYCLASS presentation to City Hall noting the city could get far more in taxes if the stables were redeveloped. Other official documents I found noted the location and building classification of the four stables.

NYCLASS, in a statements, says: “Electric carriages could have been a winner for the stable owners and drivers had they wanted it. No one at NYCLASS has ever had any desire to buy the stables; we just didn’t want stable owners or drivers to lose money.”

There are other ways that Nislick and NYCLASS hurt themselves. The New York Post reported that he was caught on tape extolling campaign contributions as “the best investment.” At that time, Nislick was showering Quinn with cash in the hope she would change her position supporting the carriages.

When that didn’t work, a consultant then working for the group threatened a Quinn aide with an independent political campaign against her if she didn’t change sides, another Quinn aide tells me. (The Daily News, which champions the carriages, reported last year that the FBI is investigating the incident as possible extortion).

NYCLASS has since been fined more than $26,000 for campaign finance violations.

And Last April, Nislick also threatened to hit a Daily News photographer in her face, the paper says.

The mayor’s actions don’t, of course, rise to that level, but plenty object to the ways he sought the ban, which he had vowed as a candidate to pass on the first week of his administration. At the very least, he could have followed through on another pledge: to actually visit the stables. I have no opinion whether carriage horses should be banned or not, but more information always benefits weighty decisions affecting so many people, and animals.

More regrettable is how the Mayor simultaneously laments and reaps the Citizens United Supreme Court decision, which loosened independent groups’ abilities to sway elections.

“I believe there should be a constitutional amendment to reverse the impact of the Citizens United decision by the Supreme Court,” he said last November. “I think there’s a whole lot of other things that should happen to reduce the flow of money into public life in general.”

I heard no such peep when Citizens United helped him in the form of the NYCLASS-tied group knocking out Quinn with misleading advertisements. Nor did he publicly gripe about the independent group he created, Campaign for One New York, also an apparent subject of law enforcement investigations.

Call me naïve but the honorable method may have been calling off all independent groups in his name, realizing that Quinn’s close ties to then-Mayor Michael Bloomberg were already making her vulnerable in the primary.

De Blasio instead argues that reform can only come by winning in the existing system, that he can’t stop using dark money to cut deals when the law allows others to just that.

“Here’s the problem—the law,” he told WNYC’s Brian Lehrer Friday. “We are following the law.”

Those investigators looking at his administration will have to judge that.


Article Link to the Daily Beast:

What Iran’s First Non-Oil Trade Surplus Means For Its Economy

Iran’s non-oil trade balance has turned positive for the first time in the history of the Islamic Republic of Iran, but is this good news?


Al-Monitor
May 2, 2016


TEHRAN, Iran — Iran’s non-oil balance of trade turned positive in the past Iranian year, which ended March 19. The $916 million trade surplus is the country’s first since its 1979 Islamic Revolution. On April 4, President Hassan Rouhani hailed it as an achievement that the country secured despite international sanctions as well as low oil prices.

“Last year, non-oil exports exceeded non-oil imports for the first time since the Islamic Revolution. Progress has been achieved through the support and participation of the people as well as their unity,” Rouhani said.

Figures published by Iran’s Customs Administration for the past Iranian calendar year put non-oil exports at $42.4 billion and imports at $41.5 billion. The non-oil trade balance turned positive as exports witnessed declines of 16.1% and imports declined by 22.5%, compared with the same period in the previous Iranian year.

Ali Mohammad Goodarzi, adviser to the minister and head of public relations and the communications center at the Ministry of Industry, Mine and Trade, believes that the government’s policies played a direct role in achieving a positive trade balance.

“The government’s success in the talks with the P5+1 countries (the five permanent UN Security Council members plus Germany) over Iran’s nuclear program, improvement of the business environment, incremental return of Iran to the global economy and the creation of mutual trust between Iran and the European Union are among the factors that led to a positive trade balance,” Goodarzi told Al-Monitor.

As for the domestic policies, the Iranian official believes that “controlling the country’s inflation as well as export-oriented strategies and monetary discipline of the government” have also played a role.

Rouhani and other administration officials’ hailing of the positive trade balance has not been welcomed by everyone. Some figures active in the economic arena do not regard it as an achievement, arguing that it was only the result of sharp drops in both imports and exports, as well as what they call “unusual economic conditions.”

Mohammad Reza Sabzalipur, head of the World Trade Center Tehran, told al-Monitor, “It is not a positive balance of trade. Rather it shows austerity and economic contraction. The overall foreign trade of the country was around $40 billion last year, of which imports shrank by nearly 25% and exports by 18% compared to the same period the previous year.”

Critics also argue that the non-oil trade surplus does not reflect an economic improvement, given that Iran’s economy is hit by a recession while falling imports have reduced domestic production.

