Wednesday, August 17, 2016

Wednesday, August 17, Morning Global Market Roundup: Asian Stocks Drop From One-Year High, Dollar Rises On Fed Rate Comments

By Nichola Saminather and Hideyuki Sano 
Reuters
August 17, 2016

Asian shares pulled back from a one-year high and the dollar strengthened on Wednesday, after an influential Federal Reserve official said interest rates could rise as soon as September.

European markets are poised for slight gains, with financial spreadbetter CMC Markets predicting Britain's FTSE 100 .FTSE and France's CAC 40 .FCHI will open up about 0.1 percent higher, and Germany's DAX .GDAXI will start the day little changed.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.3 percent while Japan's Nikkei .N225 closed 0.9 percent higher, paring some of Tuesday's sharp losses, thanks to a weaker yen.

China's CSI 300 index .CSI300 and the Shanghai Composite .SSEC both erased earlier losses to trade flat after authorities approved the launch of a long-awaited scheme to allow stock trading between Shenzhen and Hong Kong and lifted quota limits for the existing Shanghai-Hong Kong Stock Connect.

Wall Street shares retreated from record highs, with the S&P 500 .SPX losing 0.55 percent.

New York Fed President William Dudley said that as the U.S. labor market tightens and as evidence of rising wages builds, "we're edging closer towards the point in time where it will be appropriate I think to raise interest rates further."

Comments from Dudley, a permanent voter on policy and a close ally of Fed Chair Janet Yellen, also included an unusual warning on low bond yields and were seen as more hawkish than a cautious message last month.

Atlanta Federal Reserve Bank President Dennis Lockhart, seen as centrist, concurred saying he did not rule out a September hike - something markets have almost completely priced out.

Data released on Tuesday lent some support to their views, with U.S. industrial production and housing starts expanding in July, although consumer prices were unchanged from June, following two straight monthly increases of 0.2 percent.

Markets still only partly believe their comments, remembering that the Fed ended up keeping rates on hold in June even after Fed officials talked up the possibility of a rate hike in preceding weeks.

"Clearly the Fed seems to think the market's pricing of a September rate hike is too low. Today's minutes of the Fed's July policy meeting could be more hawkish than market expectations," said Tomoaki Shishido, fixed income strategist at Nomura Securities.

Yields on two-year notes US2YT=RR briefly touched a near three-week high of 0.758 percent, but failed to reach the July peak of 0.778 percent, and were last at 0.750 percent.

Fed funds rate futures are pricing in a 50 percent chance of a rate rise by December, a small increase from earlier this week.

The comments pulled the dollar from seven-week lows hit just after the inflation data.

The dollar's index against a basket of six major currencies .DXY plunged as low as 94.426 on Tuesday, its lowest level since Britain voted to leave the European Union in June. It was last trading at 94.96, down 0.8 percent on the week.

The euro EUR=EBS edged back 0.1 percent to $1.12635, after touching $1.1323 on Tuesday, the highest level since the Brexit vote.

The dollar extended gains 0.7 percent to 100.97 yen JPY=EBS after falling to as low as 99.55 on Tuesday and coming within sight of its 2-1/2-year trough of 99.00 set on June 24 after the British referendum.

"As the world economy is slowing down, many countries now need a cheaper currency to support share prices. The U.S. wants a cheaper dollar and so does China, leaving the yen taking the brunt," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

The British pound, which touched a five-week low against the dollar on Monday, held steady following gains of 1.3 percent on Tuesday. It also hit a three-year low of 87.245 pence per euro on Tuesday after UK inflation came in stronger than expected.

The data was the first in a run of July economic data that should show some of the initial impact of the Brexit vote on the economy.

The pound was last trading at $1.3039 GBP=D4. It was also flat against the euro at 86.405 pence EURGBP=D4.

The pound is bracing for UK unemployment data later in the day.

Oil prices slid from five-week highs on doubts that possible talks by producers to rein in a growing glut would be successful.

Brent crude futures LCOc1 dropped 0.6 percent to $48.92 a barrel, while U.S. crude CLc1 retreated 0.4 percent to $46.40.


Article Link To Reuters:

CRN: Cisco Systems To Lay Off About 14,000 Employees

By Ankit Ajmera and Bhanu Pratap
Reuters
August 17, 2016

Cisco Systems Inc (CSCO.O) is laying off about 14,000 employees, representing nearly 20 percent of the network equipment maker's global workforce, technology news site CRN reported, citing sources close to the company.

San Jose, California-based Cisco is expected to announce the cuts within the next few weeks, the report said, as the company transition from its hardware roots into a software-centric organization. (bit.ly/2bEQfa3)

Apart from Cisco, the other tech giants, which have announced job cuts in the face of PC industry decline in recent years, are Microsoft Corp (MSFT.O), HP Inc (HPQ.N) and Intel Corp (INTC.O).

Microsoft Corp kicked off one of the largest layoffs in Tech history in July 2014 after it said it would slash 18,000 jobs. (reut.rs/2aYTYzt)

HP Inc said in September 2015 that it expected to cut about 33,300 jobs over three years.

Intel said in April that it would slash up to 12,000 jobs globally, or 11 percent of its workforce.

Cisco, which had more than 70,000 employees as of April 30, declined to comment.

Cisco increasingly requires "different skill sets" for the "software-defined future" than it did in the past, as it pushes to capture a higher share of the addressable market and aims to boost its margins, the CRN report said citing a source familiar with the situation.

Cisco has been investing in new products such as data analytics software and cloud-based tools for data centers, to offset the impact of sluggish spending by telecom carriers and enterprises on its main business of making network switches and routers.

The company has already offered many early retirement package plans to Cisco's employees, according to CRN.

Up until Tuesday's close of $31.12 on the Nasdaq, the company's stock had risen about 15 percent this year, compared with a 10.5 percent increase in the Dow Jones U.S. Technology Hardware & Equipment index .DJUSTQ.


Article Link To Reuters:

Trump, In Law And Order Speech, Calls For African-American Support

By Ginger Gibson
Reuters
August 17, 2016

U.S. Republican presidential nominee Donald Trump on Tuesday delivered his most aggressive call yet to woo African-American voters, vowing to restore law and order, only days after a fatal police shooting of a black man sparked more street violence.

Speaking a few miles from Milwaukee, which was rocked by weekend riots, Trump accused his Democratic rival Hillary Clinton of "bigotry" and vowed to protect the jobs of minorities from immigrants. Trump has been repeatedly called a "bigot" by his Democratic opponents.

"I'm asking for the vote for every African-American citizen struggling in our society today who wants a different and much better future," Trump said.

"Jobs, safety, opportunity, fair and equal representation: We reject the bigotry of Hillary Clinton which panders to, and talks down to, communities of color and sees them only as votes – that’s all they care about – not as individual human beings worthy of a better future."

Earlier, Trump held three events in Milwaukee, a city still reeling from violent protests after the death of Sylville Smith, 23. Authorities said Smith was stopped for acting suspiciously and was shot by police because he was carrying an illegal handgun and refused orders to drop it.

Trump encountered only a handful of peaceful protesters while in the city, including some at a closed fundraiser.

He held a brief meeting with veterans and law enforcement, including Milwaukee County Sheriff David Clarke and Inspector Edward Bailey. But news media representatives were escorted out and not permitted to hear the discussions.

Clarke, who is black and spoke at last month's Republican National Convention, has criticized the protests, writing in an opinion piece for The Hill that they were "a collapse of the social order, where tribal behavior leads to reacting to circumstances instead of waiting for facts to emerge."

Trump also taped a town hall meeting with Fox News, in which he blamed President Barack Obama for what he sees as hostility toward police. "He has not been good to the police, simply, and the police are not big fans of his," Trump said.

Trump traveled 45 minutes outside of Milwaukee, which is 40 percent black, to deliver his appeal to African-American voters in the suburb of West Bend, Wisconsin, a community that is 95 percent white. He spoke before an almost entirely white audience.

"A vote for her (Clinton) is a vote for another generation of poverty, high crime and lost opportunities," Trump said. "Crime and violence is an attack on the poor and it will never be accepted in a Trump administration."

Clinton won the Democratic nomination in part thanks to her large victory margins among minorities in nearly every state, including overwhelming support from African-Americans in the South.

