Tuesday, July 12, 2016

Truth Catches The Iran Deal

Obama trumpets an agreement that Tehran violates at every turn.

By Bret Stephens
The Wall Street Journal
July 12, 2016

What diplomats call the Joint Comprehensive Plan of Action—known to the rest of us as the Disastrous Iran Deal—was agreed in Vienna a year ago this week. Now comes a status update, courtesy of our friends at the Bundesamt für Verfassungsschutz, or BfV.

In its fascinating 2015 annual report, published late last month, the German domestic intelligence service reports a “particularly strong increase” in the number of Salafists, describes the reach of Russian and Chinese espionage efforts in Germany, and notes a growing number of right-wing extremists.

Then there’s this:

“The illegal proliferation-sensitive procurement activities [by Iran] in Germany registered by the Federal Office for the Protection of the Constitution persisted in 2015 at what is, even by international standards, a quantitatively high level. This holds true in particular with regard to items which can be used in the field of nuclear technology.”

The report also notes “a further increase in the already considerable procurement efforts in connection with Iran’s ambitious missile technology program which could among other things potentially serve to deliver nuclear weapons. Against this backdrop it is safe to expect that Iran will continue its intensive procurement activities in Germany using clandestine methods to achieve its objectives.”

The BfV report arrived days before Germany arrested a Pakistani national, identified as Syed Mustufa H., accused of spying for Iran. It also corroborates another German intelligence report, this one from the intelligence service of North Rhine-Westphalia, that Iran’s nuclear procurement efforts have increased dramatically in recent years, from 48 known attempts in 2010 to 141 in 2015. Seven other German states have reported similar Iranian procurement efforts. This violates Iran’s explicit commitment to go through an official “procurement channel” to purchase nuclear- and missile-related materials.

All this was enough to prompt Angela Merkel to warn the Bundestag last week that Iran “continued to develop its rocket program in conflict with relevant provisions of the U.N. Security Council.” Don’t expect German sanctions, but at least the chancellor is living in the reality zone.

As for the Obama administration, not so much. For the past year it has developed a narrative—spoon-fed to the reporters and editorial writers Ben Rhodes publicly mocks as dopes and dupes—that Iran has met all its obligations under the deal, and now deserves extra cookies in the form of access to U.S. dollars, Boeing jets, U.S.purchases of Iranian heavy water (thereby subsidizing its nuclear program), and other concessions the administration last year promised Congress it would never grant.

“We still have sanctions on Iran for its violations of human rights, for its support for terrorism, and for its ballistic-missile program, and we will continue to enforce those sanctions vigorously,” Mr. Obama said in January. Whatever.

The administration is now weighing whether to support Iran’s membership in the World Trade Organization. That would neutralize a future president’s ability to impose sanctions on Iran, since WTO rules would allow Tehran to sue Washington for interfering with trade. The administration has also pushed the Financial Action Task Force, an international body that enforces anti-money-laundering standards, to ease pressure on Iran, which FATF did last month by suspending some restrictions for the next year.

And then there’s the Boeing deal to sell $17.6 billion worth of jets to Iran, which congressional Republicans led by Illinois’s Pete Roskamare trying to stop. Iran uses its civilian fleet to ferry weapons and fighters to its terrorist clients in Syria and Lebanon.

“The administration is trying to lock in the Iran deal and prevent a future president from doing anything, including pushing back on Iran’s malign behavior,” says the Foundation for Defense of Democracies’ Mark Dubowitz, who knows more about Iran sanctions than anyone in Washington. “Instead of curbing Iran’s worst behavior, the administration effectively facilitates it.”

One last detail: In June, the Journal’s Jay Solomon reported that the International Atomic Energy Agency had discovered “traces of man-made uranium” at Iran’s military facility at Parchin. The agency reported this finding in a footnote to a report in December, but the administration made no comment then and now dismisses it as old news. The IAEA is no longer allowed to inspect Parchin, or any other military installation, under the deal.

So let’s recap. Mr. Obama says Iran is honoring the nuclear deal, but German intelligence tells us Tehran is violating it more aggressively than ever. He promised “snapback” sanctions in the event of such violations, but the U.S. is operating as Iran’s trade-promotion agent. He promised “unprecedented” inspections, but we’re not permitted to inspect sites where uranium was found. He promised an eight-year ban on Iran’s testing of ballistic missiles, but Tehran violated that ban immediately and repeatedly with only mild pushback from the West. He promised that the nuclear deal was not about “normalizing” relations with a rogue regime. But he wants it in the WTO.

Is Mr. Obama rationalizing a failed agreement or did he mean to mislead the American public? Either way, truth is catching up with the Iran deal.

Article Link to the Wall Street Journal:

Bush! You Don’t Know What You Got Till It’s Gone

In the time of Trump, the days when the GOP was just war-waging, economy-wrecking party look pretty good by comparison.

By Michael Tomasky 
The Daily Beast
July 12, 2016

Tuesday, we citizens will experience something rare—a George W. Bush sighting. Forty-three will set aside the oils and acrylics long enough to appear alongside President Obama in Dallas, at the memorial service for the five slain police officers.

The sight of Bush, especially under such a tragic circumstance that will have people yearning for any small sign of national unity, will make for some wistful “gosh, he wasn’t so bad in retrospect” columns. Come on. In most ways, he was that bad. I hardly have to list them, starting with the worst military decision in American history.

But he wasn’t bad in every single way, and you just have to conjure up the memory of Bush’s two or three good moments to realize how loco the post-Bush GOP has become and how much work needs to be done just to bring the GOP back to being where it was when Bush was in office, when it was still a plain old war-starting, economy-wrecking political party, without (most of) the open racism and paranoid sociopathy.

So a few examples. First, Bush’s visit to that mosque after 9/11 was gracious and leaderly. I have trouble thinking of a single Republican today who’d do such a thing. Okay, I can think of a few senators who might instinctively be willing to do such a thing. But I doubt any of them would have the courage to risk the wrath of the base, the same base that of course gave the plurality of its votes this year to the candidate who promised a ban on Muslims entering the country.

And remember, Trump said last November that the United States would have “absolutely no choice” but to close down some mosques. A disconcerting number of Republicans agree. A poll taken around that time found that 27 percent of Republicans favored shutting down all U.S. mosques.

Then there was immigration reform, which Bush genuinely did try to push. Sure, he and Karl Rove did it partly for political reasons, to get a bigger share of the growing Latino vote; but so what, this is politics. Getting votes is what politicians are supposed to do. Bush came pretty close to getting the bill passed, until the base got all Limbaughed up and said no way.

As with Bush’s mosque visit, we can imagine some Republicans who would in their hearts support an immigration bill that includes a path to citizenship, as the Kennedy-McCain bill that Bush endorsed did. But it’s a lot harder to think of many who’d take the political risk of saying so publicly.

