James Landrith is...Taking The Gloves Off: syndicated

left-libertarian blogger, publisher, USMC veteran and civil liberties activist

 

Obama: Walking the Tightrope on Iran 
June 22, 2009
Ivan Eland

When massive turmoil occurs in an important country, U.S. policymakers struggle to make heads or tails of it and arrive at an appropriate reaction. Kibitzers and pundits, however, have no trouble reaching immediate and sweeping conclusions and egging on the policymakers to further their own agendas. So far, President Obama has done a reasonably good job in resisting such on-the-spot analyses and advice on the massive protests over the election in Iran.

Hawks on the right have criticized Obama’s engagement policy with a country they nostalgically remember in the “Axis of Evil” and have urged him to speak out forcefully about alleged election fraud by the Iranian government. Senator John McCain fumed on the Today show, “He should speak out that this is a corrupt, flawed sham of an election.” Danielle Pletka and Ali Alfoneh of the neo-conservative American Enterprise Institute argued that you don’t have to be paranoid to wonder if the crude vote rigging was done on purpose to trigger massive protests so that Iran’s Revolutionary Guard could launch a military coup against the theocratic regime. Really? Sounds kinda paranoid to me. And the kind of paranoia that turns the theocratic regime into something even worse—a military dictatorship—thus, casting doubt on Obama’s engagement policy and supporting an AEI-style “get tough” policy on a nefarious country.

On the other end of the political spectrum, Joseph Cirincione of the Plowshares Fund, an avid liberal advocate of negotiating with Iran to convince it to abandon nuclear ambitions, foresees change so fundamental that whatever government is in power will have to appease the multitudes by opening to the West. This development, of course, would provide an even greater opportunity to pursue his goal of Iranian nuclear disarmament. When such political turbulence in a country occurs, outside observers usually see what they want to see and use it as a justification for pushing U.S. policy toward their side of the debate.

But how is Obama weathering the pressure? So far, fairly well. For him and for U.S. policy, the more dangerous of the two camps is the hawkish one. For the hard-liners, getting tough on “evil-doing” Iran is such an end in itself that they choose to ignore the obvious: the historical animosity between the two countries makes whatever the U.S. government supports in Iran radioactive, and it would be used by the Iranian government against the protest movement.

Thus, Obama has been laudably trying to refrain from counterproductive slips of the tongue. Most important, he has said that it would be counterproductive “to be seen as meddling” in the contested Iranian presidential election. But he did say that he had “deep concerns about the election,” was deeply troubled by the post-election violence, and called on Iranian leaders to observe the democratic process. He also argued, probably correctly, that policy differences between President Mahmoud Ahmadinejad and the challenger, Mir-Hossein Mousavi, may have been overstated; but he then asserted that, “Either way, we were going to be dealing with an Iranian regime that historically has been hostile to the United States, that has caused some problems in the neighborhood, and is pursuing nuclear weapons.”

Although by the standards of an interventionist superpower, Obama has done a credible job of staying out of the Iranian political tumult, it is not enough. Even Obama’s limited concerns and cautions to the Iranian regime have brought charges from that government that the United States is once again meddling in Iran’s internal affairs, which will likely be turned against the protesters by calling them U.S. lackeys. And for a country that began the original historical animosity between the two countries by overthrowing a democratically elected leader to bring back the autocratic Shah, has created its own problems in Iran’s neighborhood by invading and occupying next door Afghanistan and Iraq, has the most capable nuclear arsenal in the world, and supports Israel, the only nuclear power in the neighborhood, such statements by even a relatively modest U.S. president seem arrogant to Iranians.

And because it lives in a rough neighborhood, any government in Iran—reformist or hard-line—will probably continue to have support for its nuclear program from across the Iranian political spectrum, thus dimming Cirincione’s optimistic outlook about negotiating away Iran’s atomic effort.

Obama needs to say even less about the unpredictable Iranian turmoil—in hope that “doing no harm” to the reformists will help them prevail—and be resigned, over the long-term, no matter what kind of government eventually arises, to living with the possibility of a nuclear-armed Iran just as we have lived with all the other nuclear-armed countries in the world.

