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The Dangers of Sovereign Proliferation

Yaron Sarid — Sat, 27 Oct 2007 19:15:42 GMT

With little improvement in the federal political situation in Iraq, there has been much speculation of whether or not Iraq would dissolve into 3 separate countries, roughly along the lines of its sectarian populations: Kurds in the North, Sunnis in the center, and Shiites in the South. To many, this seems like a natural solution to the problem, after all the three new "countries" would basically be successors to the old Ottoman provinces of Basra (Shiite), Mosul (Kurd), and Baghdad (Sunni*). In general, post-Colonial era politics of the 20th and 21st century have repeatedly led to the creation of new states along ethnic, sectarian, or religious lines. What is rarely discussed, however, is whether or not this creates more problems than it solves? In essence, are more and more countries a good thing?

Today, in 2007, the generally agreed upon number of countries is 194 (192 UN Member states, plus Vatican City, and Taiwan). In stark contrast to this, in 1900 there were only 57 countries, as large empires carved up most of the world's smaller "countries" amongst themselves. Between 1860 and 1895, about 80 countries were wiped off the map. Most of these were due to Italian and German unifications, as well as European imperial movements which eliminated most of the African and Asian kingdoms and khanates.

In the 20th and 21st centuries, large countries are again splitting into smaller and smaller ones. The 20th-century trend toward more countries began with Cuban independence (following American military action) in 1898; Australia, Panama, Norway and Albania followed in the next decade. Since then, about 130 more countries have emerged from the breakup of European colonial empires including the breakup of tsarist Russia, Austria-Hungary and the Ottoman empire after World War I. Decolonization in Asia, Africa, the Middle East, the Caribbean, and the Pacific between 1945 and 1980 created many more countries; and the collapse of the Soviet Union and Yugoslavia led to the current number, with the world's newest country being East Timor.

What remains unclear, however, is whether additional countries lead to a more peaceful, or more conflicted planet? To be sure, nationalist movements across the globe have been pressing for smaller and smaller territories to be recognized as sovereign. It is certainly no longer fashionable to be ruled from a far away capitol.

Remember the Yugoslavian conflicts of the 1990's? Where there was one country, there are now 6: Croatia, Serbia, Slovenia, Macedonia, Montenegro, and Bosnia-Herzegovina. Even this number is unsatisfactory to many. The Kosovar Albanians would like independence from Serbia. Srpska (Banja Luka) is talking about "Republic." Even Bosnia and Herzegovina are considering breaking up their federation. In fact, whenever there is talk about creating new countries, it is inevitable that one group or another will believe that their cause is worthy of yet further subdivision. Unfortunately, these subdivisions rarely fall neatly along current geo-political lines. They usually follow much more messy historical or ethno-population lines leaving dangerous grievances.

The Kurds believe that their "Kurdish homeland" includes parts of modern Syria and Turkey. Armenians believe that Armenia should include territory from Turkey, Georgia, and Azerbaijan. The Chechens want a separate Muslim homeland distinct from Russia. Many Tibetans would like to regain independence from China. India has been on the verge of ethnic breakup many times since its independence. Indeed both Pakistan and Bangladesh broke off from the India that Queen Victoria knew. And then there are the Palestinians (a term that historically refers to very different populations), some of whom believe in a homeland subdivided from Israel, others believe their homeland consists of all of Israel, and yet others who believe that parts of Jordan and Egypt are also rightfully Palestinian Arab. Nationalist movements are by no means limited to central Asia or the Middle East: Basques have been fighting for an ethnic homeland in modern Spain. Some Corsicans have been fighting the French for years. Others would like to separate Northern and Southern Italy. There is even a movement called "Hawai'i Independent and Sovereign" that would like to see secession from the United States.

As many nationalist movements have been successful at creating new countries out of the old orders, the trend is clearly towards more "countries." The problems begin when some of these countries begin to exercise their new found sovereignty against the interests of global stability, and often directed at their former rulers. This is especially true in an age of nuclear proliferation when countries like Iran and North Korea are showing the world that it is possible to gain disproportionate world attention (and resources) through what they would call sovereign exercise of rights, but others would call nuclear blackmail.