"With each passing Trump attack, it becomes clearer that his strategy is just to say about Hillary Clinton what's true of himself," Clinton spokeswoman Jennifer Palmieri said.

"When people started saying he was temperamentally unfit, he called Hillary the same. When his ties to the Kremlin came under scrutiny, he absurdly claimed that Hillary was the one who was too close to Putin.

"Now he's accusing her of bigoted remarks - we think the American people will know which candidate is guilty of the charge."

Trump also took aim at Clinton's past acceptance of large speaking fees, saying he would force top administration officials to sign a pledge not to accept speaking fees from corporations with registered lobbyists or foreign countries for five years after leaving office.

Police violence against African-Americans has set off intermittent, sometimes violent protests in the past two years, igniting a national debate over race and policing in the United States and giving rise to the Black Lives Matter movement.

Trump said critics of the police "share in the responsibility for the unrest in Milwaukee and other places in our country."

"The war on our police must end and it must end now," Trump said. "The war on police is a war against all peaceful citizens."

The shooting of Smith was likely justified, Trump argued in an interview with Fox News on Tuesday morning.

"But the gun was pointed at his (a police officer's) head, supposedly ready to be fired. Who can have a problem with that? That’s what the narrative is," Trump said. "Maybe it’s not true. If it is true, people shouldn’t be rioting."

Security Briefing

Officials from the Office of Director of National Intelligence are expected to give Trump a briefing on national security issues this week, an adviser to Trump and a source familiar with the matter said on Tuesday.

Presidential candidates are entitled to a briefing of classified information after formally securing the nomination, which Trump did last month. Hillary Clinton, Trump's Democratic rival for the Nov. 8 election, is also entitled to receive a briefing if she requests one.

Democrats have criticized Trump's positions on foreign policy and national security, besides some freewheeling remarks. Democratic President Barack Obama has called Trump "unfit" for the presidency and this month warned the Republican candidate that briefing information must be kept 
secret.


Article Link To Reuters:

Coming To An ObamaCare Market Near You: Fewer Plans, Higher Costs

By Betsy McCaughey
The New York Post
August 17, 2016

On Tuesday, Aetna announced it’s canceling its ObamaCare plans in nearly all states. Count on other major insurers to back out soon as well. When open enrollment starts Nov. 1, the public will see they’re going to have few plans to choose from.

Worse, they’re going to be paying lots more for health insurance in 2017 and getting less. Across the country, state insurance departments are announcing double-digit premium hikes — as high as 40 percent in some places. Here in New York, MetroPlus, Care Connect and Affinity are hiking premiums over 20 percent.

It’s the Not-So-Affordable Care Act.

People who earn too much to qualify for a subsidy will be forced to pay as much as a fifth of their income for health insurance. And they’ll get less choice of doctors and hospitals and prescription-drug coverage.

Annual enrollment begins eight days before voters go to the polls. Donald Trump is vowing to repeal ObamaCare.

Hillary Clinton is doubling down on keeping and expanding it. Democrats are worried ObamaCare sticker shock will have an 11th-hour impact on the election.

They should worry.

Affordability was a phony claim from Day One. The law requires everyone without coverage to buy the insurance industry’s product or get clobbered with a financial penalty. Most consumers get taxpayer-funded subsidies and see only a fraction of the true cost. And insurers get year-end lump-sum payments from the government to encourage them to under-price their plans.

But only through this year. In 2017, after Obama leaves office, that corporate welfare ends — a major reason why premiums will be skyrocketing. It’s an expensive and deceptive scheme — with taxpayers footing the bill — to make the plans look “affordable,” as the law’s title falsely claims.

The public isn’t fooled. Twenty-two million were predicted to enroll by 2016, but only half that number did.

Young healthy people decided that the Washington-knows-best benefit package, chock-full of features they didn’t need, was a rip-off. Who wants to pay for pediatric dental coverage when you’re 30 and single? Mostly older, sicker people tended to sign up, causing insurers to incur big losses — some $3 billion a year.

Democrats are telling the public not to worry about soaring premiums, because they’ll still be getting their subsidies and won’t feel the pain. That’s true for 80 percent of ObamaCare customers. But beleaguered taxpayers will feel the pain. They’re paying for the subsidies, which are already costing 50 percent more per person than predicted when the law was passed.

Also feeling the pain big time are ObamaCare customers who earn too much to qualify for a subsidy. Individuals earning more than $47,500 and couples making more than $64,080 will be whacked with the full premium hike.

Already, they’re forced to pay as much as 18 percent of after-tax income for their coverage — and it’s about to get worse.

Is there a way out of this? In many states, yes. Millions of people are opting to pay the ObamaCare penalty (2.5 percent of adjusted gross income) and then buy bargain insurance. These plans are temporary, not necessarily renewable and limit what you can collect if you’re sick. But they’re cheap.

The administration tried to ban them but lost in federal court in July. Now they’re trying another regulation to prevent consumers from buying low-cost insurance. (Unfortunately, New York legislators have already outlawed such choices.)

Meanwhile, some ObamaCare advocates are calling for draconian increases in the penalty for not signing up “to compel more people to meet their responsibility.” Ouch.

Clinton isn’t commenting on penalties, but when she first proposed universal health care in 1993, she told Congress she’d consider automatically enrolling those who failed to sign up and garnishing their wages if they didn’t pay. Yikes.

Defeating Hillary at the polls could still prevent some of the pain. But it’s voters’ last chance.


Article Link To The New York Post:

How Brexit Brought UKIP To Its Knees

Leaving the EU was the far-right party’s finest hour — now its future looks bleak.


Politico EU
August 17, 2016 

Britain may be on its way out of the European Union, but the party that did more than any other to make it happen is in crisis.

Since the referendum, the United Kingdom Independence Party has descended into open warfare. After a series of internal disputes, plots and alleged backroom stitch-ups, not a single leading figure in the party made it on to the leadership ballot to replace Nigel Farage, who stood down shortly after the vote for Brexit.

If Brexit was the apogee of UKIP power, the party’s decline since then has been dramatic. The prospect of Brexit was the glue that held the party together. Without it the UKIP machine looks dangerously fragile, especially since Prime Minister Theresa May declared “Brexit means Brexit.”

But the party’s future as an electoral force in British politics is not only of interest to hardline Euroskeptics. UKIP’s electoral prospects will have dramatic implications for British and European politics more widely, from the future of the Labour Party to the prospects of another Conservative victory and any future Brexit deal that might emerge under May’s premiership.

All sides in the UKIP civil war admit the party is at a crossroads, and some senior figures are openly saying it might be time to call it a day.

Making Plans For After Nigel

There are five candidates in the race to succeed Farage, but almost every senior party figure believes it will be a battle between Lisa Duffy — a local councilor who attracts anti-Farage types of all stripes — and Diane James, a member of the European Parliament who appeals to “mainstream Kippers.”

Steven Woolfe, the runaway favorite who was seen as Farage’s chosen successor, was blocked from standing after failing to send in the relevant paperwork on time — he missed the deadline by 17 minutes — and is said to be considering a legal challenge to get back into the contest, two senior party figures in regular contact with him said.

"Allies of Woolfe expect his support to transfer to James as long as he remains out of the contest."


Woolfe’s supporters — backed by Farage — are also vowing to call an emergency general meeting to purge those in charge of the party’s internal bureaucracy.

Allies of Woolfe expect his support to transfer to James as long as he remains out of the contest, as most expect. “If Steven was on the ballot, he would’ve won it comfortably,” one close ally said. “In terms of people who are going to vote in this election, it really isn’t a contest.”

Senior figures say the party has split into factions: UKIP’s MP Douglas Carswell, party leader in Wales Neil Hamilton and MEP Patrick O’Flynn — all of whom will likely back Duffy — on one side and the bulk of the party loyal to Farage’s vision on the other and likely to support James.

“You’ve got the Farage wing of the party, the Hamilton wing and the Carswell wing,” one Woolfe ally said. “The Carswell-Hamilton wing are being quite successful in promoting their candidate Lisa Duffy and are doing reasonably well in media terms. But the actual feeling in the membership is so strong — at least 80 percent is Faragists. That vote would’ve gone to Woolfe, it will now go to Diane James.”