Even on guns, more germane here because Micah Johnson used a military-style semi-automatic rifle in his assault, Bush was in theory willing to do something decent. It was Congress that let the assault weapons ban expire in 2004. Bush had signaled that he would sign a renewal—a position supported by all the police fraternal organizations. Yes, Bush actually went against the NRA on this one, although it must be said that he didn’t spend any political capital trying to get Congress to see things his way.

Here again, we can imagine a few Republicans who might privately agree. But there are none who’d actually stand up to the NRA on the question of assault weapons. Pennsylvania Senator Pat Toomey, for example, who worked with West Virginia Democrat Joe Manchin on the failed bill to end the gun-show loophole, supports a few gun-control measures, but he firmly opposes an assault weapons ban.

Part of what’s happened here is this. When a party has a president, that president’s policies are basically the party’s. The Republicans have been a pro-free-trade party since who knows when. But if Donald Trump should somehow get elected, the Republican Party will be an anti-free-trade party, because Trump says so. That’s one of the few unfettered powers of the presidency.

So the Republican Party of George W. Bush was pro-immigrant and not anti-Muslim, at least until Bush’s popularity cratered, because those were Dubya’s positions. But now the party has no president and very few senators or members of the House who have to go win votes in even purple states and districts, let alone blue ones. So for the last few years, “policy,” to the extent it has even existed in the GOP, has been set by the Tea Party and radio hosts and so on, since none of the more establishment figures have had the stones to stand up to them.

Which would be a nice thing to see Bush do with his life. His reluctance to criticize Obama has been admirable. But his silence as his own party has nominated a man with the open and fervid support of white supremacists is less so. It’s nice that he’s found himself a hobby and is avid about it and is even apparently not bad at it (one critic compared him to Chaim Soutine, which is awfully high praise by my lights). But he can’t be content to just say nothing forever, can he? His party has been taken over by an open racist. Whatever Bush was, he wasn’t that.

He’s fated to be remembered as one of the worst presidents. He must know this. But as Jimmy Carter has shown us, a lousy president can do pretty well for himself by becoming an admirable ex-president. After Trump (hopefully) loses, Bush should try to lead the GOP back to planet Earth. It’d be nice if he uttered a sentence or two along these lines in Dallas—a little rap on the knuckles of “those who would inflame division” or some such. The best remaining way for Bush to salvage his reputation is to trash Trump’s.

Article Link to The Daily Beast:

Theresa, Meet Angela

Both leaders hold impressive academic credentials, are childless, enjoy hiking and rose to top of male-dominated conservative parties. But Brexit will divide them.

July 12, 2016

If nothing else, Theresa May’s emergence Monday as the U.K.’s next leader gives Europe much of the clarity it has demanded in the wake of the Brexit referendum.

Just don’t expect anyone in Paris, Brussels or Berlin to break out the champagne.

While many officials regard May, who supported the Remain camp, as the lesser of the various evils that could have emerged from the Tory leadership contest, they see little chance of Brexit being reversed once she takes control.

The incoming prime minister doused whatever remaining hopes there were for such an outcome Monday morning with her declaration that “Brexit means Brexit.”

“There will be no attempts to remain inside the EU. We must leave the European Union and forge a new role for ourselves in the world,” May said in a speech delivered just hours before her remaining rival withdrew from the race, clearing the way for May to become prime minister this week.

"Both Merkel and May have a reputation for putting pragmatism ahead of ideology."

Most of the EU’s key leaders had already come to terms with that reality. However, a bigger question on their minds than ‘whether’ is ‘when.’ That is, when will the U.K. invoke Article 50 of the Lisbon Treaty to set in motion the process of withdrawal?

Brussels, in particular, is eager to press forward in order to settle the issue of the U.K.’s status, uncertainty some worry could paralyze the bloc’s ability to function.

May offered no specifics on timing but the stridency of her remarks suggested she’s not eager to wait.

At the core of the waiting game is the question of what kind of post-Brexit arrangement the U.K. will have with the EU. European leaders have insisted repeatedly in recent weeks that talks over allowing the U.K. access to the EU’s common market can only begin after the two-year divorce procedure has been completed.

Pastors’ Daughters

May’s first challenge as prime minister will be to soften the EU’s resistance to a more universal deal. U.K. officials are likely hoping German leader Angela Merkel will help grease those skids.

Media in both countries have focused on the unlikely parallels between the two women.

Roughly the same age, both are daughters of protestant pastors and grew up outside the glare of the big city. They both have impressive academic credentials, are childless and said to enjoy hiking with and cooking for husbands they’ve been wed to for decades.

Behind their austere official persona lies a sharp wit, rarely seen by either the public or the press, for which they share a deep distrust. Each has a reputation for putting pragmatism ahead of ideology.

The most important similarity of all, however, is the most obvious: Both succeeded in climbing to the top of male-dominated conservative institutions in an age when such ascents for women of their generation remain rare.

Still, whatever personal sympathy Merkel may harbor for new British counterpart will be tempered by the necessity of maintaining consensus among Germany’s key EU allies, especially France.

Germany, which sells more cars to the U.K. than to any other country, has no shortage of economic arguments for finding an amicable solution that would keep Britain in the single market.

“Valls knows her well. They have a lot of respect for each other” — French government official

France’s Socialist leaders are likely to be less accommodating.

French Connection

President François Hollande, who is doing his best to rein in Euroskeptic forces at home, warned after Britain’s vote to leave that the country would face consequences for its decision.

For now, there is little need to attack Britain publicly — financial markets and political turmoil are providing all the ammunition French Europhiles need to argue against leaving the EU.

In addition to their desire to make an example of the U.K. for other would-be exiters, French leaders also want to benefit from Brexit by luring City of London bankers to Paris.

Yet Europe’s leaders also realize the risks of backing the U.K. into a corner. If May doesn’t succeed in securing an attractive deal for the U.K., whoever replaces her could be much less to the EU’s liking. Given the deep economic and security ties between the countries, a disorderly Brexit is the last thing anyone wants.

U.S. President Barack Obama raised those concerns with EU leaders at meeting in Warsaw on Friday. Commission President Jean-Claude Juncker, who is not known for taking a soft line on the Brexit question, took pains to reassure the American president, saying the talks wouldn’t be “hostile.”

“It’s in our interest and the global interest to keep Britain as a strong ally,” Juncker said at a press conference with Obama after their meeting.

May’s biggest obstacle in dealing with EU leaders is that few know her. As the U.K.’s home secretary, she has had little exposure to key figures such as Hollande and Merkel.

To the degree May is known in France and Germany, it is for being tough on immigration — an area where May’s approach diverges sharply from Merkel’s.

May did get to know French Prime Minister Manuel Valls, having dealt with him when he was interior minister on the issue of migrants heading to Britain from France, where thousands live in makeshift camps in the port city of Calais.

“Valls knows her well,” said a French government official. “They have a lot of respect for each other.”

The response of a Socialist French MP heavily involved in EU affairs was more typical. Asked what he thought about May, he responded: “Nothing. She’s British conservative, I don’t know much more.”

