US economy strong

We have all heard in the mainstream news media the argument that the United States is on the decline because it is running budget and trade deficits. Well, below is an excerpt from a column by David Levey and Stuart Brown published in the International Herald Tribune titled U.S. hegemony has a strong foundation.

It is sometimes difficult to explain to people why a nation that holds fewer foriegn assets than foreigner hold of its own assets is not necessarily on the decline. But I'll try anyway. If people around the world (including citizens of the United States) prefer investing in the United States to investing elsewhere there will be a flight of capital into the United States, some held by foreigners and some held by Americans. But something must balancing out this flight of money into the United States. What is that something? Dollars in exchange for foreign products, thus, the trade deficit. I'll stop chatting and let you read the column.

Would-be Cassandras have found a new threat to U.S. hegemony: overdependence on foreign capital and growing foreign debt.

The U.S. economy, according to doubters, rests on an unsustainable accumulation of foreign debt. The current account deficit - the difference between what U.S. residents spend abroad and what they earn abroad in a year - now stands at almost 6 percent of gross domestic product; total net foreign liabilities are approaching a quarter of GDP. Sudden unwillingness by investors abroad to continue adding to their dollar assets, in this scenario, would set off a panic, causing the dollar to tank, interest rates to skyrocket, and the U.S. economy to descend into crisis, dragging the rest of the world down with it.

Despite the pervasiveness of this doomsday prophecy, U.S. hegemony is solidly grounded: It rests on an economy that is continually extending its technological lead, ensuring its continued appeal for foreign investors. The dollar's role as the global monetary standard is not threatened, and the risk to U.S. financial stability posed by large foreign liabilities has been exaggerated. If anything, the world's appetite for U.S. assets bolsters U.S. predominance rather than undermines it.

Autonomy or Federalism in Iraq

Iraqi Kurds Detail Demands for a Degree of Autonomy

Kurdish leaders argue that their push for federalism is nothing more than an attempt to maintain the status quo. Iraqi Kurdistan, a mountainous area the size of Switzerland, has existed as an autonomous region since the end of the Persian Gulf war of 1991, when the American military established a no-flight zone in northern Iraq.

"Like all the nations of the world, all the people of the world, we have the ability to rule ourselves, and we've proven that in the last 14 years," Hezha Anoor, 18, said as he and his friends stood outside a Chinese restaurant here in Sulaimaniya, the capital of eastern Kurdistan.

Germany and Japan

Here's an interesting article in the Economist:

The world’s second and third biggest economies both got a little smaller last quarter. Japan’s gross domestic product contracted at an annual rate of 0.5% in the final quarter of 2004, according to figures released on Wednesday February 16th. The numbers from Germany the day before were grimmer still. Its economy shrank at an annualised rate of 0.9% in the same period. Both economies started 2004 well, but failed to live up to the expectations they fleetingly raised.

It's understandable that Germany's economy went into the doldrums after unification over a decade ago. But, at this point, one must search for explanations as to why these once fast growing economies are now so sluggish.

A Crack in the Wall

by David-Pryce Jones

The delight and the dignity of Iraqis with stained fingers proving they had just participated in choosing their leaders has been a memorable spectacle of hope. Like the peoples of the old Soviet empire, the Arabs are beginning to democratize. Decent governance in Baghdad is the immediate issue, but in due course democracy — and democracy alone — may place the Arab and Muslim world and the West on an equal footing. Huge historic forces are in play.

Power in the Arab and Muslim world has always been in the hands of those who could seize and hold it, founding dynasties if they could. Absolute rule by the strongest was a mechanism endlessly perpetuating violence and therefore stagnation. Iraq is a particularly tragic example. Saddam Hussein and his two sons were only the latest in the long and bloody line of rulers bent on exploiting that unfortunate country and its riches. What determined everything, of course, was that they controlled the security and secret-police apparatus, and this was almost entirely recruited from Sunni Arabs like themselves, a minority but one traditionally powerful enough to ensure the succession of one-man rulers. Shia Arabs and Kurds and other minorities always outnumbered the dominant Sunnis by a factor of four or five to one, but they had no access to power, unless as collaborators and quislings. Saddam’s regime piled their corpses by the hundreds of thousands into mass graves.

