Saturday, July 25, 2015

Editorial: Obama Earns His Nobel

President Obama finally earned the Nobel Peace Prize he was given in 2009 and it’s driving Republicans crazy.

Secretary of State John Kerry also deserves credit for leading the 20 months of talks, along with representatives from Russia, China, Britain, France and Germany, getting Iranians to sign onto the deal to give up their pursuit of nuclear weapons and agreeing to allow UN inspectors to check their work. Now the challenge for Obama and Kerry is to get Congress to give peace a chance.

A solid majority of Americans support the agreement; a poll for the Washington Post and ABC News (July 20) showed 56% in favor and 37% opposed. While Republicans hope to make inroads into the Jewish vote, a poll conducted in June for J Street, a progressive Jewish group, found that 59% of American Jews support a final agreement with Iran that increases inspections in exchange for economic sanctions relief. And Jewish support grows to 78% for an agreement that imposes intrusive inspections of Iran and caps its enrichment of uranium as a level far below what is necessary to make a nuclear weapon in exchange for phased relief from US and international sanctions, as the final deal does.

However, Israeli Prime Minister Benjamin Netanyahu remains implacably opposed to the Iran deal. The leading Israel lobby group, AIPAC, is expecting to spend as much as $40 million on an ad campaign through the cover group “Citizens for a Nuclear Free Iran” to put pressure on Democratic members of Congress to nullify Obama’s policy.

Many former senior intelligence and national security officials in Israel disagree with Netanyahu and believe the historic agreement is in the national security interest of the State of Israel.

Jonathan Alter in (July 21), quoted Ami Ayalon, a former head of Shin Bet, the Israeli internal security service, and a former chief of the Israeli Navy, saying the issue “‘is not black and white,” but he reeled off a list of former defense ministers and chiefs of Shin Bet and Mossad who agree with him that “when it comes to Iran’s nuclear capability, this [deal] is the best option.”

Jeremy Ben-Ami of J Street told the Washington Post the battle shapes up as “The foreign policy fight of a generation… It pits folks who brought us the Iraq war and whole neocon worldview versus the Obama worldview and the concept that we can confront enemies with diplomacy.”

Israel’s allies against the deal include military contractors who would profit from war with Iran and oil companies, who lost billions of dollars in the value of oil reserves after the UN Security Council unanimously approved the deal on July 20. Crude oil prices fell below $50 a barrel for the first time in more than three months on speculation that Iran will add to the global glut of oil.

While some oil companies hope to move in to help Iran rev up its production, others see the infusion of Iranian oil blotting out their hopes of returning to $100-a-barrel oil anytime soon.

Relaxation of sanctions on Iran not only will allow Iranians to improve their standard of living and potentially increase exposure of young Iranians to Western influences; reopening oil markets will help keep gas bills low for American drivers.

If Congress overrides Obama’s veto and kills the deal, no one seriously disputes that the sanctions regime would collapse. “Russia is already planning its new business deals with Iran and the Europeans aren’t far behind,” Alter noted. “The idea that a tougher United States could by itself force better terms is a dangerous fantasy. With rejection, we would get the worst of both worlds. Iran would have much of its oil money back, but without the most intrusive inspections in history (24/7 monitoring of its nuclear facilities), 98% reductions in uranium stockpiles, and the many other provisions that sharply reduce its existential threat to Israel.”

If Israel and the Republicans risk a war full of unintended consequences to eliminate Iran’s nuclear capacity, Israeli intelligence estimates that US bunker-buster bombs would at best set back Iran’s nuclear program by two to four years, or roughly a fifth as long as required by the terms of the new deal, Ayalon said.

As for Israeli security concerns, the predominantly Jewish nation has at least 10 years to demonstrate that it is not a threat to Iran, which has no inherent enmity for Israel, beyond its concern for fellow Muslims in Palestine. Jewish communities in Iran date back to Biblical Persia. From the establishment of the State of Israel in 1948 until the fall of the Shah in 1979, Israel and Iran maintained close ties and Israel viewed Iran as a natural ally as a non-Arab power on the edge of the Arab world.

Relations suffered after Ayatollah Khomeini overthrew the Shah, but Israel still provided logistical support and sold arms to the Islamic Republic during Iran’s war with Iraq from 1980 to 1989. Hostility between Israel and Iran increased after the defeat of the Iraqi army during the first Gulf War in 1991.

The best way Israel could improve its security is to jettison Netanyahu, explore the opening to re-establish diplomatic relations with Iran and start negotiating seriously with duly elected Palestinians to recognize each others’ authorities.

US Isn’t Greece

There are many lessons to be learned from Greece’s struggles to get its economy back on track, but debt hawks are wrong to claim that the Greek troubles should stand as a warning that the US is in trouble because of its mounting national debt.

Greece’s problem is that it does not control its own economy, being beholden to the Frankfurt-based European Central Bank, which administers monetary policy for the Eurozone. Greece also has a problem in getting revenues from wealthy citizens who for generations have dodged tax collectors.

Greece owed official lenders $271 billion in June, while private investors also held $42 billion of Greek government bonds. That compares with a GDP of $238 billion in 2014, which ranks 45th in the world and 13th in the 28-member European Union.

The United States expects a national debt of $18.6 trillion at the end of FY 2015, compared with a $17.4 trillion GDP in 2014, which makes the US the biggest economy in the world.

But Greece, which was required by the ECB and IMF in 2010 to adopt austerity measures to bring the deficit under control, saw its unemployment rise from 11.9% of the workforce in 2010 to 27.5% in 2013 before falling to 25.5% in April.

The US, on the other hand, saw its economy recover after President Obama and the Democratic Congress stimulated the economy with $800 billion in spending in 2009 to pull the country out of the Bush Recession. Republicans have tried to impose austerity measures in an effort to stall the economic recovery and they have succeeded in cutting government jobs and programs since they took over the House in 2010 and the Senate in 2014, but the unemployment rate still dropped to 5.3% in June.

US Treasury bills are still considered the safest investment in the world, with interest rates ranging from 0.04% for three-month notes to 2.33% for 10-year notes because, unlike in Greece—whose 10-year bond rate was 11.22% on July 20—there is no serious question that the US can pay off its debts. The biggest threat to the T-bill’s stability is the Republican majority in Congress, which threatens to default on the debt if President Obama does not agree to further austerity measures when the next debt-ceiling fight comes up in November.

Who gains from higher government bond rates? Hedge fund speculators, who have complained that T-bills have been low-performing under Obama. Some invested in Greek government bonds when they were yielding upwards of 12%, betting that the ECB and the International Monetary Fund would backstop them.

Beware of Republicans who again are threatening a government shutdown, which will hurt government workers and the people who rely on them to provide services—who tend to be at lower income levels—but might nudge up T-bill rates as a favor for the Wall Street speculators. — JMC
From The Progressive Populist, August 15, 2015

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