In the wake of President Obama's decision to scrap the U.S. missile defence shield in eastern Europe, many are pondering Russia's response. The relationship will remain in the spotlight this week, when President Medvedev heads to the U.S. for the G20 summit. Although the precise nature of Russia's reaction remains to be seen, it has a big incentive to improve relations. It badly needs American investment and co-operation to help solve serious economic problems at home.

Critics of Obama's decision worry that it will "embolden" Russia, causing more aggressive behaviour abroad. Yet they forget that the Bush administration's antagonistic policies failed to provide security to Russia's neighbours. These policies didn't prevent Russia's war with Georgia, the repeated gas disputes with Ukraine, and a serious cooling of relations with countries such as Poland. Far from being restrained, Russia's confrontational attitude had a lot to do with its perception that the U.S. was busy encircling the country with missile bases and alliances.

The critics also imply that Russia is preoccupied with external expansion, but that hardly seems appropriate today. Russia's GDP is set to plummet by 8 percent this year. Russian analysts estimate that the country needs up to $2 trillion to renovate its dangerously clapped-out infrastructure. In major industrial cities, Russia's dilapidated factories are mulling huge job losses. For the foreseeable future, Russia's leaders are likely to be preoccupied with thorny domestic problems.

Faced with such daunting challenges, it's entirely logical that both Medvedev and Putin say they are keen to kick-start American trade and investment. Responding to Obama's decision -- which he described as "brave and correct" -- Putin immediately linked it to economic issues. He called for the U.S. to back Russia's entry into the World Trade Organisation (WTO), and scrap Soviet-era trade restrictions against Russian companies, especially those that regulate technology transfer to Russia.

On the same day, at an investment summit in Sochi, Putin held well-publicized meetings with the CEOs of General Electric, Morgan Stanley and Texas Pacific Group -- all major U.S. companies. When it comes to the economic sectors that Russia says it is most eager to develop, American investment will be especially crucial. The crisis has underscored the need for Russia to wean itself off dependence on natural resources, and develop new high-technology sectors, such as IT and nanotechnology, where U.S. companies are at the cutting edge.

This means that the U.S. still has plenty of bargaining chips left as it seeks to gain Russia's cooperation on global issues. The bigger problem could be persuading U.S. investors to come. No matter how much Russia's leaders appear to welcome foreign investment, there remain huge obstacles, including corruption and bureaucracy, which they seem largely powerless to deal with.

Nor does the tentative thaw mean an end to diplomatic tensions. Russia's relations with its immediate neighbours may well remain stormy, potentially causing renewed strains with Washington. Still, it's hard to argue that by extending his olive branch to Russia, Obama increases the likelihood of such upsets. The evidence of the last few years implies just the opposite. The frostier Russia's relations have been with the U.S., the more determined Russia has been to resist U.S. encroachment in nearby countries, increasing regional tensions.

Now, Obama's gesture has opened up the possibility of a fresh start, creating prospects for mutually beneficial economic cooperation. The Russians would be foolish not to jump at that opportunity.

After just six weeks as NATO secretary-general, Anders Fogh Rasmussen has his first crisis. The alliance may be slowly bleeding in an intractable war in Afghanistan, but the immediate cause is the U.S. administration's decision to shelve a planned missile shield due to have been built in Poland and the Czech Republic.

The shield, energetically promoted by former President George W. Bush, was designed to intercept a small number of missiles fired by Iran or some other "rogue state". But Russia saw it as a threat to its own nuclear deterrent and NATO's new east European members saw it as a useful deterrent against Russian bullying, by putting U.S. strategic assets on their soil.

President Barack Obama's decision to drop plans to install it on Polish and Czech territory leaves those former Soviet satellites feeling betrayed -- because they expended political capital to win parliamentary support -- and more exposed to a resurgent Russia, especially after its use of force against Georgia last year.

Obama's move is clearly part of a warming of U.S. relations with Moscow from which Washington hopes to gain help in return on supply routes to Afghanistan, pressure on Iran to rein in its nuclear programme, and an agreement on radical cuts in nuclear arsenals. But this "reset" of U.S.-Russian relations has only exacerbated the rift within NATO over Russia.

The three Baltic states and Poland were particularly critical of NATO's low-key response to Moscow's military action in Georgia. Some said the refusal of west European allies led by Germany and France to agree at a NATO summit last year to putting Georgia and Ukraine on a path to NATO membership emboldened the Kremlin to act. President Dimitry Medvedev's harsh attack on Ukraine's leader in an open letter last month fanned their fears of Russian bullying of its neighbours.

East European officials cite Moscow's playing with the gas taps and trade disputes, and its apparent determination to keep its Black Sea fleet in the Crimean port of Odessa Sevastopol beyond a 2017 deadline agreed with Ukraine as part of a strategy of tension intended to reverse the "colour revolutions" in Kiev and Tbilisi, and bring other former Soviet republics to heel.

