Iraq is different

The much-anticipated text is being criticized in the news this morning as "cryptic and elastic" and susceptible of many interpretations.

No, brothers and sisters, we are not talking about the $700 billion bailout package, which will call for purchase of some assets or other from unnamed financial institutions for either a high or a low price, depending on who you talk to. That package is about to be agreed upon, and probably before the Sept 30 half-year financial-reporting deadline, which is, like, next Tuesday.

What we are talking about the latest American text for a proposed long-term bilateral security agreement with Iraq. Satterfield from the State Dept and his sidekick from the NSA arrived back in Baghdad yesterday after extensive consultations in Washington. And here, according to a local Iraqi paper, is the gist of their latest proposed text on the important "immunity" question:

The United States will give complete consideration to any request from Iraq for jurisdiction over members of the American armed forces and civilian members respecting crimes that include voluntary acts and significant offenses, and that break Iraqi laws. Such requests for Iraqi legal jurisdiction will be referred for settlement by mutual agreement between the parties by a joint subcommittee.

AlHayat says Iraqi authorities wouldn't confirm or deny the authenticity of that, but they quote Ali al-Adeeb of Maliki's Dawa party as follows, (talking about the whole American text, not just the immunity section):

[He said the new American text includes material that is] "cryptic and elastic". And he told AlHayat: "Although the Americans made some concessions, they are not sufficient, and [the latest American text] includes expressions that are vague and elastic, and floating and conditional, and they bear many interpretations. He added: "Iraq accepts immunity for American soldiers when in their camps, and when on military missions agreed to by the Iraqi government, but if they commit any crimes outside of those missions they are subject to Iraqi law, and without the condition of American agreement."

Makes sense. They can confidently roll over Congress in the face of massive popular objections, because they know their animals, but Iraq is a little different. (An elegant expression, don't you think?)

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With that, I am going to shut up and do other things for a while. "Restructuring" so to speak. Sayonara.

Pattern recognition

Good comments on the live Bernanke testimony this morning at calculatedrisk.com:

Comrade Sue: "Remember 'Iraq will pay for itself'?"

Weather Helm: "I'm stunned more people aren't comparing this fear-mongering to the Iracle debacle. Watching this is like watching Colin Powell's address to the United Nations about Saddam's bio-warfare labs."

Here's a tougher one. Imagine what happens when the full moral-hazard phenomenon kicks in, and people start advocating ending this kind of bailout. That's when you will start hearing the arguments we're now hearing for staying in Iraq just a little longer. To wit:

"Sure it was a bad idea and Congress was stampeded into approving it in an election year. But we've created a situation here and we can't just exit just like that. We need to be 'responsible'"... Which in the case of the Wall St bailout will take this form: "This kind of government support has become the norm, and we can't end it too abruptly because it will cause 'the markets' to panic". So it goes.

Let me tell you another story

The story Paulson told yesterday was this: "I'm sorry my colleagues on Wall Street have brought the world to the brink of collapse, but there you are. We need $700 billion immediately to prevent catastrophe [a meltdown in a couple of days--Thursday evening spiel to the congresspeople] [the slow descent into world-wide economic depression--yesterday to the Banking Committee]. The story clearly has to do the the actions of real people, and that is what accounts for the outrage.

The story Bernanke had been working on was a different story--not about actual people and particular financial institutions, but about the Central Bank management of prices in the economy as a whole ("monetary economics"). Krugman tells the "Japanese" part of that story: The central bank buys short-term government debt (equivalent of T-bills in the US case) from the banks in exchange for cash, and this lowers the interest rates in the interbank market, which is supposed to then trigger follow-on cuts in interest rates the banks charge on loans to customers and in the economy generally. Then when rates were already zero, the central bank continued to buy the equivalent of T-bills, giving the banks even more cash, well over the required reserves (so-called "quantitative easing"). But the banks still failed to lend to customers.

Here's where the story gets interesting. Krugman, in a blurb a couple of days ago, re-tells that story in "monetary economics" terms: (Liquid reserves, or cash credits in a bank's account with the central bank, are considered to be part of the so-called "monetary base", because banks are allowed to lend to customers based on a ratio of those reserves). What happened in the zero-interest case in Japan, in Krugman's terms, was that "an increase in the monetary base" didn't have any economic effect. Why, he asks. The obvious answer lies in the behavior of the banks. They were not prepared to lend at all, in the face of falling real estate prices, and they knew no other lending skills than those of lending against real estate; they were not traditionally well-versed in the assessment of risks of general business corporations. In the prevailing jargon, the problem was "structural". But Krugman (see the "Japan" section of his web-site) at the time said no: The problem could be solved without considering the "structural" side. The problem (as he now elaborates) was that cash and T-bills had become functional equivalents, so that the increase in cash to the banks was offset by less T-bills in their hands, hence in functional terms the "monetary base" wasn't actually being expanded. If you put that story beside the real story, namely the continued lending-strike by the big Japanese banks, you can start to see what this branch of economics is all about: It is about inventing an abstract argle-bargle language that will take the really-existing behaviour of the big financial institutions, consider it to be part of the natural order of things, and explain how that natural order works in argle-bargle terms. In this case, the argle-bargle terms having to do with central bank manipulation of prices in the economy as a whole. (Raising the price of T-bills in the interbank market equals lowering their yield: "relative prices" in that sense).