Article Link to Politico EU:

Tuesday, July 12, Morning Global Market Roundup: Asian Shares Rally As Wall Street Strikes New Record High

By Hideyuki Sano
July 12, 2016

Asian stocks rose to a 2-1/2-month peak on Tuesday, a day after Wall Street shares hit a record high thanks to a combination of upbeat U.S. data and expectations of more stimulus from global policymakers.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent to hit its highest level since late April.

Japan's Nikkei .N225 jumped 2.5 percent as investors bet the country's government may inject $100 billion in fiscal spending to boost the economy, possibly financed by the central bank's money-printing, a policy mix that is often dubbed "helicopter money".

European shares are seen opening flat to slightly lower, with spread-betters expecting Britain's FTSE 100 <.FTSE > and Germany's DAX .GDAXI to fall 0.1 percent and France's CAC 40 .FCHI to be flat.

On Wall Street, the S&P 500 index .SPX on Monday broke a new record high, its first in more than a year, extending its gain after Friday's bumper job figures reduced worries about slowdown in employment.

The benchmark closed at a record 2,137.16, overtaking the previous high of 2,130.82 hit on May 21, 2015.

Globally low interest rates from central bank stimulus in both Japan and Europe are supporting risk assets.

Bond yields in the U.S., Japan, Germany, France and the U.K all hit record lows last week as investors bet on more stimulus following the Brexit shock.

The U.S. 10-year bond yield fell to as low as 1.321 percent US10YT=RR earlier this month and last stood at 1.445 percent, way below U.S. core consumer price inflation above two percent.

"U.S. real interest rates are now negative. It is inconceivable that U.S. shares will crumble when real interest rates are negative," said Hisashi Iwama, senior portfolio manager at DIAM.

The rally was in part driven by investors buying high-dividend and defensive shares, seeking refuge from low or negative interest rates in Europe and Japan.

Indeed, defensive stocks were the best performing S&P 500 sector since the previous record: utilities .SPLRCU, telecoms .SPLRCL and consumer staples .SPLRCS, all with double-digit percentage gains.

"The rally is supported not so much by economic fundamentals as liquidity. The rally is likely to prove unsustainable and short-lived," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

Fanning the latest rally in share prices, Japanese Prime Minister Shinzo Abe called for a fresh round of fiscal stimulus after a victory for his ruling coalition.

While Abe did not give details on the size of the package, it is widely expected to reach 10 trillion yen ($97.5 billion).

A visit by former Federal Reserve Chairman Ben Bernanke to the Bank of Japan on Monday fueled talk BOJ Governor Haruhiko Kuroda might decide to provide "helicopter money" - a term coined by economist Milton Friedman and cited by Bernanke, before he became Fed chairman, as a way to finance government budgets and fight deflation.

Bernanke plans to meet Abe on Tuesday.

Against this backdrop, the dollar rose 2.2 percent against the yen to 102.68 JPY= on Monday, marking its biggest daily gain since October 2014.

In Asian morning trade, the dollar changed hands at 103.02 yen, up about 0.2 percent from late U.S. levels.

The British pound GBP=D4 gained 0.6 percent to $1.3070 as weeks of political turmoil appeared to ease on news Interior Minister Theresa May have cleared the path to become Britain's prime minister on Wednesday.

Still, market players say huge uncertainty remains, including May's approach to negotiating Britain's exit from the European Union and on whether she will call a general election to cement her authority.

Some traders also expect the Bank of England to cut rates this week to fend off pressure on the UK economy following the Brexit vote.

A rate cut could undermine the sterling's dwindling yield attraction among major currencies and push it further, possibly below its 31-year low just under $1.28 hit on July 6.

The euro EUR= also rose 0.2 percent to $1.1081.

Later on Tuesday, EU finance ministers will decide on the European Commission's recommendation for sanctions on Spain and Portugal for their excessive deficits -- an issue that could re-ignite controversies over the fair application of EU fiscal rules.

Low rates in the developed world as well as concerns about the fallout from Brexit in Europe are encouraging investment in emerging markets.

MSCI's emerging market index .MSCIEF is 1.4 percent above its levels from just before the UK referendum, slightly outperforming U.S. shares.

In Asia, shares in Indonesia .JKSE, Thailand .SETI and India hit their highest levels in about a year.

"Emerging shares are at the sweetest spot now. For emerging markets, the worst thing is a U.S. rate hike. But right now because U.S. rate hikes seem unlikely while the U.S. data was strong and economic fundamentals," said Yukino Yamada, senior strategist at Daiwa Securities.

Oil markets failed to catch a bid on the broad improvement in risk sentiment, however, with their prices falling more than 1 percent to two-month lows on Monday.

Their recovery early this year has stalled on a barrage of factors including disappointing drawdowns in U.S. crude and gasoline, rising U.S. oil drilling rig count and cuts in bullish hedge fund bets on crude to four-month lows.

Brent crude futures LCOc1 rose 0.3 percent to $46.48 per barrel on Tuesday, after having slipped to as low as $45.90 on Monday.

Article Link to Reuters:

Asian Shares Rally As Wall Street Strikes New Record High

Oil Rises On Brief Iraq Loading Halt; Bearish Investors Cap Gains

By Henning Gloystein
July 12, 2016

Oil futures moved away from two-month lows on Tuesday as a brief halt in Iraqi crude loadings threatened to tighten supplies, but a drop in bullish bets by investors kept a lid on price gains.

Brent crude was at $46.72 per barrel at 0712 GMT, up 47 cents or 1 percent from their last close and off a low of $45.90 hit in the prior session. U.S. West Texas Intermediate crude was up 37 cents at $45.13 a barrel.

Traders said the rise was largely a result of the brief suspension of tanker loading of Basra Light crude at two export terminals in Iraq's south after a pipeline leak.

Although loadings resumed overnight, Iraq plans to cut crude oil exports from its southern ports to 2.79 million barrels per day (bpd) in August from 2.99 million bpd planned for July, a preliminary loading program showed.

Oil markets also drew support from an ongoing uncertainty over production in Nigeria after rebels claimed they had attacked facilities of Exxon Mobil Corp, a claim the U.S. oil giant dismissed.

Despite this, a global oil glut seems far from over.

Saudi Arabia's energy minister Khalid Al-Falih told German newspaper Handelsblatt that there was still excess oil in storage around the world and that it would take a long time to reduce the overhang.

A similar view seems to be gaining traction in financial markets, where following strong gains in oil prices in the first half of the year banks and funds are increasingly betting on a drop, or shorting the crude market, moving away from long positions that benefit from price rises.

This has contributed to an over 12 percent plunge in Brent prices from their June peak above $52 - the highest this year.

Hedge funds and other money managers cut their bullish bets on crude by 22 million barrels over the seven days ending on July 5. These players have cut their net long positions in crude futures and options by almost a quarter, from 633 million barrels to 485 million, over the last four weeks.

