Opinion

The Great Debate

Yellen: An economic tonic for the sluggish recovery

The money markets rejoiced when Larry Summers pulled out of the race to be Federal Reserve chairman. The reason was simple, self-serving and not necessarily wholesome: A different chairwoman — most likely Janet Yellen — would be more inclined to continue the Fed’s program of large-scale bond purchases and low interest rates.

Stock and bond markets, of course, love low interest rates. Cheap rates on bonds push stock values up as investors seek higher returns. Interest rates and bond prices move inversely — so cheap money keeps bond prices high. And low interest rates are good for mortgage demand and housing prices.

But low interest rates, in the absence of offsetting regulatory policies, can also create financial bubbles — as we all learned the hard way in the run-up to the financial collapse of 2008. For some critics, the Fed’s current low interest rates are now creating bubble conditions in foreign exchange and other speculative markets.

However, a different regime at the Fed, most likely under Yellen, could offer an economic tonic more subtle and healthful than just cheap money.

Yellen, who has served as vice chairwoman of the Fed since 2010 and worked closely with Chairman Ben Bernanke, would represent an intensification of Bernanke’s policies in several constructive respects. She is not only even more supportive of using monetary expansion to promote recovery, she favors tougher financial regulation as an antidote to speculative bubbles. Yellen has also been critical of the perverse elixir of deficit reduction as the cure for a sluggish recovery.

A potential turning point for Syria

In the dizzying debate over U.S. military intervention in Syria, one key point of consensus stands out: Both the Obama administration and Congress recognize that the resolution to Syria’s conflict must come through a negotiated settlement. Key international actors share the same conclusion.

But how do we get there? Russia’s recent proposal to put Syrian chemical weapons under international control could open a viable path to a long-sought diplomatic solution.

This initiative is a long shot. Yet, its potential payoff as a diplomatic breakthrough demands it be taken seriously. Not only would Syrian civilians be spared any unintended consequences of U.S. military intervention, but the Russian proposal’s successful implementation could be a real turning point.

Is this why Obama won the Nobel Peace Prize?

In December 2009 the world was treated to the unexpected news that President Barack Obama had been awarded the Nobel Peace Prize. Among those most surprised was Obama himself. Not many sitting American presidents have won the award. In fact, Obama was only the third.

Now, as Obama stumbles his way through a proposed military strike on the Syrian government, it seems the president has not paid nearly enough attention to the history of world leaders who have won this international honor. The list of Peace Prize winners impresses: Henry Dunant, the founder of the International Red Cross; American social reformer Jane Addams; George Marshall, the architect of peaceful post-World War Two Europe; Martin Luther King Jr.; Burmese freedom fighter Aung San Suu Kyi, and Nelson Mandela.

Theodore Roosevelt was the first U.S. president to win a Nobel Peace Prize. The 26th president earned it the old fashioned way – with effort. Roosevelt’s journey to winning the 1906 prize began with his decision to put some teeth into the Court of Arbitration at The Hague, so that it would begin to serve its purpose of peacefully settling international disputes. The United States and Mexico submitted a dispute to the Court of Arbitration as an example to the world.

Making frenemies with Putin

Anyone who ever worried that Barack Obama might not be Made in the USA should take comfort from his quintessentially American response to Russian President Vladimir Putin’s decision to give temporary asylum to Edward Snowden: pouting.

Democratic and Republican presidents alike tend to believe that if other countries don’t act like our “friends,” then they must be our enemies. This attitude creates unrealistic expectations that slow the healing of old injuries, and subverts the potential for a meeting of minds on critical issues — such as Syria’s chemical weapons arsenal.

It’s a truism that nations have interests, not friends or enemies. This may sound cynical, but interests act as lighthouses on the rocky shores of foreign policy. In a storm, they help governments distinguish between what they must do to survive, and what they might wish to do if seas were calm.

from David Rohde:

For Obama, a contradiction too many

President Barack Obama will have to deliver one of the finest speeches of his presidency next Tuesday if he hopes to win Congressional support for a strike against Syria. Out of nowhere, the Syria vote has emerged as one of the defining moments of Obama’s second term.

With three years remaining in office, the vote will either revive his presidency or leave Obama severely weakened at home and abroad.

There are legitimate criticisms of Obama's initial response to the Syrian government’s barbaric August 21st gas attack outside Damascus. The president should have demanded that Congress be called back from recess immediately. He should also have immediately made a far more personal and passionate case for strikes.