All that makes it a particularly awkward moment for Rasmussen to deliver his inaugural keynote speech on NATO-Russia relations on Friday in Brussels. The former Danish prime minister has put a few noses out of joint in his first weeks by making clear he intends to run NATO in a more results-oriented way, leaving less room and time for ambassadors in the North Atlantic Council to debate any idea to a standstill. He has set strict time-limits on council meetings, streamlined flabby agendas and outsourced the drafting of a new Strategic Concept to a group of 12 experts led by former U.S. Secretary of State Madeleine Albright, on which not all allies are represented.

His personal management style and high media profile (monthly news conferences, a blog and Twitter chatter) has sharpened the traditional Kabuki dance in which a new boss and the old board flex their muscles at each other in mutual suspicion, insiders say. It is the first time a former prime minister, used to running a government and to talking to fellow national leaders, has been picked for the job. Previous secretaries-general were former defence or foreign ministers, more accustomed to being servants of the member nations.

Both camps within NATO (which privately brand each other the "Friends of Russia", and the "Cold Warriors") will be watching every word of Rasmussen's Russia speech to ensure he does not depart from alliance policy. The fact is that NATO has been unable to agree on an overall policy towards Russia since the 1990s, when it declared that Moscow was no longer an adversary.

Rasmussen hopes to launch NATO's own modest "reset" of ties with Russia, offering closer cooperation on Afghanistan, a joint threat assessment and work on non-proliferation of nuclear weapons. NATO officials have received assurances that Moscow will respond positively and breathe new life into the NATO-Russia Council.

None of that will assuage NATO's east European members, who are likely to press harder now for practical steps to give credibility to the alliance's Article V mutual defence commitment. That could involve drafting military plans to reinforce the Baltic republics and Poland, and holding joint military exercises on those countries' territory. The French and Germans have resisted such ideas in the past as unnecessarily provocative to Moscow. If NATO cannot agree to such moves, the United States may have to do more on its own to compensate its jilted friends.

(note: corrects Odessa to Sevastopol in 6th paragraph)

In 1873, Walter Bagehot wrote that "the business of banking ought to be simple; if it is hard it is wrong." He would have struggled to recognize today's banking system.

It is not just ever more ornate derivatives that bend the mind. Financial firms themselves have become fabulously complicated. Citigroup lists 2,061 subsidiaries and affiliates while the institutional chart of JPMorgan Chase is 267 pages long.

Complexity -- as Bagehot predicted -- has become a curse. If nobody can understand financial firms, they will become ever more accident prone.

The crisis that exploded a year ago offered a salutary lesson in the dangers of complexity. Many shareholders and creditors simply did not fully comprehend their investments. Instead they were forced to trust managers and the rating agencies.

Regulators too could be forgiven for scratching their heads.

"Supervisors are at a decided disadvantage in understanding risk-taking and compliance for firms that might involve dozens of jurisdictions, hundreds of legal entities and thousands of contractual relationships," former Fed official Vincent Reinhart has written.

Indeed Basel II -- the international capital code -- was an admission of defeat by regulators. The message from the banking accord was that institutions had become so convoluted that only they were able to understand the risks they were taking.

Yet many intelligent executives of these same institutions failed spectacularly. It is no mean feat keeping tabs on an army of specialized financial engineers, lawyers and accountants.

As Robert Rubin, the former Treasury Secretary and Citigroup executive, acknowledged last year on the Charlie Rose show: "Unless you are either running the trading operations or running the independent risk management, you are not going to know the risk well enough to have a real sense of where those risks are."

Making financial firms simpler will be far from simple.

One approach is coercive. Regulators can make it very uncomfortable to be big. Capital requirements that ratchet up with size would encourage firms to split themselves up into their component parts, giving managers and regulators a better shot at following what is going on. On the whole, smaller firms tend to be more straightforward.

Failing this, Reinhart has proposed a Lego model, in which financial firms would be composed of "well-defined modules." A company made of units that can be easily disconnected from the whole would be easier to manage, with individually simple parts. Regulators can foster this model by insisting on a "living will," complete with plans for how companies would salvage their firm in the event a single unit implodes.

Regulators need to make it much easier to understand financial statements. First, they should impose a strict consolidation of bank balance sheets, forcing them to incorporate all special purpose vehicles.

In addition, more information should be made available about banks' risk-taking. Firms should be compelled to publish monthly indicators drawn up by regulators, including a measure of the relationship between short-term borrowing and long-term lending.

This would enable creditors to exercise proper discipline over the banks by pushing up their borrowing costs if they become too reckless. The notion that only banks themselves can understand their own risk-taking needs to be jettisoned.

Lastly, the government should also reduce the incentives for complexity. Financial institutions mirror the Byzantine structure of regulation, tax and accounting rules. They become complicated in order to shop for the most lenient regulator, lightest capital requirements and most tax efficient structure.

Paring down these rules and structures should be an underlying goal of any regulatory overhaul.