"Oil prices continued their period of weakness as investors remained concerned that increasing exploration activity in the U.S. would see U.S. production and inventories remain high," ANZ bank said. "Signs of an end to several supply disruptions and a stronger U.S.-dollar also played their part in keeping sentiment bearish."

Physical markets were also weak, with Asian oil refiners processing less crude as they grapple with margins that plunged to five-year lows after the region was flooded with supply of refined products and as slowing economic growth hits demand for fuels.

Article Link to Reuters:

Saudi Minister Hopes Slower Global Growth Won't Hit Oil Demand

By Joseph Nasr
July 12, 2016

Saudi Arabia hopes that slower global growth will not trigger a fall in the current healthy demand for oil, Energy Minister Khalid al-Falih told a German newspaper in an interview published on Tuesday, adding oil prices of around $50 per barrel were too low.

"Ultimately, market fundamentals, or supply and demand, are the primary determinant of the oil price, and at the moment we see healthy demand for oil," he told German business daily Handelsblatt.

"That said, there are economic headwinds in some important markets and we hope this does not trigger a slowdown in global demand," he added.

He said oil prices need to be somewhere between $50 and $100 per barrel for the industry to sustain investment.

"We have seen a decrease in supply by roughly one million barrels of crude oil per day," he said, referring to fracking in the U.S. and oil sands in Canada.

"At the same time, demand has recovered, meaning that supply and demand are now more balanced again. But there are still excess stocks on the market – hundreds of millions of barrels of surplus oil. It will take a long time to reduce this inventory overhang."

Article Link to Reuters:

For Chinese Officials, Trump Perhaps Better The Devil They Don't Know

By Ben Blanchard
June 12, 2016

In 2010, then Secretary of State Hillary Clinton provoked outrage in Beijing when she pushed the South China Sea to the top of the regional and U.S. security agendas.

Now as an international court prepares to hand down a ruling that threatens China's sweeping claims in the vital waterway, Beijing is watching Clinton's presidential run with trepidation.

Combined with her tough line on human rights and role in leading President Barack Obama's Asia "rebalancing", Clinton is well-known in China - but not well liked.

While presidential rival Donald Trump has irritated Beijing with comments such as comparing the U.S. trade deficit with China to rape, he is largely an unknown quantity, a person who even privately officials shrug their shoulders over.

"Clinton will be a difficult partner," one senior Chinese diplomatic source told Reuters, having just admitted to not knowing much about Trump or what he stands for.

Chinese diplomats take some comfort that Clinton’s views are known to them from years of high-level contacts, from her days as first lady to her Senate tenure to her time as secretary of state. But they are also mindful that even while seeking diplomatic accommodations, she has been a staunch critic of Beijing on a range of issues, including the South China Sea, trade and human rights.

China remembers clearly a 2010 Southeast Asian security summit in Hanoi, when Clinton waded into the South China Sea dispute, saying open access and legal solutions were a U.S. "national interest" and "pivotal to regional security".

In a strongly worded response, China stressed the South China Sea as one of its "core interests", putting the issue up there with Taiwan, Tibet and Xinjiang in terms of its importance to Beijing.

China warned its rival claimants and neighbors not to be emboldened by U.S. support - a line it has repeated ever since.

An arbitration court hearing the dispute between China and the Philippines over the South China Sea is set to hand down its ruling on in the Dutch city of The Hague on Tuesday. Legal experts expect at least some substantive findings to go against China, which has vowed to ignore the ruling.

Strength, Respect

China's military, which is ramping up its presence in the South China Sea as part of a major modernization program, is also watching the election closely.

"Hillary is very fierce when it comes to China," a Chinese official close to the military establishment told Reuters.

While the Chinese government has been largely quiet about the U.S. election, state media has not been so restrained, with one paper even equating Trump to Hitler.

In May, China's official Xinhua news agency noted Trump's more isolationist campaign compared to Clinton's, who it described as an "old foreign policy hand" and important backer of the Asia-Pacific "pivot" that China considers a threat.

"As far as she's concerned, being tough on foreign policy is perhaps the best way to show America's so called 'leadership'," it said in a commentary.

Laura Rosenberger, a Clinton campaign foreign policy adviser who worked with her in the State Department, told Reuters Clinton would remain tough on the South China Sea issue.

"She believes that we need to be very strong in terms of standing up to many of the actions the Chinese have taken," Rosenberger said.

"She believes in the principles of freedom of navigation in international waters, that commerce on the high seas in incredibly important to the United States, and that these are really very direct interests that we need to continue to stand up for."

Trump adviser Peter Navarro, an economist at University of California Irvine and the author of the book, "Crouching Tiger: What China's Militarism Means for the World," said a Trump presidency would lead to respect.

"The central difference between a Trump administration and the current administration or a Clinton administration is respect. The leaders of Russia, the leaders of China will respect Mr. Trump, will respect America because we will be strong economically, militarily and politically."

Unknown Quantity

Trump may actually find some sympathy in China, even if he is seen as an unknown quantity.

"Who is Trump? We don't really know. We do know he hates Muslims though - and that will be well received in some circles here," said the Chinese official with ties to the military, pointing to what China views as its war on terror in its Muslim-populated far western region of Xinjiang.

China also views Trump as a businessmen with whom they can probably negotiate.

"It would be very transactional for the Chinese," said a senior Western diplomat in Beijing. "He's a businessman they think they'll be able to strike a deal with."

Trump may also be less tough on China over human rights than Clinton, who has frequently clashed with Beijing on the issue.

In 2011, Clinton said China was on a "fool's errand" to try to halt the march of freedom, while in 2012 she was deeply involved in efforts to get blind dissident Chen Guangcheng out of China after he fled to the U.S. embassy in Beijing.

Trump advisor Navarro said Clinton's record on human rights abuse was "sketchy at best and abysmal at worst", highlighting her first trip to Asia as Secretary of State in 2009, where other issues were given priority.

"So it's difficult to see how she would have someone would view her as credible on that issue."

Rosenberger, the Clinton adviser, rejected that view, highlighting comments from Trump in a 1990 interview referring to the "strength" of the Chinese government in its bloody crackdown of student-led protests in Tiananmen Square a year earlier.

“It’s ironic for Trump’s adviser to criticize Hillary’s statement there when Trump himself has actually praised the Chinese for the Tiananmen massacre,” Rosenberger said.

Still, China is hoping that whoever wins they will understand that both countries need each other and will have to work closely, a source with ties to the Chinese leadership told Reuters, requesting anonymity.

"It is the most important bilateral relationship in the world. China needs the United States and vice versa," the source said. "We don't know who will be the lesser of two evils."

Article Link to Reuters:

Harvard Study Debunks Shooting Myth

By Jonathan S. Tobin
July 12, 2016

What if the popular narrative about police racism that’s being pushed by Black Lives Matter and others in the wake of last week’s fatal shootings is based on unfounded assumptions? That’s the question we are forced to confront today after the publication of a new study conducted by Harvard University’s Rolando G. Fryer Jr. that shows there is no evidence that blacks are more likely than whites to be shot by cops.

