The Diversification Challenge in Africa's Resource-Rich Economies

Rowing Against the Current: The Diversification Challenge in Africa's Resource-Rich Economies

John Page, Distinguished Visiting Fellow, Global Economy and Development, The Brookings Institution

Global Working Papers No. 28

For a growing number of countries in Africa the current commodity boom is a huge opportunity. But if the economic history of resource-rich, poor countries—especially in Africa—is any guide, rather than bringing prosperity, the resource boom may drive them into what Paul Collier (2007) in his influential book The Bottom Billion terms the “Natural Resources Trap.” In Africa, countries dependent on oil, gas, and mining have tended to have weaker long-run growth, higher rates of poverty, and higher inequality than non mineral-dependent economies at similar levels of income.

Two recent studies suggest both the potential and the risks of resource extraction. Alekseev and Conrad (2008) show the potential—resource wealth has tended to make countries better off. They find that in the long run resource-rich countries have significantly higher levels of income than other countries. However, Collier and Goderis (2007, 2008) suggest that this may be due only to the income generated by resource rents rather than to the growth of output. In resourcerich economies—unlike those with more diversified economic structures—production and income may diverge substantially. Collier and Goderis ask whether a commodity boom helps an economy to produce more output. They find that for the first few years following an increase in the price of commodity exports output increases relative to what it would otherwise have been, but usually the growth of output is not sustained. After two decades the typical resource extracting economy is producing less than it would have done in the absence of the boom. Collier and Goderis simulate the outcome of the current commodity boom and find that, if history repeats itself, after two decades output for the typical African commodity exporter will be around 25 percent lower than it would have been without the boom. This is the resource curse.

But geology is not destiny. Natural resource wealth can be an effective driver of growth. Chile, which has been the fastest growing Latin American country for the past 15 years, has relied almost entirely on exports of natural resource products. Botswana has been among the world’s fastest growing economies for the last 30 years, and Indonesia and Malaysia have used their natural resource wealth to diversify and grow their economies. From the global evidence Collier and Goderis find that although a decline in production is the norm, it is by no means inevitable. Some societies have succeeded in harnessing commodity booms for sustained increases in production, while others have not. The consequences of resource-riches, they argue, depend upon choices.

This paper is about one important set of choices faced by Africa’s resource-rich economies, whether and how to diversify production beyond the natural resource sector. Following this introduction, Section 2 examines the role of natural resource exports in Africa’s recent growth recovery. Using a new methodology developed by Arbache and Page (2007) it finds that Africa’s growth acceleration after 1995 has been driven mainly by avoiding the policy mistakes that led to sharp economic contractions in the past and by a strong surge in growth in the resource-rich economies. This makes Africa’s long-run growth prospects vulnerable to the natural resource curse.

Section 3 introduces the main theme of the paper: Africa’s resource exporters are rowing against the current as they attempt to diversify their economies. The relative price changes that occur in a resource exporting economy—symptoms of the “Dutch disease”— place Africa’s natural resource-rich countries at a disadvantage with respect to two drivers of industrial change and economic growth. Because Dutch disease discourages the development of new tradable goods producing activities, it inhibits the diversification of the manufacturing sector and limits the potential for increases in the sophistication of manufacturing production and exports. Both diversity and sophistication have been linked in recent literature to higher incomes and faster growth. In addition, research on the impact of agglomeration economies on production costs and international competitiveness strongly suggests that late-comers to industrialization, such as Africa’s natural resource exporters, suffer from a competitive disadvantage linked to the spatial distribution of global industry. It is far easier to expand an existing industrial agglomeration than to start a new one. Not surprisingly, then, the data show that Africa’s mineral rich economies trail both the Africa regional average and the least developed countries in general in key indicators of industrial dynamism.

Section 4 draws on the experience of three successful natural resource exporters—Chile, Indonesia and Malaysia—to make the point that geology is not destiny. Each of these economies had rising income growth accompanied by increasing diversity of their manufacturing and export structure between 1980 and 2000. Successful diversification away from dependence on natural resources was the consequence of different public policies to mitigate the impact of the Dutch disease. In the cases of Indonesia and Malaysia, government policies successfully targeted moving into new more sophisticated manufacturing sectors. In Chile public policy favored the expansion into new, knowledge-intensive natural resource based exports.

Some options for policy choices are set out in section 5. The basic theme of the section is that governments—through improvements in the investment climate and public expenditures—can mitigate the worst consequences of the Dutch disease. Section 6 concludes and offers some ideas for further research.

A document-based 318-year record of tropical cyclones in the Lesser Antilles, 1690–2007

Lesson of the Lesser Antilles
World Climate Report, December 30, 2008

Excerpts:

Our interest in the Lesser Antilles was heightened by a recent article in Geochemistry, Geophysics, Geosystems by Chenoweth and Divine who managed to secure funding for the research from the Norwegian Research Council and NOAA’s Climate and Global Change Program. They note that “In the Atlantic basin, the Caribbean region has several centers of continuous European settlement dating from the early 1500s in the Spanish colonies and the 1600s in other European colonies. Hence, there is strong potential for estimation of tropical cyclone activity in this region at least three centuries back in time.”

The pair of scientists cleverly compiled information on hurricanes from ship logbooks, newspaper accounts, state reports, official government gazettes, meteorological registers, consulate office reports, and more commonly relied-upon meteorological observations. From all the archival material and meteorological observations, they were able to produce the graphic below (Figure 2) showing hurricanes and tropical storms over a 318-year period. If you see no upward trend, join the world of reality! Despite all the claims to the contrary by the global warming advocates, there is zero evidence that hurricane activity is increasing over the three centuries of recorded events. Furthermore, it is far more likely to miss a hurricane 300 years ago compared to today, and this under-representation in the past should have produced a clear upward trend in the data.

[Graphs in the original article]

In describing the results, Chenoweth and Divine note “There is no evidence of trend significant at the 5% level for the entire record or for shorter segments (such as 1899–2007 and 1970–2007) but there is multidecadal variability that produces peaks and troughs in counts of up to 50% from the long-term average.” Furthermore, “The number of hurricanes passing through declined in the 20th century on the order of ~20%. Tropical storm numbers show little change over time. The net result is a nonstatistically significant decline in tropical cyclone frequency in the Lesser Antilles region. This decline is present even in the undercounted ocean areas north of the islands and we conclude that the actual decline is even larger than depicted in this area.”

It gets even better as they state “Major hurricane numbers over 12–18°N (the most accurately and reliably sampled sector) were 20 from 1701 to 1800, 19 from 1801 to 1900 and 16 from 1901 to 2000 and none have passed through since 2000.” They say “For whatever reason, fewer tropical cyclones reached hurricane intensity along 10–25°N 61.5°W in the past century than in previous centuries.”

They summarize noting “We find no evidence of statistically significant trend in the number of tropical cyclones passing through the region on any time scale. While tropical cyclone numbers show no statistically significant trend hurricane frequency is down about 20% in the 20th century compared to earlier centuries. This decline is consistent with the 20th century observed record of decreasing hurricane landfall rates in the U.S.” How about this line … “Although there is no significant long-term trend since the beginning of the series the period 1968–1977 was probably the most inactive period since the islands were settled in the 1620s and 1630s.”

[...]

Reference

Chenoweth, M., and D. Divine (2008). A document-based 318-year record of tropical cyclones in the Lesser Antilles, 1690–2007. Geochemistry, Geophysics, Geosystems, 9, Q08013, doi:10.1029/2008GC002066.

US Treasury Report to Congress Pursuant to Section 102 of the Emergency Economic Stabilization Act

US Treasury Report to Congress Pursuant to Section 102 of the Emergency Economic Stabilization Act
Dec 31, 2008

This report fulfills the requirement under section 102 of the Emergency Economic Stabilization Act (EESA) for the Treasury Department to report to Congress within 90 days of the passage of the bill on the insurance program established under Section 102(a).


Asset Guarantee Program

Treasury is exploring use of the Asset Guarantee Program to address the guarantee provisions of the agreement with Citigroup announced on November 23, 2008. Under the agreement, the Treasury Department will assume the second-loss position after Citigroup on a selected group of mortgage-related assets.

As required by section 102(a), Treasury established the Asset Guarantee Program (AGP). This program provides guarantees for assets held by systemically significant financial institutions that face a high risk of losing market confidence due in large part to a portfolio of distressed or illiquid assets. This program will be applied with extreme discretion in order to improve market confidence in the systemically significant institution and in financial markets broadly. It is not anticipated that the program will be made widely available.

Under the AGP, Treasury would assume a loss position with specified attachment and detachment points on certain assets held by the qualifying financial institution; the set of insured assets would be selected by the Treasury and its agents in consultation with the financial institution receiving the guarantee. In accordance with section 102(a), assets to be guaranteed must have been originated before March 14, 2008.

Treasury would collect a premium, deliverable in a form deemed appropriate by the Treasury Secretary. As required by the statute, an actuarial analysis would be used to ensure that the expected value of the premium is no less than the expected value of the losses to TARP from the guarantee. The United States government would also provide a set of portfolio management guidelines to which the institution must adhere for the guaranteed portfolio.

Treasury would determine the eligibility of participants and the allocation of resources on a case-by-case basis. The program would be used for systemically significant institutions, and could be used in coordination with other programs. Treasury may, on a case-by-case basis, use this program in coordination with a broader guarantee involving one or more other agencies of the United States government.


Justification

The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security. In an environment of high volatility and severe financial market strains, the loss of confidence in a financial institution could result in significant market disruptions that threaten the financial strength of similarly situated financial institutions and thus impair broader financial markets and pose a threat to the overall economy. The resulting financial strains could threaten the viability of otherwise financially sound businesses, institutions, and municipalities, resulting in adverse spillovers on employment, output, and incomes.