Asadollah Asgaroladi, a prominent businessman who is also a member of Iran’s Chamber of Commerce, told the local Eghtesad News, “It is not a good matter that Iran’s balance of trade has become positive. If imports are reduced, domestic demands cannot be met. It is good to reduce imports of consumer goods, but imports of production machinery and raw materials should be increased, otherwise smugglers will import them.”

Although official figures indicate a positive trade balance, it is no secret that smuggling, which is not included in official data, has long been a major issue for the Islamic Republic.

The value of smuggled imports is estimated at an average of between $15 billion to $25 billion a year. Mehdi Pourqazi, head of the Industry Commission at Tehran’s Chamber of Commerce, told the online outlet Omid-e-Iranian that if this estimate is added to the bill for legal imports, “the balance of trade would not be positive.”

Meanwhile, some economic experts see distorted foreign exchange rates and the government ban on imports of luxury cars as other factors behind the slide in imports. They argue that foreign exchange rates must be determined based on economic realities rather than petrodollars to boost domestic production and exports while reducing smuggling.

As Rouhani administration officials — and their critics — continue to see the country’s trade balance as black or white, there are experts who believe it all could be both an opportunity and a threat. Daniel Khazeni-Rad, an editor at English-language economic daily Financial Tribune, told Al-Monitor, “The positive trade balance can be seen in two ways. First, it shows that Iran finally has moved from an oil-based economy to a mixed economy. It also denotes a worrying trend on the other hand as local manufacturers have tougher external competition. This is likely to be compounded when Iran's application to the World Trade Organization is accepted and tariffs and protectionist policies must make way for fairer treatment of foreign businesses."

Iranian officials stress that the government has tried to lower imports of basic goods such as wheat and replace them with domestically made products — all part of its policy to implement the so-called resistance economy promoted by Supreme Leader Ayatollah Ali Khamenei.

Following the Jan. 16 removal of nuclear-related sanctions as part of the implementation of the nuclear deal, international institutions such as the World Bank have predicted that Iran’s economy will grow 3-5% in 2016. Economic experts say that an increase in exports in the non-oil sectors will largely depend on how the government uses its foreign exchange reserves. With the expected gradual return of Iranian business to the global market, it now remains to be seen how the government can materialize its promise to revive the country's economy and expand its share of global trade.


Article Link to Al-Monitor:

What Iran’s First Non-Oil Trade Surplus Means For Its Economy

Was the Fannie/Freddie 'Death Spiral' All a Mirage?

By Tara Helfman
Real Clear Markets
April 2, 2016


On April 13th, Judge Margaret Sweeney of the United States Court of Federal Claims delivered a decisive blow to the government's attempts to keep the truth about the Third Amendment under wraps. She unsealed seven documents produced during ongoing litigation challenging the lawfulness of the Treasury's 2012 decision to sweep all of Fannie Mae and Freddie Mac's profits. The documents - excerpts of three depositions and four emails - undermine the government's position that the notorious profit sweep was essential to avoid a "death spiral" in the national housing market. However, the documents strongly suggest that no such threat existed at the time. What is more, the documents reveal that at the time of the Third Amendment, government officials had every reason to know that the GSEs' outlook was improving.

When Treasury imposed the net profit sweep on the GSEs, government officials argued that it was a necessary measure. Allowing the Treasury to take 100% of the firms' profits was the only way to avoid a "circular draw" whereby the GSEs would, in essence, be forced to pay the Treasury for their outstanding commitments with money borrowed from the Treasury. In effect, the government argued that desperate times called for desperate measures.

However, notwithstanding all this talk of a GSE death spiral, Fannie and Freddie returned to record-setting profitability months after the profit sweep went into effect. (Fannie alone posted $59 billion in profits in the first quarter of 2013.) This left many commentators wondering how Treasury's projections managed to fall so far short of the mark.

The depositions unsealed by Judge Sweeney last week reveal a story that contradicts the government's narrative. In one deposition the former CEO of Fannie Mae, Susan McFarland, explained that a week before the Third Amendment was announced she reported to Treasury officials that the company was "now in a sustainable profitability, that we would be able to deliver sustainable profits over time." Her optimism was guarded, but emphatic. "We were not there yet," McFarland added, "but. . . you could see positive things occurring. . . So when the amendment went into place, part of my reaction was that they did that in response to my communication of our forecasts and the implication of those forecasts, that it was probably a desire not to allow capital to build up within the enterprises and not to allow the enterprises to recapitalize themselves."

Another deposition suggests, at the very least, that government officials cannot keep their story straight. Mario Ugoletti, formerly a special advisor to the Director of the FHFA, contradicted a prior affidavit in which he stated that at the time of the Third Amendment, the FHFA and Treasury believed that the GSEs' deferred tax assets would not be released, further impairing the companies' ability to return to profitability. However, when pressed on the issue during his deposition, Ugoletti stated simply, "I don't know what anybody else thought about it."