Fryer, an African-American economics professor, characterized the results as “the most surprising result of my career.” While FBI director James Comey is quoted in a New York Times Upshot piece about the study saying that reliable statistics about interactions between African-Americans and police have been lacking, Fryer’s effort — which was published under the rubric of the National Bureau of Economic Research — seems to fill in the gap. As the Times notes, Fryer began this undertaking because of his anger about the controversial shootings in Ferguson, Missouri and Baltimore that put the wind in Black Lives Matter’s sails. But what he discovered doesn’t back up the notion that trigger-happy white cops have declared open season on blacks.

Fryer studied more than 1,332 police shootings involving ten major American police departments in Texas, Florida, and California between 2000 and 2015. While he found that blacks were more likely to be touched or handcuffed by police during the course of investigations or confrontations, they were not more likely to be shot. To the contrary:

"In officer-involved shootings in these 10 cities, officers were more likely to fire their weapons without having first been attacked when the suspects were white. Black and white civilians involved in police shootings were equally likely to have been carrying a weapon. Both of these results undercut the idea that the police wield lethal force with racial bias."

However, that left the researchers asking whether the police were more likely to fire if the suspect was black. Fryer and his team found that the answer to that question was no. In Houston, the city he spent the most effort studying, he found that blacks were 20 percent less likely to be shot by cops than whites.

Just as interesting is the fact that, again contrary to everyone’s assumptions, the ability of citizens to record encounters with police on their cell phones and post them to social media had no impact on the number of shootings reported. The racial breakdown in the shootings was no different in the era of Facebook videos than it was before then.

These results don’t mean that there are no rogue shooters wearing police uniforms or that racism must be dismissed as an issue not worth addressing. The disproportionate amount of crime that takes place in black neighborhoods can explain some statistics but not all of them. But the study does show that the blithe assumption that cops with impunity are massacring blacks has no connection to reality. Whatever problems we must still address in a nation whose history is connected to racism, the narrative about police racism that has been promoted by Black Lives Matter and racial hucksters like Al Sharpton and legitimized by the Obama administration is basically false.

Each individual instance in which a police officer has killed a black person deserves tough scrutiny. And shooters should be held accountable if their actions are judged to be unlawful. Nor should we dismiss out of hand worries that police continue to stop blacks for questioning far more often than they stop whites. The higher rates at which cops touch and handcuff blacks may be related to the much higher crime rates in black neighborhoods, but that still doesn’t excuse the statistics.

Yet on the main issue of police shooting, the one that has dominated our discussing of late, Fryer found that not only are blacks not more likely to be shot; such shootings are extremely rare altogether.

How, then, is it that Americans have been persuaded to believe something that just isn’t true?

The answer is simple. The notion that blacks are at risk from police fits in nicely with liberal myths about law enforcement and a general refusal to admit that the America of 2016 is a different country than the place that existed a half century earlier, when Jim Crow Laws were still being erased by the newly successful Civil Rights movement. It is that lie that has kept a group like Black Lives Matter going with its destructive agenda that has led to anti-police violence and caused law enforcement to back down in many black neighborhoods, something that is actually costing African-Americans their lives.

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The War On Cops

By Thomas Sowell
Investor's Business Daily
July 12, 2016

There was never a more appropriately named book than "The War on Cops" by Heather Mac Donald, published a few weeks ago, on the eve of the greatest escalation of that war by the ambush murders of five policemen in Dallas.

Nor is this war against the police confined to Dallas. It is occurring across the country. Who is to blame?

There is a ton of blame, more than enough to go around to the wide range of people and institutions that have contributed to these disasters. In addition to the murderers who have killed people they don't even know, there are those who created the atmosphere of blind hatred in which such killers flourish.

Chief among those who generate this poisonous atmosphere are career race hustlers like Al Sharpton and racist institutions like the "Black Lives Matter" movement. All such demagogues need is a situation where there has been a confrontation where someone was white and someone else was black. The facts don't matter to them.

The same is true of the more upscale, genteel and sophisticated race panderers, including the President of the United States. During his first year in the White House, Barack Obama chastised a white policeman over his handling of an incident with a black professor at Harvard -- after admitting that he didn't know the specific facts.

Nor did he know the specifics when he publicly announced that, if he had a son, that son would look like Trayvon Martin. Are we to decide who is right and who is wrong on the basis of skin color? There was a long history of that in the days of the old Jim Crow South. Are we fighting against racism today or do we just want to put it under new management?

No one should imagine that any of this is helping the black community. The surge in murder rates across the country, in the wake of the anarchy unleashed after the Ferguson, Missouri and Baltimore riots, has taken a wholly disproportionate number of black lives.

But, to the race hustlers, black lives don't really matter nearly as much as their chance to get publicity, power, money, votes or whatever else serves their own interests.

The mainstream media play a large, and largely irresponsible, role in the creation and maintenance of a poisonous racial atmosphere that has claimed the lives of policemen around the country.

That same poisoned atmosphere has claimed the lives of even more blacks, who have been victims of violence by thugs and criminals who have had fewer restrictions as the police have pulled back, or have been pulled back, under political pressure.

The media provide the publicity on which career race hustlers thrive. It is a symbiotic relationship, in which turmoil in the streets gives the media something exciting to attract viewers. In return, the media give those behind this turmoil millions of dollars' worth of free publicity to spread their poison.

It is certainly news when there is turmoil in the streets. But that is very different from saying that giving one-sided presentations at length of the claims of those who promote this turmoil makes sense.

The media have also actively promoted the anti-police propaganda by the way they present the news. This goes all the way back to the Rodney King riots of 1992. Television stations all across the country repeatedly played a selectively edited fraction of a videotape covering the encounter between the police and Rodney King, who had been stopped after a wild, high-speed chase.

The great majority of that video never saw the light of day on the TV networks that incessantly played the selectively edited fraction.

When the police were charged with excessive violence in overcoming Rodney King's resistance to arrest, the jury saw the whole video -- and refused to convict the policemen. That is when people who had seen only what the media showed them rioted after the jury verdict.

Today, the media keep repeating the mantra that there was a "peaceful demonstration," even when it ends in violence. How many people have to die in "peaceful demonstrations" before the media admit that those who promote mob disruptions have to know what is likely to happen when you put mobs in the streets at night?

Mob rule is not democracy. It threatens democracy, as it threatens lives -- black or white -- and all lives should matter.

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China Vs. Philippines: What's At Stake As The Verdict In The Hague Looms

Time for Beijing to feel the consequences of its bad behavior.

By Gordon G. Chang
The National Interest
July 12, 2016

In recent weeks, China has announced—many times—that it will ignore the ruling of a panel convened by the Permanent Court of Arbitration in Philippines v. China.

The panel, Beijing says, is a “law-abusing tribunal,” the case is a “farce,” the award “amounts to nothing more than a piece of paper.” Said Chinese Foreign Ministry spokesman Lu Kang on the ruling, “We will not accept it or recognize it.”