Determination of Eligible Institutions

In determining whether to use the program for an institution, Treasury may consider, among other things:

1. The extent to which destabilization of the institution could threaten the viability of creditors and counterparties exposed to the institution, whether directly or indirectly;

2. The extent to which an institution is at risk of a loss of confidence and the degree to which that stress is caused by a distressed or illiquid portfolio of assets;

3. The number and size of financial institutions that are similarly situated, or that would be likely to be affected by destabilization of the institution being considered for the program;

4. Whether the institution is sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to credit markets or payments and settlement systems, destabilize asset prices, significantly increase uncertainty, or lead to similar losses of confidence or financial market stability that could materially weaken overall economic performance;

5. The extent to which the institution has access to alternative sources of capital and liquidity, whether from the private sector or from other sources of government funds.

In making these judgments, Treasury will obtain and consider information from a variety of sources, and will take into account recommendations received from the institution's primary regulator, if applicable, or from other regulatory bodies and private parties that could provide insight into the potential consequences if confidence in a particular institution deteriorated.
TARP Accounting and Treasury's Loss Position

Treasury generally achieves a greater impact per TARP dollar absorbed by taking an early loss position over a narrow interval of losses rather than a late loss position over a larger range of losses.

Treasury's purchasing authority under TARP is reduced by the total value of the guaranteed asset less the cash premium received, where the premium is equal to the expected loss on the guaranteed asset. If the Treasury collects a non-cash premium . for example, preferred shares - the TARP purchasing authority is reduced by the entire value of the guarantee until the preferred shares are sold and converted to cash.

These accounting rules imply that if guarantees for two assets of different values have the same expected loss, the larger asset will be more TARP-intensive to insure. For example, suppose Treasury has the choice between guaranteeing two different assets, one of which is worth $50 and has a 10 percent chance of losing all of its value and the other of which is worth $10 and has a 50 percent chance of losing all of its value. For the sake of simplicity, the premium in this example will be paid in cash. If the premium received equals the expected value of the losses to TARP from the guarantee (thereby meeting the statutory requirement), Treasury would collect a $5 premium for guaranteeing either asset. However, the TARP purchasing authority would be reduced by $45 for the guarantee on the first asset (the $50 covered minus the $5 premium) and just $5 for the guarantee on the second asset (the $10 covered minus the $5 premium). Although the net expected payouts of the two guarantees are equal, the second guarantee is more valuable per dollar of TARP absorbed: covering the first asset uses $9 of TARP per $1 of expected loss, whereas the second asset uses only $1 of TARP per $1 of expected loss.

Because of this feature of TARP accounting under Section 102 of the EESA, Treasury in using the AGP will generally take a relatively early loss position over a narrow range of losses to provide the greatest protection per TARP dollar absorbed.


Other Potential Asset Guarantee Programs

Treasury is reviewing options for the development of other programs to insure troubled assets pursuant to the legislation. Two design considerations will be important factors for any potential program developed under Section 102:

(1) Accounting under the TARP purchasing authority: The TARP purchasing authority is reduced dollar-for-dollar by the amount guaranteed less the premiums received; the expected net payout from the program is not considered for this purpose. This means that insuring an asset under section 102 has almost an equivalent impact on the TARP purchasing authority as purchasing the same asset (Section 102.c.4).

(2) Adverse selection: Information on the credit risk underlying a particular asset, notably complex assets such as mortgage backed securities, can often be understood only through intensive research.and even then, the risk will ultimately depend on outcomes such as future home price appreciation that can be forecast only imperfectly. If an insurance program were to offer a set premium for a specific asset class - even one that is narrowly defined - it could well be the case that only the holders of assets for whom the premium was either appropriate or underpriced would buy insurance. By construction, the credit risk associated with the securities that would actually be insured at any given premium would be higher than the premium would cover. Individually pricing the assets - a resource-intensive endeavor . is the only way of achieving an expected net payout of zero. In practice, this means that setting the pricing of the insurance premiums will inevitably require particular assumptions and judgments; the ex-post financial outcome involved with the guarantees could deviate substantially from the ex-ante actuarial analysis-for better or for worse.

To assist in the consideration of programs under Section 102, the Treasury issued Federal Register Notice (Docket # TREAS-DO-2008-0018 posted 10/16/2008). Treasury asked for comment on programs consistent with Section 102 of the Emergency Economic Stabilization Act of 2008 (EESA). Treasury particularly invited comments on the appropriate structure for such a program, and whether the program should offer insurance against losses for both individual whole loans and individual mortgage backed securities (MBS), as well as the payout and triggering event, estimation of losses, and setting the appropriate premium. A summary of the comments received is attached next as an Appendix to this report.

Gaza: UN Human Rights Experts Express Shock at the Scale of Combat

Gaza: UN Human Rights Experts Express Shock at the Scale of Combat

New York, Jan 2 2009 1:10PMA group of independent United Nations human rights experts today said it was “deeply alarmed” at the continuing violence in Gaza and called on all parties to end attacks putting civilian lives at risk.

“Both air strikes by Israeli Government forces and rocket attacks from Gaza into Israel are resulting in inexcusable loss of life and placing the civilian populations in the affected areas in extreme danger,” said Asma Jahangir, chairperson of the experts’ coordinating body, said in a statement.

She stressed that international human rights law “imposes binding obligations on all parties in situations of armed conflict.”

The chairperson said that neither Israel’s use of disproportionate force, missiles launched from Gaza, nor the general disregard for the safety of non-combatants can justify either side’s aggression.

“They constitute clear violations of international human rights and international humanitarian law,” she said.

The UN experts voiced particular concern at the impact of the current violence and destruction of vital infrastructure on the already dire humanitarian situation in Gaza and called on all parties to ensure access for humanitarian relief efforts and supplies.

“Independent human rights monitoring, including by the various UN Special Procedures, is particularly crucial in these circumstances which result in an exceptionally broad range of human rights violations.”

Independent experts, known as special rapporteurs, serve in an autonomous unpaid capacity and report to the UN Human Rights Council in Geneva.

Jan 2 2009 1:10PM
________________
For more details go to UN News Centre at http://www.un.org/news

What does Islam say about Terrorism?

What does Islam say about Terrorism?

Excerpts:

Sancity Of Human Life

The Glorious Qur’an says:

“…take not life, which God hath made sacred, except by way of justice and law: thus doth He command you, that ye may learn wisdom.” [Al-Qur’an 6:151]

Islam considers all life forms as sacred. However, the sanctity of human life is accorded a special place. The first and the foremost basic right of a human being is the right to live. The Glorious Qur’an says:

“…if any one slew a person - unless it be for murder or for spreading mischief in the land - it would be as if he slew the whole people: and if any one saved a life, it would be as if he saved the life of the whole people.” [Al-Qur’an 5:32]

Such is the value of a single human life, that the Qur’an equates the taking of even one human life unjustly, with killing all of humanity. Thus, the Qur’an prohibits homicide in clear terms. The taking of a criminal’s life by the state in order to administer justice is required to uphold the rule of law, and the peace and security of the society. Only a proper and competent court can decide whether an individual has forfeited his right to life by disregarding the right to life and peace of other human beings.


Ethic[s] Of War

Even in a state of war, Islam enjoins that one deals with the enemy nobly on the battlefield. Islam has drawn a clear line of distinction between the combatants and the non-combatants of the enemy country. As far as the non-combatant population is concerned such as women, children, the old and the infirm, etc., the instructions of the Prophet are as follows: "Do not kill any old person, any child or any woman"[1]. "Do not kill the monks in monasteries" or "Do not kill the people who are sitting in places of worship."[2] During a war, the Prophet saw the corpse of a woman lying on the ground and observed: "She was not fighting. How then she came to be killed?" Thus non-combatants are guaranteed security of life even if their state is at war with an Islamic state.


Jihad

While Islam in general is misunderstood in the western world, perhaps no other Islamic term evokes such strong reactions as the word ‘jihad’. The term ‘jihad’ has been much abused, to conjure up bizarre images of violent Muslims, forcing people to submit at the point of the sword. This myth was perpetuated throughout the centuries of mistrust during and after the Crusades. Unfortunately, it survives to this day.

The word Jihad comes from the root word jahada, which means to struggle. So jihad is literally an act of struggling. The Prophet Muhammad (peace be upon him) said that the greatest jihad is to struggle with the insidious suggestions of one’s own soul. Thus jihad primarily refers to the inner struggle of being a person of virtue and submission to God in all aspects of life.

Secondarily, jihad refers to struggle against injustice. Islam, like many other religions, allows for armed self-defense, or retribution against tyranny, exploitation, and oppression. The Glorious Qur’an says:

“And why should ye not fight in the cause of God and of those who, being weak, are ill-treated (and oppressed)? - Men, women, and children, whose cry is: "Our Lord! Rescue us from this town, whose people are oppressors; and raise for us from thee one who will protect; and raise for us from thee one who will help!" [Al-Qur’an 4:75]

Thus Islam enjoins upon its believers to strive utmost, in purifying themselves, as well as in establishing peace and justice in the society. A Muslim can never be at rest when she sees injustice and oppression around her. As Martin Luther King Jr. said:

“We will have to repent in this generation not merely for the hateful words and actions of the bad people but for the appalling silence of the good people.”

Islam enjoins upon all Muslims to work actively to maintain the balance in which God created everything. However, regardless of how legitimate the cause may be, the Glorious Qur’an never condones the killing of innocent people. Terrorizing the civilian population can never be termed as jihad and can never be reconciled with the teachings of Islam.


History Of Tolerance

Even Western scholars have repudiated the myth of Muslims coercing others to convert. The great historian De Lacy O'Leary wrote:

"History makes it clear, however, that the legend of fanatical Muslims, sweeping through the world and forcing Islam at the point of sword upon conquered races is one of the most fantastically absurd myths that historians have ever repeated."[3]

Muslims ruled Spain for roughly 800 years. During this time, and up until they were finally forced out, the non-Muslims there were alive and flourishing. Additionally, Christian and Jewish minorities have survived in the Muslim lands of the Middle East for centuries. Countries such as Egypt, Morocco, Palestine, Lebanon, Syria, and Jordan all have significant Christian and/or Jewish populations.