The first step to reducing the magnitude of future mishaps is to ensure that we can make sense of our financial institutions. The respect and awe often accorded to "black box" financial institutions is misplaced and dangerous. Instead we need to embrace simplicity.

The Year Since Lehman -- related columns:

"Living wills" are easier said than done

A year on, it's still a housing story

Even in weak employment markets, the United States has typically had a trump card to play. The nation's workers are legendary for their willingness to travel across the country for new opportunities.

The result has been a speedier recovery of job growth than in Europe and possibly a higher productivity rate, since skilled workers are better matched to openings.

With the August employment report on Friday expected to show little improvement in the job market, America has never needed this flexibility more. Yet, at the risk of adding to the gloom, this advantage appears to be fading fast. The good news is that the United States still boasts one of the most dynamic labor markets of any rich nation. OECD rankings of its 30 wealthy member nations put the U.S. far
ahead of other large countries. (It comes second only to Denmark, which has unmatched programs to help the unemployed back to work.)

On average, around a quarter of American workers change jobs each year, compared with 15 percent in Italy and 13 percent in Greece, says Stefano Scarpetta, head of employment research at the OECD.

Yet there has been a striking decline in U.S. mobility in recent years. Since 2000, the movement of Americans across state lines has halved to just 1.6 percent of the population this year -- the lowest rate since records began in 1948. Even movement between counties is at historic lows.

(Click chart to enlarge in new window)

Americans may be becoming less adventurous because they are getting older. During the recession of the early 1980s the median age in the labor force was 35, according to the Bureau of Labor Statistics. Now it is 41.

In middle age, people are less willing to leave their home and yank their children out of a school district for anything less than a dream job. OECD figures show that workers above 45 are half as likely as those under 34 to change companies.

Another factor is at work -- the housing meltdown. Tighter lending standards and negative equity make it much harder to relocate. The willingness of people to move for a new job halves when a family is suffering from negative equity, according to research by Joseph Gyourko and Fernando Ferreira at the University of Pennsylvania.

Those who owe more on their mortgage than the property is worth face a tough choice if they are offered a job elsewhere. Either they can sell and hand over the balance of the debt to the lender -- often tens of thousands of dollars -- or walk away and suffer years of higher borrowing costs.

This is a problem that is certain to grow. Negative equity currently afflicts around 26 percent of borrowers, or 14 million properties, according to Deutsche Bank. By the time the slump is over, Deutsche expects that close to half of households will suffer from negative equity. More than a quarter of borrowers could end up owing more than 125 percent of the value of their home.

Economists believe there may be other factors chipping away at the flexibility of the workforce. Rising healthcare costs have increased the risks associated with going without insurance -- something than many dynamic startups can't afford.

When a recovery gathers pace, the frustration of being tied down to depressed areas will become ever more acute. The United States may not have the onerous labor market laws seen in much of continental Europe. But the housing market collapse combined with an aging population may end up having a similar effect.

If American companies find it harder to draw on the nation's full pool of talent or if workers can't move where they will be most productive, the prospects for a full-blooded recovery will dim.

It's not often you get to lift the hood and watch a power struggle going on in the engine room of General Motors. But the vice-president of GM Europe, John Smith, has just provided tantilising details of the arguments over the rival bids for Opel/Vauxhall, the main European arm of the fallen U.S. auto giant. Smith is the chief negotiator on the sale of Opel.

In a blog apparently intended to reassure Opel staff, but accessible to the public, he insisted GM had not specified a preferred bidder. But he made clear his own preference for the bid from Belgian financial investor RHJ International, which is loosely related to U.S. private equity fund Ripplewood, over the offer by Canadian-Austrian car parts maker Magna and its Kremlin-backed Russian partner Sberbank.

Smith's post is entitled "Clearing the Air" and was ostensibly written to clarify GM's intentions and dispel erroneous reports ascribed to interested parties. But his account shows just how poisonous the atmosphere appears to be between GM and Magna, and GM and the German government, which backs Magna's bid. It also suggests that the air is not too clear within GM's top management either.

Specific to the Magna bid, which is clearly preferred by several politicians and the Labor Bench, the bid presented to GM varied from the negotiations we had in the previous weeks and contained elements around intellectual property and our Russian operations that simply could not be implemented...

The bid from RHJI is completed and would represent a much simpler structure and would be easier to implement. It would require less monetary participation by the government and would keep our global alignments solid, while still creating an independent Opel/Vauxhall organization in Germany. This remains a reasonable and viable option to be considered as the very difficult issues around the Magna negotiations continue to be worked.

The following day, (July 29) Smith felt the need to add an update denying that GM was seeking to buy back control of Opel at a later date, or that it had asked the U.S. Treasury for financial assistance to restructure Opel. The former is strange since several sources have said a buy-back option is a key feature of RHJ's offer and not of Magna's.