But Raheem Kassam, Farage’s former right-hand man and election supremo, warned against complacency.

He said: “It looks to me [like] Lisa Duffy is gaining momentum and endorsements, which is absolutely shambolic.” Part of the reason for that surge, he believes, is the recent backing of veteran UKIP MEP Gerard Batten.

“What Gerard brings is a different wing of the party. She’s got the Hamiltonians, she’s got the Carswellites, she’s got the Suzannites [supporting Suzanne Evans, one of the party’s most prominent figures], she’s got the O’Flynnites. Now she’s got the Battenites, who are the people who really want UKIP to go in a more [Dutch far-right leader] Geert Wilders direction,” Kassam said.

Kassam was brutally dismissive of Duffy’s ability. “Lisa is fighting a campaign to win. She’s not fighting a campaign because of anything she believes in. The only thing she genuinely believes in is a KFC bargain bucket.”

“The thing about Lisa is she is doing what she is being told to do. She’s saying what she’s being told to say to get the endorsement of other people.”

Exactly the same charge is leveled at James.

“If Diane is leader I think it will be a nine-month holiday,” one UKIP MEP said. “I would think post next year’s electoral cycle, Arron [Banks, UKIP’s main donor] would have a decision whether it’s Steven [Woolfe] or Nigel [Farage, to take back control of the party]. It will depend on Nigel’s disposition. The danger is you’ve got a seat-warmer rather than a leader.”

Another senior figure in the party and Duffy supporter agreed that Farage casts a long shadow over the party.

“Nigel will remain UKIP leader in Brussels. UKIP as a party has very little money and very little patronage and employs very few people. Much of what people think of as UKIP is funded through off-balance-sheet funding and a lot of that goes back to various Brussels-based funds. If he remains in charge of those funds, he will retain enormous patronage.”

“He may not be the leader of UKIP, but all those little goons who run around the UKIP office [will be loyal to him]. I suspect that will be his game plan. You notionally take a back seat, but you’ll have all the people in the press office and God-knows what else doing what you want. That means you get all the best gigs on Marr [the BBC’s flagship political show] and elsewhere.”

Over And Out?

Farage himself is adamant he will not interfere — unless the government renege on Brexit.

“I’ll support the party in what it does to keep the pressure up on Brexit. But in terms of being involved in party politics I shan’t be,” he said Tuesday.

“My intention is not to stand for election again — any form of election. But if Brexit doesn’t mean Brexit then I’m going to have to. But do I see myself coming back to the party leadership? No, I really don’t.”

Farage insisted he would back whichever candidate was elected and would not be a backseat driver. “I’m just not going to do that. That would be very, very foolish and I’ve no intention of doing it.”

"Farage believes one future for UKIP could be working closely with Leave.EU, the referendum campaign group led by Banks that has developed into a powerful online force in its own right."


“I will continue to pop over to the European Parliament to give the odd speech over there, which I enjoy more than they do. As far as UKIP is concerned, I will support the leader, I will support what they want to do.”

But he was scathing about the party’s officials and backed calls from Banks and allies of Woolfe for UKIP to be dramatically overhauled. “We’ve frankly gone backwards over the last year or so,” he said.

Farage believes one future for UKIP could be working closely with Leave.EU, the referendum campaign group led by Banks that has developed into a powerful online force in its own right.

He said: “I think Leave.EU should morph into a very active political pressure group. After all, the Left have got one — it’s called Momentum [a Jeremy Corbyn-supporting campaign group].”

“Banks has got nearly a million people signed up. Of those a large number are pretty active. As an organization, lobbying for causes, keeping up the pressure on Brexit, Banks is in a great position.”

Blame Farage

One senior figure insisted that while the party needed reforming, Farage was to blame for the current state of UKIP.

“Nigel was a very overbearing leader. There was a little clique of minions which Nigel would keep, who would run around saying ‘the boss wants this, the boss wants that.’ Which means there’s no corporate competence. That’s been on display recently.”

“Anyone [not] slavishly loyal to Nigel, they were dissed at every opportunity. That’s where we are this summer.”

Regardless of internal party management there’s no doubt Farage has been electorally indispensable for UKIP.

Tom Mludzinski, from the respected pollsters ComRes, said the basis of the party’s success was “the strength of Nigel Farage’s personality.”

“They’ve come a long way in the last few years. Now is a really testing time. They’ve got what they wanted in terms of the referendum. Their battle to stay relevant is going to be quite tricky.”

“Where are they looking to be competitive and how they do it? Is it in Conservative seats or Labour heartlands? It looks like they are moving to Labour heartlands, but it’s difficult to see how they can get a leader who could garner as much attention. Without him they are going to have to rethink their strategy.”

Unsurprisingly, Farage’s supporters agree. “Look at what’s happened to UKIP since Nigel left,” Kassam said. “The entire thing is crumbling. Nigel was the glue that kept them together. Without that guy there would’ve been no UKIP. They would’ve torn each other limb from limb. They love nothing more than going after each other — I think they love it more than Brexit.”

In the end, this is perhaps the one thing which binds UKIP together after Brexit. Whoever wins, the infighting will continue and Farage will remain the most important figure in British Euroskeptic politics.


Article Link To Politico EU:

Russian Bombers In Iran And Tehran's Internal Power Struggle

The IRGC has deep ties with Moscow; the Rouhani government isn't so enthusiastic.


By Alex Vatanka
The National Interest
August 17, 2016

For the first time since 1979, Iran has given a foreign power the right to conduct military operations from its soil. Russia is now operating Tu-22M3 long-range bombers from an Iranian airbase. The purported goal is only limited to joint Iranian-Russian operations against anti-Assad rebels inside Syria. But while an Iranian-Russian partnership to keep President Bashar al-Assad alive has been in place as long as the Syrian war has raged, this latest upswing in military collaboration might be a prelude to a greater strategic pivot. It can have far-reaching consequences not only impacting Iranian and Russian foreign policies, but also American interests in the broader Middle East. This newfound Iranian-Russian tie-up, however, is not new, nor should its latest blossoming come as a surprise.

Posture Versus Reality


Immediately after the 1979 Iranian Revolution, students in Iran were instructed each morning to chant slogans in support of the new ruler, Ayatollah Ruhollah Khomeini. They also had to chant “Neither West nor East but the Islamic Republic.” The Islamist regime that emerged following the toppling of the pro-American Shah was very determined to sell itself as an independent alternative that was not to do the bidding of either the Capitalist West or the Communist East.

In reality, while the United States was forced to leave Iran, Moscow and its [then Soviet] agents stayed put. In fact, in the chaotic early days after the revolution, when one political party after another was banned or violently repressed, the Tudeh [Communist] party of Iran was initially left alone until it faced a crackdown in 1983. It was widely considered as a concession to Moscow and an earliest sign of Iranian acceptance that shunning both superpowers at the same time was simply unworkable.

Shortly after the revolution, Iran’s new rulers began to dispatch teams of military and intelligence officers to countries in the Soviet bloc—Romania, Bulgaria, East Germany—to learn the crafts of warfare and intelligence operations. These officers returned to Iran and have since played a big part in keeping the Islamic Republic safe from any internal threat to the Islamic Republic.

The Iranian people have always known of Russia’s role in shoring up the rule of the ayatollahs, as evidenced in the chants of “death to Russia” during the 2009 opposition mass protests. From providing submarines to Iran in the 1990s, to building the country’s first nuclear plant, to training its cyber warriors, to the recent decision to ship to Iran the strategic S-300 anti-air systems, Moscow has done enough to keep at least some friends in Tehran.

Today’s Power Struggle In Tehran


Nonetheless, Iranian opinions on Russia still vary. If you ask the generals from the Islamic Revolution Guards Corps (IRGC)—Moscow’s accomplices in the Syrian war—you will mostly hear praise. Phrases such as “strategic overlap” and “the fight against terrorism” is mentioned as the common ground with Russia. However, it is not always an easy relationship to justify. The IRGC, which portrays itself as a revolutionary Islamic force, was tellingly silent throughout Moscow’s military campaigns in Chechnya, a Muslim republic in Russia that was fighting for independence. For the IRGC, it is the flow of Russian arms, intelligence cooperation and other practical benefits that Moscow offers which make it a special partner. If Iran’s Islamist credentials take a dent in the process, so be it.