It is unclear what (if any) the correlation of "sovereign proliferation" to armed conflict is. After all, 16th and 17th century Feudalism led to many wars, as did 18th and 19th century Empire. The bloodiest wars of all, the World Wars of the 20th century, were fought between mostly Colonial powers. Despite wars being fought between Empires, these powers were quite good at suppressing conflict within their territories (though their methods were often brutal). As smaller countries have emerged from this old order, it has become increasingly necessary for the world as a whole to "police" or suppress conflict within and between territories that do not have the capacity to do so themselves, or where government has failed or broken down. Witness the genocidal killings in Darfur where Muslim North Sudanese have been systematically exterminating ethnic Blacks in the South and East. The conflict in Afghanistan, where NATO is attempting to keep the peace, is another example where years of war have eroded the power of any central government to maintain order.

The United Nations defines Peacekeeping as "a way to help countries torn by conflict create conditions for sustainable peace." In fact, the UN overseas most of the world's peacekeeping missions with 17 active deployments. The UN is certainly not the only peacekeeping organization with NATO, the Economic Community of West African States, the European Union, and especially the United States all performing at least some peacekeeping duties. With more and more conflict zones throughout the world, the need for peacekeeping troops has only increased and the dangers they face are on the rise. It is clear that more and more of these "Global policeman" are necessary to keep order. The UN, lacking its own troops, has shown an inability to meet the increasing demand, and conflicts like Afghanistan and Iraq have shown the limitations of organizations such as NATO's, or countries such as the United States', ability to reduce or end conflict adequately.

The emergence of so many newly sovereign countries is severely straining the International community's ability to maintain order and suppress conflict. As these functions were previously undertaken by Imperial or Colonial rulers, they have increasingly handed them off to inter-governmental bodies such as the United Nations and NATO. These inter-governmental bodies necessarily lack the sovereign mandate to act decisively to end or prevent conflict and necessarily rely on squabbling member-states, with often conflicting interests, before any mandate can be agreed upon. The delays this lack of consensus necessarily produce allow dangerous conflicts like Darfur and Iranian and N. Korean nuclear proliferation to go unchallenged until they sufficiently threaten other sovereign powers -- a condition likely to lead towards war.

In short, we are trying to solve localized problems by creating newly sovereign countries without having built sufficient International mechanisms to solve the disputes this will necessarily create.

Most assume, for instance, that the creation of a Palestinian state will solve the Israeli-Palestinian conflict of the last half century, however, how many have really answered the question of what will be done the day after this new state is created and it continues to seek armed conflict with Israel? Will Israel be justified in declaring war and reoccupying the territories, and if so what then has been accomplished? As Rudolph Giuliani wrote in the October 2007 edition of Foreign Affairs, "It is not in the interest of the United States, at a time when it is being threatened by Islamist terrorists, to assist the creation of another state that will support terrorism. Palestinian statehood will have to be earned through sustained good governance, a clear commitment to fighting terrorism, and a willingness to live in peace with Israel."

If Iraq does dissolve into three new sovereign states, what will the International community do if Turkey takes over the Kurdish North, or if Iran takes over the Shiite South? The Syrians were content to do just that in Lebanon for 20 years, with the International community doing very little. The recognition of new sovereignty has been a political and diplomatic game of one-upmanship for more than a century. Perhaps before we recognize the 195th country, we should first take a long hard look at how the current 194 are going to police themselves. This process should begin with reforming the UN, which is an entirely different discussion.

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* During late Ottoman times, the province of Baghdad was actually heavily Jewish. According to the French vice-consul to Baghdad in 1904, Jews numbered 40,000 of 160,000 residents. By 1921, the British population figures for the city of Baghdad were 202,200 inhabitants, of which 80,000 were Jewish, 12,000 Christian, 8,000 Kurds, 800 Persians (Shi’ia), and 101,400 Arab and Turkish Muslims (Sunni). In 1952, practically the entire Jewish population of Iraq was exiled with the vast majority emigrating (forcibly) to Israel with the bulk of their lands and properties confiscated.