So what is going on here and why did the chief negotiator feel the need to explain himself in semi-public in this way? One can only speculate, but one plausible theory is that GM's top management is split. This would not be surprising since the U.S. government now holds a controlling stake in the shrunken GM that emerged from bankruptcy, and Washington is probably being lobbied heavily by Berlin to support the Magna bid. A senior aide to Chancellor Angela Merkel discussed Opel with the U.S. Treasury on Wednesday.

If GM were to choose RHJ in defiance of Berlin's clearly stated wishes, it would spark a crisis with political ramifications just as Germany is entering the final phase of campaigning for a Sept. 27 general election. Might the Obama administration not lean on GM's top management in Detroit to avoid being branded as a potential job-killer in Germany? If so, Smith's blog may be a doomed effort to make business arguments prevail over politics.

-- John Kemp is a Reuters columnist. The views expressed are his own --

Like Archbishop Thomas Cranmer before he was burned at the stake for heresy, the U.S. Commodity Futures Trading Commission (CFTC) seems about to make a dramatic recantation.

Later today, the Commission will hold the first of three public hearings to discuss whether to impose tougher position limits in energy markets and restrict the availability of hedging exemptions. But it is already preparing to release a report that will accuse speculators of playing a significant role in last year's oil price spike, according to a report in the Wall Street Journal.

While it might seem a minor shift in emphasis, it is a radical reversal of the Commission's previously stated view that there was "no evidence" that investment flows had a material impact on prices. Commission staff have doggedly maintained that physical supply and demand factors could explain all the observed volatility in oil and other commodity prices over the past two years.

The position was stated most forcefully by CFTC Chief Economist Jeffrey Harris in testimony to the House of Representatives' Agriculture Committee in May 2008 (http://www.cftc.gov/stellent/groups/public/@newsroom/documents/speechandtestimony/harris-fenton051508.pdf).

It was repeated in September 2008 in the CFTC's "Staff Report on Swap Dealers and Index Traders" and again this year in a joint report with the United Kingdom's Financial Services Authority (FSA) on commodity regulation for the International Organisation of Securities Organisations (IOSCO).

The Commission's view has come under pressure from sceptical legislators as the scale of speculative positions in commodity markets and the number of exemptions the Commission and exchanges have granted have been revealed. Congressional anger threatened to derail Gensler's confirmation. The price of allowing him to take office seems to have been a promise to take a tougher approach.

The CFTC's position had become politically unsustainable. The climbdown was foreshadowed earlier this year when incoming CFTC Chairman Gary Gensler admitted in a pre-confirmation letter that "rapid growth in commodity index funds was a contributing factor to a bubble in commodities prices that peaked in mid-2008" and "the expanding number of hedge funds and other investors who were increasing asset allocations to commodities ... also put upward pressure on prices".

But most observers expected it to announce a shift only after the three public hearings planned for July and August, giving the futures industry an opportunity to water-down the conclusions. The Commission's early move suggests it does not intend to be side-tracked from determined reform by vested interests.

The shift is significant because it changes the question from "whether" to limit the impact of investment money on commodity markets to one of "how". The Commission has issued a set of questions for the hearings that include a strong presumption the outcome will be some form of tougher and more comprehensive position limits (http://www.cftc.gov/newsroom/generalpressreleases/2009/pr5681-09.html).

The move leaves the FSA increasingly exposed. It has not accepted there is a problem in the commodity markets it regulates, let alone agreed that the solution is tougher limits and more stringent regulation. The FSA's line is still that there is "no evidence" speculation has influenced prices. If the CFTC abandons that position, however, the FSA's could become intellectually indefensible, and London's sleepy regulator may come under strong pressure to fall into line.

Joshua Foust is an American military analyst. He blogs about Central Asia and Afghanistan at Registan.net . Reuters is not responsible for the content - the views are the author’s alone.

It would be an understatement to call opium cultivation in Afghanistan America's headache. The issue of illegal drug cultivation and smuggling has vexed policymakers for three decades, and led to a multi-billion dollar campaign to combat the phenomenon.

Opium causes all of our problems, so they say—according to a factsheet at the U.S. Embassy in Kabul (pdf), opium creates instability, funds the insurgency, and wreaks havoc on the government. They’re not alone - entire books have been written on the subject.

The blame game on opium, however, ignores a critical - and quite uncomfortable - fact: it misses the point. The reality is, while the cultivation of opium does not help matters from a Western perspective, in Afghanistan it is actually a healthy economic activity. The concerns over its cultivation, too, are overblown: even a brief look at the numbers show it to be at best a trailing indicator of insecurity, insurgency, corruption, and economic malaise. Opium, therefore, is only an indicator of other, more substantial problems.