The complexity of the election reflects the immensity of the task of replacing absolutism by due process: There were over 7,000 candidates on more than 100 lists. Having the numbers, the Shia are certain to be the winners in the election, therefore preponderant in the forthcoming assembly and in the constitutional debate to follow. Last year, to be sure, Moqtada al-Sadr, a junior Shia cleric, tried to take a leaf out of the Sunni book by recruiting a militia and forcing his way into power at gunpoint. Bringing him to heel peacefully, Grand Ayatollah Ali al-Sistani proved that the Shia establishment is both responsible and capable. Sunni terrorists including the Zarqawi group have committed unspeakable atrocities in order to provoke the Shia into reprisals, and perhaps civil war. Sistani and other ayatollahs have restrained what would otherwise have been willing hotheads from falling into that trap.

In Iraq now, the whole spectrum of prominent personalities — politicians, ayatollahs, and clerics, tribal sheikhs, ethnic leaders, and representatives of minorities — are visiting each other in processions of Mercedes-Benzes along dusty and often shattered roads, and then sitting in backrooms to drink coffee and cut deals among themselves. The questions to be resolved are how much power the Shia are going to want for themselves, and how much they will concede; and beyond that how the state taking shape is to reconcile Islamic and secular values.

Here is an Arab version of the process that collapsed absolutism in the Soviet Union. Mikhail Gorbachev’s introduction of elections was also complicated, and seemingly controlled, but it was enough to break the militarized monopoly of power. In his refusal to sanction the use of violence for his own ends, Ayatollah Sistani is in the mold of Gorbachev, and he wants to incorporate the Sunnis much as Gorbachev also hoped to make allies of his critics and other dissidents. His approved electoral list included 30 Sunnis, because they and many others like them well understand that a boycott of this process will effectively shut them out of power. Iraq’s backroom debates are the local equivalent of the “round tables” in former Soviet republics and satellites where political and ideological opponents negotiated the concessions necessary for power-sharing.

Al-Qaeda’s Dr. Ayman Zawahiri and Zarqawi and the Sunni Association of Muslim Scholars object to these developments, and it is easy to see why: For them, and for Saddam’s Baathists too, this version of a round table spells the imminent replacement of Arab and Muslim absolutism with a social model taken from the West. Such people resent the accommodations already made to the West over the last 200 years, and fear that any more will finally undermine their identity.

Napoleon Bonaparte’s invasion of Egypt in 1798 first exposed the imbalance between the creative energies of the West and the stagnation bred by absolutism in the Middle East. Occupying Egypt in 1882 — and Palestine and Iraq subsequently — the British enforced reforms whose thrust was the institutionalization of these countries in order to close the gap between Us and Them. This was done so clumsily that Arabs instead formed a sense of their continuing subordination, and responded with nationalism. Nationalist leaders from Nasser to Saddam Hussein turned out to be nothing more than absolute rulers in another guise, extending the vicious circle of violence and stagnation. The present American-led intervention is therefore the third — and by far the most urgent — challenge from the West to the Arabs to define for themselves their place in the modern world.

Iraq’s version of a round table is already having positive repercussions. In Beirut, Rami G. Khouri, one of the most prominent and articulate Arab commentators, writes that “the sight of Iraqis enthusiastically choosing their leaders from among a wide range of options is causing many Arabs to reassess the political implications of developments inside Iraq.” This May, elections are due in Lebanon. Except for the usual collaborators and quislings, the Lebanese actively want an end to the Syrian occupation of their country, and may use the elections as a means of showing that they too can choose leaders able to hand their state to them.

No absolute ruler in the region is more threatened by the Iraqi example than Bashar al-Assad, president of Syria, a country mired in violence and stagnation. He is a fine example of a contemporary dynast, with no legitimacy except being the son of Hafez, the previous strongman and president. Recently he has been suppressing his Kurds and arresting anyone pleading for democracy. However, Syrians have had the extraordinary experience of observing Iraqi expatriates among them enjoying a free vote when they themselves have no such opportunity.

In Libya and Egypt, sons of Col. Moammar Qaddafi and Hosni Mubarak appear ambitious to succeed their fathers as dynastic president. In both countries, on the other hand, it looks unlikely that democratic reform can continue to be thwarted by the simple expedient of imprisoning anyone with ideas. In his late seventies, Mubarak has ruled by emergency decree for over 20 years, and later this year in an unopposed election will “seek” a fifth six-year term. After serving a prison sentence for promoting democracy, the admirable Saad Ibrahim aims to stand against him. Ayman Nur is another democrat and one of the few parliamentarians who do not belong to Mubarak’s monopolistic party. Stripped of immunity by Mubarak’s party, he was arrested minutes later, and is being held without trial. A crowd about 1,000 strong demonstrated, chanting, “Mubarak is a disgrace and a traitor!” They too follow events in Iraq.