This is not surprising to a Muslim, for his faith prohibits him from forcing others to see his point of view. The Glorious Qur’an says:

“Let there be no compulsion in religion: Truth stands out clear from Error: whoever rejects evil and believes in God hath grasped the most trustworthy hand-hold, that never breaks. And God heareth and knoweth all things.” [Al-Qur’an 2:256]


Islam - The Great Unifier

Far from being a militant dogma, Islam is a way of life that transcends race and ethnicity. The Glorious Qur’an repeatedly reminds us of our common origin:

“O mankind! We created you from a single (pair) of a male and a female, and made you into nations and tribes, that ye may know each other (not that ye may despise (each other). Verily the most honored of you in the sight of God is (he who is) the most righteous of you. And God has full knowledge and is well acquainted (with all things)” [Al-Qur’an 49:13]

Thus, it is the universality of its teachings that makes Islam the fastest growing religion in the world. In a world full of conflicts and deep schisms between human beings, a world that is threatened with terrorism, perpetrated by individuals and states, Islam is a beacon of light that offers hope for the future.

----------
[1] Narrated in the collection of traditions of Abu Dawud
[2] Narrated in the Musnad of Imam Ibn Hanbal
[3] Islam At Crossroads, London, 1923, page 8

Conservative views on the Bush nominations for the Supreme Court

Supreme Success, by M. Edward Whelan III
Thanks to Bush, we have a chance for a Roberts Court.

Monday, December 29, 2008
National Reveiw Vol. LX, No. 24

Dwight Eisenhower called his appointments of Chief Justice Earl Warren and Justice William Brennan his two biggest mistakes as president. With ample reason, George W. Bush regards his appointments of Chief Justice John Roberts and Justice Samuel Alito as two of his best decisions.
In the space of barely six months, from mid-July 2005 to the end of January 2006, President Bush achieved what his Republican predecessors since Eisenhower each failed to accomplish through the whole of their presidencies: the nomination, confirmation, and appointment of two new justices whose sterling qualifications appear to include a deep commitment to respect the broad play the Constitution gives to the operations of representative government. It's too early, to be sure, to take for granted that Roberts and Alito will prove to be superb justices over the long haul and that they will resist the temptation to "grow" to curry the favor of the liberal elites in legal academia and the media. But their strong performance in their initial years on the Court and their admirable characters and temperaments justify lofty expectations.

Lest Bush's 2-for-2 record on Supreme Court appointments be underappreciated, it is important to recall that the great Ronald Reagan went only 1 for 3 (a stellar pick in Antonin Scalia, but tragic failings in Sandra Day O'Connor and Anthony Kennedy) -- or 2 for 4 if you include his elevation of William Rehnquist to chief justice. Bush's father batted 1 for 2 (the home run of Clarence Thomas, preceded by the dismal whiff of David Souter).

To the essential virtue of judicial restraint, Roberts and Alito both add the virtue of (relative) youth. Roberts, who became the youngest chief justice since John Marshall, is still only 53, and Alito is 58. It is reasonable to hope that they -- and Clarence Thomas, who is only 60 (and nine years younger than the next youngest justice) -- will serve on the Court for a long time to come.
The fiasco of the Harriet Miers nomination must be acknowledged. Whatever Miers's merits, she was surely not in the top tier of qualified Supreme Court candidates. As Reagan did with O'Connor in 1981, Bush made the mistake of deciding in advance that his nominee must be a woman, and Miers was somehow the only one left standing after other, better-qualified candidates were knocked off the list. The conservative movement deserves credit for grasping the importance of what was at stake and objecting vociferously (some publicly, others privately). Bush in the end also deserves credit for taking the difficult step of withdrawing the nomination of his longtime friend. Thus, a Justice Miers is not part of his legacy in the way that O'Connor, alas, is part of Reagan's.

While President Bush earns the highest marks for Chief Justice Roberts and Justice Alito, his project of restoring the Court to its proper role in a constitutional republic remains incomplete for the simple reason that he was presented with only two Supreme Court vacancies over his eight years in office. The "Roberts Court" bears that title only as a formality, as Chief Justice Roberts is one vote short of a working majority that is broadly aligned with his jurisprudential principles. Roberts, Scalia, Thomas, and Alito form a strong core of four, but in politically contentious cases Kennedy frequently sides with, or even leads, the liberal-activist quartet of Stevens, Souter, Ginsburg, and Breyer in inventing newfangled constitutional rights. So, if President-elect Obama fails to inflict irreversible damage on the Court, it will be up to a future president to pick up where Bush left off and build on his excellent progress.

President Bush's record on lower-court appointments is much more mixed. Let's begin with the numbers. Bush appointed 62 judges* to the federal courts of appeals. That's even fewer than the 65 that President Clinton appointed, amidst bitter Democratic complaints and media buzz about a confirmation slowdown by Senate Republicans. Bush's total also includes three of Clinton's unsuccessful nominees whom Bush renominated -- two in 2001 in unrequited gestures of goodwill, and one in 2008 as part of a Sixth Circuit deal. The numbers for the federal district courts are even worse: 261 Bush appointees versus 305 Clinton appointees. The Bush numbers are all the more disappointing as Republicans controlled the Senate for more than half of the Bush presidency, whereas Clinton enjoyed Democratic control for only two of his eight years.

There's plenty of blame to go around. When they were in the minority, Senate Democrats resorted to unprecedented measures of obstruction. Until the presidency of George W. Bush, there had never been a partisan filibuster against a judicial nominee. In 2003 and 2004, Democrats unleashed the filibuster and succeeded in defeating some 20 cloture petitions on ten different nominees, five of whom -- including Miguel Estrada, the superbly qualified nominee to the D.C. Circuit -- were never ultimately confirmed. Even as the bipartisan "Gang of 14" agreement in May 2005 permitted some of the filibustered nominees to be confirmed, it undercut what would have been a successful Republican effort to revise Senate rules to forbid the filibuster of judicial nominees.

Many Senate Republicans, meanwhile, seemed to demonstrate more interest in the patronage opportunities that judicial nominations presented them -- getting their own home-state folks nominated and confirmed -- than in moving Bush's judicial nominees generally. Indeed, the Senate Judiciary Committee under Republican leadership dramatically expanded the Senate's "blue slip" policy by giving individual senators an effective veto over judicial nominations in their states (including over federal appellate judgeships, which the laws do not assign by state and whose workload has no more connection to one state than to any other in a circuit). This Senate Republican conferral of extraordinary leverage on obstructionist Democrats explains, for example, why a Fourth Circuit seat regarded as belonging to Maryland has been vacant throughout Bush's presidency -- and why so many other seats were filled with compromise candidates.

After retaking control of the Senate in 2007, Democrats were even better positioned to play hardball. Over the last two years, the Senate confirmed only 10 federal appellate judges (including one former Clinton nominee), compared with 15 confirmed by the Republican-controlled Senate in the last two years of the Clinton administration. Among the nominees left languishing were Peter Keisler, a brilliant lawyer whose nomination to the D.C. Circuit in June 2006 received hearty bipartisan acclaim; Robert Conrad, a Fourth Circuit nominee who, like Keisler, received the ABA's highest rating and who had the ardent support of both Republican senators from North Carolina; and Glen Conrad, a Fourth Circuit nominee from Virginia, who was pre-approved by Democratic senator James Webb.

The Fourth Circuit, long stalwart in its judicial conservatism, provides perhaps the starkest illustration of the Bush administration's failure to get its nominees confirmed. The 15-member court, which covers Maryland, North Carolina, South Carolina, Virginia, and West Virginia, has four vacancies, three of which have existed for the entirety of the Bush presidency. Among the eleven active judges, six are Republican appointees and five (counting Roger Gregory, the Clinton recess appointee who was renominated by Bush) are Democratic. So President-elect Obama will likely soon be able to establish a Democratic majority on the Fourth Circuit.

There is no evidence that the Bush White House ever developed a general strategy to counter Democratic obstruction and Republican indifference in the Senate, and, especially once Democrats regained control of the Senate, it's far from clear what strategy would have been effective.

The good news on the lower courts is that President Bush did succeed in appointing a number of outstanding judges to the courts of appeals, judges who have already made their mark and will continue to do so. Fifteen Bush appointees serving on federal appellate courts are 50 or younger, and several more are just over 50. If and when a future president is ready to help build a real Roberts Court, that president will have plenty of strong Bush appointees to choose from. Let's hope that President Bush's full Supreme Court legacy proves to be even greater than his outstanding appointments of Roberts and Alito.

-- Mr. Whelan is president of the Ethics and Public Policy Center and a regular contributor to National Review Online's Bench Memos blog.

* Correction: the number of Senate-confirmed appointees for Bush is 61, versus 65 for Clinton; if one includes recess appointments, the Bush total is 62, versus 66 for Clinton.

Relax: British Embassy Breach Is an Iranian InfoOp

Relax: British Embassy Breach Is an Iranian InfoOp. By Steve Schippert

Folks, the "storming" of the British Embassy in Tehran by "a large group of people and students" is an Iranian Information Operation (IO) intended to be perceived (by you) as just an impromptu gaggle of angry Iranian citizens expressing rage at Israel's operations against Hamas in the Gaza Strip. Hamas is, never forget, the newest Iranian satellite and client.

The British Embassy was not stormed by angry everyday Iranian citizens, folks. You are looking at a coordinated event staged by the regime employing the Basij (see here for a lightweight, digestible introduction), which is the mullah regime equivalent to the Hitler Youth. These embassy stormers, it should be noted, are the same regime Basij youth corps that is unleashed on Iranian people who dare defy the regime. And we are supposed to believe that those who beseiged (pardoning the aural pun) the British embassy are those same defiant Iranians. Don't. They aren't.