Consider, for example, what I call The Nangarhar Swing. According to the United Nations Office of Drugs and Crime, in 2005 Nangarhar produced nearly 1/5 of Afghanistan’s opium, but was virtually poppy-free in 2006. 2007 saw a 285 percent increase (pdf) in cultivation, making the province one of the country's top poppy producers. Yet in 2008, it was once again virtually poppy-free (pdf). This shift cannot be tied only to security, as many like to claim: according to the violence statistics compiled by the Long War Journal, even as Nangarhar has stopped the large scale cultivation of opium, it has become steadily more violent. Moreover, there are many other areas of the country, like Khost province along the border with Pakistan, or Kunar province further north, where the insurgency has become worse even as those provinces were emptied of opium.

The discrepancy is really a trick of language: When the UNODC declares a province poppy-free, what they mean is, production there is “negligible”, not non-existent. Whether that is in the context of total production, other provinces, or some sort of absolute number (a percentage of arable land or total worldwide opium production) isn’t really clear. In Nangarhar, several times declared “poppy free” by the UNODC, there remain active opium eradication missions in outlying districts such as Sherzad. What's noteworthy about it is not the presence of some fairly smallish opium farms in southwestern Nangarhar, as most opium farms are small family affairs. What is interesting is the density of the farms. In a single 5 km stretch of the countryside, teams found and destroyed 100 poppy fields. For a supposedly poppy-free province, that is simply stunning.

It also covers up the substantial effect of destroying the opium economy. In many parts of Afghanistan, opium is the economy, and the World Bank estimated in 2008 it accounts for 1/3 of the country’s economy. In opium-adjacent communities, opium funds underpin the entire local economy: especially in the opium “heartland” in the South, the only way for small farmers to get microcredit loans or deal with exporters is through opium traders. Through a system of loans called salaam, they in essence create informal futures markets on crops… but only opium. Cereal crops and fruits, or other licit agriculture, are not included in this system (even though it is possible for other actors, whether the government or NGOs, to provide this service). In fact, the ways these markets have developed in the south is remarkably similar to how informal credit markets formed in rural medieval Europe. It is normal. The West just happens to dislike the crop.

But even in opium “success stories”, there are significant problems to simply removing the crop. In Nangarhar, the wild swings in opium prices and cultivation crashed the rural economy again and again. Most of the microcredit salaam loans farmers take out are not denominated in any currency - they pay in opium. So, when prices crash or an eradication team sweeps through, farmers become trapped in a horrendous debt cycle where the only means of escape is to grow yet more opium. There are even rumors of farmers selling a daughter or son to the traffickers in payment, and many families have fled to either Iran or Pakistan to avoid reprisals for unpaid opium debt.

There is a more fundamental economic problem to growing poppy, however: areas that grow opium actually tend to be the wealthiest. Sherzad District in Nangarhar, where there is still opium cultivation and eradication, actually has relatively high income compared to the rest of Nangarhar. According to the International Monetary Fund (pdf), when Nangarhar province saw a huge drop in opium cultivation in 2005/6, province-wide GDP was about $1.3 billion (which was a big drop from the year before, when there was much more opium). The next year, 2006/7, when opium production spiked 285%, province-level GDP rose to $3.2 billion, only to fall the next year to $1.8 billion as the UNODC declared it poppy-free.

So what is to be done? The Obama administration has wisely recognized that opium eradication is a non-starter, and does far more harm than the marginal good of destroying some opium crops. UNODC Chief Antonio Maria Costa recently agreed, and suggested a “flood of drugs” in its place. Under this plan, somehow the borders of Afghanistan would be sealed so that no drugs can “escape”, in their words, thus crashing the price of opium. Feasible or not, Costa’s idea at least tries to examine other ways of reducing the need for opium cultivation. Looking at opium cultivation as an economic factor, however, leads one to many other conclusions that are inconvenient for a political and military apparatus designed to oppose the very idea of drug cultivation.

If opium is an economic puzzle, and not a political-military one, then there should be an economic (or at least non-military) solution to it. Several years ago, the Afghan Research and Evaluation Unit published a study (pdf) comparing the factors behind the cultivation of opium in adjacent provinces in the “poppy-free” north. Water shortages, soil moisture and salinity, severe socioeconomic inequality driving food insecurity, a poor presence of formal institutions, all have decisive impacts on a household decision whether or not to cultivate opium.

More recently, a team of Norwegian researchers has noted a strong causation between violence and opium cultivation, but not in the way most think: in their research paper (pdf), they assert that opium follows conflict, and not the other way around. In other words, opium cultivation is simply a feature of ungoverned conflict zones, and especially in Afghanistan, something people do as a last resort when other economic activities fail to provide for their families.

Taken together, these studies (and the many others like them—this is a growing field of study) point to a counterintuitive conclusion: do nothing. That is, focusing only on opium misses the point, and doesn’t address the reasons why it is grown. If opium cultivation were an indicator of an ungoverned or contested space, then that would indicate that making that space governed and uncontested would also address the opium.