The decision from The Hague is expected in a few hours.

The case will, among other things, determine the legal status of a handful of land features in the contested South China Sea. Yet China’s anticipatory repudiation has significance far beyond the matters to be determined by the panel.

In short, Beijing, with its declarations that it will ignore the court’s findings, looks set to put itself outside the international community.

That community now needs to think about what it will do to defend the systems of laws, resolutions, pacts and treaties that make up the world’s rules-based order. Nations, in general, should begin imposing costs on China for its renegade stance.

The Philippines, as a signatory to the UN Convention on the Law of the Sea, brought the action in 2013, just months after Beijing seized Scarborough Shoal. The shoal, 124 nautical miles from the main Philippine island of Luzon, guards the strategic Manila and Subic Bays and was long thought to be part of the Philippines.

In early 2012, Chinese vessels surrounded the shoal, as did those from the Philippines. American officials persuaded both sides to withdraw their craft, but only Manila complied, thereby permitting the Chinese to seize the feature. The United States, seeking to avoid confrontation, decided not to hold China accountable for its deception, essentially an act of aggression.

China was not satisfied with its prize, however. After seeing no opposition at Scarborough, it increased pressure on Second Thomas Shoal, off the coast of Palawan, also in the South China Sea. There, Manila in 1999 grounded a World War II–era landing ship, the Sierra Madre, and placed a small detachment of marines on board to mark sovereignty. The Chinese have been trying to prevent resupply of the troops.

The Philippines, which could not hope to compete with China ship for ship even in its own waters, chose lawfare. At first, Beijing did not grasp the significance of the case filed by the now-departed Aquino administration, but China eventually realized its importance and contested the jurisdiction of the Court, filing a position paper in December 2014.

Beijing, as was its right, did not accept arbitration delimiting sea boundaries when it ratified UNCLOS, as the UN sea convention is known, in 1996. Yet by ratification it implicitly accepted arbitration of other matters. Last October, the arbitration panel ruled it had jurisdiction on seven of the fifteen matters raised by Manila. Since then, Beijing withdrew and has not participated in the substantive phase of the case.

Most observers expect the Philippines will prevail on at least most of the matters to be decided. China’s positions on South China Sea issues, after all, are generally inconsistent with the UN convention, not to mention customary international law. Beijing’s “cow’s tongue”—the name informally given to about 85 percent of the South China Sea within either nine or ten dashes on official maps—includes features claimed by five other states and abuts other nations in locations far from Chinese shores.

Perhaps an adverse ruling will persuade the Chinese to negotiate its claims, as many hope, but that’s unlikely. Beijing in recent years has announced intransigent positions that allow no compromise, and in fact China has never settled a South China Sea claim except to issue a clarification that the Natuna Islands, but not their surrounding waters, belong to Indonesia.

As the controversial Hugh White of Australian National University notes, Beijing’s repudiation raises “the obvious question.” What happens, he asks, when China ignores the expected ruling?

The answer, most unfortunately, is nothing. Too many times in the past, the international community has allowed China to cherry-pick, to obtain the benefits of agreements it signed while ignoring the obligations it did not like. And rarely did other parties impose meaningful costs on Beijing for such blatant disregard of commitments. Because countries shied away from holding China accountable, Beijing this time feels it can ignore the UNCLOS ruling with impunity.

What’s the rationale for such meek behavior? Countries wanted to entice the Chinese into accepting global norms.

The thinking underpinning today’s policies was set decades ago. “Taking the long view, we simply cannot afford to leave China forever outside the family of nations, there to nurture its fantasies, cherish its hates, and threaten its neighbors,” Nixon famously wrote in Foreign Affairs in 1967.

He was correct then, but now China, inside the family, is still nurturing, cherishing and threatening. And at the same time it is taking down—from the inside now—the legal norms that the world took a century to put in place.

Yes, China is large and should have a voice—the argument that Beijing often makes for inclusion in agreements—but Beijing is using that voice irresponsibly. The only thing worse than having China outside the community of nations is having it inside and shaking it from within. At the moment, that is exactly what is happening.

China says it has “no intention to unravel the system or start all over again,” to borrow the words of former diplomat Fu Ying, speaking on behalf of Beijing. As she told a Chatham House audience in London this month, “China has a strong sense of belonging to this UN led order system, as China is one of its founders and a beneficiary, a contributor, as well as part of its reform efforts.”

Those words are what we want to hear, yet by flouting UNCLOS, a UN-sponsored pact, China is demonstrating that it does not believe it should be bound by its rules, and its defiance is helping to unravel “the order system.” Bilahari Kausikan, a Singapore diplomat, understands that China’s reaction is “a matter of wider significance than the South China Sea.” As he told the New York Times, “The importance of the issue is whether international rules will be obeyed.”

As long as there is no penalty for violation, China will not obey those rules to its detriment or enmesh itself into the international system of norms, laws, treaties and conventions.

So what is the remedy? The ultimate answer is, in some fashion, to impose costs. In the South China Sea matter, the first cost to be imposed should be expulsion from UNCLOS. The convention, like many agreements of its type, has no provision permitting that remedy, however. It has some enforcement mechanisms for various matters, but they would not be effective for China’s defiance of an arbitral award.

Perhaps now is the time for extraordinary economic pressure on Beijing, especially because its economy is showing signs of stress. And at a minimum, countries should not sign new agreements with Beijing while it continues to act like a renegade. China, due to thuggish behavior, should be shunned.

Yet shunning is not much of a punishment for a regime determined to get its way, no matter what. The international community has no Plan B for Chinese disregard of norms, and policymakers and analysts are not even talking about developing one. This is a conversation we must now have.

Article Link to The National Interest:

Crossing The Nile: Egypt’s Return To A Role In Israeli-Palestinian Peacemaking

After several years of uncertainty, Sisi sought to return Egypt to stability and a renewed role in the region.

By Seth J. Frantzman 
The Jerusalem Post
July 12, 2016

On November 15, 2012, Washington-insider Sidney Blumenthal wrote an email to secretary of state Hillary Clinton sharing information from sources with “direct access” to Western intelligence services. The day before Israel had killed Hamas terrorist mastermind Ahmed Jabari in Gaza. Now it looked like fighting would increase between the Gaza Strip and Israel.

Egyptian leader Mohamed Morsi, a Muslim Brotherhood member, said he was concerned that he was “unable to exert significant influence” over Hamas and that fighting might spiral out of control. What if Egypt were drawn in, the Egyptian worried. General Abdel Fatah Sisi assured Morsi things were under control. “Military Intelligence officers were meeting secretly with their Israeli counterparts” and Israel had agreed Egypt might play a positive role in mediating the conflict. According to the report Sisi understood Jabari had been killed for his role in kidnapping IDF soldier Gilad Schalit. Morsi felt pressured by Islamists to stand up to Israel, but Sisi expressed concern. Morsi was “a new leader with a precarious hold on his country which creates a dangerous environment,” wrote Blumenthal. “Al-Sisi has not shared this particular view with the Egyptian President.”