The IRGC’s key rival inside the Islamic Republic, the moderate government of President Hassan Rouhani, has a far less rosy view of Russia, and it is not beholden to Moscow as a transactional partner as is the IRGC top brass. The Rouhani team has largely looked at the new U.S.-Russian cold war following the fallout from the annexation of Crimea as an opportunity to push its own agenda - not as an opportunity to move closer to Moscow per se, but to play the Russia card as a way to prod Washington to reassess its overall posture toward Iran. Rouhani’s key goal is the transformation of the Iranian economy, and it recognizes the United States as a pivotal obstacle that one way or another has to be placated. The IRGC generals do not share this view, and claim legitimacy is based not on how many jobs they can create, but on military prowess in the many conflicts around the Middle East.

Nonetheless, both camps in Tehran quietly agree that Russia has historically taken far more from Iran than it has ever contributed to its national interests. In recent years, the Russians upset the Iranians to no end by voting repeatedly against Tehran’s nuclear file at the United Nations; by deliberately delaying the completion of the Bushehr nuclear plant as Moscow sought to use Iran as a pawn in its broader talks with Washington; and by systematically absorbing Iran’s global oil market share when the country was under sanctions. And yet for the hardliners in the ranks of the IRGC and elsewhere in the Iranian regime, the Rouhani government’s proclivity to favor the West over the East is more ominous.

They see Rouhani as a man who might look to cut more deals with Washington at the expense of the influence and agenda of the hardline camp. Moscow’s ability to find a way to fly its bombers out of an Iranian airbase has to be seen in the context of this power struggle in Tehran. From Washington’s perspective, the question is whether this Iranian-Russian military cooperation poses a fundamental test to U.S. interests in the Middle East. It has had plenty of time to ponder this question. Iran and Russia signed a military cooperation agreement in January 2015, which has so far been met by little response of any kind from Washington. The United States might see this mounting Tehran-Moscow axis as a cursory build-up. That is not necessarily how U.S. allies in the Middle East will see it, and that alone should matter to Washington.


Article Link To The National Interest:

Why Israel Won't Admit Success Of The Iranian Nuclear Agreement

The Israeli government can't admit that the nuclear agreement with Iran is being successfully implemented or Israel itself might have to face similar requirements.


Al-Monitor
August 17, 2016

One may say that Defense Minister Avigdor Liberman is crass, radical and cynical, but one absolutely cannot accuse him of stupidity, naivete or negligence. The announcement condemning the president of the United States that Liberman demanded his ministry's spokesman (and not, as is customary, his own media adviser) issue on Aug. 5 was no slip of the tongue. A seasoned politician like Liberman surely knew that the mere mention of the Munich Agreement with Hitler would stir the media out of its weekend doldrums. And indeed, Munich did the job. The defense minister as well as the prime minister then apologized for the style, but not for the message.

The half-hearted apologies provided them an opportunity to reiterate their message: that the agreement signed with Iran a year ago is not worth the paper it’s written on. A clarification issued by the Defense Ministry read, “Israel remains deeply concerned by the fact that even after the agreement with Iran, the Iranian leadership continues to declare that its central goal is the destruction of the State of Israel and continues to threaten Israel’s existence with words and deeds.”

Prime Minister Benjamin Netanyahu said Aug. 5 that Israel’s position on the Iran deal ''remains unchanged.” Its stance is that the Iranians were and still are a gang of con men whose signature means nothing. Liberman praised the United States and the president “for their tremendous contribution to Israel’s national security.” Netanyahu was careful to sign off with, “The prime minister firmly believes that Israel has no more important ally than the US.” It almost goes without saying that important allies don’t prevent each other from equipping themselves with the best means of deterrence and warfare.

Israel’s political echelon cannot ignore the declaration by the US president that the agreement “has worked exactly the way we said it was going to work.” Obama was right in saying recently, “That would be a shock. … If some of these folks who had said the sky is falling suddenly said, 'You know what, we were wrong and we're glad that Iran no longer has the capacity to break out in short term and develop a nuclear weapon.'”

An admission by the prime minister of Israel or the defense minister that they were wrong is not “a shock.” It’s an earthquake. Israeli recognition of the fact that Iran does not have the capacity to produce nuclear weapons is the sky falling on Israel’s entire defense perception.

If Iran’s nuclear threat has dissipated, why does Israel need the hundreds of nuclear bombs it has (according to foreign sources)? If there’s no nuclear threat on the horizon, there’s no need for nuclear deterrence. Why does Israel deserve to be the only country in the Middle East exempted by the United States from joining the Nuclear Non-Proliferation Treaty (NPT)? On the day Israel concedes its mistake regarding the nuclear agreement with Iran, what reason would the United States have for maintaining Israel’s “qualitative military advantage” — a laundered way of saying that it protects Israel’s nuclear policy? Not only that, but if the threat has indeed been eradicated, as the president says, there’s no reason to keep boycotting Iran.

Since his 2009 call to rid the world of nuclear weapons speech at the start of his presidency, and up to his dramatic visit to Hiroshima in May of this year, Israel has been anxiously following Obama’s nuclear policy. Speaking in Hiroshima, the site of a nuclear bomb, the president urged “nations like my own that hold nuclear stockpiles" to "have the courage to escape the logic of fear and pursue a world without them.” He pointed a finger at all nations, without exception.

On the other hand, following Israeli-Jewish pressure, Obama shelved his initiative to convene a December 2012 conference in Helsinki to promote a Middle East free of nuclear weapons under the auspices of the United States, Russia and the United Kingdom. Instead, the United States joined Israel, Canada, Micronesia, the Marshall Islands and Palau — the only UN member states to vote against a resolution calling on Israel to immediately adopt the NPT and open up its nuclear facilities to inspections by the International Atomic Energy Agency. Obama was worried that a clash with Israel on the nuclear issue would derail negotiations with the Palestinians. Either way, the forecast that Obama would force Israel to change its nuclear policy was proven wrong.

Several recent reports say Jerusalem is preparing for the possibility that Obama will take advantage of the twilight period between the November presidential elections and the passing of the White House torch on Jan. 20 to drop a new initiative on Netanyahu for resolving the Israeli-Palestinian conflict. Obama could also take advantage of his remaining months in office to justify the 2009 Nobel Peace Prize awarded to him for his promotion of a world without nuclear weapons. Having eliminated the Iranian nuclear threat, so he says, what would be more natural than dealing with the Israeli nuclear program?

If that happens on a day after Democratic nominee Hillary Clinton wins the presidency, she will not be able to complain that Obama foisted on her a policy opposed to her worldview. As secretary of state, Hillary Clinton was a pledged partner in Obama’s non-proliferation vision of the world. Speaking at a 2010 New York Review Conference on the NPT, Clinton said, “We support efforts to realize the goal of a weapons of mass destruction-free zone in the Middle East. … The Middle East may present the greatest threat of nuclear proliferation in the world today.” Clinton argued, "Iran is the only country represented in this hall that has been found … to be currently in noncompliance with its nuclear safeguards obligations — the only one.” Today, the president of the United States has determined that Iran is compliant with its commitment under the treaty, while Israel is resolute in its refusal to sign it.

One can assume that like her predecessor and husband, Clinton, if elected, will be in no rush to jump into Israel’s heavy water and splash her Jewish supporters.

Meanwhile, Donald Trump doesn’t even understand why a country that has nuclear weapons can’t use them. If the Republican candidate becomes the commander in chief of the US Armed Forces, rest assured that champagne corks will be popping in Dimona.


Article Link To Al-Monitor:

Why Israel Won't Admit Success Of The Iranian Nuclear Agreement 

Who Would Win A Currency War? No One

By Satyajit Das
The Bloomberg View
August 17, 2016

It's been a year since a sudden, 1.9 percent decline in the Chinese yuan rattled global markets and prompted fears of a global currency war. China has mostly soothed nerves by moderating the renminbi's swoon since then. But what should really put minds to rest is the knowledge that no one -- not even China, which arguably did power its rise, at least in part, on the back of an artificially depressed yuan -- could win a true currency war today.