There are a few examples even within Afghanistan where governance and security came first, and then opium cultivation simply dropped off. Badakhshan province was the only province in the country that was completely Taliban-free in 2001, and as a result was the only one to grow opium in any really measurable amount during the Taliban’s prohibition. Since the American invasion, it has remained mostly quiet, and has seen a growing success in both trade connections to neighboring areas and better governance by multiple levels of officials. As an aid worker active there told me recently, “the price of poppy has fallen fastest in the north (where the poppy has a lower morphine content), and in Badakhshan, farmers can already make more from okra or onions than opium.” Selling vegetables is relatively low risk and carries a good profit margin - something that cannot be said for the majority of Afghanistan’s non-subsistence farmers.

Drug traffickers have taken enormous measures to lower the risk of drug cultivation, but the development community has not taken the time to do so for legal agriculture. It remains prohibitively expensive to ship anything out of Afghanistan, and border politics especially with Pakistan (one worker recently complained that difficulties in crossing the border into Pakistan meant an entire crop of potatoes from Khost province rotted at the border crossing, unsold) keep export-driven agriculture uncertain and extremely risky. By focusing so much of its energies onto eradication or somehow controlling the cultivation of opium, both the International Community and the government of Afghanistan have ignored providing other ways for farmers to make money legally - even when Alternative Livelihood programs exist in an area, they’re poorly administered and often barely make a dent in the local economy.

So why not do nothing? Opium is not Afghanistan’s biggest problem - it is horrendous poverty, bad infrastructure and no security. When it comes to all three problems, Afghanistan faces two major hurdles - underinvestment (money, equipment, education, health, and security) and corruption-driven illegitimacy. Making matters worse, the overwhelming majority of aid in the country flows outside government channels or oversight, which undercuts Kabul’s legitimacy even among the people it helps.

Focusing only on opium, therefore, doesn’t actually focus on the more fundamental problems facing the country. It is an obsession on symptoms, while the causes go unaddressed. The missing piece of governance, and with it the development of the necessary institutions of society and economy, is the critically ignored piece of almost all plans to eliminate opium in Afghanistan. And as examples like Badakhshan have shown, when even moderate progress is made on these fronts, people will voluntarily switch to growing other crops, and they will make enough money to support themselves. It’s enough to make one wonder just why there needs to be a plan in the first place. It’s counterintuitive, but scrapping the West’s counternarcotics policies is surest way to actually achieve the counternarcotics goal of a poppy-free Afghanistan.

(Reuters photos: Opium fields in Farah province/Goran Tomasevic)

The murder of Kansas abortion doctor George Tiller has been condemned by prominent groups and activists on both sides of this divisive and emotive issue.

But the language used by some opponents of abortion rights who reviled Tiller for his work providing late-term abortions remained very strong.

Take this statement by Dr. James Dobson, founder of the conservative evangelical group Focus on the Family.

"We are shocked by the murder of George Tiller, and we categorically condemn the act of vigilantism and violence that took his life," Dobson said in a statement. He went on to say that the perpetrator must be prosecuted to the full extent of the law.

But he also said: "Tiller recently faced serious charges related to the killing of babies in violation of the law, by the most grotesque procedures administered without anesthetics or compassion.  We profoundly regretted the outcome of his legal case, believing the doctor had the blood of countless babies on his hands.  Nevertheless, he was exonerated by the court and declared 'not guilty' in the eyes of the law. That is our system, and we honor it."

Randall Terry, founder of the anti-abortion rights group Operation Rescue, made Dobson's strongly-worded comments about the "blood of countless babies" seem moderate by comparison. Terry didn't even condemn the murder but he expressed concern about Tiller's soul in his statement.

"George Tiller was a mass-murderer. We grieve for him that he did not have time to properly prepare his soul to face God," Terry said.

Most of the opposition to abortion rights in the United States is faith-based and the movement has been led mostly though not exclusively by evangelical Christians and conservative Catholics.

Opponents of abortion rights regard the procedure as murder, though virtually all of the U.S. based activists insist that their fight must be done within the parameters of the law. That is why even the staunchest of opponents such as Dobson say that those who kill abortion doctors must be held accountable for their crimes.

But some supporters of abortion rights have long argued that the language used by opponents -- with terms such as murder, blood-stained, destroy or holocaust frequently evoked -- create an atmosphere that fosters violence. This angle was raised today on various U.S. news programs such as the Ed Show on MSNBC. Tiller himself had been shot before by an abortion opponent and his clinic was bombed in 1985.

If you really think abortion is mass murder why would you work within the law to stop it?

What do you think? Has strong language dangerously enflamed abortion passions on the ground in the United States? But if you equate abortion with murder or mass murder shouldn't you be able to say so freely? Should the deplorable actions of the very few stifle free speech for others on this issue?