At least this early story from the UK's Telegraph eventually hits the target — but only after first playing up the alarm. (Wrong way to counter clear IO, but what should we expect journalists to know?):

Iran’s official news agency said: “A large group of people and students entered the Gulhak Gardens, which are occupied by the British embassy to protest at Britain’s policies in supporting the Zionist regime and put up the Palestinian flag there.”

The demonstrators had torched the British, US and Israeli flags, other Iranian media reports said.

There appears to be little doubt that the Iranian regime orchestrated or at least inspired the attack on Gulhak. Just days ago Major General Mohammad Ali Jafari, the commander of Iran’s Revolutionary Guards, suggested his force should facilitate “revolutionary action” similar to the capture of the “Den of Spies” – the US embassy — on November 4, 1979.

The remarks, made in a speech to hardline university students from a large paramilitary vigilante organisation under his control, were seen as a thinly-veiled threat against the British embassy which has become of the main focus of ire against the West since the American embassy became defunct.

Look carefully at the AFP/Getty image included in the story. Couple things to make note of.

First, just as the "storming" begins (both gates are not even open yet, just one), a photographer just happened to be ahead of the wave to take a very convenient snap of "The Breach." These are the things that Pulitzers are made of, what with these zany photographers who just happen to be in the right spot for the money shot, no? Bilal Hussein, anyone?

Second, note that there are two members of Iranian security (cough) in riot gear in the photo.

First thought: It's "The Breach" and there are but two near the gates.

Second thought: Iranian crowd control is not known for their tepid restraint. If the regime wanted to control the situation, they would be outside the gates and not inside, and there would be a general beatdown with injury and immediate dispersal by the "large group of people and students" in reaction.

Third thought: Similarly, average Iranians do not defy regime (read: Revolutionary) thugs enforcing "security." That is a precious rarity, plain and simple. This group of Basij members knows full well that the "security force" is part of the IO Dog & Pony Show and not a bodily injury risk. Who, in defiance of regime thugs, smiles as they run past the "riot police" and toward the waiting photographer(s) but fellow regime thugs? Answer: In Iran, no one. These "people and students" are the Basij, whose role and embrace has been renewed and reinvigorated under Ahmadinejad, himself a former commander in the "all grown up" Basij, the Islamic Revolutionary Guard Corps.

So sit back and enjoy the show, folks. Staged Iranian information operations are best enjoyed with a spot of tea, a few biscuits and a touch of jam. Their inherent inferiority complex causes the Iranian regime to do the most bizarre things, sometimes entertaining and sometimes dangerous and deadly. This one falls on the entertaining side.

Accept this one for what it is, an amusing sideshow, and be sure to play your part of the alarmed and impacted IO target.

US Sate Dept On Dispute Regarding Gas Delivery from Russia to Ukraine

Press Statement
Gordon K. Duguid, Acting Deputy Spokesman
Washington, DC, January 1, 2009
Ukraine: Dispute Regarding Gas Delivery from Russia to Ukraine

We are concerned that Gazprom has cut off gas sold to Ukraine. The U.S. encourages Gazprom and Naftogaz to resume negotiations on an agreement that will maintain the reliability of gas delivery to Ukraine and Europe. We urge Russia and Ukraine to resolve their dispute over the gas debt and the terms of their natural gas supply arrangements in a transparent, commercial manner.

Released on January 1, 2009

US State Dept Secretary's Remarks: Situation in Gaza

US State Dept Secretary's Remarks: Situation in Gaza
Fri, 02 Jan 2009 09:43:15 -0600
Secretary Condoleezza Rice
The White House, Washington, DC, January 2, 2009

SECRETARY RICE: Good morning. I’ve just had a chance to brief the President and to discuss with him the situation in Gaza. Obviously, the United States is very concerned about the situation there and is working very hard with our partners around the world to address it.

I want to begin by noting that Hamas has held the people of Gaza hostage ever since their illegal coup against the forces of President Mahmoud Abbas, the legitimate President of the Palestinian people. The Hamas has used Gaza as a launching pad for rockets against Israeli cities and has contributed deeply to a very bad daily life for the Palestinian people in Gaza, and to a humanitarian situation that we have all been trying to address. But frankly, Hamas has made it very difficult for the people of Gaza to have a reasonable life.

We are working toward a ceasefire that would not allow a reestablishment of the status quo ante where Hamas can continue to launch rockets out of Gaza. It is obvious that that ceasefire should take place as soon as possible, but we need a ceasefire that is durable and sustainable. I might note that it was Hamas that rejected the Egyptian and Arab calls for an extension of the Takia that Egypt had negotiated. But I have been in constant contact with the key Arab states. I have talked with our European colleagues, and we are talking constantly with the Israeli Government to find a solution to Gaza that will be a sustainable one for the people of Gaza, for the people of Israel and for the people of the Palestinian territories of the Middle East more broadly.

The President has also been in touch with the major leaders of the Arab States and with the Israelis. And we’re going to continue our work toward a ceasefire that will not allow a return to the status quo ante and that will be durable. Thank you very much.

QUESTION: Dr. Rice, do you plan to go to the Mideast to broker…?

SECRETARY RICE: I have no plans at this point. Thank you.

Released on January 2, 2009

US State Dept on Burma's Independence Day

Press Statement
Sean McCormack
Washington, DCJanuary 2, 2009

Burma's Independence Day

Sunday, January 4, 2009 marks the 61st anniversary of Burma’s independence from British rule. We wish to express our warmest wishes to the people of Burma on this occasion. As we reflect on Burma’s independence struggle, led by General Aung San, we are reminded of our own history.

We support the peaceful efforts of people everywhere to exercise freely their universal human rights. We stand with the Burmese people today in honoring Aung San’s vision for an independent, peaceful, and democratic Burma and look forward to the day when Burma’s citizens will be able to enjoy the fruits of freedom and democracy. We earnestly hope that day will come soon.

2009/002

Released on January 2, 2009

Haass and Indyk: Beyond Iraq

Beyond Iraq. By Richard N. Haass and Martin Indyk
A New U.S. Strategy for the Middle East
Foreign Affairs, January/February 2009

Summary: To be successful in the Middle East, the Obama administration will need to move beyond Iraq, find ways to deal constructively with Iran, and forge a final-status Israeli-Palestinian agreement.

On taking office, U.S. President Barack Obama will face a series of critical, complex, and interrelated challenges in the Middle East demanding urgent attention: an Iraq experiencing a fragile lull in violence that is nonetheless straining the U.S. military, an Iran approaching the nuclear threshold, a faltering Israeli-Palestinian peace process, weak governments in Lebanon and the Palestinian territories challenged by strong militant Islamist groups, and a U.S. position weakened by years of failure and drift. He will also discover that time is working against him.

For six years, U.S. policy in the Middle East has been dominated by Iraq. This need not, and should not, continue. The Obama administration will be able to gradually reduce the number of U.S. troops in Iraq, limit their combat role, and increasingly shift responsibility to Iraqi forces. The drawdown will have to be executed carefully and deliberately, however, so as not to risk undoing recent progress.

The improved situation in Iraq will allow the new administration to shift its focus to Iran, where the clock is ticking on a dangerous and destabilizing nuclear program. Obama should offer direct official engagement with the Iranian government, without preconditions, along with other incentives in an attempt to turn Tehran away from developing the capacity to rapidly produce substantial amounts of nuclear-weapons-grade fuel. At the same time, he should lay the groundwork for an international effort to impose harsher sanctions on Iran if it proves unwilling to change course.

Preventive military action against Iran by either the United States or Israel is an unattractive option, given its risks and costs. But it needs to be examined carefully as a last-ditch alternative to the dangers of living with an Iranian bomb. To increase Israel's tolerance for extended diplomatic engagement, the U.S. government should bolster Israel's deterrent capabilities by providing an enhanced anti-ballistic-missile defense capability and a nuclear guarantee.

The U.S. president should also spend capital trying to promote peace agreements between Israel and its Arab neighbors, in particular Syria. Damascus is currently allied with Tehran, and an Israeli-Syrian deal would weaken Iran's regional influence, reduce external support for Hamas and Hezbollah, and improve the prospects for stability in Lebanon. On the Israeli-Palestinian front, there is an urgent need for a diplomatic effort to achieve a two-state solution while it is still feasible. Although divisions on both sides and the questionable ability of the Palestinian Authority (PA) to control any newly acquired territory make a sustainable peace agreement unlikely for the moment, these factors argue not for abandoning the issue but rather for devoting substantial time and effort now to creating the conditions that would help diplomacy succeed later. What all these initiatives have in common is a renewed emphasis on diplomacy as a tool of U.S. national security policy, since the United States can no longer achieve its objectives without the backing of its regional allies as well as China, Europe, and Russia.

Some might argue that these efforts are not worth it, that the Bush administration paid too much attention to and invested too much American blood and treasure in an ill-advised attempt to transform the Middle East and that the Obama administration should focus its attention at home or elsewhere abroad. But such arguments underestimate the Middle East's ability to force itself onto the U.S. president's agenda regardless of other plans. Put simply, what happens in the Middle East will not stay in the Middle East. From terrorism to nuclear proliferation to energy security, managing contemporary global challenges requires managing the Middle East.

[...]

Full article: http://www.foreignaffairs.org/20090101faessay88104/richard-n-haass-martin-indyk/obama-s-middle-east-agenda.html

The NYT: Grief Marks Anniversary of Triumph of Castro

Grief Marks Anniversary of Triumph of Castro, by Damien Cave
TNYT, December 31, 2008

HIALEAH, Fla. — Four months after they appeared in the waters between Havana and Miami, the four dead men remain nameless. At a morgue in the Florida Keys, they lie on stretchers stacked like bunk beds, their bodies chewed by sharks, their faces too putrified to be recognized.
The police suspect they were Cuban rafters. Nilda Garcia thinks one of them might be her son — and the thought makes her weep. Fourteen years after she left Cuba on her own makeshift boat, she finds herself wondering once again: When will it end?

