Forward Or Backward?

Move America Forward, which presents itself as "the nation’s largest grassroots pro-troop organization", has issued a call for ousted General Stanley McChrystal to "come public with the true extent of the Obama Administration’s disengagement with the war in Afghanistan."

“Now that General McChrystal is no longer part of the military chain of command, he is free to expose the mismanagement of the war by the Obama administration, which is what got him in trouble in the first place.” said Move America Forward’s Director of Communications, Danny Gonzalez. 

Has Obama mismanaged the situation in Afghanistan?  There is an argument to be made that he has--certainly there are deep divisions within the Obama Administration over Afghanistan, divisions Obama has not managed to heal, and it is the civilian side of the US presence in Afghanistan, not the military side, that has a growing rift with Afghan President Hamid Karzai.

Yet there are also complaints to be levied against the Pentagon as well.  The glacial pace of the troop buildup in Afghanistan for the "surge" strategy (the last of the 30,000 troops are only now arriving in Afghanistan) can only be laid at the feet of the Pentagon, not the Administration.

If indeed Obama has been "disengaged" from Afghanistan, creating a continuing public controversy over his handling of matters to date is hardly going to assist him becoming "engaged" now.  Operations in Afghanistan are still unfolding, and there will be ample opportunities for General McChrystal to lend his perspective to the strengths and weakness of the Administration's efforts.  To "come public" with inflammatory charges of mismanagement and misconduct does not help the Administration focus its energies on Afghanistan.

Obama has publicly re-committed himself to the "surge" strategy.  In announcing the replacement of McChrystal with General David Petraeus Obama stated: "This is a change in personnel, but this is not a change in policy."

If the goal of  Move America Forward is to ensure the Obama Administration is fully engaged and supportive of the troops in Afghanistan, McChrystal's career-ending flirtation with Rolling Stone has already done most of what can be done to achieve that goal.  Supporting the troops now means standing back and giving the Obama Administration the latitude to manage things as they wish.  Obama remains the Commander In Chief until 2012; for the sake of the troops, that needs to be respected.

McChrystal Out, Petreaus In, Challenge Remains

A day after Rolling Stone published a profile piece of General Stanley McChrystal in which McChrystal and several of his senior staff made caustic, derisive, and arguably insubordinate comments about Obama, Vice President Joe Biden, and several members of Obama's administration, Obama fired McChrystal, replacing him with General David Petraeus, head of the US Army's Central Command (and, ironically, technically McChrystal's superior).

In many respects, Petraeus is an easy choice to make for McChrystal's replacement.  As the architect of the successful "surge" strategy in Iraq that for many has been the model of what needs to take place in Afghanistan, he is arguably the Army's foremost expert on counterinsurgency strategies and tactics (COIN, in the military argot).  As the general many credit with salvaging the situation on the ground in Iraq, Petraeus is quite popular with Republicans in Congress (there has been considerable speculation as to whether Petraeus would be drafted by the Republicans for the 2012  Presidential elections) Indeed, that the new assignment is technically a demotion for Petraeus only serves to underscore the heft Petraeus brings to the table.

What Petraeus does not bring is a substantial alteration to the situation in Afghanistan.  US Ambassador Karl Eikenberry, Obama's diplomatic lead in Kabul, has never walked back the opposition to a "surge" strategy he voiced  last fall in a series of classified cables to Obama (that were subsequently leaked to the New York Times).  Neither has Vice President Biden, who was quoted by Jonathan Alter in The Promise that "In July of 2011, you’re going to see a whole lot of people moving out, bet on it."--an assertion Secretary of Defense Robert Gates emphatically rejected earlier this week.  Despite assertions by Obama in announing McChrystal's ouster that he could tolerate debate but not division, divisions over Afghanistan are everywhere in Obama's Administration:

Secretary of State Hillary Clinton has gone along with the project, but Vice President Joe Biden—who might have been secretary of state had the cards fallen in a slightly different way—has not. Divisions within the administration grow by the day.