I think this sheds some light on what happened yesterday in Congress. Bernanke added to his prepared statement, or substituted for it, remarks showing his understanding of what the current problem is in terms of prices. He said it should be possible to set up mechanisms to figure out the value of the assets in question in "hold-to-maturity terms", the implication being that this would legitimately prop up the prices to be paid for these assets and avoid the phenomenon of "fire-sale prices". (It isn't an all clear why hold-to-maturity calculations would result in prices higher than the current bids, but that is another question). Obviously, and many people have pointed this out, the real motive here is to bail out the institutions that hold these assets, by paying them high prices for them. But my point here is the more general one of trying to understand how Bernanke is trying to go at this--"intellectually" so to speak. He is trying to prop up prices, not in the sense of bailing out the really-existing holders of those assets, but rather as a macro-economic issue: How to prevent a form of asset-deflation. In just the same way that Krugman dismissed or shelved the "structural" or real-world side of the Japanese problem in the late 90s, Bernanke in this case is trying to wave the magic wand of argle-bargle over the structural or real-world side of what has been going on with the selling, tranching, re-selling and so on of these so-called "assets", and treat this as a theoretical anti-deflation price management story, something central banks are expected to think about, or at least talk about, all the time. (His problem in being taken seriously was unfortunately for him personified in the guy he was sitting next to).

Obviously professional economists are expected to be able to switch back and forth seamlessly between the argle-bargle side and the structural side, so for instance Bernanke can try and show how you could figure a big price for these "mortgage-related assets" to prevent price-deflation, all the while not letting people forget that this is critically important because the holders of these "assets" happen to be also the masters of the universe.

I don't know if I've made any of that clear, but in any event for my part I also think this helps with an understanding of the whole phenomenon of academic involvement in the current affairs more broadly. Take the American military involvement in the Middle East, and Iraq in particular. Continued involvement is going to be justified in various ways, but the arguments are in a way similar to those of Bernanke et al for propping up Wall Street, in the sense that they are argle-bargle, and their aim of that is to skate over the structural or real-world issues in the interests not necessarily of a particular ideology even, but mainly just as a cloak or a covering for the actions of the particular interest-group in question. For "COIN-based training and support for the Iraqi military" you could read "support for sectarian death-squads", and so on. Translating from the argle-bargle back to the various underlying realities is an endless task. The feeling is of bailing out a boat that has already sunk.

A Japanese point about the Paulson plan

While we're on the subject of the Paulson scheme, I have another two cents to contribute: A journalist writing in the mass circulation Japanese daily Asahi Shimbun explains to his readers today that there is another dimension to the plan, beyond just buying shaky securities from shaky financial institutions and then re-selling them. He says the aim includes actually having the Treasury Dept and/or its agents get right into the management and accounting/reporting of the financial institutions in question. Commenting on the section that says the financial institutions named to act as agents of the Secretary of the Treasury shall "perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them", he writes:

This establishes their [the Secretary and his agents] having a say in management [of the selling institutions] in the areas of financial reform and restructuring.

And in his concluding remarks, the journalist adds:

It appears that the authorities will go about their buying and selling while at the same time doing fine-tuning* so as to avoid any sudden increase in loss-reporting [by these institutions].

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* Saji-kagen, from the words for spoon, and for increase/diminution. Literally used in connection with seasoning to taste in cooking, and mixing medicines in prescriptions. The expression isn't an unusual one in describing traditional market manipulation by the Japanese authorities, so it is interesting to see it used here in connection with the Paulson plan.

Pre-history of the Paulson scheme

Folks have forgotten, but it was September 18 2002 when the Bank of Japan announced its surprise plan to buy stock from the big Japanese commercial banks, the historical ancestor of what Paulson et al are now trying to market to the Congress. The BOJ said it would buy up to 8.3 trillion yen-worth of stocks, which was the amount by which the banks' holdings of listed stocks exceeded their capital. BOJ said the price-risk pressure on banks from all that stock was holding them back from aggressive bad-loan disposals and renewed lending. It was the first central-bank foray into the buying of shaky risk-assets. The plan announced Sept 18 2008 by Paulson and Bernanke was the second, and the announced purpose is very similar: The central bank, by buying shaky assets from the banks, hopes to remove balance-sheet pressure on them, and thereby get them to return, as if by magic, to their traditional lending functions. The big problem being how to get the elected government to go along with what would otherwise look like a boondoggle among friends. (The fact that the Sept 18 date is the same in the two cases is surely one of those spooky coincidences; but the proximity to the half-year-end reporting date of Sept 30 probably isn't).

In the Japanese case, the BOJ move (which didn't require legislation, and was criticized by some as being quite limited) was seen partly as putting pressure on the Koizumi administration to itself become more aggressive in ending the lending logjam. Those who had been recommending aggressive and unconventional measures throughout this period were frustrated by the argument that there would be no political support for such measures. The BOJ move was supposed to trigger a follow-up program by the government, which however didn't come about. The point is that in general terms it was a case of administered central authority versus the elected government.

One of the things that was inherited from that experience, which was naturally studied by the Americans, was the focus on the question of how you obtain political support for this kind of bank bailout. You would need fear. But capital adequacy and questions of that nature are generally of a long-term nature and have a lot to do with accounting and reporting decisions, not normally the stuff of political hysteria.

By contrast, the interbank market, which in the US is the so-called federal funds market, has just the characteristics needed, because in addition to being the market where banks swap funds in order to stay ahead of reserve-ratio requirements (which have to do with liquidity, not capital requirements) it is also where banks settle their commercial transactions each day. So if people thought in some way that market were to fail, then it would indeed be armageddon, and people would do whatever you asked in order to restore the necessary "confidence".

This is only a somewhat educated guess, but probably what Bernanke and Paulson told the congresspeople during that frightening meeting on Thursday evening was a just such a story about the interbank market and armageddon. In the cold light of day, it would be remembered that when banks can't get other banks to lend them funds, there is always the central bank to act as lender of last resort, and then if there is a basket case, an orderly bank-liquidation. But don't forget that staff were excluded from that meeting...

This is a little sketchy, and partly based on what I remember from that period, but I think it is important to remember at least that there is a historical context for the whole idea of how you get an elected government to do something as raunchy-looking as buying bad assets from the commercial banks when the going gets rough. And that this includes the problem-area of building what you could call administered pressure on the elected representatives to do that. Logic suggests that at the very least, the drama of last Thursday wasn't something that just happened.