Bahrain is to hold legislative elections this year. As for Saudi Arabia, it takes pride in maintaining its Muslim identity and absolute rule, but even there the retrograde royal family has agreed to hold municipal elections, limited, to be sure, because women will have no vote and a proportion of candidates are to be appointed rather than elected. Still, nothing like it has ever taken place. Nor has anything ever taken place in Morocco like the commission now trying to establish the extent of injustice and torture in that country’s concentration camps under the previous ruler.

In his State of the Union address, President Bush paid tribute to elections in Iraq, the Palestinian Authority, and Afghanistan, pursed his lips over Egypt and Saudi Arabia, and went on to say that “hopeful reform is already taking hold in an arc from Morocco to Jordan to Bahrain.” The Iranians, he added meaningfully, should stand up for their own liberty. Perhaps nothing immediate will come of this pressure to reform. Perhaps absolutism is too strong for the people to rid themselves of it, and cunning rulers will do just enough to keep the United States off their backs. At the last moment, the Shia may decide that it is payback time and they aren’t about to share power with the Sunnis. But even so, this Iraqi election has put down a permanent marker.

At this defining moment, Sen. John Kerry sees fit to deny reality with a warning not to “over-hype” the election. Sen. Edward Kennedy speaks of Iraq as a “catastrophic failure.” Everywhere politicians, academics, commentators, reporters in the hundreds, cannot go beyond the parrot-cry of “exit strategy,” too caught up in partisan politics to consider the historic context of the Iraqi election. The phenomenon reveals ignorance, and condescension too, as if Arabs are to be condemned forever to violence and stagnation, and the rights and privileges of democracy are quite beyond their benighted reach.

Mr. Pryce-Jones is an NR senior editor. Among his books is The Closed Circle: An Interpretation of the Arabs.

Islamism and Leftism in Turkey

By Robert L. Pollack

ANKARA DISPATCH

The Sick Man of Europe--Again
Islamism and leftism add up to anti-American madness in Turkey.

Wednesday, February 16, 2005 12:01 a.m. EST

ANKARA, Turkey--Several years ago I attended an exhibition in Istanbul. The theme was local art from the era of the country's last military coup (1980). But the artists seemed a lot more concerned with the injustices of global capitalism than the fate of Turkish democracy. In fact, to call the works leftist caricatures--many featured fat capitalists with Uncle Sam hats and emaciated workers--would have been an understatement. As one astute local reviewer put it (I quote from memory): "This shows that Turkish artists were willing to abase themselves voluntarily in ways that Soviet artists refused even at the height of Stalin's oppression."

That exhibition came to mind amid all the recent gnashing of teeth in the U.S. over the question of "Who lost Turkey?" Because it shows that a 50-year special relationship, between longtime NATO allies who fought Soviet expansionism together starting in Korea, has long had to weather the ideological hostility and intellectual decadence of much of Istanbul's elite. And at the 2002 election, the increasingly corrupt mainstream parties that had championed Turkish-American ties self-destructed, leaving a vacuum that was filled by the subtle yet insidious Islamism of the Justice and Development (AK) Party. It's this combination of old leftism and new Islamism--much more than any mutual pique over Turkey's refusal to side with us in the Iraq war--that explains the collapse in relations.

And what a collapse it has been. On a brief visit to Ankara earlier this month with Undersecretary of Defense Doug Feith, I found a poisonous atmosphere--one in which just about every politician and media outlet (secular and religious) preaches an extreme combination of America- and Jew-hatred that (like the Turkish artists) voluntarily goes far further than anything found in most of the Arab world's state-controlled press. If I hesitate to call it Nazi-like, that's only because Goebbels would probably have rejected much of it as too crude.

Consider the Islamist newspaper Yeni Safak, Prime Minister Recep Tayyip Erdogan's favorite. A Jan. 9 story claimed that U.S. forces were tossing so many Iraqi bodies into the Euphrates that mullahs there had issued a fatwa prohibiting residents from eating its fish. Yeni Safak has also repeatedly claimed that U.S. forces used chemical weapons in Fallujah. One of its columnists has alleged that U.S. soldiers raped women and children there and left their bodies in the streets to be eaten by dogs. Among the paper's "scoops" have been the 1,000 Israeli soldiers deployed alongside U.S. forces in Iraq, and that U.S. forces have been harvesting the innards of dead Iraqis for sale on the U.S. "organ market."

It's not much better in the secular press. The mainstream Hurriyet has accused Israeli hit squads of assassinating Turkish security personnel in Mosul, and the U.S. of starting an occupation of Indonesia under the guise of humanitarian assistance. At Sabah, a columnist last fall accused the U.S. ambassador to Turkey, Eric Edelman, of letting his "ethnic origins"--guess what, he's Jewish--determine his behavior. Mr. Edelman is indeed the all-too-rare foreign-service officer who takes seriously his obligation to defend America's image and interests abroad. The intellectual climate in which he's operating has gone so mad that he actually felt compelled to organize a conference call with scientists from the U.S. Geological Survey to explain that secret U.S. nuclear testing did not cause the recent tsunami.

Never in an ostensibly friendly country have I had the impression of embassy staff so besieged. Mr. Erdogan's office recently forbade Turkish officials from attending a reception at the ambassador's residence in honor of the "Ecumenical" Patriarch of the Orthodox Church, who resides in Istanbul. Why? Because "ecumenical" means universal, which somehow makes it all part of a plot to carve up Turkey.

Perhaps the most bizarre anti-American story au courant in the Turkish capital is the "eighth planet" theory, which holds not only that the U.S. knows of an impending asteroid strike, but that we know it's going to hit North America. Hence our desire to colonize the Middle East.

It all sounds loony, I know. But such stories are told in all seriousness at the most powerful dinner tables in Ankara. The common thread is that almost everything the U.S. is doing in the world--even tsunami relief--has malevolent motivations, usually with the implication that we're acting as muscle for the Jews.

In the face of such slanders Turkish politicians have been utterly silent. In fact, Turkish parliamentarians themselves have accused the U.S. of "genocide" in Iraq, while Mr. Erdogan (who we once hoped would set for the Muslim world an example of democracy) was among the few world leaders to question the legitimacy of the Iraqi elections. When confronted, Turkish pols claim they can't risk going against "public opinion."

All of which makes Mr. Erdogan a prize hypocrite for protesting to Condoleezza Rice the unflattering portrayal of Turkey in an episode of the fictional TV show "The West Wing." The episode allegedly depicts Turkey as having been taking over by a retrograde populist government that threatens women's rights. (Sounds about right to me.)

In the old days, Turkey would have had an opposition party strong enough to bring such a government closer to sanity. But the only opposition now is a moribund People's Republican Party, or CHP, once the party of Ataturk. At a recent party congress, its leader accused his main challenger of having been part of a CIA plot against him. That's not to say there aren't a few comparatively pro-U.S. officials left in the current government and the state bureaucracies. But they're afraid to say anything in public. In private, they whine endlessly about trivial things the U.S. "could have done differently."

Entirely forgotten is that President Bush was among the first world leaders to recognize Prime Minister Erdogan, while Turkey's own legal system was still weighing whether he was secular enough for the job. Forgotten have been decades of U.S. military assistance. Forgotten have been years of American efforts to secure a pipeline route for Caspian oil that terminates at the Turkish port of Ceyhan. Forgotten has been the fact that U.S. administrations continue to fight annual attempts in Congress to pass a resolution condemning modern Turkey for the long-ago Armenian genocide. Forgotten has been America's persistent lobbying for Turkish membership in the European Union.

Forgotten, above all, has been America's help against the PKK. Its now-imprisoned leader, Abdullah Ocalan, was expelled from Syria in 1998 after the Turks threatened military action. He was then passed like a hot potato between European governments, who refused to extradite him to Turkey because--gasp!--he might face the death penalty. He was eventually caught--with the help of U.S. intelligence--sheltered in the Greek Embassy in Nairobi. "They gave us Ocalan. What could be bigger than that?" says one of a handful of unapologetically pro-U.S. Turks I still know.

I know that Mr. Feith (another Jew, the Turkish press didn't hesitate to note), and Ms. Rice after him, pressed Turkish leaders on the need to challenge some of the more dangerous rhetoric if they value the Turkey-U.S. relationship. There is no evidence yet that they got a satisfactory answer. Turkish leaders should understand that the "public opinion" they cite is still reversible. But after a few more years of riding the tiger, who knows? Much of Ataturk's legacy risks being lost, and there won't be any of the old Ottoman grandeur left, either. Turkey could easily become just another second-rate country: small-minded, paranoid, marginal and--how could it be otherwise?--friendless in America and unwelcome in Europe.

Mr. Pollock is a senior editorial page writer at the Journal.