Earlier this month Karen and I checked into the W Hotel on Times Square and pretended we were on vacation, and Manhattan during December is a real treat from the Tree at Rockefeller Center to a general feeling of festivity in the air (there are guards around the tree who will tell you all about the tree, which this year comes from someone’s back yard in upstate New York). Went to a day spa, saw some shows, did a little shopping at Saks Fifth Avenue, you get the idea. It’s a great way to be away without the flight and passport. We saw this fun new play on Broadway called Avenue Q. It’s one of the toughest tickets in town and the show is a grown-up version of Sesame Street with a mixture of people and puppets. I was prepared to think it would be stupid and not like it, but it really was funny. It’s also a bit raunchy and let’s just say that puppets can say and do things that humans would not tolerate from humans on a theater stage. 

Anyway, another shocking thing I noticed was when I went to the men’s room there was this lady standing around near the entrance and I didn’t know why she was there. Then after someone walked out and I was about to walk in, so did she. And the person walking out was also a woman. This happened twice that afternoon. It seems that people in New York are getting tired of the inequality that results with women standing on line for restrooms and men not having to (have you ever noticed this because women need seats and they don’t build more of them), especially when the intermission is only so long and you have to get back to your seat or else you have to stand in the back. Nevertheless, the one time I saw a long standing line at the men’s room was at La Cage Aux Folles (the show draws a large gay crowd and I guess they take their time as well – I saw an unusual number of people in there spending time preening themselves in the mirrors). Sometimes the interesting show in the City is not always what’s on stage.

Karen is to have some anticipated corrective surgery on January 10 followed by a month of bed rest, so I expect to be local through at least the middle of February, and plans for several months afterward are on hold. My company is opening a business school in India this year and I am to go there to do legal preparatory week the third week of March, but that trip is as well tentative. In the meantime, we are heading south to Puerto Rico for the New Year's holiday weekend to thaw out from the winter, and you can stay tuned for the travel notes in about 2 weeks.

Quite a few things have come up in the past month in terms of Global Thoughts so here goes. Overall it can be said across the board that on the matters of foreign policy which follow, the American position is that of broad bipartisan consensus. In my holiday-time discussions with people around the world, I sense across-the-board cautious optimism for the medium to long term in almost all areas ranging from Iraq to Israel-Palestine. With the exception of Arafat’s unanticipated death and the Indian elections upset, you did very well if you went with my predictions in 2004; the one on the Euro hitting 1.35 was spot-on. In response to requests by readers, I am highlighting certain areas in bold to make it easier for those who find these articles too long to read.

Iraq

If it isn’t clear, it should be: The Coalition of the Willing is a joke. America is paying for everything down to the breakfast cereal and bullets being used by our partners. Huge cargo planes filled with cash (sometimes a billion dollars per plane) fly regularly to Iraq to keep paying everyone off. Whether or not the upcoming election will work I don’t know. I am suspicious that the plan does not work well on the local level to make the different factions feel adequately represented. Sistani’s direction seems to be at the correct gut level and I am not hostile to him in this scene. Democracy will be determined by whether people feel government represents them and not whether there is an Islamic factor in public policy. Anyone who has spent time in the Arab World knows that Islam is a major part of people’s lives, more so than Christianity is in the West and, here in America, we are realizing across the board that our own taboo against religion in the public sphere is becoming overdone and politically hazardous to the liberal parties – we don’t want to take Christmas out of the public eye and the Democrats know they have to talk about God if they want to get back into power. My sense of Iraqi Shiism is that it is not likely to be theocratic as Iran, and that the clergy are not looking to run the country, but to make sure that the country leaves them franchises to get earnings from religious shrines and the freedom to run their religious affairs. Iraq will continue to be a matter of American involvement for at least the next several years and the key to the elections is to get the Sunnis on board, something the US is at last trying to do. We have to make those elections work, one way or another. I also at this point think that Rumsfeld ought to resign and let himself be replaced and give Bush a clean slate going into his second term in terms of giving us more leeway to have another chance at convincing the rest of the world as to the merits of our policy. It will help America to have Rumsfeld out of the scene, and I don’t particularly see the value to him staying. I am not sure what he has accomplished beyond the war campaign and his remaining in his post will just be a bogeyman for critics of Bush.

The neighboring countries have much to fear from Shiites and one must consider how much Sunnis detest Shiites and vice versa, but they must and probably do realize 4 things: (1) Just sticking it to the US via Iraq is not going to do them any good except to keep the whole area unstable and it will really be awful for the region if the Americans pack up and leave; (2) Iraq Shiism is not Iran and what Iraqis have in common as Arabs is still more than what Iraqi and Iranian Shiites have in common as Persians vs. Arabs (although the caveat here is that the Iranians are trying to move more people into Iraq); (3) the reason the Shiites have been on the losing end for the past century is that they opted out of elections in Iraq last time it happened. They have to consider whether or not they want to make the same mistake. (4) Iran is a big threat to the region; they need an Iraq that will stand up to Iran as opposed to be manipulated by it, and if the Sunnis sit out they increase the odds of an Iranian manipulation of power in that country.