“How many mothers are going through this?” Ms. Garcia said in an interview at her daughter’s apartment here as she awaited DNA results on the bodies. “How many more are crying for their losses? How many young people have drowned in this sea? How many?”

Fifty years ago today, many Cubans cheered when Fidel Castro seized power in Havana, and even now, the revolution attracts many fans — as evidenced by the Canadian tour agencies advertising trips “to celebrate five decades of resilience.”

But the bodies speak to a different legacy. Here in South Florida, where roughly 850,000 Cubans have settled over the years, repeated waves of painful exile and family separation define the Castro era. The revolution never met their hopeful expectations, the island they love has slipped into decay, and for many, this week’s golden anniversary provides little more than a flashback to traumas, old and new.

“It pounds in everybody’s conscience every day,” said Ramon Saul Sanchez, 54, the founder of Movimiento Democracia, a Cuban-American group known for using boats to stage protests. “Fifty years is something very hard to accept.”

Some Cubans remain defiant. Huber Matos, a former revolutionary leader who came to Miami after Mr. Castro sent him to jail in 1959 for suggesting that the Cuban government included too many Communists, said that the anniversary inspired him to keep pushing for change.

“When you think of what you have to do, you can’t be sad,” Mr. Matos, 90, said. “To continue working, that’s the key.”

But for many, the revolution’s 50th anniversary has inspired a period of reflection. Cubans across Florida say they are mourning privately, or trying to forget, and formal commemorations are being kept to a minimum. If Miami in the 1980s was a place of militants, where “Havana vanities come to dust,” as Joan Didion wrote, today it is also a home to newer arrivals who ask, Must the pain go on?

A poll released this month by Florida International University shows that 55 percent of Cubans in Florida favor lifting the United States embargo against Cuba, up from 42 percent a year ago. It is the first time a clear majority has held that position since the survey began in 1991.

President-elect Barack Obama — while backing away from an earlier pledge to meet with Cuban leaders during his first year in office — condemned the current “failed policy” during the presidential campaign and promised to make it easier for Cuban-Americans to visit relatives on the island or send them larger amounts of money.

Even among those who support the 46-year-old embargo, like Senator Mel Martinez, a Republican, continued damage to families has become a more prominent concern.

“This is an ongoing tragedy,” said Mr. Martinez, who left Cuba at age 15 and spent four years without his parents. “How many people today are still being separated? How many people in Cuba are making plans to leave?”

Ms. Garcia was a “balsera,” one of the 38,000 rafters who fled Cuba in 1994. She said she left her suburb of Havana because her daughter needed medical care she could not get in Cuba for a brain tumor. Her son, Osmani, stayed. He was 20 at the time, a speaker of English and French, who became an independent journalist.

His work often put him at odds with the Castro government. In one dispatch, published on Oct. 26, 2007, he condemned Cuba’s foreign minister, Felipe Pérez Roque, for mischaracterizing comments from President Bush.

“I will not take the time to point out all the lies told by Felipe Pérez Roque at this press conference, but I will say there was a worried look on his face and those of his cohorts,” Mr. Garcia wrote, in an article posted online. “It almost seems that they too are realizing there is little time left to the Castro dictatorship and that change is very near.”

Instead, over the next year, political pressure on Mr. Garcia increased. In June, according to a report in a Cuban online forum, he was arrested and interrogated by state officials. Two months later, his mother said, he was filmed by a Cuban television reporter at a protest against the government, scaring him enough to flee.

Mr. Garcia’s relatives said that on the night of Aug. 15, he climbed aboard a boat with no motor and seven or eight other people, pushing off from an area near Havana with hopes of reaching Florida within a few days.

The pace mattered; the sea was churning. By early Monday morning, Tropical Storm Fay had moved through Cuba into the Florida Straits, bringing nearly a foot of rain, swells of several feet and winds that would strengthen to 60 miles per hour.

Ms. Garcia, 64, a home health aide, said she was not sure if her son had known the storm was coming. Even if he had, she said, “he was desperate and needed to go.”

She said her son had done all he could to change Cuba from the inside. “How can Cubans confront the government, with rocks and sticks?” Ms. Garcia said. “Everyone has nothing, and the people are afraid.”

She found out about the bodies from the news. The first one, tagged 0107 in morgue records, appeared in the waters off Craig Key just after 5 p.m. on Aug. 21. A fisherman called the Coast Guard, and two Monroe County police officers pulled the dead man from the teal-blue sea. Three other bodies followed, appearing offshore over the next 24 hours in a line heading north.

Detective Terry Smith, one of the lead detectives investigating the case with the Monroe County Sheriff’s Department, said the locations and currents suggested that the bodies had probably spent several days in the water, drifting from somewhere to the south, though the Coast Guard’s computer analyses were not definitive.

Their identities have been even harder to determine. E. Hunt Scheuerman, the medical examiner for Monroe County, which includes the Keys, said all four bodies were naked and gnarled, with only three defining characteristics. Body 0107 wore a ring with a Celtic cross and green stone on the fourth finger of his left hand; 0109 arrived with a white sock and blue Lotto running shoe on his right foot; and 0110 had a tattoo on the inside of his lip that said “Raquel.”
Ms. Garcia said the ring sounds similar to one she gave Osmani, but the ring in the morgue is yellow, suggesting gold, and the ring she gave her son was silver.

She said she hoped her son was at the American military base in Guantánamo Bay, Cuba, where she was processed before coming to the United States. And initially it seemed possible. The Coast Guard stopped a boat near the Bahamas with eight or nine Cuban rafters a few days after Aug. 15. But it must have been another group, Detective Smith said; Mr. Garcia’s name could not be found on the Coast Guard’s list of repatriated refugees.

At least two other Cuban families in Miami are in a position similar to Ms. Garcia’s. In emotional phone calls, they have told Detective Smith about relatives who left Cuba on Aug. 15 in a boat, never to be heard from again.

“What if the four we received are not any of their relatives?” the detective said, discussing what haunts him most.

DNA may be the only way to know for sure. In September, Detective Smith swabbed Ms. Garcia’s mouth and sent the sample to the Federal Bureau of Investigation for a comparison with the bodies. For the other two families, the DNA must be collected from closer female relatives, who live in Cuba.

Mr. Sanchez, of Movimiento Democracia, has been trying to arrange for secure samples from the island. “There are hundreds, probably thousands of Cubans who think they lost relatives in the high seas,” he said. But so far, he has received little help from either the Cuban or American governments.

And so the cycle continues. According to Coast Guard statistics, 10,489 Cubans have been stopped at sea since the beginning of 2005, more than double the 4,223 who were caught in the previous four years. A report in May from the Institute of Cuban and Cuban-American Studies at the University of Miami found that 131,000 Cubans had settled in the United States permanently over the last four years, and its title predicts more of the same. “Not Going Away,” it says. “Cuban Mass Migration to Florida.”

Ms. Garcia said she just wanted an end to the 50-year pattern: the uncertainty, tears and tales of woe.
Three months after her DNA reached the F.B.I., she is still waiting for answers. Conversations about her son are drenched with tears, and she is never far from a photograph that shows him staring straight ahead, with a stern face, a few wrinkles and thick, dark hair.

It looks like a passport picture — of a man who may have only reached a Florida morgue.

Helen Suzman, R.I.P. Posted by David Boaz
Cato at Liberty, Jan 01, 2009

Helen Suzman, the longtime leader of the parliamentary opposition to apartheid, has died at 91. The Times of London writes:

Helen Suzman had a special place in South African history, being generally recognised as the most effective parliamentary fighter against apartheid policies.

For 13 years - from 1961 to 1974 - she was the sole representative in Parliament of the liberal Progressive Party, forerunner of the Democratic Party.

In South Africa they knew the difference between liberals and leftists. Plenty of leftists and communists opposed the National Party and its apartheid system. But so did liberals like Suzman, people committed to human rights, freedom of thought, and a market economy. She did not forget her liberalism when apartheid finally fell and the African National Congress came to power. She continued to speak out against repressive policies and the Thabo Mbeki government’s continuing support for Robert Mugabe.

I loved reading about her quick wit in parliamentary debates. She sent the minister of law and order a postcard from the Soviet Union, saying, “You would like it here. Lots of law and order.” Once she told a government minister to go into the black townships and see their appalling conditions for himself. He would be quite safe, she said, if he went “heavily disguised as a human being.” In a famous exchange a certain minister shouted: “You put these questions just to embarrass South Africa overseas.” To which she coolly replied: “It is not my questions that embarrass South Africa – it is your answers.” When an Afrikaner in Parliament sneered at her Jewish roots and asked what her ancestors were doing when his were bringing the Bible to the “savages,” she snapped, ”They were writing the Bible.”

In 1989 Helen Suzman was a Distinguished Lecturer at the Cato Institute. See a picture on page 55 of this very large pdf of our 25-Year Annual Report. Her remarks were reprinted in Cato Policy Report and then in Toward Liberty, our compilation of essays from our first 25 years, and can be read here.

On the first day of the new year, the world has lost one of its great champions of freedom. May she inspire many more.

US State Dept on Status of Food Aid Deliveries to North Korea

US State Dept Press Statement
Sean McCormack
Washington, DC, December 30, 2008
Question Taken on December 30, 2008

Status of Food Aid Deliveries to North Korea (Taken Question)

Question: Will you please provide an update on the deliveries of food aid to North Korea?

Answer: To date, over 143,000 metric tons of U.S. food (wheat, corn, and soybeans) has been delivered to North Korea. Of that amount, the latest shipment of 25,000 metric tons of corn and soybeans arrived in North Korea on November 23 and has completed unloading for distribution by the U.S. NGOs. The latest shipment of food aid (totaling 21,000 metric tons), which was expected to arrive by the end of December, is now expected to arrive in the DPRK on January 2, due to recent rough seas.