Nor does Petraeus have large numbers of troops in his back pocket to take to Afghanistan.  He flies to Kabul alone, to take command of McChrystal's men and execute McChrystal's strategy, on the eve of a major push to retake Kandahar, Afghanistan's second largest city.  The last of the 30,000 troops allocated by Obama to the Afghanistan "surge" are just now arriving on the battlefield--delays in their arrival have been a principal frustration of the Kandahar offensive.  Secretary Gates is counseling patience, to give the strategy time to succeed, but the political reality is that time is running out on Afghanistan; the July 2011 pullout date is fixed in the minds of many, and Americans, by a 53-44 percent margin, do not count the Afghanistan war as one worth fighting--and certainly one not worth American lives.

By replacing McChrystal with Petraeus, Obama is essentially rebutting the crux of McChrystal's Rolling Stone complaints, a lack of strong support for the troops.  However, if all Obama does is replace McChrystal with Petraeus, he will have largely validated McChrystal's complaint.

He may be gone, but McChrystal has managed to box Obama in yet again.

McChrystal and Rolling Stone: Why Obama is losing the Battle of Kabul

General Stanley McChrystal, by opting to be the subject of a profile in Rolling Stone Magazine, to be published in issue 1108/1109 of that publication, touched off a firestorm with the biting criticisms attributed to him and his staff of several members of the Obama Administration, including Barack Obama himself.  The profile piece may very well cost him his career, and could send US military efforts in Afghanistan spiraling into chaos.

There can be no doubt that McChrystal erred by speaking as he did, and by allowing his subordinates to speak as they did, to reporter Michael Hastings.  Not only does Article 2, Section 2 of the Constitution explicitly make the President the Commander In Chief of the Armed Forces and therefore McChrystal's superior in the chain of command, but Article 88 of the Uniform Code of Military Justice makes insults and criticisms by military officers of the civilians placed over the military an offense punishable at court martial:

Any commissioned officer who uses contemptuous words against the President, the Vice President, Congress, the Secretary of Defense, the Secretary of a military department, the Secretary of Transportation, or the Governor or legislature of any State, Territory, Commonwealth, or possession in which he is on duty or present shall be punished as a court-martial may direct.

Yet what many have overlooked is that the Rolling Stone article portrays McChrystal's deepest conflict as being with US Ambassador to Afghanistan former Lieutenant General Karl Eikenberry:

By far the most crucial – and strained – relationship is between McChrystal and Eikenberry, the U.S. ambassador. According to those close to the two men, Eikenberry – a retired three-star general who served in Afghanistan in 2002 and 2005 – can't stand that his former subordinate is now calling the shots. He's also furious that McChrystal, backed by NATO's allies, refused to put Eikenberry in the pivotal role of viceroy in Afghanistan, which would have made him the diplomatic equivalent of the general. The job instead went to British Ambassador Mark Sedwill – a move that effectively increased McChrystal's influence over diplomacy by shutting out a powerful rival. "In reality, that position needs to be filled by an American for it to have weight," says a U.S. official familiar with the negotiations.

The relationship was further strained in January, when a classified cable that Eikenberry wrote was leaked to The New York Times. The cable was as scathing as it was prescient. The ambassador offered a brutal critique of McChrystal's strategy, dismissed President Hamid Karzai as "not an adequate strategic partner," and cast doubt on whether the counterinsurgency plan would be "sufficient" to deal with Al Qaeda. "We will become more deeply engaged here with no way to extricate ourselves," Eikenberry warned, "short of allowing the country to descend again into lawlessness and chaos."

McChrystal and his team were blindsided by the cable. "I like Karl, I've known him for years, but they'd never said anything like that to us before," says McChrystal, who adds that he felt "betrayed" by the leak. "Here's one that covers his flank for the history books. Now if we fail, they can say, 'I told you so."