North Korea

I fear a repeat here on the Iraqi file; the threat is probably exaggerated according to the available intelligence, which is not much.

Russia 

The problem with Putin is that till now he was given a space of grace by the rest of the world because he was seen to be cleaning up a dirty system of oligarchs. Now it is apparent that today’s Russia remains terribly corrupt and that he and the people around him are no better than what was before. His grace has ran out and this past week’s exit of Deutche Telecom giving up its $1.25 billion stake in a Russian cellular company (one of the more profitable things to hold in that country) is a distinct sign that even with Germany’s Schroeder making deals with Putin as European lead, the future of investment is not in that country. Putin did not suffice with going after Yukos; he is trying to reconsolidate economic interests in the hands of the state. What the West can do here is to bring the price of oil down – it will solve many evils, such as put pressure on Putin and Iran, as well as to bring the Saudis to deal realistically with its problems. The sense in the West is that Putin is miscalculating viz. the Ukraine, Georgia, Yukos and in his general management of the country’s foreign policy, and there is no good reason to attack him while he is weakening Russia all by himself. Russia is good for those in charge but not for anyone else. I was hoping he would do more for the country as a whole.

Islam and the State of Gulf Countries

My sense of things is that Islam is changing even though Westerners don’t see it happening. People are seeing through the hypocrisy of Islamic banking products which were attempts to get around Islamic restrictions against interest. Fact is you can’t get around this because there is an open market for money and people want to be paid for their use of it. The answer is not to make a better “Islamic” banking product but rather to explain away the need for it, and that’s pretty much the way things are going, albeit in a face-saving way. Various clerics around the Middle East are raising questions in sermons, books and television programs about the excesses of religion, and in Iran it is clear that the clergy is not popular. In Gulf countries, we see more women in “men-only-like” public roles (the new minister of economics and planning in the Emirates is a woman Skeikha Lubna).   In Asia and the West, there are also movements of moderate moslems who are being influenced by their surroundings and who want things to change in their religion (they want to see a reformation akin to what happened with Judaism and Christianity) – true, there are also people being radicalized as they feel alienated by their Western surroundings, but they are not the majority and we pay attention to them because they are loud. Overall, I feel the trends are moving in a long-term positive direction here. Saudi Arabia, flush with oil revenue, continues to throw money at its problems rather than really solve them; it is still a high-alert area and nobody expects anything to happen till the crown prince dies. Still, there is movement even in this country, just slower than it should be. 

I finally watched Fahrenheit 9/11, a disturbing and unabashedly unbalanced film that raises significant questions, particularly about Saudi Arabia. It also notes that we were hosting the Taliban just before 9/11 and that a good number of the people now running Afghanistan were advisors to a company that entered into a contract with America just after our invasion to build a profitable pipeline through the country and that it was in our financial interest to forget about Bin Laden soon afterward. It says that Saudi investment of close to 1 trillion dollars constitutes ownership of 6-7% of America’s economy. Hard to figure we could ever seriously give the baddies a hard time when so much of our establishment is on the take from them. The film alleges that the Bush family and their associates have received $1.4 billion of Saudi money, far more than the $400,000 a sitting president receives as salary. Even if you love Bush and don’t think the film is credible, it is well-produced and needs to be watched by serious observers of current world affairs because it simply cannot be ignored.

Israel/Palestine

Post-Arafat the parties are finding their positions, and the USA realizes it will promote final status negotiations rather than step-by-step Oslo type frameworks, even if implementation will be slow. People want to see where things will go in the end in order to have faith in the beginning. Mubarak wins my award for Most Improved Statesman of 2004; he is obviously taking some risk to put his butt on the line for moving things forward with Israel, the PA and the rest of the Arab world with his advance initiatives in Syria and Kuwait. When I find that Mubarak pays more compliments to Sharon than my business partner does to me, I know that the world is not as it used to be. People right now want to see how the elections go. The fact that I am now reading that the Israelis are going to civilianize border crossings with the Palestinians means there is no doubt that things are set to change once the elections take place. The post-Arafat future is likely to come faster than many of us thought it would. Mubarak clearly recognizes that Sharon is in a strong position – Arabs want to see this before dealing with Israel. In 1995, the main reason nobody dealt with Peres is that he called for elections after Rabin died instead of negotiating, and the Arabs thought he would not be in a position to deliver the goods if he lost.