The United States has not stopped food aid to North Korea. Under the terms of our agreement with the DPRK, there is to be no limit imposed on the Korean language capabilities of the World Food Program (WFP) and U.S. NGO staff implementing the food aid program. The lack of sufficient Korean speakers on the WFP program is one of the key issues in ongoing discussions. The issuance of visas for Korean-speaking monitors for the WFP program is another issue currently being discussed, along with other technical issues. A delegation that recently visited North Korea, identified problems in the implementation of the world food program portion of the food aid program. Those problems are not yet resolved.

2008/1105

Released on December 30, 2008

Indonesian President's Praise of Natsir

Indonesian President's Praise of Natsir Raises Questions, by Walter Lohman
Heritage WebMemo #2181
December 31, 2008

These are perilous times for those in the idea business. Whether you're a think tanker or a politician, it is easier than ever to be misunderstood. Words reach the four corners of the world at the speed of light; it is impossible to segregate audiences.

Indonesian President Bambang Susilo Yudhoyono seemed to be aiming at a very specific audience a couple weeks ago when he capped a long-standing push to designate M. Natsir a national hero with a speech in the Indonesian province of West Sumatra. His host, West Sumatra's Governor Gamawan Fauzi, used the occasion to note that history will forever remember President Yudhoyono's leadership in making the determination. Indeed. But what did the president intend by conferring essentially favored son status on this very learned--and by all accounts polite and unassuming--Islamist?


A Suitable Role Model?

The president sought to explain. He lauded Natsir for his anti-colonialism and his fundamental contribution to Indonesia's unity. Natsir's anti-colonialism credentials are best judged by Indonesians; but they seem to be beyond question. With regard to his impact on Indonesian unity, the debate will continue. Some will surely fault the president's logic in praising someone so closely identified with rebellion.

But the seriously perplexing part of the speech came when the president praised Natsir as a model for addressing misunderstandings about Islam and serving as a bridge between cultures and religions.

Natsir is associated with a political ideology that informed people do not generally associate with Indonesia. His founding of Dewan Dakwah Islamiyah Indonesia (DDII) alone would make him an inappropriate role model for the nation. Theodore Friend, a highly regarded historian, describes DDII as "extreme," "intolerant," and yes, "Islamist." Among its targets, he counts "Muslim liberalism," "the economic dominance of the Chinese," and a "conspiracy to Christianize Indonesia." The DDII's problem with Christians in particular makes it strikingly odd to commend its founder for an ability to bridge understanding between religions.

Natsir's precise views on and personal history with Pancasila (Indonesia's founding non-sectarian state philosophy) were no doubt complex. But when all is said and done, history remembers him as Indonesia's foremost advocate for the direct role of Islam in government and the ideal of the Islamic state.


Perplexing Politics

So what's a friend of Indonesia to do? He could tell himself that it's pure politics. The presence of the Islamist PKS minister of agriculture in the entourage to West Sumatra is good evidence of that. But to the president's Islamist political allies, this is about much more than politics. And so, given the stakes, that is not a satisfactory answer. One could say that it's an anomaly, but there are too many similar developments in Indonesia to consider it an anomaly. This year there was the violent Islamist attacks at Indonesia's national monument, the fatwa on Ahmadiyya, and the media circus over the execution of the Bali bombers. Last year's enormous Hizbut Tahrir rally in Jakarta and near victory of an Islamist candidate for governor of Jakarta also jolted observers of Indonesian politics.

A friend of Indonesia would definitely tell his colleagues that all of this must be kept in perspective. Despite a 2004 electoral surge for Islamist standard-bearer PKS, considerable success at the local and provincial levels since, and high hopes for 2009, the fundamentalists are further from taking control than they were in the 1950s. He would cite the centuries-old ebb and flow of fundamentalism that has always left the Islamists on the losing end of Indonesian history. He would also note Indonesia's extraordinary well-springs of cultural and religious tolerance.

But the Islamists are savvy. They understand better than anyone that ideas can transform a political environment without ever owning it. From Natsir until today, they have sought to prepare the grassroots for Islamization of the state. So even while national politics may register only an occasional flare of radicalism, underneath, the coals glow bright. This friend of Indonesia worries that Indonesia's mainstream political leaders will wake up too late to find that Indonesia's house is on fire and that not only did they not prevent it, but they unwittingly fanned it.


Only Time Will Tell

For a politician, sometimes the only way to deal with different audiences is to just say what he has to and accept that he may be misunderstood by those on the outside. To make that call, however, the political need should far outweigh the risk of alienating his other audiences.

In the case of President Yudhoyono's praise of Natsir, one can only conclude that either the need to accommodate Islamist sentiment is much greater than Indonesia's friends abroad appreciate or that he is miscalculating the strength of the Islamists and unnecessarily appropriating beliefs he doesn't himself hold.

Neither is a particularly comforting conclusion, but at least one friend of Indonesia hopes it is the latter.

Walter Lohman is Director of the Asian Studies Center at The Heritage Foundation. A version of this article first appeared in the December 31, 2008, edition of The Jakarta Globe.

Conservative views: National Security Resolutions for 2009

National Security Resolutions for 2009, by James Jay Carafano, Ph.D.
Heritage WebMemo #2182
December 31, 2008

The United States should resolve to help make the world a better place with initiatives that keep Americans safe, free, and prosperous in the coming year. Here is a short list of commitments Washington can offer:

Finish the Job in Iraq. A stable, secure, and free Iraq remains a worthy long-term U.S. goal, but this project now rests primarily in Iraqi hands. However, America still has a vital role to play in training and supporting Iraqi security forces and building the instruments of governance for a fledgling democracy. Meeting these obligations should be the most important factor in determining the pace of the drawdown of U.S. forces in Iraq.

Finish the Long War. Rooting out the al-Qaeda sanctuaries in Pakistan would be a severe--if not fatal--blow to the transnational Islamist terrorist movement. Achieving that end will require an integrated policy that gets Afghanistan, Pakistan, and India working together jointly toward that end.

Don't Mess with Homeland Security. U.S. law enforcement has thwarted a number of post-9/11 conspiracies aimed at killing Americans. Meanwhile, FEMA has just completed a record year of responding to floods, forest fires, and hurricanes. Further major reorganization or changes in the Department of Homeland Security's mission are wholly unwarranted.

Build Missile Defenses. Of all the threats of the modern era, the danger of a ballistic missile attack on the U.S. is most troubling. While the U.S. has built land-based interceptors capable of dealing with a missile fired from North Korea, much more needs to be done. America as well as friends and allies in the Middle East and Europe would be largely defenseless against an Iranian ballistic missile threat. To address that, the U.S. needs to, as it promised to NATO, build land-based missile defenses in Poland and the Czech Republic. In addition, the United States must field land- and sea-based regional assets, such as the Terminal High Altitude Area Defense and the Aegis Ballistic Missile Defense systems. More work also needs to be done on developing "boost-phase" interceptors capable of knocking down enemy missiles right after they are fired and are their most vulnerable. Finally, we need to continue, with our friends and allies, to develop a global command and control network capable of dealing with new missile threats wherever they might come from.

Do Something about Space. Space is the "ultimate" high ground, not just for the military but for the private sector as well. U.S. assets and assured "access" to space are vulnerable to disruption and direct attack. At a minimum, the United States needs to develop better "space awareness" with hardened and redundant capabilities to track both what is being sent into space and activities in earth-orbit. Washington can get the ball rolling by funding a space-based platform for experimentation this year.

Worry about Iran. Iran routinely employs terrorism as instrument of foreign policy. It is developing long-range ballistic missiles to threaten other nations. It supported insurgents in Iraq who targeted American soldiers and fermented ethnic-civil war. It may test a nuclear weapon at any time. For starters, the U.S. must lead an international coalition to impose the strongest possible targeted economic sanctions against Iran and mobilize allies to contain and deter Iran's drive for regional hegemony.

Build Better Border Security. The Bush Administration has made significant progress in making America's borders more secure, from a host of measures for thwarting terrorist travel to the Merida Initiative--an effort to promote U.S./Mexican cooperation in combating transnational smuggling in drugs, people, arms, and money. Terrorists see post-9/11 America as a hard target, not easy to get to. Meanwhile, both the unlawful population in the United States and the number of attempted illegal border crossings are on the decline. Successful programs--from building border obstacles to enforcing immigration laws and strengthening the surety of identity credentials like driver's licenses--need to continue. Stopping now would roll back progress.

Get Smart on Cybersecurity. Many in Washington have rightly expressed concerned over the surety of information technology and control systems that serve our economy. Most, however, are woefully ignorant about the nature of these systems and the threats to them. Even as Washington wrestles with issues concerning organization, authorities, responsibilities, and programs to deal with cyber competition, it must place more emphasis on developing leaders who are competent to engage in these issues. This will require a professional development system that can provide a program of education, assignment, and accreditation to develop a corps of experienced, dedicated service professionals who have an expertise in the breadth of issues related to the cyber environment. This program must be backed by effective public-private partnerships that produce cutting-edge research, development, and capabilities to operate with freedom, safety, and security in the cyber world.

Stop Doing Stupid Security. A number of congressional national security mandates have proven unnecessary and unworkable, consuming precious time, manpower, and money to implement measures of little value at great cost. Requirements such as 100 percent scanning of cargo sent to the United States have been documented by the Department of Homeland Security and the Government Accountability Office as extremely problematic. Congress should repeal ill-advised mandates and refrain from imposing excessive regulatory restrictions in the name of national security.

Don't Let the Military Go Hollow. A military is hollow when it lacks the resources to conduct current missions, maintain adequate trained and ready forces, and prepare for future threats. There is no way to prevent the armed forces from becoming inadequate to defend the nation's interests and provide for our men and women in uniform other than robust defense budgets year in and year out. Changes in strategy, cuts in acquisition programs, and promises to slash fraud, waste, and abuse are all chimeras--smokescreens to cut costs without appearing weak on national security. The United States must spend at least 4 percent of its annual GDP over the next decade to recover from the long post-Cold War "peace dividend" of the 1990s and refurbish the military after years of fighting the long war in Iraq and Afghanistan. To plan to do anything less over the foreseeable future will put both the nation's security and the lives of our troops in jeopardy.