New from Ivan Eland! THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed (Updated Edition) Most Americans don’t think of their government as an empire, but in fact the United States has been steadily expanding its control of overseas territories since the turn of the twentieth century. In The Empire Has No Clothes, Ivan Eland, a leading expert on U.S. defense policy and national security, examines American military interventions around the world from the Spanish-American War to the invasion and occupation of Iraq. Learn More »»

A Realistic Postmortem on China’s Tiananmen 
June 22, 2009
William Ratliff

Some pundits have taken to calling the violent military repression of post-election protesters in Iran a “Tehran Tiananmen.” Clearly “a Tiananmen” has come to mean a military dispersal of largely peaceful demonstrators, taking its name from the Chinese military’s shutting down of nearly two months of student protests in Beijing’s Tiananmen Square in June 1989. But while this journalistic shorthand adds drama to today’s commentary, it also misses the broader consequences of what happened in China at that time.

On the recent twentieth anniversary of what has come to be known as the Tiananmen Massacre, some Western analysts opined that while the students lost the battle for political rights in 1989, they won the war. But a realistic postmortem of the showdown and aftermath refutes that politically feel-good conclusion.

This reality has recently been shouted from the grave by the last reformer to hold the top post of General Secretary in the Communist Party of China (CPC). That was Zhao Ziyang, who was purged during the crisis because he refused to order military action against the students. His posthumous memoirs, Prisoner of the State: The Secret Journal of Premier Zhao Ziyang, provide an unprecedented inside story of how the CPC blamed its top leader for tolerating the event that embarrassed (and some said threatened) the state. He spent the rest of his life under house arrest.

Little did the party imagine that Zhao would use those years of isolation (1989–2005) to secretly tape-record his analysis of the events he lived through and often guided as well as his evaluations of China’s economic reforms and post-1989 political stagnation. Or that those tapes would be smuggled out of the country and published for the Tiananmen Square anniversary in English and Chinese—though not in mainland China.

A little history helps to put Zhao’s story into perspective.

Beijing University students first flooded Tiananmen Square in 1989 to mourn the April 15th death of Hu Yaobang, the reform-oriented CPC chief from 1980 until his demotion in January 1987. Hu had been replaced by Premier Zhao, also a reformer. Both were protégés of patriarch Deng Xiaoping, the most powerful man in China, who in 1980 had chosen them to jointly carry out the most liberalizing economic reforms in Chinese history.

For almost two months the student demonstrations, which built on initially modest demands, ebbed and flowed, and as time dragged on a minority of the most radical students became increasingly vocal, demanding and provocative. Government actions ranged from confused to well-meaning, from alarmist to violent . Long before the tanks actually cleared the Square, any chance of serious political reform was tossed off the agenda.

How could demonstrations go on for so long under a regime hardly known for its indecision or timidity? The party’s top decision-makers were split between the Zhao camp that favored dialogue and Premier Li Peng and followers who wanted to clear the Square immediately. Even so, Zhao thought he found a compromise when in late April Li said he would support dialogue permitting the students to “express themselves freely” before going back to their classes. But according to Zhao the Li camp then did all it could to “block, delay and even sabotage the process.” As policy stumbled along, Deng and lesser party elders were drawn in. (Much of this story is substantiated in the top-level CPC documents smuggled out of China and published in 2001 as The Tiananmen Papers.)

Step by step, at several critical junctures behind Zhao’s back, Li convinced Deng that he had to use military action to guarantee the survival of the economic reform program, a story well known already from the 2001 anthology The Tiananmen Papers containing top-level CPC internal documents. Deng’s mantra became “stability,” not too surprisingly in a country just barely escaping from two centuries of unremitting chaos and finally making productive economic reforms.

What were the main features and consequences of the 1989 Tiananmen developments ?

• Death. The name “Tiananmen” has come to represent the military repression that resulted in the deaths of some hundreds of students and others, but also of hopes for the unprecedented respectful dialogue the vast majority of the students sought with CPC and government officials.
  
  
• Ignorance and politics. Many leaders in the West promptly proclaimed that the “massacre” proved the decade of reforms after Mao’s death was a fraud, that China was the same old butchership it had always been. U.S. President George H.W. Bush did not buy this line, but presidential candidate Bill Clinton led the charge when he condemned Bush’s moderation as “coddling butchers from Baghdad to Beijing.” In reality, the prolonged showdown suggested just the opposite, an unprecedented level of relative moderation within the upper ranks of the CPC that caused paralysis which in turn made the drawn-out activities of the students possible.
  
  
• Less Political Reform. Despite their bravery and idealism, when the students pushed the showdown with the government to physical confrontation they unwittingly tipped the ideological balance of power within the CPC away from the uneven but relatively positive moves toward political opening that occurred in the 1980s. Since Tiananmen the type of political reform Hu and Zhao sought has generally been thwarted by traditional authoritarian paternalism sharpened on occasion—as with the Falun Gong—by remnants of Maoist brutality. Since post-Tiananmen Chinese have felt powerless to change basic political institutions, they have focused instead on getting ahead economically, with successes that have awed the world.