A little over seven months later, Morsi was gone and Sisi was in power. It’s clear now from the secret dispatches that Sisi feared for the security of Egypt, and was deeply concerned over sectarian tensions and the rise of Islamist and terrorist groups, especially in Sinai. Sisi’s first year in power was spent shoring up his support and removing the tentacles of the Muslim Brotherhood from power. In late May 2014 he was elected president by an overwhelming majority.

After several years of uncertainty, Sisi sought to return Egypt to stability and a renewed role in the region.

Before The Arab Spring overthrow of Hosni Mubarak in February of 2011, Egypt had worked closely with Israel on security issues. For instance, according to a US diplomatic cable, in 2009 Mubarak warned US General David Petraeus that Qatar and Syria were paying Hamas $50 million to keep captive IDF soldier Schalit captive.

Mubarak obviously wanted Schalit released. After his overthrow, there was a hiatus in relations with Israel as Egypt turned inward.

Two months later he got his first chance to play a role in the Israeli-Palestinian conflict when war broke out in Gaza in July. Mahmoud Salem at Al-Monitor claims the Gaza war gave Sisi a major victory. It “changed the balance of power in the Middle East conflict, sidelined Qatar, Turkey and Hamas, placed all the cards in the hands of Israel, the Gulf States [minus Qatar] and Egypt and none of them gave any weight to the Obama administration, which was unprecedented.” Turkey had had close relations with Morsi, whom Turkish President Recep Tayyip Erdogan viewed as a fellow-traveler in the world of political Islam. After 2013 relations between Turkey and Egypt soured to a kind of cold war.

This outcome was the result of a view that the US was weakening its support for its traditional Egyptian and Saudi allies in the region. This was symbolically evident in the snubbing of President Barack Obama by Saudi Arabia in April of this year when he was greeted by low-level functionaries on the tarmac during a visit to the kingdom. Sisi had been dismayed by the US administration’s policies on Egypt. Documents show that Sisi warned the Americans about threats to US interests in Egypt in 2012, and it seems he was not given credit for his attempt to care for the Americans.

In March of 2015 Sisi gave two interviews in which he spoke of his interest in working with Israel and the Palestinian Authority. Bret Stephens claimed “Egypt’s security cooperation with Israel has never been closer.”

Sisi told The Washington Post he speaks to Netanyahu “a lot” and that he wanted to achieve a “historic deal” with Israel. In late May and early June Egypt said it supported renewed Israeli-Palestinian talks with Sisi as mediator. Meanwhile France has been pushing its own initiative, which Israel has rejected. The Palestinian ambassador to Cairo said Egypt’s involvement does not “contradict” the French plan.

Egypt Foreign Minister Sameh Shoukry’s very public visit with Prime Minister Benjamin Netanyahu on Sunday was the culmination of Egyptian efforts to return relations to where they had been before the Arab Spring. As Herb Keinon noted in The Jerusalem Post, it was the first visit since 2007 by an Egyptian foreign minister and showed Sisi’s attempts to become a central player in diplomacy in Jerusalem. Shoukry spent time with Netanyahu at his office and then later at his home. There is no doubt this is an important step for Israel and Egypt, but to what end? Coming on the heels of the reconciliation with Turkey and Netanyahu’s trip to Africa, one gets the impression Israel has emerged from its diplomatic slumber of the past six years. This isn’t coincidental. Turkey has also reconciled with Egypt. That illustrates not just a return to pre-Arab Spring normalcy, but a realization that the terrorist-chaos in Iraq and Syria is the real problem. Shoukry said the extremism is an “existential threat to peoples of the region.”

Cairo has traditionally been one of the main centers of culture and influence in the region, alongside Damascus and Baghdad. The wars in Syria and Iraq have virtually destroyed Baghdad and Damascus’ influence, which leaves Egypt in an excellent position. Egypt has also largely stayed out of the sectarian Sunni-Shi’ite conflicts, unlike Saudi Arabia and Iran whose regimes are ruled by clerics. This puts Egypt in a special position, and its connection to Israel is important. The problem is that there is more than an impasse in the Israeli-Palestinian peace issue. With Hamas in power in Gaza, and a lack of a clear solution to the Palestinian yearning for a full-fledged state, only incremental peace issues can move forward, such as improving the Palestinian economy or freedom of movement. A greater Egyptian role in the PA-controlled areas and an emphasis on stability will be good for PA President Mahmoud Abbas, who is now in his 80s. The return of Egypt to its role with Israel also shows the irrelevance of the Western powers and the need for greater regional diplomacy.

Article Link to The Jerusalem Post:

The NATO Summit’s Winners And Losers

Defense contractors and Eastern Europeans went home happy. Germans, Ukrainians, and Georgians, not so much.

By James Stavridis
Foreign Policy
July 12, 2016

Every two years, the heads of state and government of the venerable NATO convene to deal with the crucial issues facing the 28-member organization. These NATO summits are always important, and they always produce both winners and losers. The recently concluded event in Warsaw, Poland, has been no exception.

In typical fashion, the outcome was a mixed bag, one that will neither fully satisfy proponents of a more assertive NATO, or opponents — like President Vladimir Putin of Russia. But it’s still worth examining how the chips fell.

At the top of the winner’s list in Warsaw are the Eastern European members of the organization. For at least six years, they have constantly chided NATO for failing to provide more protection “on the ground” within their borders. Estonia, Latvia, Lithuania, and Poland will now permanently host a full multinational battalion comprised of 1,000 NATO troops from countries including the United States, the United Kingdom, Germany, and Canada. While not enough to actually blunt a full-on Russian invasion, the additional forces will increase deterrence significantly.

In addition to the Eastern European nations, the tiny Balkan country of Montenegro emerged a winner by receiving what some have called the “golden security ticket” that is NATO membership. The small nation of some 650,000 souls was formally invited to join the organization, thus continuing the work of consolidating the Balkans in the trans-Atlantic community. While not militarily significant, the invitation is a key political signal that NATO maintains its open membership policy as stipulated in its founding treaty.

In addition to the Eastern Europeans, another entity in the winner’s circle is clearly the troubled nation of Afghanistan. Despite a plan three years ago by NATO to drop its in-country forces to essentially zero by 2017, the alliance has firmly recommitted to maintaining a significant level of troops (probably 13,000 or more) for the foreseeable future. Equally important for the struggling government of Afghan President Ashraf Ghani, NATO members have committed to continued funding for the Afghan National Security Forces, a bill of roughly $4 billion to $5 billion annually.

Finally, the defense industries of the West, especially those in Europe, come away a winner. With NATO members each agreeing to spend 2 percent of their national GDP on defense by 2020, the recent slide in European defense spending should be arrested and hopefully will begin to rise. NATO has signaled that certain areas are likely to receive increased funding, including cybersecurity (a glaring vulnerability for NATO); Special Forces (The alliance is in need of a standing operational headquarters for these forces); and unmanned vehicles (building on the now operational NATO Global Hawks in Sicily).