Syria

US has actually been telling Israel to go-slow with Syria, making it easy for Sharon to ignore them. The US mulls the possibility of tactical military acts against the Syrians out of frustration with their support of insurgent groups in Iraq (ie: the recent suicide bombing of a mess-hall tent in Mosul is believed to have come from a group that was brought in via Syria), which means not only tolerating such groups on their soil but active support among higher-ups in the Syrian government. The Israelis heard out the Syrians and decided they weren’t serious after the Syrians said they wanted $6-7 billion to modernize its army as part of a deal. Right now, there is a strong feeling in Israel that peace with Syria is not very important and that they enjoy having the Golan more than they feel they need peace with Syria or feel threatened by it. They don’t expect taxes or military requirements to go down with peace; quite the opposite: they are being told to expect more service this year for the Gaza pullout. If the Syrians come forth and lay some honey on the Israelis, the Israelis will come around but they shouldn’t expect to see the Israelis laying rose pedals at Ben Gurion airport for Assad, just as the Americans didn’t get that kind of reception in Baghdad. 

Iran

This is a bigger problem than the press makes it appear, and it would not surprise me if the Americans take military action in 2005 even though I don’t expect this to happen. Some analysts say it is the next big thing. They feel that although the Iraqis prefer the Americans to stay out of their affairs thinking in retrospect that Saddam was weak and they themselves are divided about what they want for the future, the Iranians want America to invade and get rid of their cleric government which is strong and which cannot be removed any other way. If America and Europe would simply cut off the oil to Iran, it would go bankrupt and have to cry Uncle. Iran is the only country with true economic and nuclear potential and today they are the leading source of terror in the world and they are meddling in Iraq preventing progress from taking place, as well as trying to meddle in Lebanon and Israel via Hizbullah and Hamas. The Lebanese are dying to make peace with Israel because they want Hizbullah out, but we all know the Hizbullah is a proxy for Syria and Iran. If Syria didn’t have Iran to lean on, they’d be out of business in a day. The thinking goes: Get rid of Iran and you will have an economic revolution featuring Turkey, Iraq and Iran from which the whole region will finally change. Iran is a potentially easier country than Iraq to deal with; you don’t have the mess of tribes and ethnicities that you do in Iraq, and you have borders with all the other countries such as Pakistan and Afghanistan from which to project power (presumably that would finish off Bin Laden). Yessir, from Morocco to Afghanistan, there is no other show in town. Hmm, well you can think about it.

The War Against Terror

Tom Keane, chairman of the 9/11 commission, spoke recently in my neighborhood, and he is a good speaker. One thing you won’t read in their report is his emphasis on changing attitudes toward the Arab world and giving them hope and changing our bankrupt Saudi policy. It is an overlooked area of policy, he says. He really dug into the idea that congress and the intelligence services sucked it up with incompetence and emphasis in their personal fiefdoms. I think he stole his report from Global Thoughts. What I didn’t know is that the Director of Homeland Security is required to brief and give reports to something like 150 committees and subcommittees on Capitol Hill – he says he spends over 90 days a year just testifying. This is nuts and means that nobody in his job could possibly spend his time running homeland security. My sense is that the new intelligence law just creates a new layer of bureaucracy and that as long as we have powerful entities such as the congressional committee on armed services which is more interested in its fiefdom than in national security (ie: witness the billions of dollars going toward this network of satellites that have no use and that haven’t been successfully killed for years despite opposition), we will never actually get real about all this.

The problem with Guantanimo is that people are brought to hearings and hear unclassified evidence against them and respond to it. They are then convicted on the basis of “classified” evidence that they don’t even get to hear, nor do their lawyers. It is a catch-22 and a sham; they don’t even know what is going on in this regard. People are also being thrown out of government positions on the basis of such evidence that they never get to see. It is all very bad and undemocratic.

Israel won the war against terror by playing offense by hunting down and killing terrorists and sewing up its borders; America is credited with winning by having a good defense. The question of whether or not America is winning is to some extent proving a negative; nothing has happened since 9/11 and we don’t know if it is because we have prevented anything or that nobody has tried. Is Bin Laden an overrated flash in the pan who peaked too early, as some now say he is? Is Iraq and Afghanistan a sideshow with any tangible benefits? How seriously can you take the Afghanistan war effort which features 11,000 troops – Manhattan has more policemen on its force. So far, as far as we know, nobody has actually been prosecuted for being a terrorist and we aren’t reporting that we are killing anyone. Experts insist that we are accomplishing a lot behind the scenes. Based on review, I have no doubt that we are not getting much cooperation from Pakistan as far as Bin Laden or Mr. Khan’s nuclear program and I expect that at the elite level we have made our peace with this or traded it for something else which I am not aware of. I have said for several years that Bush seems to want Bin Laden not to be caught; I thought maybe they would catch him in time for the 2004 election, but now I think they will just keep him there as the bogeyman.