While the comments attributed to McChrystal in the Rolling Stone profile do indeed make him and his staff appear, in the words of John Dickerson of Slate magazine, "petty, frustrated, and reckless," Eikenberry's cable last fall--and its subsequent leaking to the New York Times shows him to be equally so (it was Eikenberry, not McChrystal, who alienated Afghan President Hamid Karzai by attending news conferences called by Karzai's opponents in last year's elections).  That incident also showed the intense competition between Eikenberry and McChrystal for resources and support from Washington:

General Eikenberry has been an energetic envoy, traveling widely around Afghanistan to meet with tribal leaders and to inspect American development projects.

He has been pushing the State Department for additional civilian personnel in the country, including in areas like agriculture, where the United States wants to help wean farmers off cultivating poppies. The State Department has tried to accommodate his requests, according to a senior official, but has turned down some because of budget constraints and its desire to cap the overall number of civilians in Afghanistan at roughly 1,000.

He played a significant role, along with Senator John Kerry of Massachusetts, in persuading Mr. Karzai last month to accept the results of an election commission, which called for a runoff presidential ballot.

That Michael Hastings was granted nearly two months of access to the inner workings of McChrystal's staff shortly after the New York Times piece where Eikenberry undermined McChrystal's counterinsurgency strategy leaves one wondering if this was not the latest in a tit-for-tat media conflict between McChrystal and Eikenberry.  Even if it is not, there is no denying that Obama's top diplomat in Kabul and Obama's top general in Kabul do not like each other and are taking steps to undermine each other. There is also no denying that Obama appointed them both to serve at his pleasure; it is difficult to envision Obama being pleased with either man at this juncture.

What Michael Hastings has revealed to the world is that the real battle for Kabul is in fact a clash of egos between the leaders of Obama's military and civilian strategies in Afghanistan--strategies which require each other if Obama's chosen task of building the Afghan nation is to succeed.  McChrystal and Eikenberry appear to view each other as more of an enemy than the Taliban or al Qaeda.

While Eikenberry is poised to win that battle (by default, as McChrystal is likely to be forced to resign), there is little likelihood of the clash of egos ending.  McChrystal's staff and deputy commanders are quite loyal to him personally, and any McChrystal replacement needs to come from those ranks if Obama is to avoid any major disruptions in the execution of the counterinsurgency strategy Obama chose in his speech at West Point last December.  The profile piece showed that McChrystal's staff and deputy commanders share his criticisms of the civilians involved in Afghanistan.

What is most disturbing about this ego clash is that it has been going on even as the military and diplomatic situation in Kabul deteriorates, and that it has been going on under Obama's ultimate leadership; nor is there indication of any effort by the Obama Administration to bring McChrystal and Eikenberry to some form of modus vivendi.  The Obama strategy for Afghanistan is a two-pronged strategy that involves defeating the Taliban militarily while building up the Karzai government diplomatically to withstand other insurgencies in the future.  That strategy demands cooperation and coordination between the military and diplomatic personnel in Afghanistan--between McChrystal and Eikenberry.  Not only has Obama not been getting that cooperation, he seemingly has not been demanding such cooperation.

Whether or not McChrystal loses his job over this is problematic, but regardless of that, unless Obama can get the civilian and military personnel in Afghanistan to play nice with each other, he faces a very serious risk of losing Afghanistan.  As the battle for Afghan hearts and minds has played out thus far, the clear loser at this juncture is Barack Obama. 

Evil Taking Root in Europe -- The Next Day

How will the eurozone survive crushing debt?

Yesterday's announcement of a €750 Billion bailout of eurozone sovereign debt was cause for some celebration in the world's bond markets.  That celebration appears to have been short lived, as by the end of the trading day today bank swaps and the LIBOR inter-bank interest rates showed pessimism over the viability of the bailout, while the Japanese yen rose against the euro.

The market place assessment of the bailout has been simply this: "That's fine for today, now what about tomorrow and the day after next year?"  The bailout may have arrested the free-fall of eurozone sovereign debt in the marketplace, but it does nothing to eliminate the burden that debt places on the economies of Europe.