The politics of Syria

Congressional Democrats are in a bind. If they vote to authorize a military strike on Syria, they could be putting the country on a slippery slope to war. But if they vote no, they will deliver a crushing defeat to their president.

What President Barack Obama did was call their bluff. Last week, more than 50 House Democrats signed a letter urging the president to “seek an affirmative decision of Congress” before committing to any military engagement. That was the Democrats’ way of going on record to express reservations about what Obama sounded like he was going to do anyway. Then, lo and behold, the president decided to do exactly what they asked. Now it’s their decision.

Anti-war sentiment is a powerful force on the left. It was nurtured by bitter experiences in Vietnam and Iraq. Obama himself comes out of that tradition. He is trying to keep faith with it by arguing, as he did at a meeting with congressional leaders, that his attack plan is “proportional, it is limited, it does not involve boots on the ground.” He added, “This is not Iraq, and this is not Afghanistan.” Secretary of State John Kerry tried to change the metaphor when he called it “a Munich moment.” Meaning, a “no” vote would be a vote to appease a dictator.

Obama’s flawed case for a Syria strike

We should not bomb Syria without a vital national security interest and a precise foreign policy objective.

Right now, the Obama administration has not established either.

Under the United States’ legal and historical precedents, a president faces the highest burden for justifying military attacks that are essentially optional: actions not required for self-defense and which are not in response to an attack on the United States — or imminent threat of such attack.  Intervening in the Syrian civil war fits that difficult category.

Even supporters of Syrian intervention do not claim it is required for U.S. security, since the Assad regime has not directly attacked the United States or its interests. In fact, the mission’s stated goal doesn’t attempt to qualify as traditional self-defense. The aim is to “prevent or deter” Syria from killing its citizens with chemical weapons, according to the Obama administration’s original draft resolution.

Syria: What happened to diplomacy?

There is a bizarre quality to the U.S. public debate about bombing Syria. Much time and effort has been spent analyzing President Barack Obama’s decision to finally call for a vote in Congress: whether this was a wise choice; what the repercussions of an attack may be; the (il)legality of acting without a United Nations Security Council mandate; the moral case for bombing, and the strategic case for restraint.

But almost no attention has been paid to a fundamental question: Have all other options been exhausted?

Obama has presented the American public with a false binary choice: taking military action or doing nothing.

Common ground for Obama and Putin is offshore

Low expectations surround the G20 meeting in St. Petersburg on September 5-6.

President Barack Obama’s decision to cancel the pre-G20 summit with Russian President Vladimir Putin means the big photo op will likely be the two leaders awkwardly trying to avoid each other. The other headline-making issues in U.S.-Russian relations — Syria, nuclear weapons reduction, missile defense — also appear off the table now. There is one timely matter, however, that resonates with Washington, Moscow, and the entire G20 — the continuing fight against offshore tax havens.

The Cyprus financial collapse in March focused world attention on the outsized role played by offshore banking zones in international tax avoidance and money laundering. Though Russian depositors were the primary victims here, Moscow appeared indifferent to this unprecedented expropriation by Cyprus of the assets of Russian citizens. Putin proved unwilling to help those he viewed as tax-evading oligarchs and corrupt bureaucrats — as well as a few legitimate businesses.

Putin has made the fight against offshore tax havens a key plank of his foreign policy. Other world leaders — including British Prime Minister David Cameron and French President Francoise Hollande — have also issued strong statements criticizing sophisticated legal strategies that allow companies to skirt the domestic treasury, depriving the state of critical revenues in this time of economic recession.

from David Rohde:

Has Iraq shackled American power?

In an extraordinary series of disclosures this week, Obama administration officials said that the United States will launch only cruise missile strikes in Syria. The attacks will last roughly two or three days. And the administration’s goal will be to punish President Bashar al-Assad, not remove him from power.

But those clear efforts to placate opponents of military action appear to be failing. Warnings of “another Iraq” are fueling opposition to the use of force on both sides of the Atlantic. And the Obama administration’s contradictory record on secrecy is coming back to haunt it.

In Washington on Wednesday, one-third of the members of Congress asked that they be allowed to vote on any use of American force. In London on Thursday, Prime Minister David Cameron's effort to gain support in Parliament for strikes failed, despite the release of an intelligence assessment which said Assad had used chemical weapons fourteen times since 2012.

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