The temptation to gain an advantage over competitors with a cheaper currency hasn't diminished, of course. First and foremost, devaluation holds out the promise of boosting exports by making them less expensive. Where a country has substantial external borrowing in its own currency, a weaker currency also engineers a transfer of wealth from foreign savers, as the value of those securities falls in dollar terms. Devaluation may also stimulate inflation as the higher cost of imported products pushes up price levels.

In recent years, governments have refrained from intervening directly in currency markets, preferring to use monetary policy to help drive down the value of their currencies. These policies -- on display most notably in Japan and Europe -- are supposedly intended to increase demand. But households and companies have proven reluctant to borrow more to finance consumption or investment. Instead, low and in some cases negative rates have served to reduce the cost of servicing debt and, by encouraging capital flight, to create pressure on the currency.

It's not clear, however, that this strategy of implicit devaluation can achieve any wider benefits. For one thing, a weaker currency no longer guarantees an increase in exports. External demand remains sluggish because of the slowdown in global growth. Trade growth has slowed sharply since 2014.

Moreover, the complexity of today's global supply chains, with production spread across multiple countries, undermines the advantages of a weakened currency. When the yen was strong, Japanese carmakers relocated plants to cheaper locations abroad; they're not going to move those factories back home unless convinced that the yen isn't going to strengthen once again. Recent estimates from the World Bank suggest that falling currencies were only half as effective in increasing exports between 2004 and 2012 as they were in the prior eight years.

In many countries, exports also matter much less than they did before. The U.S. in particular is relatively self-contained, with imports and exports together accounting for around 20 percent of GDP. While Europe is more exposed to trade, most takes place within the free-trade area, where many nations share a single currency. China’s external exposure is complex as it now acts mostly as a manufacturing or assembly hub, using domestic labor to convert imported components into intermediate or finished products. A lower yuan thus has less impact on economic activity than previously.

Key sectors such as advanced manufacturing, information technologies, pharmaceuticals and entertainment are less likely to be affected by currency fluctuations due to high intellectual property content, limited competition and the prevalence of long-term contracts. Services, which are playing an increasingly important role in China and elsewhere, are mostly local: One in four U.S. manufacturing jobs is linked to trade, whereas only around 6 percent of jobs in services are similarly affected.

And countries have simply gotten better at defending against artificially cheapened goods. They now deploy a range of covert trade restrictions, from highly restrictive procurement policies to local-content provisions that favor national suppliers. Many offer subsidies and preferential financing to domestic manufacturers. In 2015, the number of discriminatory measures introduced by governments rose 50 percent from the year before, of which G20 countries accounted for over 80 percent.

Finally, it's important to remember that other factors may offset any advantages gained from devaluation. Currency volatility and uncertainty tend to discourage long-term business investment. A weaker currency also reduces the purchasing power of citizens. The euro has lost over 30 percent of its value against the U.S. dollar since 2011, effectively slashing the income and wealth of euro-zone consumers. Australians, heavily dependent on imports, have lost a similar amount of purchasing power. Combined with stagnating incomes, this only cuts further into global demand.

A currency war is winnable only if a single country resorts to devaluation. Every nation can't by definition simultaneously have the cheapest currency. That doesn't mean countries won't try to gain an advantage over competitors. But their chances of succeeding are lower than ever before.


Article Link To The Bloomberg View:

Will Texas Stick Around For A Hillary Clinton Presidency?

Three out of five Trump voters in the Lone Star State would back secession if the Democrat wins, a new poll finds.


By Russell Berman
The Atlantic
August 17, 2016

When politicians accuse their opponents of trying to divide the country, they usually don’t mean it literally. But in Texas, Donald Trump supporters dread a Hillary Clinton presidency so much that three out of five of them would rather the state secede than live through it.

In conducting a rare general-election poll of the Lone Star State, the left-leaning firm Public Policy Polling asked voters a (mostly) hypothetical question: Would you support or oppose Texas seceding from the United States?

Fortunately for Unionists, a clear majority of 59 percent of Texans said they’d rather stick with the Stars and Stripes, while just 26 percent said they wouldn’t. But that number dropped when the pollsters followed up by asking whether voters would support secession if Clinton won the election. Forty percent said they would, including 61 percent of Trump supporters. (While PPP is run by Democrats, it has a solid grade in FiveThirtyEight’s pollster accuracy ratings.)

PPP is known for its zany survey questions. It has begun including Harambe—the gorilla killed at the Cincinnati Zoo after he grabbed and dragged a young boy into his enclosure—in occasional presidential ballot questions, by way of testing just how much some voters loathe their choice of candidates this year. It also asks questions that reveal just how uninformed some people are about the news. The firm asked Texans, for example, whether they believe ACORN would “steal” the election for Clinton, even though the community-organizing group shut down in 2010.

Yet there is an actual small-but-vocal movement in favor of secession in Texas. Supporters nearly succeeded earlier this year in getting the state Republican Party to endorse a referendum on the question modeled on the Scottish independence vote that occurred in the U.K. two years ago. GOP delegates prevented a resolution backing a statewide vote from being added to the party platform in May. Former Governor (and presidential hopeful) Rick Perry infamously suggested at a Tea Party rally in 2009 that Texas could leave the Union if it wanted to. (Actually seceding might be messy, as it was in the 19th century: The White House told petitioners in 2013 that according to an 1869 Supreme Court decision, Texas did not have a right to leave the U.S.)

In the past, liberals who live on the coasts might have simply said ‘Good riddance’ to Texas, knowing that if the nation’s largest Republican bastion dropped out of the Electoral College, Democrats would all but clinch the presidency in perpetuity. But the demographic breakdown in the PPP survey suggests they might want to have a little more patience. The survey found Trump leading Clinton by just six points overall in a state Mitt Romney won by nearly 16. And the age gap is stark: While Trump is leading by a nearly 2-to-1 margin among voters 65 and older, Clinton has the edge among all others and is ahead decisively, 60-35 percent, among Texans under the age of 45. (Conversely, the idea of seceding from the Union is more popular with younger voters than it is with older Texans, which suggests increasing polarization.)

Clinton could benefit from the presence of Libertarian nominee Gary Johnson on the ballot. He drew 6 percent of the vote. But a new independent entrant, the ex-CIA officer and House GOP policy staffer Evan McMullin, isn’t faring as well. McMullin registered 0 percent in the PPP survey and has to sue Texas just to make it onto the ballot after he missed the May filing deadline by three months.

Democrats have been predicting that Texas would turn their way for years, arguing that the rising Hispanic population there would make the state competitive in presidential races after decades of voting reliably for Republicans. That shift has yet to occur. The GOP margin actually grew between 2008 and 2012, and recent statewide races for senator and governor haven’t been close, either. Could Trump accelerate Texas’s leftward move? It’s certainly possible. While the state might not be winnable for Clinton in 2016, Democrats will take solace in the finding that younger voters and Hispanics—by a 68-27 percent margin—are moving their way. The future viability they’ve long envisioned in the Lone Star State might finally be drawing closer—if only Texas doesn’t flee the U.S. before it arrives.


Article Link To The Atlantic:

The U.S. Helped Birth South Sudan. Now Americans Are Being Beaten And Targeted By Its Troops.

A brutal assault on American and other foreign aid workers in Juba marks a new low for a supposed U.S. ally and the state of U.N. peacekeeping.


By Colum Lynch, Dan De Luce, and Paul McLeary
Foreign Policy
August 17, 2016

The rape and beating of American and Western aid workers in the South Sudanese capital of Juba by government soldiers has struck a devastating blow against two of President Barack Obama’s signature foreign-policy efforts: reforming the United Nations’ troubled peacekeeping program and standing up a stable government in the world’s newest country.

The horrific July 11 attacks on the Terrain hotel facility mark a grim moment in a long-standing U.S. effort to help South Sudan achieve its independence from the Arab-dominated Sudanese government in Khartoum. The violence highlighted the degree to which South Sudanese President Salva Kiir has evolved from a valued U.S. friend to the leader of a rampaging army that has now targeted American nationals.