(Photo credit: Anti-abortion demonstrators unfurl a giant sign on the side of North Table Mountain in Golden, Colorado August 26, 2008 referring to the 2008 Democratic National Convention in Denver. REUTERS/Rick Wilking (UNITED STATES) US PRESIDENTIAL ELECTION CAMPAIGN 2008 (USA)

- Joshua Foust is a defense consultant who has just spent the last 10 weeks embedded with the U.S. Army in Afghanistan. He also blogs at Registan.net. Any opinions expressed are his own. -

It is a cliché that, in counterinsurgency, one must be among "the people". In Iraq, the U.S. Army did this to great effect under the leadership of General David Petraeus, moving large numbers of soldiers off the enormous bases and into smaller, community-oriented security outposts. As a result, in densely populated urban areas like Baghdad, an active presence of troops played a significant role in calming the worst of the violence. The Western Coalition forces in Afghanistan, however, face an altogether different problem. Kabul is not Baghdad - far less of Afghanistan's population lives there than in Iraq, and the insurgency is concentrated outside the country's largest urban areas. In many urban areas-Herat in the west, Jalalabad in the east, Mazar-i Sharif in the north-a westerner is far safer in the city itself than out in the countryside.

A rural insurgency is a devil's game. It is difficult for a foreign counterinsurgent force to concentrate itself to maximize effectiveness, in part because the insurgency itself is not concentrated. When there are no obvious population clusters, there are no obvious choices for bases. Bagram Air Base, the country's largest military base, is in the middle of nowhere, comparatively speaking - dozens of miles north of Kabul, and a 45-minute drive from Charikar, the nearest city in Parwan Province. FOB Salerno, a large base in Khost Province, is miles away from Khost City, the province's capital-and the road in between is riddled with IEDs.

The many smaller bases strung in between are surrounded by enormous Hesco barriers, concertina wire, and guard towers. No one is allowed on the base without being badged and interviewed by base security, and in many places delivery trucks are forced to wait in the open for 24 hours before completing their trips to the dining halls, clinics, or technology offices.

There are other ways in which Coalition Forces are separated from the people of Afghanistan beyond their heavily fortified bases. Most transit - on patrol, on delivery runs, or on humanitarian missions - is performed through Mine Resistance Ambush Protection, or MRAP vehicles. These enormous trucks, thickly plated with metal blast shields on the bottom with tiny blue-tinted ballistic glass, make it near-impossible to even see the surrounding countryside from another other than the front seat.

On the narrow mountain roads that sometimes collapse under the mutli-ton trucks, soldiers drive, too, in up-armored Humvees, which are similarly coated in thick plates of armor and heavy glass windows they aren't allowed to open.

When soldiers emerge from their imposing vehicles, they are covered from head to groin in various forms of shielding: thick ceramic plates on the torso, the ubiquitous Kevlar helmets, tinted ballistic eye glasses, neck and nape guards, heavy shrapnel-resistant flaps of fabric about the shoulders and groin, and fire-resistant uniforms. A common sentiment among Afghans who see these men and women wandering in their midst is that they look like aliens, or, if they know of them, robots.

There is no doubt that MRAPs, up-armored Humvees, and the seventy pounds or so of bullet and blast shielding has saved the lives of countless soldiers. But counterinsurgency is counterintuitive: in the relentless quest to ensure a casualty-free war, it seems the West has begun to engineer its own defeat.

By separating itself so completely from the population it claims to be trying to win-even at Bagram, where there is almost no combat, ever, it is almost impossible for a soldier or civilian to walk outside the gates to purchase something in the nearby bazaar-there remain precious few opportunities to do the gritty work of actually trying to "win hearts and minds".

The end result is stark: in a war that is desperately short of the troops needed to provide security to increasingly less remote communities, 93% of the soldiers stationed at the Coalition's primary base never walk outside the gates. Instead of a focus on separating the insurgents from the population - another clichéd pillar of counterinsurgency - the focus seems instead to be simply killing as many of the enemy as can be identified.

It is a brutal catch-22. The United States operates an incomprehensibly sophisticated Army - its ability to see things from afar, monitor and decode transmissions, and snoop on anything electronic is unmatched, and quite daunting.

But without strong Human Intelligence, there is little chance to contextualize the many streams of data they receive each day: is that man digging near the road emplacing a bomb, or is he digging up rocks for his fence? When this man identifies the elder from across the valley as a Taliban commander, is he telling the truth or pursuing some decades-old rivalry? Is that firefight the result of Jalaluddin Haqqani's foot soldiers, or are they villagers worried their timber harvest might be impounded?

These are the sorts of questions that cannot be answered while holed up on a large base. Military bases are societies in miniature: they have their own politics, their own players, a separate culture, and even their own language. When focused on themselves, they develop into a so-called "garrison mentality" - a focus on rules, administration, and process, rather than accomplishing any larger strategic objectives.

There are entire swaths of territory that have been ceded to the militants in Afghanistan. In some cases, entire districts are essentially "no go" areas, starved of development and even regular security resources. The abandonment of these areas - at a cost in Afghan lives - has not resulted in any punishments or reprimands of the commanders who did so. Rather, they were praised for reducing their own casualties.