Bernanke, meet Hobson

Yaron Sarid — Sat, 18 Aug 2007 06:49:11 GMT

As I drove to work this morning, a friend I had called quipped, "it looks like another 250/50/25 day today." His voice sounded a little edgy, a cross between a certain nihilistic abandon and something of a morose fatalism. He was referring, I quickly surmised, to the latest drops in the Dow, NASDAQ, and S&P, each of which was now losing about 2% of their value. The US (and indeed many world-wide) stock-markets have been taking a beating lately as (depending on who you listen to) investors worry about housing, liquidity, energy, global warming, terror, inflation, toy recalls, indigestion, acne or any of a dozen other ills plaguing our economy.

So what's really going on? Why are the stock markets in triple digit descent one day and then in triple digit ascent the next? Why has the Dow Jones Industrial Average lost 10% of its value from the 14,000 level just two weeks ago, and is the end in sight? Why hasn't the Federal Reserve stepped in to calm everyone down and make sure that things continue running smoothly? Is the end of this madness in sight and what can we expect down the road? The answers to these questions are not necessarily obvious, but a careful analysis of what's happening today can lead us in the right direction. This column is not usually in the habit of making predictions, but it seems clear what the next 6-12 months are likely to bring so I'll go on record and be prepared for any mea culpa’s if time bears these words foolish.

Fundamentally, the reason why so many investors are quick to panic is because we've borrowed ourselves into a fine mess. The American savings rate is at an all time low ( some have actually measured it as negative). The cost of money has been so low for the last few years that we have simply bought everything in sight, paying for it with remarkably cheap (and arguably subsidized) credit. This spending binge has suited many just fine. Consumers have enjoyed it because cheap money has (temporarily) increased their purchasing power. Low-rate mortgages have made the dream of home buying much easier for many. Cheap money has allowed business to spend lavishly on everything from fancy new offices to executive perks. Politicians have been able to provide for a pork hungry constituency.

So why is this a problem? The simple reason is that every dollar borrowed eventually needs to be paid back. The not so simple reason is that your creditor may not be quite so obvious. At a macro-economic level, our creditors as a nation have, as of late, been mostly from Asia. China is now the second largest foreign holder of US Treasury bonds (behind Japan). While this has allowed the American consumer to borrow at artificially low prices (this is due to Treasury bonds being an internationally desirable brand and thus able to sell at lower interest rates than other sovereign debt), it also makes us partially subject to the whims of foreign powers that may not coincide to our own national interest. Witness the recent careless comments of one Chinese official who threatened that China's large holdings of treasury bonds could be used as a sort of economic weapon. While this is true, to some extent -- China can dump US treasuries on the open market driving their price way down and forcing the US government to pay exorbitant rates to borrow the money it needs to continue operating -- in reality, China has just as much to lose as America if it pursued such a policy. Forgetting for a moment the potential of economic battles slipping into the more traditional armed variety, China holds most of its foreign reserves in dollar denominated holdings. If it crashed the dollar or devalued US treasuries it would simply be erasing a good portion of its own treasury. Furthermore, such a move would almost certainly trigger a US (if not global) recession and destroy the very export market that China is thriving on.

So what does this have to do with what is going on in today's financial markets? Globalization has very much tied the world's markets together, so how we behave affects the rest of the world and how they behave affects us. In short, the best way to deal with a liquidity crisis -- all things being equal -- is to increase liquidity. This might sound obvious, but the best tools we have to do just that lie (in the US at least) with the Federal Reserve who has the power to lower interest rates and thus lend banks money more cheaply so as to disperse liquidity into the economy and secondly to increase the money supply, quite literally printing more money (these are really two sides of the same coin). The problem is this remedy has the potential, in today's economy, to do more harm than good. This is because both actions are inflationary and the Fed would be reticent to encourage inflation at a time where high energy prices, high food prices, and increasing inflation abroad (especially in China) are causing concern. Let's not forget that the Fed's stated priority one is to keep inflation under control. Secondarily, given the large deficits and debt we have been accumulating, the US dollar has been under tremendous pressure, and is currently quite weak by historical standards. If the Fed cuts interest rates it risks undermining the dollar even further.