“The U.S. and the U.N. gambled on close relations with Salva Kiir, and it turns out that Salva Kiir in an untrustworthy partner who hates the U.N. and increasingly hates the U.S.,” said Richard Gowan, an expert on U.N. peacekeeping operations at the European Council on Foreign Relations.

In the assault last month, uniformed South Sudanese troops singled out Americans for abuse and beatings, shot dead a local reporter while forcing foreign nationals to watch, carried out mock executions, and gang-raped several foreign women, according to a report by The Associated Press, which cited interviews with multiple witnesses on the ground.

The grim details of the attack have raised questions about why the nearby U.S. Embassy didn’t send American troops to rescue those trapped at the hotel — and why Washington kept silent about the incident for more than a month until it was revealed by the AP’s report.

When about 80 to 100 South Sudanese troops stormed the compound and overwhelmed the hotel’s small security team, foreign aid workers at the facility sent desperate pleas for help to the U.N. peacekeeping mission, located less than a mile away, as well as to the U.S. Embassy. But no U.N. blue helmets ever arrived to stop the nearly four-hour ordeal.

The U.S. ambassador to South Sudan, Mary Catherine Phee, immediately asked the South Sudanese government to send troops deemed trustworthy to intervene, and forces from the National Security Service did eventually arrive, senior U.S. administration officials said. But by then several foreign nationals had been raped, and Americans had been terrorized and beaten. A South Sudanese reporter, John Gatluak, who worked for Internews, a U.S.-funded media development organization, had been hauled out and shot in the head in front of aid workers.

The incident carries potentially damaging political overtones for the Obama administration and Democratic presidential nominee Hillary Clinton, who has faced an avalanche of criticism from Republicans over how she handled a 2012 attack on an American diplomatic outpost in Benghazi, Libya.

Two days after soldiers from the Sudan People’s Liberation Army (SPLA) carried out the assault, the Obama administration rushed dozens of American troops to bolster security for the embassy there. Another 130 American troops were deployed to nearby Djibouti as a quick reaction force.

That was too late to help those hurt in the July 11 attack at the Terrain hotel. U.S. officials said the embassy had a small security contingent that was not equipped to carry out a major combat and rescue operation against dozens of armed and disorderly South Sudanese troops. Embassy staff had to move to bunkers more than once during that day due to mortar and small-arms fire around the embassy compound, officials said. With the capital engulfed in violence, the primary mission of the security team — as in other embassies around the world — was to protect embassy staff and classified material, officials said.

“We didn’t have the personnel with the mission or the capacity to respond to such a wide-scale event. Our response was to engage the government that had the capability to do so,” a senior administration official told Foreign Policy on the condition of anonymity.

“There’s no Delta Force residing at the embassy,” the official added.

The U.N., for its part, has launched an “independent special investigation” into reports that Chinese, Ethiopian, and Nepalese peacekeepers failed to respond to calls for help from the hotel. U.N. Secretary-General Ban Ki-moon’s office issued a statement late Tuesday night saying the U.N. chief “is concerned about allegations that UNMISS [The United Nations Mission in South Sudan] did not respond appropriately to prevent this and other grave cases of sexual violence committed in Juba.”

The statement, which was attributable to Ban’s spokesman, noted that the U.N. chief is “alarmed” by the preliminary findings of a U.N. fact-finding investigation that probed the July 11 attack on the Terrain hotel, and confirmed that one person was killed and “several civilians were raped and brutally beaten by men in uniform.” He urged the South Sudanese government to investigate the abuses and “prosecute those involved in these unspeakable acts of violence.”

The latest bout of fighting between government forces loyal to Kiir and those of his vice president-turned-rival, Riek Machar, erupted on July 8 after a cabinet meeting at the presidential compound and quickly spread to several locations around Juba. Researchers from Human Rights Watch visited Juba later that month and found evidence of “multiple crimes,” according to an Aug. 15 report by the group. The researchers said most of the wrongdoing was “committed by government soldiers from the Sudan People’s Liberation Army (SPLA).”

The Obama administration says it is working tirelessly to ensure that U.N. peacekeepers are in a better position to defend civilians in South Sudan. Last week, the United States led negotiations on a resolution that authorizes an additional 4,000 peacekeepers to secure the capital of Juba.

The U.S. ambassador to the U.N., Samantha Power, condemned the attack in a statement issued late Monday and demanded an inquiry into the response of the U.N. peacekeepers.

Power said the United States is “deeply concerned that United Nations peacekeepers were apparently either incapable of or unwilling to respond to calls for help. We have requested and are awaiting the outcome of an investigation by the United Nations and demand swift corrective action in the event that these allegations are substantiated.”

She also defended the U.S. reaction to the attack on the Terrain compound, saying that “the U.S. embassy responded to distress calls from the compound and urgently contacted South Sudanese government officials, who sent a response force to the site to stop the attack.”

The U.S. effort to reinforce the U.N. mission in South Sudan is part of a broader push by the Obama administration to reform peacekeeping operations to make them better suited to protect civilians from atrocities. The U.N.’s failures in Juba raise serious doubts about how much progress will have been made by the time Obama leaves office next January.

In July 2009, Obama’s newly appointed U.N. ambassador, Susan Rice, delivered an address to the U.S. Congress in which she defended the U.N.’s often maligned peacekeepers as “an essential instrument for advancing” American interests around the world.

The Obama administration, she pledged, would make their “effectiveness” and “efficiency” a key priority. In September 2015, Obama hosted a peacekeeping summit in New York to highlight the U.S. commitment to such operations and to urge other countries to pledge troops and equipment.

But more than seven years after Rice’s speech, U.N. peacekeepers continue to generate damning headlines, including on sexual assault scandals in the Central African Republic and the failure to confront atrocities in Darfur, Sudan. In South Sudan, the U.N.’s inability to stem the violence even in its own compounds has raised doubts about the peacekeepers’ effectiveness.

Since fighting erupted in December 2013, more than 50,000 people have been killed and another 2 million displaced, including more than 180,000 people seeking protection in six U.N. compounds. A U.N. board of inquiry this month faulted the world body’s response to an attack likely carried out by government forces and allied militias on a U.N. compound in the northeastern city of Malakal, which resulted in 30 deaths and 123 injuries. The latest allegations about U.N. inaction in Juba have only reinforced those doubts about the mission’s effectiveness.

“This is an incredible moment of frustration for the U.S.,” Gowan said. “The U.S. has pushed hard for UNMISS [the U.N. mission in South Sudan] to raise its game since 2013,” when the country descended into civil war. “But the U.N. has been unable to protect civilians. After the Obama summit and all the emphasis on increased U.S. support to the U.N., it seems that the blue helmets are no better than before,” Gowan added.

The chaos in South Sudan also marks a major setback for China, which has significant oil interests in the country and has taken a lead role in the peacekeeping effort there. “It’s a big embarrassment for China,” Gowan said. “China had invested heavily in South Sudan, sending its first full combat brigade to Juba and doing a lot behind the scenes to try to make the government behave properly. Now, it has not only lost two peacekeepers, but Chinese troops also stand accused of ignoring mass rape near their base.”

It’s unclear what effect the attacks, and the reports of widespread abuses by SPLA soldiers, will have on Washington’s support for the government in Juba. The United States remains the single biggest bilateral donor to South Sudan. In its budget request for 2017, the State Department asked for $30 million to help modernize the South Sudanese army so that it “respects human rights, represents its population, is accountable to elected leadership, protects the people of South Sudan, and encourages stability in the Horn of Africa” — in other words, to ensure it does not carry out the kinds of abuses it stands accused of. Another $132 million was requested for civil society and peace-building programs.

Two days after the attack on the Terrain hotel, Obama said in a statement that he was sending into the country an additional 47 U.S. troops “equipped for combat” who were being deployed “for the purpose of protecting U.S. citizens and property.” Those troops remain in Juba, along with the 130-strong quick reaction force in Djibouti.

A spokesperson for the U.S. Africa Command told FP that there are American military “assets positioned within the region that are capable of providing a wide variety of responses when requested by the ambassador” but declined to go into detail about what capabilities are available.