The unsealed documents also yield a second major revelation: the markets are a lot more resilient than the Treasury Department thinks they are, and the judiciary is a lot more independent than Treasury officials might expect it to be. The government has fought tooth and nail to avoid discovery and public disclosure in the lawsuits challenging the Third Amendment. Initially, the courts gave the government the benefit of the doubt with respect to the potentially destabilizing implications of public disclosure.

In a 2014 declaration filed with Judge Sweeney, then Director of the FHFA Mel Watt warned that public disclosure of information about the Third Amendment would unleash a chain reaction of nearly nuclear proportions on the American housing market. It would "have a destabilizing effect on the Nation's housing market and economy," he warned, and "easily could set off a chain of volatile and unpredictable reactions in the financial markets that could not be contained." At that time, Judge Sweeney authorized discovery in the case to proceed, but she imposed a strict protective order to prevent public disclosure of information produced out of deference for the government's concerns.

But with the government's claims growing more outrageous by the day, the court has changed course. When government lawyers recently redoubled their efforts to keep discovered information out of the public eye by resubmitting Watt's 2014 declaration to Judge Sweeney, she did not take the bait. In a blistering reproach of Treasury and FHFA officials, Judge Sweeney rejected the government's efforts to stonewall the public, writing:

While the court recognizes that protection of the Nation's financial markets and fledgling financial institutions were legitimate goals when the court first entered its order, with the passage of time, the potential for harm to the Nation's markets and then-fledgling financial institutions no longer exists. Instead of harm to the Nation resulting from disclosure, the only "harm" presented is the potential for criticism of an agency, institution, and the decision-makers of those entities. The court will not condone the misuse of a protective order as a shield to insulate public officials from criticism in the way they execute their public duties.

Judge Sweeney's decision to remove the "Protected Information" designations from the documents was a restrained and measured move that will have far-reaching implications for the GSEs and for the rule of law generally. And if the first round of public disclosures is any indication of what is to come, public officials will have a lot to answer for in the way they have executed their public duties through the GSEs.


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What Ails Japan's Economy?

Tokyo's problems are of its own making. 


By Milton Ezrati
The National Interest
May 2, 2016


A quarter of a century of failure and economic stagnation has built a strong consensus on what ails Japan. All sources of analysis—domestic, foreign, government, corporate and nonprofit—identify two problems: the country’s aging demographics and its deeply entrenched, top-down approach to economic organization. This analysis is wrong. Demographics and entrenched structures are challenges facing Japan. The real problem is Tokyo’s inability to do any of the many things that might mitigate their ill effects.

Demographic pressures are indeed real and relentless. Fertility rates in Japan have fallen dramatically; at 1.3 births on average in a woman’s lifetime, they are well below the replacement rate. Low birth rates have slowed the flow of young people into the workforce, medical and public-health advances have increased life expectancies. The combination has left Japan with fewer than three people of working age for each person of retirement age, down by half in the last twenty-five years and is set to fall farther. Such a relative loss in the number of working hands and minds cannot help but limit the economy’s growth potential, especially since the need to care for the elderly has siphoned large portions of the country’s limited workforce from growth-promoting activities. The lack of youth has further impeded growth by constraining the country’s innovative spirit, while the tendency for retirees to support their consumption by drawing on accumulated wealth has taken funds that might otherwise finance productivity-enhancing, growth-promoting investments.

Tokyo, however, has always had ways to mitigate such strains. Workplace flexibility, for instance, might have encouraged older workers to stay on the job longer, simultaneously boosting the workforce and reducing the relative population of dependent retirees. But the government’s lack of initiative has left Japan with the oldest population of any major country and one of the lowest average retirement ages at about sixty. Japan’s government has not tried to encourage more women to work, perhaps through more flexible work schedules and by developing affordable, reliable childcare. Though Prime Minister Shinzo Abe has offered what he calls “womanomies,” only some 50 percent of working-age Japanese women seek or engage in paid employment, compared, for example, to some 70 percent in the United States. Nor has Japan looked to increase levels of economically productive immigration, though culturally that might be impossible.

Most telling, Japanese policy has done little or nothing to make needed trade adjustments. An advanced economy, such as Japan, can cope with relative shortages of youthful labor by giving up on the production of simpler, labor-intensive products, such as textiles and assemblies, and importing them, effectively using foreign labor even as it stays at home. It can further mitigate the strain by concentrating its domestic economic efforts on more complex, high-value products, thereby using its limited but well-educated working population to best advantage. Though some firms in Japan have moved in this direction, government has done nothing to facilitate or encourage the process. On the contrary, its policy of depressing the foreign exchange value of the yen, and so reducing the global price of all Japanese-made products, has actually impeded this adjustment by artificially extending the life of Japan’s remaining simple, labor-intensive activities.