Therefore it is this column's opinion that the Fed is faced with something of a Hobson's Choice: They must lower interest rates a little in the short term to stave off panic and inject some immediate liquidity into a scared marketplace, but they will soon need to raise interest rates even higher than they are now to protect the dollar and stave off inflation.

In the short term this would have quite a few beneficial effects. First and foremost it should stave off a panic and a run for the exits that could decimate financial markets and leave investors and businesses fighting off bankruptcy. Secondly it should give the bleeding mortgage market a little bit of breathing room, allowing banks to continue lending to at least the most qualified buyers. And potentially for others to refinance some of the disastrous loans that they had taken in the last few years that are causing the defaults fueling today's panic. This is not to say that the Fed should act to bail out banks who made bad loan decisions, rather that decisive action should be taken quickly to stop a liquidity crisis from becoming a solvency crisis.

In the medium term we cannot sustain low interest rates for long, at least not while running record deficits, financing a foreign war, and spending without virtually any saving. In order to return to some sort of equilibrium, interest rates will have to go quite a bit higher eventually causing less spending and increased savings which should help bring the current account deficit under control and help tame inflation and with it bring up the dollar. All of this, however, will come at a cost as it will certainly lead to an economic slowdown and quite possibly a recession.

The Fed can carefully attempt to smooth out this rather inevitable process a little, however a loan always come due eventually. The more we borrow, the larger the tab gets, and the longer the pain will last until we can get back on our feet. We have delayed this process for a long time as our profligate borrowing has taken our markets further and further away from reality. The stratospheric prices of real-estate, stocks, and other hard assets are testament to what cheap money can do if left unchecked for too long and like a house of cards, can come tumbling down when loose investors realize that their base has been shaky all along.

The Proxies' Proxies

Yaron Sarid — Fri, 06 Jul 2007 06:21:48 GMT

"What do you mean? I didn't do it. Don't blame me, it was him!" We must have heard these words thousands of times; however they have recently become far more frightening as they are often heard not on grade school playgrounds, but in the halls of Departments of State the world over. Fighting wars used to be the exclusive domain of sovereign powers. Waging symmetric war -- that is, army to army -- has now become far too costly both in treasure and personnel, especially when waged against a modern industrialized power. As such, many of the world's most disagreeable regimes have now made asymmetrical warfare, through the use of proxies, virtually de rigueur.

Last summer's particularly nasty war in Lebanon pitted sovereign Israel against Iran and Syria's proxy: Hezbollah. Iran dares not confront the United States directly but is covertly sponsoring many Shi'ite proxies in Iraq to hit American troops. Sudan conveniently blames the "Janjaweed" over the massacres in Darfur, even when its own government planes have bombed villages to clear the way for the "insurgents." When the PLO morphed into the Palestinian Authority following the Oslo accords in 1994, the dominant Fatah party quickly formed the "Al-Aqsa Martyrs Brigades" who continued the movement's terror campaign against Israel unabated. Even Hamas, a terrorist group in its own right, after gaining legitimacy following Palestinian elections in 2006, simply changed the name of its militants to the "Al-Qassam Brigades" who's masked gunmen could then continue firing missiles into Israel and throwing rival Fatah activists off buildings while respectably dressed Hamas "spokespeople" could say "We knew nothing about this outrage!" It would seem that these governments no longer wage war, it's always a "troublesome splinter group" that's responsible. The problem is that now even the splinter groups have splinter groups. The proxies now have their own proxies!

Why the proliferation of proxy militias killing civilians and destabilizing the world order? The simple answer is that, as a political strategy, they have worked flawlessly. Countries who sponsor terror proxies have been very adept at the use of "plausible deniability," literally the "It wasn't me, it was him" defense.