The State Department declined to say exactly how many American forces or staff were at the U.S. Embassy in Juba on July 11. But, in recent years, the government has said about 50 staff were working out of the embassy. After the outbreak of fighting in Juba and the July 11 attack, the United States helped secure medical treatment for victims of the hotel rampage and organized flights out of the country for 80 U.S. nationals. The State Department also scaled back the embassy’s footprint to a skeletal staff, officials said.

U.S. diplomats and aid workers in South Sudan have faced recurring security threats. In 2013, a U.S. military attempt to evacuate American citizens from a U.N. post in Bor had to be aborted when a CV-22 Osprey aircraft came under machine gun and small-arms fire, wounding several Navy SEALs.


Article Link To Foreign Policy:

Hillary Clinton Is The Silly Putty Of American Politics

But her opportunism could be the left's opportunity.


By Jeet Heer
The New Republic
August 17, 2016

Hillary Clinton entered the 2016 primaries as both the Democratic Party’s likely next president and, incongruously enough, the living symbol of a past that liberals were eager to relegate to history’s dustbin. She was the Wall Street Democrat facing the rise of economic populism; the tough-on-crime stalwart amid an invigorated movement for criminal justice reform; the gung-ho free trader at a time when nearly two-thirds of Americans think trade deals need to be restricted. She was just so ’90s.

Sixteen months later, Clinton has been reborn as a paragon of twenty-first-century liberalism. She’s the Democratic nominee running on the boldest platform the party has put forth since 1972. And after their made-for-TV display of party unity in Philadelphia, the Democrats are stuck with her, for better or worse, in scandal or in health. But as happens in all marriages of convenience, the second thoughts are beginning to set in. Can Clinton be trusted to follow through on her new set of promises? Won’t her old instincts of triangulation and compromise reassert themselves if she makes it to the White House?

The answer is: not if liberals are as clear-eyed about Clinton’s faults as she tends to be about gauging the political winds of the moment. The trouble with Clinton is not so much her congenital “moderation.” It’s that she is the Silly Putty of American politics: malleable and shapeless, taking on the imprint of whoever presses hard enough against her. But that, if liberals play their cards right, could prove to be her greatest virtue.

Clinton has been America’s champion shape-shifter for more than half a century. She has morphed, over time, from a Goldwater Girl to a McGovernik, from a feminist to a woman who stands by her man, from a centrist eager to move the party to the right to a born-again liberal crusader. To fend off her surprisingly robust primary challenge from Bernie Sanders, Clinton largely signed on to his “revolution,” at first with reluctance and then with relish.

It’s hard to think of another American politician who has had so many makeovers. There have been more New Hillaries by now than there were New Nixons. If the Clinton of the 1990s and early 2000s bore the heavy imprint of the Wall Street Journal editorial page, the new Clinton seems to have been impressed upon an issue of The Nation. Annie Oakley Clinton has become Gun Control Clinton, Gordon Gekko Hillary a Wall Street reformer, Milton Friedman Hillary a fair trader vowing to block the job-killing Trans-Pacific Partnership. The politician who famously warned of “super-predators” now echoes the chant, “Black Lives Matter.”

It would be sheer folly for Democrats to imagine that Clinton’s latest identity will somehow be indelible. Given her shape-shifting history, what can liberals hope for from a President Clinton? Is distrust the only option?

In one important sense, it is. But that’s no reason for despair or resignation—quite the contrary. Clinton has now shown that she can be moved left just as effectively as she was once moved right. Her vaulting opportunism, her Silly Putty politics, might turn out to be the very quality that makes her able to adapt to the rising expectations of the Democratic base. If liberals learn the right lessons from the way Clinton has been successfully pressed and pulled over time in different political directions, they may be able to convert her opportunism into their opportunity.

Elizabeth Warren used to love telling a story that vividly illustrates Hillary Clinton’s slipperiness. In 1998, when Warren was a Harvard professor and Clinton was first lady, Warren wrote a New York Times op-ed warning against a proposed “bankruptcy reform” law that would make it harder for those with credit-card debt to get relief. After Clinton read the op-ed, she reached out. The two women met in a “tiny room,” as Warren recounted last November to Bill Moyers, in the “bowels” of a Boston hotel. Over hamburgers and french fries, Warren offered a quick tutorial on bankruptcy law. “I never had a smarter student,” Warren recalled.

The first lady became a convert to Warren’s cause, convincing her husband to veto the bankruptcy bill. But after Clinton became a senator from New York, Republicans revived the measure and Clinton voted “yes.” Warren’s take on Clinton’s reversal was unsparing: “Big banks were now part of Senator Clinton’s constituency,” she wrote in her 2003 book, The Two-Income Trap. As first lady, Clinton had been “willing to fight for her beliefs.” But “as New York’s newest senator, it seems that Hillary Clinton could not afford such a principled position.”

But the story didn’t end there. This year, Clinton ended up courting Warren’s support for her presidential bid. Her antagonist now has her ear. Warren could repurpose her cautionary tale as a lesson for how liberals should approach a Clinton presidency. She didn’t stay silent about what she saw as Clinton’s betrayal. She didn’t worry that she’d be excluded from Clinton’s circle in punishment for her dissent. She pressed hard. And ultimately, Hillary paid heed, and drew Warren back in.

"It’s a curious fact about both Clintons that they reserve their greatest respect not for their friends, but for their erstwhile enemies."

It’s a curious fact about both Clintons that they reserve their greatest respect not for their friends, but for their erstwhile enemies, whom they actively try to win over. David Brock, who made his name in the ’90s as the man who penned fabulist accounts of Clinton scandals for The American Spectator, is now a star of the Clinton universe, his Media Matters website the campaign’s ally in counterpunching against its right-wing critics. The late billionaire Richard Mellon Scaife, a major purveyor of the Vince Foster conspiracy theories, became an ardent Clintonista. And when Hillary transitioned from first lady to senator, she buddied up to some of her husband’s chief Republican antagonists, including John McCain and Sam Brownback.

The lesson here isn’t just that Clinton is a shape-shifter, but that it pays to oppose her. Those who have stood up to her the most forcefully and relentlessly—from Newt Gingrich to Bernie Sanders—have reaped political dividends. The left must now do the same, to ensure that she keeps the ambitious promises she’s making as a candidate.

What will work best to keep up the pressure? For starters, nothing works on Clinton like the threat of political annihilation. The prospect of another challenger from the left in 2020 might do wonders to keep her in line. Early in her presidency, either Sanders or another left-wing stalwart should issue a blunt message: If Clinton backslides, if she starts to revert to ’90s Hillary, she’ll be met with a serious Democratic opponent. Groups like MoveOn can also take a page from the Tea Party’s book and threaten to primary any Democrat in Congress in the 2018 midterms who supports Clinton in trying to water down Wall Street reforms or renege on her opposition to the Trans-Pacific Partnership.

Clinton has also shown that she can be moved by pressures from outside the political system. Last August, when Black Lives Matter threatened to disrupt a Clinton campaign event in New Hampshire, she arranged to meet in private with BLM activists. An often heated discussion ensued, with Clinton insisting that the group needed a more traditional, detailed policy agenda, while her interlocutors resisted what they saw as the trap of pragmatic politics as usual. But the upshot was telling. It wasn’t just that Clinton began to give increasing prominence to BLM’s policy positions, like reforming mandatory minimums and abolishing private prisons. She began to frame criminal justice issues in a more radical manner, talking about “systemic racism” as the underlying problem, instead of simply riffing through a laundry list of flawed policies.

"Progress in America happens when militant social movements are willing to make life uncomfortable for liberal presidents."

The burgeoning social movements of the left should take a cue. The historical record is clear: Progress in America happens when militant social movements are willing to make life uncomfortable for liberal presidents, whether it be the sit-down strikes of the 1930s or the civil rights marches of the 1960s. Activists now have more tools in their political box, thanks to their online networks. Environmentalists, for instance, scored big by making the Keystone pipeline the target of their ire, combining targeted protests with online pressure campaigns to make it clear that Democrats—Clinton among them—couldn’t count on their vote until they landed on the right side of the issue.

Would President Clinton be annoyed by constant, nagging pressure from her left? Would her ferocious loyalists denounce the ungrateful dissidents for undercutting party unity in the face of Republican opposition? Yes, no doubt, on both counts. But if the left takes a chapter from Warren, from BLM, and from Sanders—and from the countless centrists and right wingers who have pressed their issues and images onto her for decades—Clinton may actually end up thanking them for the pressure.