It is a mindset bred into the very framework of the U.S. Army. If a soldier dies in combat, his or her commanding officer is investigated. A "15-6," as they are called, is convened by Court Martial authority, and should any fault be found on the commander's part, his or her career could be destroyed.

"No one has ever gotten a 15-6 for losing a village in Afghanistan," a Lieutenant Colonel who worked at the U.S. Army's headquarters in Afghanistan recently said, "but if he loses a soldier defending that village from the Taliban, he gets investigated."

Under such a threat, can a mid-level Army officer be blamed for taking few risks? The problem is much higher than individual battalion and brigade commanders: a command obsessed over casualties in the short term misses the chance to create an environment that results in fewer casualties over the long term.

In Afghanistan, that process is growing worse by the month: already in January of 2009, casualties were several times higher than they were the previous winter, when fighting is normally at its least intense.

It is that mentality - severe risk aversion, coupled with attention paid to process rather than outcome - that risks ultimately undoing the Western mission in Afghanistan. As an institution, the U.S. Army seems unwilling to make the difficult choices necessary to create the conditions for peace: a population that is adequately protected from the crime, drug, and war lords, and therefore no longer contributing to the desperate regional instability.

It is also a mentality that can be challenged in small doses from below, but demands concerted action from above. Command at the highest levels is vital in changing course, and admitting that war is actually a terrible and ghastly thing that requires your own people dying to win. It is a choice not many at the top seem willing to consider.

(Photos by Joshua Foust: ANP officer in Charikar, Parwan Province; the Nijrab Bazaar in Kapisa Province and FOB Salerno, in Khost Province.)

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

The United States is fighting a fire in the world economy, but Germany and some other European countries fear a flood of inflation as a result.

That clash of cultures is at the heart of transatlantic debate over whether Europe should spend more and ease monetary policy to revive growth, with a deep economic contraction certain this year and an end to the recession not yet in sight.

The perception gap could cause lingering resentment among Americans and Germans on the way out of the crisis.

World Bank President Robert Zoellick sees concern on both sides of the Atlantic, not just in Europe, at the risk of inflation down the road from the massive additional liquidity created by the U.S. Federal Reserve and soaring public debt.

The current gush of liquidity made the glut after the bursting of the Internet bubble in 2001 look like a desert, he told the weekend Brussels Forum, a conference of North American and European policymakers, business and opinion leaders.

The dollar’s sharp fall and the jump in the price of gold after the Fed’s announcement of a giant purchase of long Treasury bonds reflected fears that the United States will try to inflate its way out of the crisis.

“What some political leaders say when you bring this up is: “Well gee, when we’re putting out the fire, can you really worry about the water damage?” In a way, you really do have to worry about both,” Zoellick said, advocating a timely pathway back to fiscal and monetary discipline.

The European Central Bank has provided unlimited liquidity for banks to unfreeze credit markets and is weighing following the Fed into unconventional measures such as buying bonds to provide an extra monetary stimulus. But Germans are especially wary due to their traumatic history of hyperinflation in the 1920s, something that contributed to the rise of Hitler.

“I can promise you the European response to this crisis will not be inflationary. That’s why guys like me exist,” German Bundesbank President Axel Weber, a member of the ECB’s Governing Council, told the Brussels Forum. “I can promise you once it starts looking inflationary we will tidy up the mess.”

European Union leaders agreed at a summit last week they had taken enough fiscal stimulus measures for now and rejected pressure from the Obama administration to do more.

German leaders were particularly dismissive of calls to throw more money at the crisis when two stimulus packages adopted in the last five months are still being implemented.

European Commission President Jose Manuel Barroso made clear EU countries would review their stimulus efforts if the economy continues to deteriorate. European Economic and Monetary Affairs Commissioner Joaquin Almunia said the high debt levels of many states before the crisis were a constraint on further deficit spending.

“We are concerned by countries whose public debt is increasing very, very fast,” Almunia told the forum. “We cannot afford to spend the next two decades absorbing the debt we have created to tackle this very deep recession.”

The dispute about how to fight the crisis may have longer term negative consequences on both sides of the Atlantic — fuelling pressure in the United States for trade protectionism and stoking opposition in Germany to helping European partners.

Germans feel they made tough choices in the good times to balance their budget and cut unit labor costs to improve their competitiveness. Now many feel they are being expected to pay for the fiscal recklessness of other European countries.

Americans are raging at the greed and irresponsibility of bankers and corporate moguls. But if Main Street resents bailing out Wall Street, it will be even more resistant to paying to revive European or emerging economies through imports.

Lord Mark Malloch-Brown, the British minister in charge of preparing next week’s London crisis summit of G20 nations, said there was a big risk if Americans felt other countries were not pulling their weight in reviving the global economy.

“The most dangerous idea out there is that the world is somehow going to expect the American consumer to ride to he rescue,” the former senior U.N. official said. “If that idea is left out there, it’s going to lead to protectionism in America.”