Tale of two cities

Here are the main themes in the three top original stories in the Iraqi paper Al-Mashriq this weekend:

Parliament reduced to a rubber-stamp for the executive

(1) A Fadhila deputy on the parliamentary Committee on Services said the supervisory function of his committee and the others operating in Parliament have seen their roles "weakened and become practically non-existent in the face of the efforts of political parties that are trying to weaken Parliament and turn it into a part of the executive power as opposed to having a supervisory function over that executive power". (In the context of dissatisfaction with answers by the Minister of Electricity in the committee last week and a decision to call him back in the coming week).

Political opponents threatened with prosecution; global firms to the rescue

(2) Prime Minister Maliki said during a visit to the Baghdad governate offices that anyone who obstructs the progress of services "will be considered to have a political agenda that is destructive and supported by terror, and will be referred to the courts." (Naturally it isn't explained who he is talking about, but it is worth remembering that Maliki wasn't shy about threatened members of parliament with criminal prosecution, in this same semi-veiled way, when they staged a sit-in in Sadr City during the US bombings there last summer). Maliki added that "there are corporations and states that are requesting [permission to] operate in Iraq, and after Ramadan there will be entry of giant global firms into Iraq." In the same vein, a provincial-council official said there are plans jointly with the ministries of health and education to build four hospitals and 100 schools in Baghdad.

Alleged corruption in basic services

(3) There was an uproar in parliament when the head of the Parliamentary anti-corruption committee said he wanted to question the Minister of Trade (the minister responsible for the ration-card system) and accused him of theft and administrative corruption. This doesn't say what if anything happened as a result.

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I don't know about you, reader, but when I read this sort of news day after day, I get the picture of a Parliament that is mostly dysfunctional; a central government that is not adequately carrying out even its basic civil functions (in this case electricity supply and the distribution of the ration-card items); and a Prime Minister prone to threatening his critics with criminal prosecution, and who promises that help will arrive soon in the form of global corporations.

It is not exactly the same as what goes down in Washington, but it is not entirely dissimilar either. Scrape off a few layers of the slick stuff, and here's what you find:

Moribund congressional role

(1) We have yet to hear the screams of protest from Congress on a proposal that would give the Treasury Secretary $700 billion to pay out to financial-services corporations, with only the most vague directions, and an express ban on any kind of judicial or administrative review of what he does with the money.

Basic central government role already trashed

(2) The central government has showed itself dysfunctional in failing to carry out its basic duty of protecting the value of 401k and other retirement assets from the disastrous excesses of Wall Street.

Corporatism up, dissent down

(3) PATRIOT Act and other measures have gone a long way to chill dissent. Corporate media and the government continue to focus on the global corporations.

This is just my own idea, but what would be the reaction if an "Iraq Institute of Peace", or some Iraqi Sam Parker, issued a report that said America risks instability because of its dangerous underlying racial divide, with a largely white financial elite getting bailed out at the expense of the struggling homeowner and taxpayer class, which is much more heavily black. Ludicrous, of course, and completely irresponsible! Obviously the problem is much more simple: How to get rid of that elite which is between incompetent and corrupt.

Echoes of the recent past

--"When you listened to him describe it, you gulped." Schumer (New York)

--"...we're literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally." Dodd (Connecticut)

These are NYT quotes from senators describing the frightening effect of their closed meeting with Bernanke and Paulson, sounding very much like another rendition of the old mushroom-cloud trick, from another election year not so long ago (Oct 2002 Iraq War authorization).

(Not that there isn't an actual crisis this time, as opposed to a phony one. The point is that panicking Washington in an election year has become the pattern. In the interests of--how can I put this. What could well turn out to be the same kind of arranged boondoggle for the financial elite that Iraq has been for the military/security establishment).

IMF prepares austerity program for US

And the United States Institute of Peace criticized "our superficial commitment to national unity", admitting: "Our recent criticism of Iraqis for their selfish attitudes would have been better directed to America itself. We can see that now. After all, who are we to impose standards of behavior on other countries, least of all by force of arms."

just kidding

Straws in the wind

It appears that for the fall-winter season, in addition to the exciting new PTB/PTA line, we are going to be offered two somewhat refurbished lines of argument (refurbished from earlier, similar arguments, that is) in support of continued American military involvement in Iraq: (1) The argument that Iraqi nationalism means nothing in terms of domestic Iraqi politics, because those groups that appeal to that idea are at loggerheads among themselves; see the meager legislative accomplishments of the so-called July 22 Front. So there will be a continuing need for the moderating influence of America. (2) Maliki is becoming a "strongman" (!) and more and more beholden to Iran, so in the interests of moderating that influence, and protecting regional stability, there will be a continuing need for involvement by a completely impartial military force such as only the United States can provide.

Sam Parker of the United States Institute for Peace has outlined most of the first point, as well as he was able, in a little essay recently, and as for the second point, I think he is working up to it, noting today an escalation in tension between ISCI and strongman-Maliki, and concluding with the melodramatically raised eyebrow: "I wonder where Iran stands?" (Personally I wonder where Washington stands, but I guess he doesn't know anything about that)

So you have the story of strongman-Maliki the increasingly-Iranian, against the background-story of a sham, or at least a weak-to-negligible Iraqi nationalist movement.

The difficulty, in the story-telling sense, comes to light when you try to put these stories together and use both of them to justify the continued US military involvement in Iraq: Argument 1: Political "nationalist" unity can't hold Iraq together (this is a modified version of the earlier "inevitable civil war" story, so it has good pedigree) meaning that the US is morally obligated to do so "for the time being"; and at the same time, Argument 2: The US is also morally obligated to protect regional stability against excessive Iranian incursions in Iraqi politics.

So what's wrong with that? Two moral obligations--are they not better than one? The point is that each one works okay as a source for manipulative sound-bites: Squabbling Iraqis, calming Americans. Destabilizing Iranian influence that needs to be moderated, in the interests of stability. Both under the overall rubric of conditional engagement; responsible withdrawal, etcetera.

The problem for the military-apologists* is that you can't put these two story-lines together into a coherent position, because then they both fall apart. In his most recent attack on Iraqi nationalism Parker quite understandably left out any reference to external influences (no mention of the Kurdish parties' reliance on their privileged position with the Americans; ditto the SupremeCouncil; no mention either of Shiite anxiety about American cooperation with former-regime military and intelligence people; not even any mention of the famous Maliki-Iran connection that has the starring role in his other story). That is because of the nature of what he has to show: namely that Iraqi nationalism is in and of itself negligible or a sham. American or Iranian or any other external influences have no place in that story. It has to be kept simple. No to Iraqi nationalism. It doesn't exist and it will never exist. And this has nothing to do with the fact that Iraq was invaded by the Americans in 2003 and continues to be occupied by a 140,000 person military force, along with an "embassy" that is reportedly about the size of the Vatican, with all the fixings and all the influence that go with it.

When he attacks Iraqi nationalism, it is as if Parker was talking about Switzerland. Because if Iraqi nationalism cannot be ruled out in the simplistic way that Parker outlines, the result would be to leave the door open to an argument for troop-withdrawal and let Iraqis sort out their own affairs. But they can't have that. So you have to keep all of the issues relating to American, Iranian or any other influence out of that story. Iraqi nationalism is a sham, and it can never be a reason for American troop-withdrawal. And in the telling of that pure and simple story, there are no American machinations or influences whatsoever. Not to mention, anyway.

Then when they turn to the Iranian-influence/regional-stability story, it is all American machinations and influences. This has yet to be fleshed out, but certainly Colin Kahl, to name only the most famous of the group, keeps telling us that America has to stop writing a blank check to the Maliki administration. How exactly do you do that? Turn up or down the volume of American support for the Kurdish parties? Turn up or down the American support for other parties or groups? Who knows? All we know from Kahl is that America has to do something to rein in Maliki.

And just to repeat, the attack on Iraqi nationalism depends on assuming that all of the influence that America has wielded in the country since 2003 didn't mean a thing in terms of Iraqi politics. America, in that story, is and has always been a complete bystander.

Of course, when you look at it this way, both story-lines are essentially propaganda. Increased American machinations and influence, along the lines Kahl wants to see, will obviously not lead to peace or stability, not least given the revulsion that the American occupation, machinations and influence have already (after five and a half years of it!) earned from Iraqis. And the idea that you call for this kind of thing, then turn around and dismiss Iraqi nationalism without paying any attention to those American and other external influences, boggles the mind. Or as the young people say WTF.
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*Again, in the story-telling sense. For the general hypocrisy involved, see the comments of Alex and an anonymous followup on the first of the above-cited Parker posts.

Scheherezade

There are similarities in America between finance and the military, for instance while the ball is in play, the players all talk the talk, period. Confidence. "The mission".

But when the whole financial enterprise crashes and burns, there is a strong tradition for turning around and picking the bones clean, and for criticizing the "hubris" and the "folly" of those who only yesterday or the day before, were the heroes. Which is a good thing, relatively speaking.

By contrast, when the military enterprise crashes and burns, the reaction isn't the same at all. (For orders of magnitude, note that Lehman has filed for bankruptcy with $613 billion in parent-company debt, which is an amount of money, that had they earmarked it all for the military scheme in Iraq instead of for their various financial schemes, would have been enough to keep the war there going, just with that money, for several years at least. Not to mention the other Wall Street bodies). But the interesting thing is that when someone in finance tries, nevertheless, to keep on talking the talk, he is ridiculed. BOA chief Lewis said in a NYT interview this morning he thinks we have been through "a Golden Age in banking and financial services"...Check out the comments on calculatedrisk.blogspot.com this morning for all the fun you can have with that... One guy said he has a couple of old Bob Marley flags and a dirty glass pipe, and he wants to know how to value them as loan-collateral. Not so with the military. Run out of soldiers to occupy Iraq? Need more soldiers in Afghanistan? From there need to invade north Pakistan? All in the fight against the elusive "terror", or for the even more elusive "hearts and minds"? Having won over no hearts, no minds, no diminution in "terror"? No problem. Just keep rolling.

What's their secret? How can you spend hundreds of billions to accomplish nothing, and never have to face a Lehman moment? Obviously, finance isn't wrapped in the flag the same way the military is. Equally obviously, it's a lot easier to hide mistakes when you're the only news source. Plus there's no draft. But there's something else that keeps the ball rolling too, and that is the fact that there's always a new story. Back in 2003 it was preemption. Now it's COIN. Pretty soon it will be preemption again, or something else, maybe "liberal interventionism". The story-telling just goes on and on and on*. And that's the part of this ominous show where we can all have good seats.

*Interesting conference on up-to-date narrative techniques for a warlike nation described here.

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(There are other reasons for keeping up with the comment-threads at calculatedrisk, for instance one commenter tells this story: A wealthy Baghdad merchant sent his servant to buy provisions in the market. The servant was jostled by someone and turning around saw that the woman was Death, and she made a threatening gesture to him. Returning home he told his master and asked for the loan of his horse, so he could ride at all speed to Samarra, because she would never find him there. Later the merchant went to the market and asked the woman: Why did you make a threatening gesture to my servant? She replied: It was not a threatening gesture, it was a gesture of surprise at seeing him here, for I have an appointment with him in Samarra this evening).

???

* Maliki spokesman Ali Dabbagh criticized representatives of the Ayatollah Sistani for making recommendations respecting elections for provincial councils (a Sistani representative had said merely that they should be held, and promptly, urging an end to the political roadblocks to legislation on this). Dabbagh said the marjaiyyah is to be respected in its guidance on religious matters, but should stay out of politics. This is unusual, and as RoadstoIraq notes, being perhaps an initial sign of a split between the Najaf authorities and Maliki. It should be remembered that Sistani's people have been increasingly blunt in their criticism of the Maliki administration in recent weeks for its incompetence and toleration of widesread corruption.

* AlSharqiyya TV (sister organization to the newspaper Azzaman), which ran a program recently on torture of Iraqis in Iraqi prisons, has been subect in the last few days to a campaign of vilification by the government-run AlIraqiyya TV, and yesterday four of its employees were kidnapped and murdered in Mosul while filming the next episode in a Ramadan series. According to AlHayat, the director of AlSharqiyya linked the killings to the program on torture, and to the campaign of vilification, and said the government-run station bears moral responsibility for the killings. (Remarks by an unnamed McClatchy correspondent on their blog indicate that the campaign against AlSharqiyya is part of the government's "Baathist menace" theme).

* Maliki in person, for his part, has apparently come up with an additional line of defence for his government's performance, blaming none other than Paul Bremer for having created problems in Iraq which his government is still trying to rectify. He said Bremer commited mistakes that are no less serious than those of the terrorists, but the Aswat alIraq summary doesn't refer to any specifics. Maliki showed particular sensitivity to the issue of poor provision of government services to the people. He said: "We have made great efforts to provide basic services like electricity, petroleum derivatives and the ration-card items, and we appreciate the sufferings of the people in the area of these services, which have been in the forefront of the operations of the terrorist and destructive operations over the course of the recent years." Maliki made the remarks in Karbala, where he had gone to speak with Shiite religious authorities by way of defending his government's performance. There is obviously some immediate background to the remarks on Bremer, but it isn't clear what that is).

In any event, it appears that the Maliki administration, under increasing pressure in the face of the cholera epidemic, disclosures about inability to provide political leadership, torture, corruption, and so on, is pushing back against its critics in the only ways it can think of--against its erstwhile allies among the Najaf authorities under the rubric of separation of religion and state, against other domestic critics on the theme of fighting the Baathist menace, and with the errors of Bremer thrown in for good measure.

It isn't clear where this is going to end up, but I think it is important not to lose sight of the fact that the Maliki administration is gradually cutting itself off from, and pushing back against, its traditional supporters, from the authorities in Najaf to the heirs of Bremer in the American Embassy, not to mention the Kurdish warlord parties.

Nutshell news

* Ammar al-Hakim son and heir of the ailing SupremeCouncil chief Abdulaziz al-Hakim, made remarks in an interview with Aswat alIraq in which he now claims his party is in favor of prompt local-council elections, after having been in the forefront of efforts to postpone and/or derail the elections until very recently (see also Reidar Visser's notebook for Sept 11). Visser says mini-Hakim may be responding to pressure from the Najaf religious authorities, but it is also important to note that the authorities themselves, along with Ammar, are ultimately responding to popular pressure.

* Local authorities in Babil province ordered the arrest by security forces of three water-management officials in the province, on charges of negligence in failing to deal with the cholera epidemic. In response to popular pressure to be seen doing something, needless to say.

* A Turkmen member of Parliament says he thinks the Presidency of the Republic will be forced by popular pressure to withdraw its veto of the July 22 law (in particular clause 24, which calls for an interim power-sharing arrangement in Kirkuk pending local elections).

* Association of Muslim Scholars of Iraq has called for ending the UN mission involved in the Kirkuk crisis, headed by DeMistura, because of lack of confidence in his neutrality and damage to the unity of Iraq. While AMSI has been critical of DeMistura, this call for actually ending the mission no doubt reflects additional pressure from their Sunni constituents.

These are nothing but fragments, but what they indicate in the background is the growing popular sense of alienation and impatience with the Kurd/SupremeCouncil/Dawa regime. This is nationalist, not only in content--rejection of Kurdish expansion in the North, and of SupremeCouncil ambitions (now being distinctly toned down) in the South--but also in its cross-sect character. For instance, the bluntest denunciation of the Maliki government came from a Sadrist preacher in Sadr City yesterday, calling the government's promises of improved services laughable and a joke, and warning the government not to cover up the number of cholera fatalities. (For a denunciation of government incompetence and coverup from the Sunni side, see this op-ed by Haroun Mohammed).

I think an understanding this kind of nationalist pressure on Maliki is the necessary background for an understanding of Maliki-Bush standoff.

Incoherence and instability

Like the waiter who takes your plate away before you're finished eating, the progressive blogosphere has whisked away the "withdrawal-agreement" theme, touted only a few days ago as a victory for the left, and passes over without comment the fact that Bush has now announced only insignificant troop-reductions, (1) over a time period that extends beyond his actual term of office; and (2) makes no mention of the continuing legality or otherwise of the post-Dec troop-presence. What happened to the victory for the left?

Moreover, it seems almost as if "Mama don't 'llow no" netroots discussion of the coup warnings or the background for that ("Let's hold our horses on this one", says Sam Parker of the United States Institute of Peace). Or discussion by the military enlightenment (COIN) crowd either, in spite of the fact that what is driving the SupremeCouncil anxiety on this is the fact that the Americans seem to have had some success incorporating ex-Baath experts into the Iraqi security system.

Earning the confidence of neighborhood Sunni regimes and the domestic Sunni population has been a theme of American policy since at least the famous Hadley memo of fall 2006, and there has been vast coverage of the Awakenings and the Accord Front issues in this regard.

Now we find both SupremeCouncil and Kurdish politicians are warning of what they call a "Baathist" direction in the Iraqi security apparatus ("Baathist" sometimes in the narrow sense and more often in the broad sense meaning about what "pinko" and "comsymp" used to mean in the America of the 50s, people have pointed out), apparently brought out into the open by the Americans' arrest of Ali al-Lami, director of the De-Baathification Commission, something that crystallized for them the spectre of American cooperation with the security experts of the prior regime.

So while any accommodation with the Awakenings and the IAF have been amply and more than amply reported as play-acting and unserious, what the SupremeCouncil and the Kurds are worried about is something something they think actually did happen, and that is a degree of integration of "Baathist expertise" into the security apparatus. And this they see not as an accomplishment on the road to accommodation, rather as a red flag and a harbinger of trouble.

Moreover, there are signs that the arrest of Al-Lami and what it says about US-"Baathist" cooperation have been feeding into the bilateral-agreement standoff, because to the extent the Americans are able to arrest government officials like Al-Lami at will, naturally the government will be particularly vigilant about these "jurisdictional" points.

In America, the nightmare possibility of a fundamentalist small-town mayor becoming the most powerful person in the world--moreover as a result of the operation of the world's most wonderful democratic system--has understandably so preoccupied Democrats that it's hard for them to concentrate on something as complicated as the "withdrawal" from Iraq. It is like the conductor who beats strict time for his orchestra, then tries to make them stop while he turns the page of the score and thinks about it, then tries to start them up again. Meanwhile, just on the Kurdish front, the interlocking nature of the issues (elections, natural resources, borders, security policy) makes their solution all the more difficult, and the worst part of it is that the longer the standoff continues, the more likely it is that the populations on both sides come to see this as not a series of specific political problems, but rather as a racial issue.

Behind the Supreme Council concerns about a coup: Baath-phobia

An op-ed writer sympathetic to the Supreme Council had this explanation of Adel Abdul Mahdi's coup warning (dated Sept 5, something I overlooked at the time; h/t Sam Parker):

The warning that he issued is owing to his familiarity with the structure of the Iraqi army, which is assumed to be new and different from the [prior] army which carried out more than one coup--and [the warning is owing to] his knowledge that foreign advisers have convinced the Iraqi leadership to make use of the expertise of prior officers who had served under the government of the Baath party, not in operational leadership but in the areas of training and preparation, and thus persons suspected of Baathist thought are able to penetrate to important positions. And they have participated importantly in building up the military structure according to Baathist theory, and they trained them in the same ways, to have set loyalty to the army leadership, and this facilitates obedience and motivation to fight against the masses of the people on the orders of those leaders. And that is what happened in Khaniqin, where the attack brigade wreaked terror and chaos on a city that had been stable, with their attacks and insults against the people and the notables, pointing their machine-guns at the chest of unarmed citizens...

Lest we dismiss this writer, with his phobia of the Baathists, as an outlier in the Supreme Council milieu, recall last week's sermon by Supreme Council parliamentary leader and preacher Jaladdin al-Saghir, who said, in explaining the dangers of poor voter turnout, that the alienation of voters is part of the "discourse of the Baathists, who are promoting this so that people will see only the dark spots [in the government]", adding:

"The conspirators [meaning the Baathists] are still planning by various routes to return to their former status, or to a part of their former status, and they have now seen that elections are an easier means and a quicker way for them to return to those responsibilities..."

Saghir sees the hand of the Baathists ready to exploit voter discontent with the government; similarly what this op-ed writer says is that Mahdi sees the hand of Baathists behind the militarization that he warns could conceivably lead to a military coup.

And if you are wondering what could possible keep alive this kind of phobia in the military/intelligence area, consider the following piece this morning's AlHayat. It's headed: "American source to AlHayat: Director of the De-Baathification Agency provided information that helped 'special groups' kill Iraqis", and it quotes an anonymous American official to the effect that Ali al-Lami, director of the De-Baathification Commission, arrested recently (Aug 28) by the Americans, used his position to feed specific information on Baathists to Shiite death squads. The official was evasive when the reporter asked him when they plan to turn Al-Lami over to the Iraqi government, saying only that under the terms of the current UN mandate, the Americans are entitled to act on their own in cases like this.

It is the kind of thing that the op-ed writer might well have had in mind when he wrote of Mahdi's warning, that it was based on his understanding of the fact that "foreign advisers have convinced the Iraqi leadership to use the expertise" of officers that have served under the former regime.

Sam Parker of USIP says the reports of Mahdi's remarks on this have been overwrought (actually the only report on this in English I've seen is my own, so I guess he was referring to the reports in Arabic). But be that as it may, and whatever the underlying possibilities may or may not be, it is at least worth the effort to try and understand the mind-set of the Supreme Council people who are obviously concerned about this.

But when he says "this [Arabic] media speculation is about 1% substance and 99% hype," it sounds a little as if Sam Parker knows as well or perhaps better than the people in the Supreme Council milieu when it will be time to actually worry. Hopefully when he thinks the ratio of substance to hype changes he will let everyone know.

Cholera

Oil Minister Hussein Shahristani said in a statement to the press that Iraq is not suffering from any drought as far as money or liquidity is concerned, adding that the country has around $30 billion surplus currently deposited in the Central Bank, and another similar amount in the Finance Ministry, (for a total of around $60 billion, says the Iraqi paper AlDustour, which summarized the statement), so that:

There is funding available for any investment project in any sector, adding that the oil ministry is commited to supplying what Iraq needs for its budget for the development of the country on the fastest possible schedule.

Meanwhile, the threat of a cholera epidemic in the South of Iraq--resulting from lack of clean water--has become more frightening, with the six confirmed deaths from cholera in Babil province on the weekend (and a medical official said there are another 200 patients hospitalized with the same symptoms). Local officials declared the province a disaster area and called on the UN for help. And:

The local official laid the blame on "lack of hygiene conditions in the province’s water treatment plants", adding "Water department and Ministry of Public Works left them a year ago, holding the projects to a local department despite provincial council objections".

The connection between the flood of money in the Green Zone on the one hand, and the suffering of the people on the other hand, is increasingly apparent not only to the victims themselves, but also the Najaf establishment, whose criticisms of the government have become increasingly blunt. For instance, Sistani representative put it this way in a sermon on Sept 5:

"What we hear in the news is about many projects and the fact that the country is in a great period of construction. But do these projects actually exist? When we follow up we find that the great majority of them are no more than ink on paper." He laid the blame on the Iraqi authorities, and he challenged the government to identify by name the polluters who have been the cause of these hindrances and these problems. He added: "We see and we hear about the killing of 50 or 100, but we do not see or hear anything about the thieves of millions. And they are many".

This increasing bluntness in criticism of the government, comes together with the tougher talk from Najaf about what would be required in a bilateral agreement with the US. Which suggests that Najaf and the government have come to realize that there is only one issue that could restore popular support for them both, and that is intransigence on the issue of throwing out the American occupier.

The other view, namely that the intransigence is a personal adventure of the "overconfident" Maliki, seems to be more of a made-in-Washington smokescreen.

One reading of the coup warning

Nahrainnet.net published on the weekend a brief account of the remarks of vice president Adel Abdel Mahdi warning against a military coup, and then this Sadrist-oriented news-site added this:

This warning by the vice president harks back to something that has been published in western reports recently: namely that the United States of America, and specifically its intelligence agency, the CIA, has completed preparation of a scenario for carrying out a military coup in Iraq, and is waiting for the right political and security circumstances, because a military government will guarantee to it a permanent presence in Iraq, that will facilitate obtaining the signing at will of any agreement, in various areas, and primarily in the military and security area.

I don't know what "recent western reports" they are referring to here.

An interesting hypothesis

Here's how Sabah al-Lami concludes his column in the Iraqi paper Al-Mashriq today*, headed "Dreams and Nightmares: Whither the War on Maliki?" In a nutshell, he accepts the view that America seems to have given up on getting Maliki to agree to some kind of acceptable bilateral agreement, and is considering how to punish him. But if they did that, the result could be the coalescing of all of the nationalist forces--Sadrist, Awakening and everyone--should Maliki be seen to have his back against the wall versus the Americans.

Punishment of Maliki, to the Iraqis' way of feeling, would mean this: Say he now has a 20% popularity rating with Iraqis for "effective leadership in improving the security situation". This would multiply if the America were to go ahead with any "specific measures" to bring down the Maliki government. And that is for a well-known reason, connected directly with his rejection of an agreement that is rejected by the entire Iraqi people if it stipulates the Americans staying for for even one year.

I say very clearly that the Maliki government--and I don't understand why--is behaving in a way that serves the interests of the "war on him", and I am not here supporting the government...; but when I look at the opinions of most of the political analysts [I wish I knew who he was talking about here], I find that the Maliki government does stand accused of that [behaving in a way that serves the interests of the "war on him"]. And if the government wanted to follow through with its "nationalist" struggle against the occupation, then I wager that it will find all Iraqis rallying to its side, and perhaps in the forefront of that the Sadrists, and the militias of the Awakenings.

The other differences are secondary compared to "Iraqi sovereignty". In fact the one stance that would make this government "strong" vis-a-vis the American forces and the American intelligence... is if it were to be strong with the Iraqi people, and with all of the nationalist blocs, and if it were to set out and implement a credible program to make the government truly a government of national unity, and secondly to be effective in the provision of services, and keep away from all foreign influences...not least because of how the Americans harp on the Iranian string.

___________
*For some reason this paper has an unchanging URL indicator, if you know what I mean, so you'll have to click on the "columns" button on the right if it's today; later you'll have to use their archives. Correction: see LB's note in the comments.

Mahdi warns of the effects of militarization (in Iraq that is)

Here's what Adel Abedl Mahdi (vice president of Iraq and a senior Supreme Council politician) said on AlArabiya on Thursday, according to the Aswat alIraq summary, about the danger of a military coup:

Giving a major role to the army in the resolution of political questions is a problem in any country. And for that reason we should be on our guard against the occurrence of a military coup in Iraq--on account of [the prevalence of] centralized and military training, for all of my respect for the military.

And he elaborated on the reasons for his concern, as follows:

In Iraq, what we have is a type of askara (literally, military encampment) and particularly so in the light of the fight against terrorism and against the armed militias, which concentrates on the military and intelligence aspects.

And he said:

The role of the Iraqi armed forces and security forces should be limited to the tasks that are placed on their shoulders at the appropriate places [meaning in the appropriate circumstances], and subject to specific controls, given that the political process is conditional on the military being under political leadership--so that Iraq does not return to its prior climate of coups.

He is right, of course, (not to mention the fact that he could be talking about America itself, when it comes to the effects of militarization).

But particularly in Iraq, under the rubric of military solutions of political questions, it is worth remembering the "Diyala incident" where head of the provincial security committee (an ally of the local Awakenings) was kidnapped by some kind of a "special forces" operation whose so-called "chain of command" has never been explained; and similarly the Sadr City incident in which senior American "diplomatic" and military persons were killed while supervising the political takeover of a local council from Sadrists to anti-Sadrists. But more particularly Adel Abdel Mahdi's remarks were made on the eve of the turnover of security responsibilities in al-Anbar province to the Iraqi armed forces, without any political resolution of the question of the Awakenings, the obvious danger being that these political questions would once again be handed over to the military for a military solution. His point being that if this process goes on unchecked, the trend is to military decision-making, military control, and eventually military coup.

The Americans are of course adamantly opposed to this kind of thing, given their devotion to the democratic process, and it is pure coincidence that the victims of these operations are without exception those groups thought to harbor militant opponents of the occupation itself. After all, haven't we been hearing on a daily basis about the concerns the Americans have about Maliki's overconfidence, and so on and so forth? And since all of those reports originate with the American officials themselves, who are persons of unquestioned integrity, and are passed on to us by persons known for their fiercely independent judgment, it is a truth that can hardly be doubted. Pre-2003, it could hardly be doubted that Iraq under Saddam was a threat to world peace, and had to be brought down by America; that following the American invasion it became clear that it was in the nature of Iraqi society that there would inevitably be a protracted civil war, to be mediated by America. Now it is equally clear that Maliki is another threat that the Americans will have to stand up to (and in the process stay in Iraq just a little longer) . These are the kinds of overpowering truths that are formed by the consensus of the American establishment, and it would be foolhardy to question them (except of course in retrospect).