I think that the most important thing to remember is that despite the rumblings of the 2004 election campaign and the Iraqi campaign, the overall trend in the Arab and Moslem worlds are that people are becoming more optimistic. The economy is looking up, Arafat is dead, Afghanistan had elections, Iraq is going to have elections, and there are reforms taking place in the region. Pre-9/11, the mood was much more bleak and angry, and it is from such moods that Bin Laden draws when he launches attacks. Look back on the chronology and you will see this. Right now, the trend in the Moslem World is that other movements are passing him by in places such as Saudi Arabia, that he is itching for attention and is changing his tone in search of a new voice, and that strategically not much has really gone his way since 9/11. Keep hope alive with trade agreements and economic initiatives, move the peace process with Israel and the Palestinians forward, get the price of oil down and force changes in the region, and make sure the Iraqi elections are legitimate and useful, and the world will not be as interested in Bin Laden. Studies in Europe show that as immigrant Arabs and Africans labeled “Moslem” move up the socio-economic ladder, they do not refer to themselves and are not perceived as “Moslem.” 

Economics

The cuts in the budget of America’s National Science Foundation show where the Bush administration is at in terms of science. It is important to get the price of oil down; so far we have seen some of this. The need to bring down budget deficits is important to avoid continued damage to the US dollar. I believe that in the longer term the Americans will pay for the weak dollar, high budget deficits and the tightened immigration policy – all things that will reduce America’s centrality to the world. People will buy Euro, invest and study elsewhere. Oil-producing countries have shifted a sizable percentage of their Dollar holdings to Euros, and I expect the Euro to continue to rise against the dollar. This year the number of Indian students taking the Graduate Entrance Exam to study in the US was down 65% over last year. The real estate bubble crisis awaits, and it will dwarf the stock market crash when it finally happens, perhaps when it becomes time to refinance all the variable rate mortgages that are out there.

Let’s talk about oil. Most of us here in the US tend to think that the Saudis set the price of oil, either to play ball with us or to stick it to us. Arabs see it differently. They think the US and the Saudis closely coordinate this. With the weak dollar and so much of today’s oil being bought in Euro, the price of oil must stay up or its equivalent would be more like $15 a barrel if the dollar-pegged price were at $30 (which is a dangerously low price for American producers as well). Oil is in fact rather cheap today, goes this analysis. 

Romania
People I talk to in Austria and Turkey still think Romania is a happening place for investment. Recent elections brought in a reform-minded conservative party in leadership. 

Do We Need Humans Anymore? Have You Flown Lately?
Have you noticed when flying that airport personnel all want you to use these new kiosks, even though these kiosks will leave them without jobs? People seemed upset to have to help us push buttons. Salespeople at Barneys New York and Allen Edmonds Shoes walked away from me when I was shopping and asked for assistance; these are supposed to be high-end stores. I still prefer humans to machines, but one wonders where people are at. As long as I'm on the subject of airlines, I think we should just replace the term Chapter 11 Bankruptcy with the term Government Subsidy. All the major "legacy" airlines are on it and this is not fair to the upstart airlines that are actually profit-making. The reason we call them legacy carriers is that they have been sick for so long with outdated structures that we consider this the legacy that is attached to them.  The only good thing about Chapter 11 is that it allows management to tear up union contracts which is one thing they have to do in order to reform the industry. The reason government is allowing these companies to survive is that so many people work in this industry. We should liberalize foreign ownership rules just as we did in the auto industry and see about letting the industry take a more normal course.

Spam
A year ago I was on the prowl looking for new software to solve this problem and over the year there has been progress in this area. Take a look at digiportal.com which offers up Choice Mail One with a 14 day trial and a cost of $40. The software blacklists everyone unless they respond to a registration challenge which then allows them to be whitelisted. Or you can allow everything to come to a gatekeeper and you then decide which senders to whitelist and which ones to blacklist. You can decide not to run the challenge part of the program, but if you do, it will keep you from dealing with spam without having to not know when spam filters out mail you actually do want to read. So far this program is the best I’ve seen out there.

As far as the remaining areas such as Latin America, China and Japan, there are no real changes to report this year as far as trends are concerned, and I expect pretty much the same for 2005. A good indication that Argentina is pulling out of its recession is the fact that immigration to I srael is down 70% this year over last. The jury is still out as to whether the country's good fortune is due to good global luck or to the country's president's unorthodox moves -- who has done his best to alienate the rest of the world economic community. If his luck runs out, there is a long line of people all over the world waiting to pounce on him. In China, this would be the most likely year for the Taiwan issue to come to a head, but my sense is that US-Chinese relations are doing very well right now, as is the US-Japanese track.