When the Reagan administration pulled out of Lebanon in 1984, it was in response to the bombing of the Marine barracks in Beirut that killed 241 Americans by a previously unknown group called "the Free Islamic Revolutionary Movement." In fact, this group was put together by the Iranian Revolutionary Guards who also train and supply Hezbollah today. The US did virtually nothing in response to the attack, and the pullout from Lebanon achieved Iran's aims of distancing American power from the Middle East. When another Iranian proxy hit another US barracks, the Khobar Towers in Saudi Arabia, the response was again virtually nil. Not surprisingly, governments hostile to the US saw this successful strategy and repeated it many times, including The USS Cole bombing in Yemen in 2000.

On June 24, 2007, another previously unknown group the "Jihad Badr Brigade" killed 6 UN Peacekeepers in Southern Lebanon, after firing a few errant missiles into Israel a week prior. This "militant group" has been found to be linked to Hezbollah. Hezbollah, like Hamas, is trying to re-brand itself a political party and also, like Hamas, refuses to give up its (UN outlawed) independent militia. The militia simply renames itself whenever politically expedient. The same people are committing atrocities, the same people are killing civilians, but armed with a fresh new name and grievance the world somehow treats this as a new problem rather than an all too familiar old one.

The solution to this problem is as readily apparent as on any grade school playground: Consequences. Like any child looking to test authority, a lack of consequences only reinforces a sense of invulnerability and a belief that they are somehow not bound by the same rules that everyone else must play by. Like an errant bully using weaker kids to achieve his goals, rogue nations use proxies to achieve their ends while avoiding the consequences of direct involvement. To begin to see Peace in the Middle East, there must first be order and security. To achieve order and security, rogue nations must be told -- in no uncertain terms -- that the arming, financing, and support of terrorist proxies is unacceptable and carries with it stern consequences.

This cannot be the laughable response of endless bickering in the UN Security Council where, even after repeated flouting of resolution after resolution, Iran continues its nuclear program virtually unabated as the West argues with Russia and China over increasingly meaningless sanctions. Iran must understand that a serious price needs to be paid for supporting militias that kill American troops; Syria must understand that a serious price needs to be paid for re-arming Hezbollah; and Sudan must understand that a serious price needs to be paid for its tacit support of the Janjaweed and their cleansing of Blacks from Darfur in favor of their Arab brethren.

A new treaty needs to be circulated between the great powers of this age, the G-8 countries plus China and Australia, that together provide the vast majority of military "peace keepers" that calls for automatic sanctions for any regime found to sponsor, support and encourage terror organizations. Rogue nations can no longer be allowed to hide under the safety of sweet-heart oil contracts to China or lucrative arms contracts with Russia. The time to act is now, before a nuclear armed Iran decides to "lose" a couple of warheads in Hezbollah’s direction only to say "What do you mean? It wasn't us. See it was them!"

America's Wasted Victory?

Yaron Sarid — Fri, 01 Jun 2007 05:37:07 GMT

The Economist Magazine this week published a cover headlined "Israel's wasted victory, the six-day war, 40 years on." The magazine summarized the extraordinary military achievements that led to Israel's pummeling of 3 Arab armies and the conquering of land 3 times larger than the pre-war state in an awe-inspiring 3 days. The story described the incredible opportunity that this victory afforded Israel and how in 40 years that victory has been squandered, due mostly, to an inability to agree on what the state (and the region) should -- or realistically could -- look like decades later. As I read the article I couldn't help but think that the same lessons are worth learning with regards to America and Iraq.

Those lessons can be summarized into three main categories: 1. Peace Within - That is the ability of differing groups, clans, or factions to live in peace within a governmental framework. 2. Peace Without - The ability to live among often hostile neighbors in a relationship that is strategically prudent. 3. Societal Peace - Marshaling the aftermath of war to better your society.