How things work

Here's what David Sanger in the NYT says about the Anbar turnover:

It allows Mr. Bush to claim that five years after the invasion, Iraq is achieving stability, and it allows Mr. McCain to argue that he was the first to come up with the winning strategy, an infusion of additional troops.

And here's what AlHayat says about the US election strategy:

The United States has put off the turnover to Iraqi security forces of security in six Iraqi provinces that are mixed by race and sect, until after the signing of a security agreement with the Maliki government and its approval by the [Iraqi] Parliament, out of concern for unexpected repercussions [from an immediate turnover in those six provinces] that could mix up the cards (or reshuffle the deck) ahead of the American presidential election scheduled for November 4.

Later in this short article the writer quotes the head of security in the Iraqi Interior Ministry, Abdel Karim Khalaf, who is clearly the source for this. Khalaf says the turnover in the remaining six provinces will happen "soon", adding they have problems common to those areas that are mixed by race and by sect. The six are Salahaddin, Baghdad, Kirkuk, Diyala, Mosul and Babil. But the implication is that the turnover of those provinces will happen before year-end. This is because when he mentions the Anbar turnover, the journalist says:

[With the Anbar turnover] there are now twelve provinces that have taken over their security file, within the policy that calls for Iraqis to take over security responsibilities in all cities before the end of this year.

That is an interesting remark, because up to now the idea of US forces "withdrawing" from the cities by the end of this year has been reported merely as one of the clauses in various leaked versions of the draft security agreement.

Two points emerge: (1) According to Khalaf, the US and Iraq are already working together on handing "security responsibilities" in the cities to the Iraqi forces by year-end; and (2) this is being timed in a way that will maximize the Republicans' electoral chances, because the Anbar turnover can be used as a electoral slogan, while the potential problems in the other provinces will so far as possible be put on hold until after the election, so as not to interfere with the sloganeering.

And there is another point that Khalaf sets out very clearly:

Khalaf explained that "the head of police in each province is the person primarily responsibility for security in his province, and if there is any security emergency in any of the provinces where the Iraqi forces are in control [meaning where the turnover from the US has been done], he will be able to call on additional forces, first from the Ministry of Defence, and then it will be possible to call for help from the American forces, if we need to do that in the worst case".

When Kahl and others talk about "strategic conditionality" or the Democrats more generally about "responsible withdrawal", the implication is that the US should be able to use its leverage to force the Maliki government to do good things. (For instance, perhaps by saying to them: No logistical support for your special forces operations against the bad guys in Group A, unless you agree to accomodate these good guys in Group B, and we the American authorities will tell you which is which). But what appears to be indicated in Khalaf's remarks is that the broad outlines of an agreement are already in place. Helping the American forces withdraw from the day-to-day firing line in the cities, while explicitly retaining the possibility of calling on them for "assistance" whenever this might be required.

Of course, the question how the post-Dec 31 occupation-legality will be finessed still remains to be answered.

Iraq's McCain

I failed to call attention to the most interesting of all the Friday sermons, that of SupremeCouncil politician and preacher Jalaleddin AlSaghir. He too leads off with recognition of the suffering of the people as a result of lack of essential services like electricity and fuel, but unlike those who focus on government corruption and incompetence, Saghir says these are all secondary issues. He says the core problem is the failure to promote government de-centralization and the private sector.

[T]here is a problem that doesn't concern this minister or that minister, but rather it is a problem with the whole administrative and economic system in this country which if it isn't solved we will continue to have these [particular] problems...The problem is called centralism (markaziyya) of the state and state control over everything. [In cases like this] it is demanded of the state that it grasp and control everything, and there are many demands that have to be met based on this state having the grasp and control of everything. The alternative method is for the state to be directed not to centralism, but to the grant rights ...Today I am talking about the rights of the provinces, and about the fact that the provinces are entitled to have complete independence except in those matters involving general coordination with the central government, and this is confirmed in the Constitution and in the Law on Provinces.

Under the rubric of decentralization, AlSaghir includes economic privatization, calling in particular for privatization of the electric-power sector in Iraq, a solution he says would solve the problem of generation and distribution of electricity in Iraq within a year.

On the question of the poor turnout for voter-registration, AlSaghir is very specific. People who fail to understand that the lack of essential services is the fault of government centralism, are prone to become alienated and will decline to participate in the political process. This, says AlSaghir, is part of a plot by the arch-centralizers, the Baathists. First, he suggests that the atmosphere of alienation from the political process is part of "the discourse of the Baathists, who are promoting this so that people will only see the dark spots on paper which is otherwise completely white..." And:

With the call by [Sistani] ...we must intensify our preparations so that people understand and move toward true responsibility in this matter... The conspirators [referring to Baathists] are still planning by various routes to return to the former status, or to a part of the former status, and they have now seen that elections are an easier means and a quicker way for them to return to those responsibilities...

(He sees the hand of the Baathists in the Kirkuk crisis as well, warning against people talking about this or that Baathist being involved in the liberation of Kirkuk. And against people saying that the Supreme Council "has sold Kirkuk to the Kurds". He says the Kirkuk issue isn't "an issue that can be solved by voting [referring to the recent Parliamentary vote that was vetoed by Talabani], because it isn't a simple issue that should be decided by two extra votes this way or two votes that way. But he supports application of Section 140 of the Constitution).

To adopt the language of his counterpart on the American right, Saghir sees the transcendent issue of his time as the fight against the Baathists, in the context of free-market theory. For him the popular alienation from the political process is the result of government centralization and refusal to privatize services; and this popular alienation is feeding into the Baathist conspiracy to drive people away from the political process and permit them to return to power via the ballot box. He is almost saying: "They hate us for the freedoms (which we don't have but we should and could have, we must be vigilant to make the people keep on exercising in the form of the vote)".

You can see why this is America's main proxy party in the Iraqi system, particularly now that there seems to be some trouble with Maliki.