“Markets realized quickly that this crisis won’t be cured by adding liquidity, no matter how big it is,” said Toshihiko Sakai, head of trading for currencies and financial products at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “The structural problems of the euro zone will persist. I’m not surprised at all the euro is losing strength again.”

Still unanswered are the lingering questions about how successful efforts to trim deficit spending in the eurozone will be--even fiscally prudent Germany's deficit will be in excess of 5% this year, well in excess of the 3% allowed under euro rules.  Nations such as Greece and even the UK are faced with the daunting challenge of growing their economies while drastically slashing government spending, a task that yesterday's bailout mechanism does not even begin to address.

The eurozone is spending the equivalent of $1 Trillion, not to solve their sovereign debt crisis, but to buy (on credit) a little time before they must resolve their sovereign debt crisis.  That does not seem a wise use of increasingly scarce financial resources.  €750 Billion of new debt will not make the existing debt any less troublesome; it will most likely make that debt more troublesome.

The evil taking root in Europe is simply this: to defend a particular bit of money--the euro currency--Europe is prepared to lay waste to its nations' finances and economies.  The marketplace realizes this, and so the euro's downward spiral against other currencies continues despite Europe's spending their very last euro to reverse that course.

Evil Taking Root in Europe

The Euro is under duress from a slew of unforced errors.

Recently, I speculated on the practical wisdom contained in the Bible verse "For the love of money is a root of all kinds of evil....." Since then, events in Europe have illuminated the Biblical warnings about an inordinate focus upon money, as the $146 Billion bailout of Greece announced on 3 May 2010 failed to soothe global bond markets, resulting in a pan-European debt crisis:

Yields on German two-year debt reached a record low, falling to 0.71pc on safe-haven demand in echoes of credit stress at the height of the financial crisis. This is below the European Central Bank's short-term rate of 1pc. "This is very unusual and indicates concern about systemic risk from sovereign debt," said Stephen Lewis from Monument Securities.

The response of European finance ministers has been to blame the bond markets themselves, laying the need for a fresh bailout of the Euro currency itself squarely on the bond markets:

“In the night, when the markets are opening, we cannot afford a disappointment,” said Finance Minister Anders Borg of Sweden, one of 11 EU nations not in the euro. “We now see herd behavior in the markets that are really pack behavior, wolfpack behavior.”

The solution to the Euro crisis?  Pile on still more money--this time on a scale to rival the US Treasury's TARP program in 2008:

European policy makers unveiled an unprecedented loan package worth nearly $1 trillion and a program of securities purchases as they spearheaded a drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro.  Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, governments of the 16 euro nations agreed to make loans of as much as 750 billion euros ($962 billion) available to countries under attack from speculators.

Is that really a solution, when every nation in Europe has external debt in excess of one hundred percent of GDP?

• Greece' external debt is 170% of GDP
• Italy's external debt is 147% of GDP
• Germany's external debt is 182% of GDP

European nations are all highly leveraged--far more so than the United States is (external debt is 96% of GDP)--which begs the question of from where do the EU countries presume to get these billions of euros?

Further, how does the creation of still more debt by nations already drowning in debt lend strength and credibility to the euro?  This latest rescue package is still little more than a series of preferential loans to distressed nations--cheaper than what those nations could borrow on the open market, but borrowing nevertheless.  This past week's currency crisis is a debt crisis on steroids, and the European Union's solution is to just borrow more, albeit at more "friendly" rates.  Given that the debt crisis is predicated upon the grave doubt that Greece and other nations will be able to pay off their external debts, further borrowing does not deliver any new assurance that the new debt will be easier to repay than the old debt.

Finally, the bailout mechanism is laden with its own potential instabilities, for it empowers the European Union to reach deeper into the governance of member states than any ratified treaty envisions:

"It is an absolute general mobilization: we have decided to give the eurozone a veritable economic government," said French president Nicolas Sarkozy, once again basking as Europe's action man. "Today we have an attack on the whole of the eurozone. This is a systemic crisis: the response must be systemic. When the markets open on Monday morning we will be ready to defend the euro." 

In the space of a weekend, the EU has determined to arrogate to itself powers well in excess of those contained within the Lisbon Treaty:

But if the early reports are near true, the accord profoundly alters the character of the European Union. The walls of fiscal and economic sovereignty are being breached. The creation of an EU rescue mechanism with powers to issue bonds with Europe's AAA rating to help eurozone states in trouble -- apparently €60bn, with a separate facility that may be able to lever up to €600bn -- is to go far beyond the Lisbon Treaty. This new agency is an EU Treasury in all but name, managing an EU fiscal union where liabilities become shared. A European state is being created before our eyes.

Perhaps this is an inevitable evolution, but it is worth noting that the United States Constitution was hammered out over a summer in 1787, and that the Constitutional Convention was only called after some years of ineffective central government under the Articles of Confederation; similarly, the Treaty of Lisbon--analogous in many ways to the US Constitution--took the better part of a year to craft.  Is zealous defense of a particular currency sufficient impetus to accomplish in a weekend what otherwise would (and, arguably, should) take far longer?

Very likely, the answer will turn out to be "No."  Already, there are consequences to the bailout strategy which reach beyond Athens and Brussels, and even Berlin.  Regional elections in Germany have produced a rejection of German Chancellor Angela Merkel's acceptance of a Euro-centric response to the ongoing financial crisis and with it her control of the Bundesrat, the upper house of the German parliament.

According to a poll on Saturday, 21 % of voters said their decision would be influenced by the bailout.

And the next day they voted the regional coalition of Mrs Merkel's Christian-Democrats (CDU) and their liberal Free Democrat allies (FDP) out of office.

Such are the "sorrows" generated by making currency--money--the center of everyone's attention.  Such are the "sorrows" cautioned against by the Apostle Paul in his letter to Timothy.

The nations of Europe have lived beyond their means for many years--Greece in particular although not exclusively.  For years they have consoled themselves with a conceit that a common currency meant money would always be in abundance.  For years they have ignored the fundamental economic nature of money:

It's time to get back to basic economics. Money--both the paper and electronic varieties--is, in and of itself, worth nothing; it has no intrinsic value. It is a means--and a profoundly important one--of enabling people to more easily conduct transactions without having to go through the clumsy and utterly inefficient barter process.

What the governments of Europe refuse to acknowledge is that the current debt crisis within the Eurozone is not "wolfpack behavior" but a vote of no-confidence by bond markets in those governments' fiscal policies.  There is no denying that is the fiscal policies of European nations that have brought them to this point--the decision to run a deficit is a fiscal decision, after all--and therefore it will be within the realm of fiscal policy that ultimate resolution to the debt crisis will be found.  

This, of course, is the crux of the problem, for no nation wants to take on the hard choices necessary to bring their debts under control.  As Bill Fleckenstein observed in his "Contrarian Chronicles" column:

The ending is not clear, but here's something that is: There's virtually no chance that the Greeks (who have defaulted on debt often in the past) will be willing to adhere to austerity measures just so they can use a colored piece of paper -- the euro. Especially since government workers, the folks who would probably have to give up the most, are the most entrenched.

 Nor is a nation such as Great Britain any more amenable to such policies:

Mervyn King is warning that the victor in next week's election will be forced into austerity measures that will keep the party out of power for a generation, according to the US economist David Hale.

Instead of tackling these issues head-on, the nations of Europe have opted to merely shovel more money on top of the pile, digging themselves deeper into a financial hole, in hope that stabilizing the euro will make all these distasteful duties disappear.

When at last the money runs out, Europe may find itself so deep in a financial hole that not a single one of the institutions it has built up since WWII will survive intact.  Such is the destruction that comes when the evil that is a love of money and currency takes root on a national scale.