A Silly Putty presidency, by definition, isn’t likely to be a consequential one—certainly no more than that of the shape-shifting President Clinton who came before. Hillary, for all her instinctive caution, will want to leave a legacy more substantial than her husband’s. The left can play not only on her malleability, but on her ambition. And if they can effectively mold her into the shape of American politics to come, Hillary Clinton may yet wind up in the history books as an FDR for our times.


Article Link To The New Republic:

Read Hillary’s Lips: No Pacific Trade Deal

Clinton has drawn a line in the sand, yet rebuilding support for trade may fall to her.


By William A. Galston
The Wall Street Journal
August 17, 2016

No one can be wrong about everything, not even Donald Trump. Buried within his blunderbuss attack on globalism is an important truth: The surge of imports that came after China joined the World Trade Organization in 2001 has devastated U.S. manufacturing workers.

Between the start of 1989 and the end of 1992, manufacturing employment fell from 18.1 million to 16.8 million, according to estimates from the Bureau of Labor Statistics. But then it stabilized. During President Bill Clinton’s two terms, growth in output was more than enough to compensate for rising imports and productivity. By the time Mr. Clinton left office, manufacturing employment had increased to 17.1 million.

Then the roof fell in. Between January 2001 and December 2007, the official beginning of the Great Recession, manufacturing employment fell by 3.4 million. During the next two years, it fell another 2.2 million. By January of 2010, the figure was 11.5 million, down 5.6 million—nearly 33%—in less than a decade. Since then it has inched up by 800,000 jobs to 12.3 million.

What was China’s contribution to this calamity? In 2013 the economists David Autor, David Dorn, and Gordon Hanson published their pathbreaking study “The China Syndrome.” Competition from imports, they concluded, explains about one quarter of the aggregate decline in U.S. manufacturing employment between 1990 and 2007. In the most affected regions, public expenditures ballooned for unemployment, disability, retirement and health-care benefits, compounding the economic damage.

“Theory suggests that trade with China yields aggregate gains for the US economy,” the authors wrote, but in practice the effects were more mixed. Workers and communities struggled to adjust to the trade shock. Their difficulties doing so worsened inequality. The labor market is anything but the frictionless process that theory typically posits.

The three economists returned to the fray this year, joined by Daron Acemoglu and Brendan Price. In “Import Competition and t he Great US Employment Sag of the 2000s,” they conclude that the flood of imports was a major force behind not only declining manufacturing employment but also weak overall job growth between 1999 and 2011. During this period, they estimate, competition from Chinese imports caused job losses in the range of 2 million to 2.4 million, enough to cut overall employment gains by about half.

Two more economists, Justin Pierce and Peter Schott, added an article pungently titled “The Surprisingly Swift Decline of U.S. Manufacturing Employment,” which they trace to China’s accession to the WTO. The most exposed industrial sectors experienced the largest increase in Chinese imports and the greatest losses of employment. Adding to the effect on workers, many American plants responded by investing in labor-saving production methods while increasing their reliance on offshore production.

Messrs. Autor, Dorn and Hanson speculated in their 2013 paper that the consequences of the surge in Chinese imports “may contribute to public ambivalence toward globalization and specific anxiety about increasing trade with China.” The past three years amply confirmed this prediction, as the hardest-hit communities tacked toward populism and economic nationalism.

Riding a tide of blue-collar resentment, Donald Trump, the most trade-skeptical Republican presidential candidate in decades, snatched the nomination from a bevy of more traditionally minded aspirants. On the Democratic side, Hillary Clinton was compelled to renounce her previous support for the Trans-Pacific Partnership trade deal. Responding to widespread doubts about the durability of her conversion, she declared last week that “I oppose it now. I’ll oppose it after the election, and I’ll oppose it as president.”

Make no mistake: This statement is the political equivalent of George H.W. Bush’s pledge to “read my lips: no new taxes.” Breaking that promise helped lead to President Bush’s 1992 defeat. If Mrs. Clinton were to support TPP after taking the White House, the consequences would be equally dire.

This means that the post-election lame-duck session of Congress is do-or-die for TPP. President Obama continues to advocate the trade deal. “We are part of a global economy,” he said last week. “The notion that we’re going to pull that up root and branch is unrealistic.”

So it is. But if this fourth-quarter push falls short of the goal line, as it may well, Mrs. Clinton will be left with the task of rebuilding support for an international economic agenda. This will have to begin with credible steps, which the U.S. has never taken, to compensate the millions of Americans who have lost ground and to provide them with a path to a decent future.


Article Link To The Wall Street Journal:

How To Avert America’s Brexit

By Glenn Hutchins
The Washington Post
August 17, 2016

This year’s startling election poses a real risk of touching off an American Brexit. In other words, there is a meaningful chance that 2016 could begin a retreat of the United States from the mix of economic policies and the global engagement that U.S. businesses have regarded for decades as central to their success — unless business leaders can move decisively to redefine their goals as harmonious with those of working- and middle-class families.

The key question is how we rise up in more muscular defense of the interests of U.S. workers and industries without doing permanent damage to our economy. We must also demonstrate that government can function and that business can be a constructive partner to it.

Every four years, we learn something new and important about our huge, complex, heterogenous and dynamic country. And every generation, we seem to witness an election that startles us, triggering tectonic shocks that change our politics and policies for decades to come. This could be one of those elections. Very much like the realignment revealed by the vote in Britain to leave the European Union, U.S. politics might be transforming into a debate less between right and left and more between those voters who are advantaged by globalization and those who are not.

For decades, the United States has led the way as the world’s markets for manufacturing, labor and capital have become increasingly interconnected and interdependent. This has benefited poorer nations around the world — most prominently China — as well as large multinational corporations with the reach and balance sheets to compete globally. It has also contributed to a surge in the incomes of well-educated professionals with globally competitive skills.

Since the Reagan years, our leaders in business and government have offered up a consensus view that chief among the gains from open trade is a small financial benefit — reflected mostly in lower prices for a host of imported goods — spread in a thin layer over an enormous number of people, which in the aggregate offsets the narrowly focused devastation wreaked on discrete industries, workers and communities.

While this still may be true in theory, today’s practical lesson is much simpler: The deal on offer to the U.S. working and middle classes from globalization is in tatters. We have ignored at our peril the dislocations and the uneven distribution of the benefits. No matter who wins in November, this stark message coming from voters is likely to alter fundamentally the United States’ stance toward the world by undermining the prevailing wisdom about the virtues of globalization. We need a new agenda promising fairness and growth in equal measure.

The business community’s agenda for accelerating economic growth is straightforward. It includes making our corporate tax system simpler and more globally competitive; subjecting regulations to rigorous cost-benefit criteria; reforming our immigration laws to admit more highly educated and skilled workers, particularly in the technology and engineering fields; and adopting more free-trade agreements, most notably the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, to stimulate global flows of goods and services. Corporate leaders (and many economists) are convinced that this is the clear path to accelerated growth and job formation.

However, in order to create the social circumstances necessary to make this commercial agenda at all politically feasible, the business community must find a way to support — and especially be willing to pay for — an array of policies designed to foster economic fairness that are traditionally opposed by the business lobby.

This list is long but would include increasing the minimum wage, expanding the earned-income tax credit and reforming unemployment programs; investing in early-childhood education, vocational training, prison-to-work assistance, apprenticeships and college affordability; financing a large-scale infrastructure building program; implementing robust transition assistance for workers dislocated by foreign competition and technological change; and ensuring health-care and retirement income for aging citizens in need.

The cost of all of this would be, of course, high. But the price of inaction is certainly far more dear. One of the best ways to finance it all might be a national sales levy along the lines of a progressive value-added tax.

Our nation’s business leaders must prove that we have listened to the message from the voters. To restore credibility to the business community’s agenda, we must work to set in motion the policies necessary to stimulate growing incomes and rising equality. In actuality, growth and fairness agendas are compatible and mutually reinforcing because a stronger middle class — and healthier consumer — would be as good for business as it is for society. If we are willing to invest in fairness, we can also harvest growth.


Article Link To The Washington Post: