Sharon's New Party: The big news this month was Sharon leaving the Likud to start his own centrist party. I had heard it was to happen and it wasn’t exactly a secret. The results are no big secret either which is why I didn’t write about it earlier in the month. Basically, Sharon had no choice if he wants to accomplish anything in a second term and now, if elected, he will claim to have a mandate to do what he says he wants to do as well as ratify what he did. The majority wants him to seek peace with the Palestinians but not to give away the store while doing so. They want security for peace, not land for peace without security guarantees, and he is now enunciating this as his policy. He will do what he says; he will pull out of a good portion of the West Bank and consolidate the rest behind the separation wall. He will probably do well in the elections. Likud will self-implode (and I suspect that Shaul Mofaz is staying there to keep the various people at each other’s throats as a sop to his friend Sharon but note that Netanyahu ultimately controls the party machinery), while Shas will come out a loser since they are not well equipped for this snap election and now a Moroccan is head of the Labor party which will cut into their support. The Palestinians will have their own election in January and Hamas is probably less popular now that Palestinians see that the Israelis will be coming to the table in a real way come Spring 2005. There is no benefit to having Hamas throw suicide bombers at Israel and drive people to the Right as they did in 1995 which begat them Bibi Netanyahu; the Palestinians will not support it. Who is Peretz (the new Labor party leader)? He’s been in politics for 25 years and might be well suited to dealing with the peace issues; he’s been an officer in the army but not a general of war and is used to negotiating business oriented agreements as the head of the country’s largest labor union. Problem is that he really doesn’t have enough experience to run the country which is still not at peace and people will have to think twice before voting for him. He might be a good prime minister in 3-5 years if the country is at peace by then. Interestingly, Mubarak came out this week saying that only Sharon could make peace. My feeling is that Labor tends to chew up and spit out its leaders and Peretz may be no more than flavor of the month just like Barak and Mitzna before him, especially with a European elite that will have to stomach a Moroccan as party head. Peres, who thinks he will live forever, might have figured that he will again be head of the party in 1-2 years after Peretz has his run but finally cut loose having made a deal with Sharon to get a lead job without having to actually join his party. Many Israelis always say they would vote for Peres but in the voting booth they tend not to. So it is all for vanity because Peres could run against himself and still lose. Sharon will work with Peres this way because having Peres inside his party hurts as much as helps him. In fact, it is rather clear that Sharon prefers Peres not to join this party. It is clear to me that Sharon and Peres made a deal in advance of Peres losing his position as head of the Labor Party; the minute he lost, Sharon bolted his own party because Peretz pulled Labor out of the government and Sharon didn’t want to be left governing at the mercy of his own Likud rebels..

If I were advising Sharon how to package his party, I wouldn’t try to pass it off as something new, but rather a return to the country’s fundamental principles and of his own Likud party and its contemporary inspiration which is that of Menachem Begin. Sharon can claim that he was a swing vote with Begin through Camp David and again with the peace with Jordan and that it was always a tenet of the country that one day when the time was right there would be compromise with the Arabs for peace. Begin and Sharon compromised with Sinai for Egypt, and Sharon worked with the Labor party to deliver compromises which sealed the peace with Jordan. I think that Israelis today want to reconnect with their roots both religiously and politically and that the concept of post-zionism was killed with the October 2000 intifadah. Israelis are still zionists, the concept is still very much alive and Sharon can plausibly unite the country with a zionist message that hearkens back to an authentic theme, especially since he is one of the country’s patriarchs who has truly been through it all and is viewed as a guy who is trying to fix what is broken for the next generation. Had he simply wanted to stay in power, he could easily have stayed in Likud and done nothing.

As far as the Palestinians are concerned, with Sharon they have an interesting thing to consider. Until now, their focus has been on getting as much land as possible. Sharon is showing them that they can have land and it can be a prison for them. What they really need is not just land but independence. What they can get from Sharon is independence if they can deliver security. Otherwise, he will be only too happy to give them X amount of land, but fenced in all around. That’s what I meant when I said earlier that the operative doctrine is not land for peace, but security for peace.

Condi Rice is getting kudos for taking on difficult subjects and making things happen. Cheney, I hear, is a bit on the rocks with the prez because he himself has been attracting so much heat. Bush has a real problem because the various mistruths about Iraq and stumbles over other items such as his handling of Hurricane Katrina and Ms. Miers as supreme court nominee are creating a crisis of confidence in whatever he says. The Colbert Report, a nightly half hour of political satire on the Comedy Central network, is quite funny and definitely beats out Saturday Night Live, a satirical institution for a quarter century, in content and delivery.

Europe: I’ve been asked about the French riots. Truth be told, I don’t have much of an opinion about them. I’m not sure why it is going to matter much in the long run unless the country changes its attitudes toward integration. France is a very class-driven place but one indication of change is that the lilly-white cast of television news anchors now features some people of color. Europe is being affected by Moslem immigration and it is a real question whether the UK model (a more integrationist model) works better than the French (everybody has to become Frenchlike); as the French think they want to go toward the UK model, people in the UK want to go toward the French model. Geneva this summer looked to me like Cairo and frankly I could understand how native Swiss would be really upset that the face of their country was changing with all these women walking around the city center looking like Darth Vader, not to mention what it does for tourism cache outside of Arab countries. The US is a tolerant place but I don’t see Americans ready to see streams of people wearing chador veils walking down Fifth Avenue. As for Germany, it is too early to know what Merkel’s priorities will be but it may not matter; she has a weak hand and I wouldn’t be surprised if the country goes to another round of elections within a year. The Euro is being beaten down by the lack of confidence that the Germany economy will be reformed and a general nonperformance across the continent. The dollar was supposed to be weak but it is strong for perhaps no other reason than it is better than the European alternative. Warren Buffett has changed his stance on the dollar and bet against the Euro and I just sold out of my Euro positions. Whether or not America has a big budget deficit that is perceived as a real problem, people are short-term bullish on America and the new fed chairman inspires confidence. Japan also looks like it is heading positive and this lends additional investor confidence. I think the economy is also reacting to the higher probability that the US is looking for the exits in Iraq ahead of the 2006 elections and that this will reduce the load on our economy.

China’s leadership has been pretty lousy at dealing with disasters, the latest of which was the polluted water and the bird flu. At some point, the leadership may pay the price from the people.

As far as the Iraq campaign, I am still undecided as to whether the US should get out of Iraq but for the short term I advocate staying the course. There ought to be a better reason to stay and keep spending all this money than the idea that pulling out would undermine American credibility in the region and encourage the jihadis who would be emboldened to take their holy war even closer to America’s shores. These are actually good reasons, by the way. Overall, Arabs if they think about it should want the US to stay the course a bit more. Changes in Egypt, Syria, Lebanon, Kuwait, Saudi Arabia and elsewhere are not happening in a vacuum, and I think it is fair to say that America’s weight in the region has something to do with it. Iraq is slowly gaining an army and central institutions, the Sunnis are learning to get with the political process, and American soldiers in the field think they are doing something useful. There are of course reasons to leave, chief among those that the majority of Iraqis say they prefer an end to occupation. But they also admit they will have a civil war if the Americans do leave and everyone is worried that if a void is created Iran will step into it. Overall, despite the daily drumbeat of rebel attacks and the misleading statistics the Bushies put out to show the country is improving, the jihadis are losing their war and, the more they carry on, the more they are losing the Arab street as witnessed recently in Jordan. 

At a certain point, the Americans need to exit and not intend to stay there for 10-20 years, but it must leave from a position of strength and not of weakness. Not because being weak is bad for America, but because being weak is bad for everyone in that region who would have to live with the void that would be created if America were to start such a grand adventure and abandon it in the middle.  Bush has done a lousy job of justifying this campaign both at the beginning and at present and it is not clear that Cheney and Rumsfeld were the best people for the architecture or execution because it is clear that many assumptions as to how the war would be fought and how the country would be rebuilt were simply wrong. The evidence is starting to stack up that they misled the nation about Iraq, choosing to ignore intelligence that didn’t suit their scheme (but this is nothing new in our history). The irony is that we were led into this adventure in an attempt to keep Al Qaeda out of Iraq and now its world headquarters is in Iraq. Our post-9/11 war on terrorism has had some clumsy executions such as Guantanimo and torture in Iraq and this has cost our country greatly in goodwill and given cynics reason to doubt our intentions. It would help if he could say something useful and honest. 

But the logic of the campaign is greater than Bush, Cheney and Rumsfeld. It might be lame to say to stay the course even though it is not promising because exiting is worse. The better answer is to declare a course with objectives that people can sign onto, admit past mistakes, make some changes and get more people involved and Bush has headed to that direction even if you had to read between the lines of his recent speech to get this point. The idea of trying to help Iraqis bring a better future to Iraq and help democracy in the region is not a bad idea, even if the neocons were a bit too dreamy about the idea that people would throw roses at us and the going would be easy and cheap and we underestimated how much manpower would be needed and the fact that we would be drawn into a guerilla war. 

Unfortunately, I don’t feel that I know enough to state what the goals should be in Iraq and how we should get there. For that reason, as I stated at the beginning of this discussion I am undecided about what the US should do for the long term. So far, I know we’re interested in democratic elections and a constitution but then I hear that we are backing all sorts of proposals that are not democratic. I don’t know if we are engaged in power politics, are compromising because we have no choice, or whether the Iraqis just don’t care about these ideals and we need to be realistic about supporting ideals that after all are realistic to the people who have to live there. If they don’t care, why should we? At the end of the day, Iraq is about Iraq, not us. I’m not sure what we ought to want to accomplish and why we need to be there. That’s Team Bush’s glaring failure – if I don’t know what constitutes victory, why should anyone else be supporting the idea that our soldiers are just sitting there being shot at? Clearly they are not and this is why public opinion in America is running solidly against continuing this campaign and why the Republicans know they have a problem on their hands with the 2006 elections. Party politics in America is a bit fishy; the Republicans are acting like Democrats (lots of spending and deficits) and leading politicians are taking sides against their own party (ie: Senator McCain on torture and Senator Clinton on health care reform where she is partnered with Newt Gingrich). Neither party has a consistent message and Americans seem to be hungry for pragmatic solutions. This past month The West Wing (a TV series about politics and the White House) featured a fantastic debate between the two presidential candidates that actually contained real content about real issues that went beneath the surface. We aren’t likely to see such a nuanced debate between real candidates and that’s too bad, because the debate showed that there are no easy answers to today’s problems and that slogans and ideologies cannot be applied across the board without unintended consequences. For instance, considering that Republicans want government to stay out of people’s lives, does it make sense that Bush has this government ever more intruding into people’s morality and private decisions? If the Democrats want us to be more competitive and improve education, then why let the teacher’s union keep stifling initiatives in order to feather the nests of those who stand to be hurt by shaking things up?

Something is going on between the Americans and Iranians. They seem to be reaching some sort of detente. The Israelis are toning down their positions on the Iranian nuclear program and recognizing that they are going to have to deal with a nuclear Iran. The Americans seem to be working out arrangements with them on several fronts and it is also somewhat clear that the Syrians are being let off the hook with regard to their assassination of Hariri. The Russians are in the background selling to Iran. By the way, the two new major Russian officials are pretty savvy in the foreign policy game and should help Putin chart a foreign policy course that will not be simply to give the Americans a hard time but to advance Russian strategic interests. So far the Americans seem to have been having the upper hand on the world’s chess board and indeed the Americans are the superior power. The Russians have so far been just causing trouble without much effect; they may move toward picking their battles more carefully but actually serving their interests to better effect. I’m not talking about the Indian arms deal which is a joke. I’m thinking more of their movements in the Ukraine and in the ‘Stans. The Financial Times had a very optimistic survey on Turkey; country looks in really good shape. India also seems to be picking up in manufacturing, besides the services sector we all hear about. I have a good feeling about Microsoft; even though the Xbox is a minimal part of revenues for the short term, video gaming is a big business and it seems that Microsoft is set to give Sony a big challenge in this industry. I also expect that Microsoft will give Google a tough ride just like they did to Netscape once upon a time. Remember when people used to laugh about Internet Explorer?

Here’s a thought about Iraq which is not so obvious. I’m told that the Chinese are very curious to see if the US pulls out. They are being asked by Iran to buy oil from them using Euros and to stop investing in American dollars to finance their oil purchases since they currently buy their oil in dollars. For China it is a good deal and for Iran and Europe it is a big win. If so, the Euro would go up and the American interest rate would have to rise significantly to finance its deficit. It would be very bad for America if this were to happen, but it would be more likely if China were to think of us as a paper tiger that could be ignored, a message they would receive if America cut and ran in Iraq especially with Bush the victim of his Congress telling him what to do. China is currently taking many positions in the world to shore up its economic position that are hostile to America, such as partnerships with Venezuela and Sudan.  Bush was recently in China and it is not clear that the Chinese take him very seriously given his increasingly precarious political position at home; there is a definite value in having them do so especially since they are increasingly able to ignore us on economic issues and cause great inconvenience to our interests. Remember in the long run that almost all wars stem from economic interests; World War II from Japan came about because of economic disagreements between the US and Japan that could not be resolved. The immediate point in this instance being that the economic damage of having China pull out of its American investments could well negate the economic value of pulling out of Iraq. At the least, you don’t want to have the Chinese think that pulling out of Iraq means the US is weak and therefore can be dumped on with any economic decision the Chinese choose to take. If Iran is the beneficiary of such a deal with the Chinese, we would be in effect giving them carte blanche via the Chinese to pocket oil revenues at our expense and use this to buy their way into Iraq. If the Arabs all see that China and Iran are the main beneficiaries of US weakness, they will realize where the wind blows and this will not help the US in the future either. This is not a big picture item that Congress or the American People are expected to consider and it’s not the type of thing that anyone could explain to the masses, but it is a strategic imperative that must be considered and Global Thoughts is the place where such matters are tabled specifically because it is understood that the world’s leading thinkers and other websites which round up global thought check this spot for such insights. By the way, more so than I often realize, they do. The insight being here that Iraq is small-fry; China is where the coming competition for global domination is and it may be that the US has to stay in Iraq for the time being so as not to let China use a US withdrawal to get the upper hand in this struggle.

The Economist has a survey out about Canada. Says that Canada now has the world’s second largest oil reserves after Saudi Arabia and that technology is increasingly bringing down the cost of exploiting them. Together with changes in Western Africa, it seems that the world will increasingly move away from reliance on Gulf oil. We will wake up in 10-20 years to find out that the world has indeed changed. By the way, on background, Canada has recently made a major decision to change its foreign policy to a more pro-Israel stance which will become clear on its votes in the UN, even though the country has of late been more hostile to US policy. 

Karen and I moved December 1st to a new apartment about 2 miles away but still in Manhattan. It is in one of Donald Trump’s buildings and it offers many more amenities and conveniences that I hope we will both enjoy now that we will be working parents who will also hopefully be hosting more visiting relatives and friends. This particular building is a condominium which means that people living there own their apartments (we are renting from an owner) and therefore the upkeep is much better. We are big fans of Trump’s Apprentice show and so far we think it is a very well managed building.  Karen will have a state-of-the-art brand new kitchen where she can function without having to do our version of kitchen step aerobics, and the building has many families with children who own their units and intend to stay, instead of people who rent who constantly move in and out. As you can guess, fewer trips are on schedule for the next 6 months. Hopefully, the next e-mail you get from me will have festive news.