On the losing side of the ledger, Putin tops the list. Given that his overarching goal remains weakening or breaking the NATO alliance, the continuing unity demonstrated by the nations in Warsaw is a setback. Even worse for Putin is NATO’s decision to deploy troops on Russia’s borders, which the Russian president will find difficult to explain to his constituents back home. And, finally, the potential increase in defense spending will mean that Russia may feel compelled to increase defense expenditures as well — a difficult move to make given the ongoing sanctions levied on Russia since its invasion of Ukraine and annexation of Crimea, as well as flat oil and gas prices.

Other losers coming out of Warsaw are the two nations that aspire to NATO membership — Ukraine and Georgia. Both have been invaded by the Russian Federation (Ukraine in 2014 and Georgia in 2008), and the Russians continue to occupy significant chunks of their territory (Crimea and arguably parts of southeastern Ukraine; and the tiny regions of Abkhazia and South Ossetia taken from Georgia). Given these disputes with Russia, the likelihood of full membership seems quite distant, and the Warsaw summit did not offer much in the way of hope for their goals. While the alliance provided platitudes about an “open-door” policy and pledged continued military cooperation, there is not much of a glimmer of actual membership.

Another loser coming out of the summit was the Islamic State. NATO is clearly beginning to wake up to the need to confront the Islamic State along the Turkish border, and indeed to go directly at the threat in Iraq and Syria. NATO will begin flying additional Airborne Warning and Control Systems (AWACS), which can help with airspace deconfliction, intelligence gathering, and command and control. NATO will also explore providing a training mission to support the fragile Iraqi Security Forces. (NATO had such a training mission in Baghdad while I was supreme allied commander several years ago, but closed it in a dispute with the Iraqis about the Status of Forces Agreement.) Clearly NATO will be taking a more direct hand in the fight in Iraq and Syria, and that is bad news over time for the Islamic State.

Finally, the Warsaw summit was not a positive experience for the strongest European nation overall — Germany. No nation within NATO has a stronger desire generally for better relations with Russia given trade ties, historical worries, and an aversion to more defense spending. Over 80 percent of Germans favor better ties with Russia, and many German politicians are categorically opposed to NATO’s move to the Russian border. So given the continuing fraught state of relations with Russia, Germany came away from the summit dissatisfied with NATO’s trajectory and generally unhappy with the organization.

The bottom line is that this was an important but not a seminal summit. The key takeaways — more deterrence against Russia, engagement with the Islamic State, improvements on defense spending levels, increased cybersecurity, and the invitation to Montenegro to join NATO — are all significant but incremental steps. For a bigger and bolder NATO, we’ll have to wait for the effects of the presidential election in the United States and the as-yet unclear impact of Brexit to play out over the next couple of years. Putin will certainly be staying tuned, and we would all be wise to do the same.

Article Link to Foreign Policy:

One Year On, US Obstacles Blunt Hopes From Iran Deal

July 12, 2016

A year ago, a landmark nuclear deal with world powers led jubilant Iranians to dream of an end to isolation and economic hardship, but critics say US obstacles have soured those hopes.

Despite many sanctions being lifted, the international banking system is still too nervous to work with Iran.

At the same time, President Hassan Rouhani faces criticism for over-hyping the economic benefits of the accord as well as fierce opposition from hardliners who reject closer ties with the West.

Many in the Islamic republic and beyond trace the problems back to Washington.

"Iran has done its part. The blockage comes from the Americans -- the Europeans should put more pressure on them," said a European diplomat in Tehran, speaking on condition of anonymity.

"There are political leaders in the United States who make Iran out to be the devil and have not understood the goal of this accord," he added.

The deal reached on July 14, 2015 saw the US, Britain, China, France, Germany and Russia agree to lift some international sanctions in exchange for guarantees that Iran would not pursue nuclear weapons.

But even after it too k effect in January, the US maintained primary sanctions linked to Iran's human rights record and ballistic missile testing -- blocking Tehran from dollar transactions and leaving banks worried they could still be prosecuted for doing business with the country, despite repeated assurances from Washington that they will not.

Oil production has soared back almost to pre-sanctions levels, but Rouhani's hopes of attracting $30-$50 billion in foreign investment each year increasingly look like wishful thinking.

Aside from a 400-million-euro ($441-million) joint venture announced last month between France's Peugeot-Citroen and its old partner Iran Khodro, investments have been slow to materialise despite a rush of business delegations.

Planned sales of hundreds of Airbus and Boeing planes are stalled, with Republicans in Washington doing their utmost to derail the deals.

"The accord opened up the possibility (of working in Iran), but it's still complicated to get concrete results due to financing problems," said Romain Keraval, head of Business France's Tehran office.

'Intense Fight For Power'

Hardliners are having a field day with the meagre results, using the media to press home a narrative that the nuclear deal will not benefit ordinary citizens.

Iran's supreme leader Ayatollah Ali Khamenei, who supported the deal in order to end sanctions, continues to emphasise a "resistance economy" aimed at boosting domestic production and warns against Western "infiltration" through the agreement.

"There is a very intense fight for power happening," said the European diplomat.

"The hardliners are doing everything they can to impede Rouhani's efforts to improve relations with the world. They see it as leading to more foreigners coming to Iran and 'spoiling' the country from within."

Many see the continued US sanctions as proof that Washington never wanted a real reset in relations, and only saw the nuclear deal as another way to manipulate Iran.

"The US used this deal to put more pressure on us, trying to make us change our behaviour in the Middle East or give up our ties with (Lebanese militia) Hezbollah," said Amir Mohebbian, a Tehran-based political analyst with ties to politicians of all hues.

"History has taught us we should not trust the United States."

Conservatives are at least taking heart from the chaos engulfing Western politics -- from the divisive rise of Donald Trump in the US to Britain's dramatic decision to leave the EU.

"They won't be able to gather together against us as they did in the past, especially when we are showing them a new face of flexibility," said Mohebbian.

'A Lot Of Work To Do' 

Rouhani faces a tough re-election bid next year, and with 11 percent of Iranians out of work, his advisors have been pleading for patience.

"Sanctions had become a very big obstacle in the path of Iran's economy, but removing them was not by itself going to be the sole engine of economic growth," said Said Leylaz, an analyst close to the president.

"We have a lot of work to do."

But for all the challenges, analysts remain bullish on Iran's longer-term prospects.

"Pent-up demand, a youthful population, a skilled workforce, and a strong hydrocarbon and consumer story all make Iran one of the most positive and relatively well-balanced economic growth stories in the Middle East over the next decade," wrote BMI Research, a London-based consultancy.

A report it published on July 7 predicts an annual growth rate of 5-6 percent over that period.

Article Link to AFP:

One Year On, US Obstacles Blunt Hopes From Iran Deal