James Jay Carafano, Ph.D., is Assistant Director of the Kathryn and Shelby Cullom Davis Institute for International Studies and Senior Research Fellow for National Security and Homeland Security in the Douglas and Sarah Allison Center for Foreign Policy Studies at The Heritage Foundation.

US Interior Dept: Royalties from energy production almost double the amount last year

‘Tis the Season: Development of U.S. Energy Resources Nets Taxpayers $23.4 Billion in Royalties. By Institute for Energy Research
Interior Announces Largest Disbursement of Funds in Department’s History – Almost Double the Amount Distributed Last Year

December 30, 2008

Washington, DC – Institute for Energy Research president Thomas J. Pyle issued the following statement today in response to news from the U.S. Department of the Interior’s Minerals Management Service (MMS) that the agency distributed a record $23.4 billion to states, tribes and the federal treasury in fiscal year 2008 – every penny of which came from the responsible and diligent development of America’s abundant, homegrown energy resources:

“ As lawmakers look to increase government revenue this year by thinking up creative new ways to separate taxpayers from their money, they and the people they represent would be well-served to take note of the $23.4 billion in royalties, rents, and bonus payments made available thanks to the responsible development of America’s abundant energy resources. In fact, almost $10 billion of that sum was directed to taxpayers in the form of bonus bids alone – which means that even when no new energy was produced, taxpayers still got paid.

“Keep in mind this is money that flows to state, local and federal coffers completely separate from the hundreds of billions of dollars in taxes and fees tied to domestic energy exploration. All told, we’re talking about an awful lot of money – as much as $4 trillion in potential revenue waiting to be collected and disbursed, according to one recent study. As it is, energy production accounts for hundreds of billions of dollars in government revenue each year – none of which would available to taxpayers today if opponents of responsible energy development had their way.

“At a time of unprecedented economic insecurity, the new Congress and incoming administration have pledged to leave no stone unturned in looking for ways to get our economy back on track. Fair enough. But if they’re interested in finding a plan that creates millions of new jobs, billions in new revenue, and doesn’t cost taxpayers a penny, they’ll need to dig just a little bit deeper – preferably below the surface.”

For more information: http://www.mms.gov/ooc/press/2008/pressDOI1120.htm

The Institute for Energy Research (IER) is a not-for-profit public foundation that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. Founded in 1989, IER is funded entirely by tax deductible contributions from individuals, foundations and corporations. No financial support is sought or accepted from government (taxpayers).

Shlaes In the WaPo: A Chilling Uncertainty

A Chilling Uncertainty, by Amity Shlaes
The Washington Post, Wednesday, December 31, 2008

The United States has entered the era of the experiment. President-elect Barack Obama is putting forward an infrastructure program whose plans and price tag are unclear. Treasury Secretary Henry Paulson whipped up the Troubled Asset Relief Program to buy up bad mortgage instruments, and, expanding on that experiment, President Bush wants to try extending TARP to autoworkers.

The idea that experiments are warranted in current circumstances comes from the New Deal. The official history is familiar: FDR put forward multiple projects, some at cross-purposes. Yet New Deal inconsistency was not a problem and might have been a virtue. Through "bold, persistent experimentation," his catchphrase, Franklin Roosevelt brought recovery.

Modern economists, monetarist or Keynesian, have not rejected this story line. The trouble with the 1930s, in their view, is that government did not fiddle enough. Had the Federal Reserve, the Treasury or the White House fiddled more, the Depression might have been shorter or less severe. The New Deal Fed, they say, never got the price level quite right. Or, the New Deal stimulus programs were too little. And so on.

But there is significant evidence that the very arbitrariness of the New Deal made the Depression worse.

In 1932, stunned market players and citizens wanted to know what the new rules were. They voted for a party with a platform so moderate it could have been written by today's Concord Coalition: stability, sound money, balanced budgets. That was the Democratic Party, led by Roosevelt.

Many of FDR's initial plans did bring stability: His first Treasury secretary worked to sort out banks with the outgoing Hoover administration in a fashion so fair that an observer noted that those present "had forgotten to be Republicans or Democrats." By creating deposit insurance, FDR reduced bank runs. His Securities Act of 1933 laid the ground for a transparent national stock market. Equities shot up.

But other policies were more arbitrary. Using emergency powers, FDR yanked the country off the gold standard. Both American and international markets looked forward to a London conference at which a new monetary accord was to be struck among nations. Over the course of the conference, though, FDR changed orders to his emissaries multiple times. Some days he was the internationalist, sending wires about international currency coordination. Other days he was the cowboy, declaring that all that mattered was what the dollar bought in farm states. The conference foundered.

Some of the worst destruction came with FDR's gold experiment. If he could drive up the price of gold by buying it, he reasoned, other prices would rise as well. Roosevelt was right to want to introduce more money into the economy (the United States was deflating). But his method was like trying to raise an ocean level by adding water by the thimbleful. What horrified markets even more was that FDR managed the operation personally, day by day, over a breakfast tray. No one ever knew what the increase would be. One Friday in November 1933, for example, Roosevelt told Treasury Secretary Henry Morgenthau that he thought the gold price ought to be raised 21 cents. Why that amount, Morgenthau asked. "Because it's three times seven," FDR replied.

Morgenthau later wrote that "if anybody knew how we set the gold price, through a combination of lucky numbers, etc., I think they would be frightened."

They were. The "Roosevelt Rally" flattened. The arbitrary quality of other initiatives reinforced concerns. The New Deal centerpiece, the National Recovery Administration, helped some businesses compete and criminalized others for the same behavior. Sometimes Roosevelt goaded federal prosecutors into harassing corporate executives. Other times, he schmoozed the same execs at the White House. In 1936, FDR pushed through deficit spending. In 1937, he was Mr. Budget Hawk.

Uncertain, markets froze. Businesses refused to hire or invest in equipment. Unemployment stayed stuck in the teens. The 'deal' part of the New Deal phrase was problematic; businesses didn't want individual favors, they wanted clear laws for all. Industrialist Ernest Weir summed up what his community was desperate for FDR to do: "Above all to make the program clear and then stick to it."

Today, uncertainty also chills. Questions abound over the future regulation of stocks and derivatives, over tax policy, over bailouts. All this makes it hard for the market to settle on equity or home prices. And Americans follow stories about names--Secretary Paulson, Secretary-designate Timothy Geithner--more than they do the news about the Fed or the Treasury.

Luckily, we are entering the optimal time for reducing uncertainty: a new president's first hundred days, with a majority to back him on the Hill. Obama might start by rebuilding key institutions: creating a super-Securities and Exchange Commission, a tough regulator with clear plans for overseeing stocks as well as those instruments that had been monitored unpredictably because of vague status. He should also halve corporate tax rates, currently some of the world's highest, and reduce the capital gains rate to 5 percent. Rewriting the Fed law to clarify it will make avoiding an Alan Greenspan bubble easier. Defining his infrastructure program clearly would have the effect of putting up a sign: Open for Business.

Some will say all that sounds politically impossible. Until recently, though, so did a trillion-dollar infrastructure project. A new hundred days spent making good laws will bring sturdy recovery. A hundred days spent making more deals will not.

Amity Shlaes is an adjunct fellow at AEI. She is the author of The Forgotten Man: A New History of the Great Depression.

The key problem facing Somalia is not one of security, but rather the vacuum in political leadership, says UN envoy

Paucity of political leadership at root of Somalia's problems, says UN envoy

UN, New York, Dec 31 2008 10:10AM

Somalia’s problems are driven by a lack of responsible political leadership, the top United Nations envoy to the Horn of Africa nation said today.

In a letter to the diaspora, Ahmedou Ould-Abdallah, the Secretary-General’s Special Representative, said that there is an “emerging consensus that ultimately your country’s problems stem from the absence of accountable and committed national leadership.”

The key problem facing Somalia – which has not had a functioning central government since 1991 – is not one of security, but rather the vacuum in political leadership, he wrote.

“I am confident that progress is being made towards a situation where responsible leadership will have friendly relations with its neighbours, and smooth integration into the international community.”

The envoy hailed the recent “peaceful resignation” of President Abdullahi Yusuf Ahmed. He also noted the relocation of the leaders of the opposition group known as the Alliance for the Re-liberation of Somalia (ARS) and delegates from the Joint Security Committee, comprising both the ARS and the Transitional Federal Government (TFG), to the capital Mogadishu.

In June, the two sides signed a UN-facilitated peace accord, known as the Djibouti Agreement, under which they agreed to end their conflict and called on the UN to deploy an international stabilization force to the troubled nation.

The Djibouti process “has opened a new era in the history of your country,” Mr. Ould-Abdallah said, adding that it has also “given the opportunity to all Somalis to witness the activity of a vital generation that is committed to peace and stability.”

With women and the younger generation losing hope after witnessing two decades of power struggles in Somalia, he said it is time for leaders to “demonstrate their commitment to peace and the well-being of their country.”

2009 will be a busy year for Somalia, with the first few weeks seeing the preparations for the election of a new president, the formation of a government of national unity and an enlarged Parliament. The Representative wrote that he hopes to hold talks with the business community, as well as with former top military and police officials to seek their views on how to bolster security and rebuild the national army.

“Somalia is entering a new era,” he said, calling on the diaspora to “catch the train of history and mobilize all efforts to maintain solidarity among all brothers in order to recover the integrity, sovereignty and dignity of Somalia.”

Gonzales Defends Role in Antiterror Policies

Gonzales Defends Role in Antiterror Policies. By Evan Perez
WSJ, Dec 31, 2008

WASHINGTON -- Alberto Gonzales, who has kept a low profile since resigning as attorney general nearly 16 months ago, said he is writing a book to set the record straight about his controversial tenure as a senior official in the Bush administration.

Mr. Gonzales has been portrayed by critics both as unqualified for his position and instrumental in laying the groundwork for the administration's "war on terror." He was pilloried by Congress in a manner not usually directed toward cabinet officials.

"What is it that I did that is so fundamentally wrong, that deserves this kind of response to my service?" he said during an interview Tuesday, offering his most extensive comments since leaving government.

During a lunch meeting two blocks from the White House, where he served under his longtime friend, President George W. Bush, Mr. Gonzales said that "for some reason, I am portrayed as the one who is evil in formulating policies that people disagree with. I consider myself a casualty, one of the many casualties of the war on terror."

His political problems started with the firings of nine U.S. attorneys in 2006, which grew into a firestorm that Mr. Gonzales said he never saw coming. In November of that year, Democrats had taken control of Congress and the power to conduct investigations of Bush administration policies.

His previous role of White House counsel put Mr. Gonzales at the heart of the administration's decision-making on issues relating to terrorism, making him an easier target than the president. Critics also said he allowed the Justice Department to become politicized through its hiring practices and prosecutions, favoring Republicans for plum positions and targeting Democrats for prosecution.

Mr. Gonzales fueled the fire by giving evasive answers to Congress, frequently responding "I don't recall."

Among other things, Mr. Gonzales said Tuesday that he didn't play a central role in drafting the widely criticized legal opinions that allowed the Central Intelligence Agency to use aggressive interrogation techniques on terrorism suspects and expanded the president's power to hold "unlawful combatants" and terrorism suspects indefinitely. He also said he told the truth to Congress about a classified eavesdropping program authorized by the president, and admitted to making mistakes in handling the U.S. attorney firings while maintaining that he made the right decisions. He says that while he bears responsibility as former Attorney General that "doesn't absolve other individuals of responsibility."

Mr. Gonzales, 53 years old, doesn't have a publisher for his book. He said he is writing it if only "for my sons, so at least they know the story."

The chapters on the Bush administration's surveillance program, which involved eavesdropping without court warrants, and other controversial aspects of his work, remain blank. That is in part because he remains under investigation regarding allegations of political meddling at the Justice Department.

The Harvard Law School graduate, onetime corporate lawyer and Texas judge also hasn't been able to land a job. He has delivered a few paid speeches, done some mediation work and plans to do some arbitration, but said law firms have been "skittish" about hiring him.

The biggest blow to Mr. Gonzales came during Senate testimony by James Comey, former deputy attorney general, who recounted dramatic details of a 2004 confrontation at the hospital bed of then-Attorney General John Ashcroft.

Mr. Comey had refused to sign a reauthorization of a secret government program, believed to be the eavesdropping initiative. Mr. Gonzales and Andrew Card, White House chief of staff at the time, drove to the hospital where Mr. Ashcroft was recovering from surgery to instead seek approval from him. Mr. Comey drove to the hospital to stop them. The episode highlighted a dispute between Justice and the White House over the surveillance program's legality.

In Tuesday's interview, Mr. Gonzales said Mr. Comey's characterization of the dispute was "one-sided and didn't have the right context," and gave the impression that he and Mr. Card were attempting to take advantage of Mr. Ashcroft. "I found Ashcroft as lucid as I've seen him at meetings in the White House," he said.

Mr. Gonzales was at a meeting in San Antonio the day of Mr. Comey's surprise testimony. "He didn't have the decency to notify anyone what he was about to testify," he said. "That was extremely disappointing." Mr. Comey declined to comment.

Mr. Gonzales also downplayed his role in formulating opinions that allowed the CIA to use aggressive interrogation methods, which included waterboarding. The memos have since been rescinded and replaced with opinions that explicitly call torture "abhorrent."

Mr. Gonzales said his role as White House counsel at the time was one among several administration lawyers who debated the opinions, but that in the end it was the Justice Department's call. John Yoo, the then-Justice official who had been assigned to draft the memos, had strong feelings and no one could have pressured him to write the memos a certain way, Mr. Gonzales said. Mr. Yoo didn't respond to a request for comment.

In one of his final acts before leaving office, Mr. Gonzales denied he was planning to quit, even though he had told the president of his intention to resign. Asked about the misleading comment Tuesday, he said: "At that point, I didn't care."

The Kremlin's foreign policy priorities are determined by the changing ideology and the domestic political agenda of Russia's rulers

Russia's Woes Spell Trouble for the U.S. By Leon Aron
WSJ, Wednesday, December 31, 2008

Russia faces a particularly nasty version of the global recession (at a minimum), and perhaps an economic "perfect storm." Regardless of how bad its economy gets, two broad political trends, each carrying profound implications for Russia's foreign policy and U.S.-Russian relations, are bound to emerge.

The first will be a growing dissatisfaction with the government, which may lead to a political crisis. The second will be a reactionary retrenchment: increased internal repression and more of its already troubling foreign policy. Managing the relationship with Moscow in the face of these trends is something President-elect Barack Obama and his administration should start thinking about now.

The size and depth of Russia's economic problems -- and thus the amount of political turbulence -- will depend primarily on two variables. The first is the ruble decline. The national currency is steadily depreciating and has reached an all-time low against the euro despite the central bank's having spent $161 billion on its defense since mid-September. The ruble's losing at least 25% to 30% of its value is a given; the key political issue is whether the weakening can be managed into a gradual decline, or whether the depreciation turns into a panicky flight from the currency. (Already last September Russians dumped around 160 billion rubles to buy $6 billion -- the highest demand for dollars since the aftermath of the 1998 financial crisis.)

The second factor is oil prices. Last year, oil revenues accounted for at least one-fifth of Russia's GDP and half of state revenues. At $40 a barrel, the state budget goes into a 3%-4% deficit. In the past eight years, the national economy has mirrored fluctuating oil prices. So the 7%-8% growth projected for 2008 will have to be cut at best to 1%-2% for 2009. Zero growth or contraction are distinct possibilities.

Such a predicament is most dangerous politically for a country whose population has become used to incomes increasing 8%-10% every year since 2000. Growing disappointment is sure to follow, first among the elites and then people at large.

Despite the reduction of the poverty rate to 14% from 20% in the last five years, tens of millions of Russians continue to live precariously: A recent poll found that 37% of all families have money enough only to cover food. Unemployment and inflation (already 14%, year-on-year, in November) may well push these people over the edge and into the streets.

Perilous for any regime, such disenchantment would be especially worrisome in a country where the legitimacy of the entire political structure appears to rest on the popularity of one man, Vladimir Putin, whose astronomic ratings stemmed largely from the relative economic prosperity he has presided over. This dangerously narrow legitimacy will be sorely tried in the coming months.

Forestalling or at least containing inevitable political consequences of the economic crisis is likely to be at the root of the other political tendency: an attempt by the Putin-led elite, coalesced around Gazprom, Rosneft, state corporations and the loyal industrial "oligarchs," to pre-empt challenges by beefing up the authoritarian "vertical of power." The rewriting of the constitution to give the president 12 consecutive years in office signals the implementation of this strategy. The amendment was overwhelmingly passed by both houses of the Federal Assembly within three weeks in November, ratified by all 83 regional parliaments in less than a month. President Dmitry Medvedev signed it into law yesterday.

One scenario bruited about in Moscow has Mr. Medvedev taking full responsibility for the crisis and resigning to free the Kremlin for the caretaker prime minister (Mr. Putin), soon to be re-elected president.

A bill introduced in the Duma on Dec. 12 expands the definition of treason, punishable by up to 20 years in prison, to "taking action aimed at endangering the constitutional order, sovereignty and territorial integrity" of Russia. That same day the parliament approved the elimination of the right to jury trials for defendants charged with treason. The ruthlessness with which the riot police troops, the OMON, attacked protesters, journalists and bystanders in Vladivostok over the weekend of Dec. 20 may be a preview of things to come.

A reactionary crackdown will also mean the continuation and intensification of the already incessant and deafening propaganda portraying Russia as a "besieged fortress," surrounded by the U.S.-led enemies on the outside and undermined by the "fifth column" of the democratic political opposition within. In the words of one of the most astute independent columnists, the courageous Yulia Latyinina, the rabid anti-Americanism, which has become a linchpin of the regime's domestic political strategy, is likely to turn into a full-blown "hysteria."

The key lesson of George W. Bush's dealings with Russia is that the Kremlin's foreign policy priorities are determined by the changing ideology and the domestic political agenda of Russia's rulers to a far greater degree than by anything the U.S. does or does not do. (Which is why the U.S. exit from the antiballistic missile treaty was accepted with equanimity in 2002, while the intent to install a rudimentary antimissile system provoked Moscow's fury in 2007.) If reaction advances at home, the Kremlin will continue a truculent or outright aggressive foreign policy of resurgence and retribution, intended, among other things, to distract from and justify domestic repression. The recovery of geostrategic assets lost in the Soviet collapse will remain Moscow's overarching objective, especially in the territory of the former Soviet Union.

The Obama White House will have to navigate a difficult and narrow path in its relations with Moscow in 2009 between continuing to engage Moscow on the key issues of mutual concern (Iran, missile defense, nonproliferation, terrorism), on the one hand, and the broader strategic goal of assisting democratic stabilization in Russia.

But no matter what the Kremlin leaders and their propaganda stooges say in public, anything interpreted as approval or even a mere sign of respect by America, first and foremost by its president, is a huge boost to the government's domestic popularity and legitimacy. So the natural, almost protocol-dictated, inclination of the new administration to show good will must be balanced against firm support for the return to political and economic liberalization in Russia. Throwing diplomatic lifelines to a regime that refuses to choose such a path out of the crisis is not in America's -- and Russia's -- long-term interests.

Mr. Aron is director of Russian studies at the American Enterprise Institute and the author, most recently, of "Russia's Revolution: Essays 1989-2007" (AEI, 2007).