China has become a model of national economic development over the past three decades, and the state has sometimes played a constructive role in guiding that change. But the state’s greatest contribution was just leaving the industrious Chinese people alone to work hard for their own benefit and make the national economic development happen. Since Tiananmen, significant Chinese political reform has been on hold. Hopefully Tehran’s current troubles will not result in the same prolonged political stagnation that settled upon China after the violent showdown twenty years ago in Tiananmen Square.

William Ratliff is Research Fellow at the Independent Institute and a member of the Board of Advisors of the Institute’s Center on Global Prosperity. He is also a Research Fellow and Curator of the Americas Collection at the Hoover Institution. He travels frequently in China and Asia. His latest book is Vietnam Rising: Culture and Change in Asia’s Tiger Cub.

The Rise of the Poor 
June 17, 2009
Alvaro Vargas Llosa

WASHINGTON—Two years ago, the life of Manuel Mendez del Rio, general director and head of global risk management at the Spanish bank BBVA, took an unexpected turn. His fellow directors decided to entrust him with the responsibility of launching a BBVA Microfinance Foundation that would bring credit to the poor in Latin America. The conditions were simple: He would have 200 million euros (about $277 million) at his disposal, but he would have to run a profitable enterprise because the foundation would not get one more penny from the bank.

The mission fit Mendez del Rio’s own philosophy well. He believed in enterprise rather than charity and was convinced that the big financial institutions were missing the chance to serve potentially 500 million poor people in the world by placing most of their focus on their clients’ collateral and guarantees, as opposed to the merits of their business proposals. And, it could revolutionize economic development.

To be sure, a few other microfinance institutions lend money to the poor without asking for collateral. The best known is Bangladesh’s Grameen Bank, which won the Nobel Prize a few years ago. But it is funded by selling bonds guaranteed by the Bangladeshi government and operates on the principle of peer pressure—each borrower has to be part of a group that makes sure he or she manages the loan responsibly and pays it back. Mendez del Rio manages risk the old-fashioned way—by gauging the sustainability of the proposals put forth by borrowers. And he has no government backing.

The BBVA Microfinance Foundation went around Latin America buying various nongovernmental or semi-governmental organizations and turning them into small private banks obliged to survive by making a profit. From Colombia to Peru to Chile to Puerto Rico, the foundation absorbed, restructured and trained the various institutions, and then started to engage the entrepreneurial poor. In just one year, it has lent money to more than a million Latin Americans. In Colombia, the average loan, typically involving commercial activities, amounts to $870, while in Peru, where the lending relates primarily to farming and livestock, the figure is $1,600. The rate of delinquency is a mere 3 percent. The foundation is on the verge of being profitable and will reinvest all the money, expanding its reach to other parts of the world.

“We want the activities we fund to be sustainable,” Mendez del Rio recently told me over lunch, “because that is the only way to effect economic development for millions of poor people.”

The obstacles standing in the way are not a dearth of business initiatives, lack of infrastructure, or insufficient education and capital. The main problem is that government policies are inadequate and insensitive to the entrepreneurial revolution now taking place among people once considered beyond the reach of bank loans and the market.

“Current regulations,” says Mendez del Rio, “are focused on regulating the microfinance institutions themselves rather than setting a very general framework for the activity, and this has the effect of mixing up productive loans with a minimal delinquency rate with consumer loans, mostly through credit cards, in which excessive credit and high delinquency are the norm.” In other words, government rules are hurting the good guys in attempting to pre-empt the bad ones.

Mendez del Rio wants nothing from politicians—except sorting out the property registries, which are a mess, and clearly defined property rights. Because of current inefficiencies, there is no reliable registry of the credit records of most of the poor. He considers this unfair: “The greatest wealth that the majority of poor people have to start with is their honesty and fulfillment of commitments, something that, in the absence of records, is lost.”

In his book “Security Analysis,” Benjamin Graham, the legendary Wall Street figure and theoretician of “value investing,” wrote that “traditionally the investor has been the man with patience and the courage of his convictions who would buy when the harried or disheartened speculator was selling.” At a time when the world is picking up the pieces of the last speculative bubble, it is heartening to know that there are still investors out there renewing the promise of free enterprise for the excluded masses.