This last disappointment brings up the government’s second great failure: its insistence on retaining a rigid, top-down approach to economic direction. For decades Japan has set its economic emphasis on close cooperation among big business, the permanent government bureaucracy and elected politicians—what the Japanese call the iron triangle. It has long marshaled the economy’s resources—natural, financial, labor and organizational—to a limited number of clear economic objectives. Theoretically, it could do the same now to manage demographic pressures. But a seemingly strong conservative streak within the triangle has prevented it taking the lead in refocusing the economy’s emphasis.

Actually the triangle’s behavior would have failed Japan even if there were no demographic pressures. Its approach really only worked while the economy remained relatively underdeveloped and the triangle could look for guidance to trends in the West. As Japan caught up to the United States in the 1980s, it lost that clear direction. Since then, Japan has needed to innovate for itself, and that has required an economic environment that fosters experimentation in a number of different directions simultaneously—in other words one that is antithetical to the old heritage of clear, overriding direction. The triangle has refused to adjust, even denying innovative startups financing from either the country’s big banks (more important in Japan than in the United States) or new stock issues. It speaks to this resistance that until relatively recently a company had to have ten years of earnings to list on the Tokyo stock exchange, hardly a way to encourage the new.

So it is Tokyo that has permitted Japan to squander more than two decades during which it could have begun adjusting to its challenges. To be sure, the economy would have faced an uphill battle even if the government had taken concerted action immediately. The best policy could ever have done is mitigate the demographic effects, not erase them. Still, Japan has wasted time. Even if it were to adopt a more proactive policy tomorrow morning, it could not recover what has been lost much less re-establish its economy’s once enviable rates of growth and development. Still, a change in policy could lift the country’s growth trajectory from its present, disappointing, almost flat slope and brighten prospects.


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The Balkans Suffer for the EU's Refugee Mistakes

Europe's Turkey deal does Serbia and Macedonia no favors. 


By Stephen Blank
The National Interest
May 1, 2016


The Balkans are burning. Europe’s refugee crisis has now entwined with the general crisis of governance afflicting the Balkans, and reached its apogee in Macedonia.

Between April 13 and 14, Macedonian rioters burned the presidential office and destroyed the building housing the country’s Ministry of Justice because the president had pardoned people involved in a 2015 wiretapping scandal. Just days earlier, on April 10, Greek police had bussed refugees to the Macedonian border, telling them that they could cross within an hour. Groups of up to five hundred men subsequently stormed the border, and thereafter clashed with Macedonian police.

Thus Macedonia, a pro-Western state that has made remarkable advances in health care and economic growth, and which successfully processed one million refugees last year (half of its total population), now faces anarchy at the worst possible time. Moreover, leftist opinion in the European Union blames the Macedonian government for allegedly undemocratic behavior, and is making threats against it.

But Macedonia is not alone. The massive human tragedy of Muslim refugees, who are now being deported from the Balkans back to Turkey because Europe cannot and will not accept them, along with the recent terror attacks in Brussels, underscore Europe’s twin failures of counterterrorism and assimilation.

A tidal wave of Muslim refugees fleeing failing states and civil wars throughout the Middle East will soon overwhelm Europe. The BBC reports that over a million refugees entered Europe in 2015, and that over 135,000 did so between January and February of this year alone.

To date, Europe’s response to this trend has been woefully inadequate. As part of a recent agreement with Turkey, the EU agreed to take control of the problem and stop the smuggling of refugees into Europe by returning (i.e., deporting) new arrivals to Turkey, which will then process them and allow some of them to move to Europe in return for a substantial EU financial package. Yet while this deal may reduce smuggling, the problem continues to fester because European countries refuse to fulfill previously accepted immigrant quotas. Eastern European states are even more adamant about refusing refugees.

Consequently, the Balkan states, among the poorest in Europe, now face the burden of processing the refugees on their own, without EU support and in the face of denunciations from Brussels for alleged "democracy deficits.”

Such a stance is shortsighted in the extreme. Historically, every major Balkan crisis inevitably became a crisis of the European state system. World War I was the worst such incident, but Yugoslavia’s collapse in the 1990s also triggered a pan-European crisis. Stability in the Balkans, in other words, is paramount to the same in the Eurozone.

It stands to reason that the United States and EU need to formulate stronger policies to help these countries meet the refugee challenge. Invoking their democratic deficits is, in this context, a smokescreen for inaction—one which deeply hurts European security.

A European Union that can compensate Turkey for its role in mitigating refugee flows can certainly afford the material and reputational costs of helping Serbia and Macedonia confront their respective refugee and governance crises. Such a contribution would be a preventive investment in security, and one that is sure to cost less than the price of the inevitable crisis in the Balkans that will arise if nothing is done. For while the deal with Turkey may help Europe regain control over the immigration process, excluding the Balkan states from it will ensure its ultimate failure.



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