Israel believed, following 1967 that the best way to ensure "Peace Within" would be to quickly consolidate its territorial gains into the fabric of Israeli society. Many Israelis believed (wrongly, as it turned out) that by treating the Arab residents of the conquered territories the same way Israeli Arabs were treated -- that is building Western-standard infrastructure for water, sewage, power, and schools, in areas almost completely neglected by their former Jordanian and Egyptian sovereigns -- that they would in time become Israeli. Unlike their Arab brethren who did not flee Israel in 1948 and subsequently became Israeli citizens, the Arab populations of the newly conquered territories assumed the identity of "Palestinians" and collectively decided to resist Israel head-on in a way that their former host governments were unable to do. Instead of building a "Peace Within" by lavishly spending on infrastructure and connecting Gaza, the West Bank, and the Golan Heights into Israel, the Israelis unwittingly created an enemy within that (like Hamas threatens almost daily) would like nothing better than to destroy it.

Similarly, by deposing the unpopular dictator Saddam Hussein, the United States believed that it could achieve "Peace Within" Iraq by providing a democratic voice to the disparate Sunni, Shia, and Kurds of Iraq. The war planners believed -- naively -- that by empowering political expression, Iraqis could accept peaceful coexistence. Instead, the major religious factions began looking at nation-building as something of a Zero-sum-game. That is, any gains for one's religious or political rival is a loss for one's own ambitions. This infighting quickly spiraled into armed conflict with local or religious militias vastly outmaneuvering the nascent Iraqi army and police forces. What was to be a peaceful and democratic country is devolving into three separate entities based loosely on religious affiliation, only one of which (the Kurds) is particularly friendly to the US.

No less important than building a "Peace from Within" is "ensuring Peace from Without." War is fundamentally about protecting yourself from your enemies. In the aftermath of the six-day war Israel had achieved "strategic depth" of territory that it could not imagine before the war and for the first time in its short 19 year history breathed a collective sigh of relief that it was no longer in existential peril. The reality, however, was that Israel's strategic problem was not only in its territorial depth, but rather in its demographic minuteness. A small country of 5.5 million Jews, surrounded by over 300 million Arabs sworn to your destruction is necessarily a ticking-bomb waiting to explode. Israel's best hope for a Peaceful and prosperous future was and is to negotiate Peace with its neighbors. Following their losses in the Six-Day war (in Arabic "an-Naksah," the setback), the defeated Arab governments were so humiliated that they were in no position to talk peace of any kind with the Israelis.

Far from being a setback to America's enemies, the victory in Iraq provided a golden opportunity for Syria and Iran to strengthen themselves by entangling the US in an ever deepening Iraqi morass. A strong, democratic Iraq would serve as an extremely dangerous foil to the theocratic Iranians or the autocratic Syrians. Both countries fear their own populations and neither can afford the inevitable democratic murmurs that would result from a successful Arab Democracy right across their borders. The US had an opportunity in the momentary euphoria following its deposition of Saddam to clean things up, to remove the massive stockpiles of weapons, and to seal the borders in an attempt to prevent the infiltration of foreign agents and jihadists. Mistakenly believing that Iraqis of all kinds would welcome America as their liberators and sit down together to draw up a successful form of government, the US missed this opportunity and found itself fighting an increasingly intransigent insurgency as well as defending itself from an ever more belligerent Iran.

Besides the internal forces shaping conquered populations and the external forces shaping new geo-political realities are the more subtle forces facing the victors themselves, the "Societal Peace." In the aftermath of 1967 Israelis began to see themselves not as cornered underdogs, but rather as hardened warriors willing and able to take care of themselves. While this transformation was welcome, indeed desired by fervent Zionists, the role of "occupier" was certainly an unwelcome consequence of the war. The Israelis, like the Americans in Iraq, saw themselves as benevolent rulers, truly hoping to build institutions of peace and live side by side with the Arab populations in their midst’s. It was not until the first intifada (uprising) in 1987 that most Israelis understood that the Palestinians had no desire whatsoever to live under Israeli rule. It was one thing to defend yourself against Arab terror, it was quite another to police a hostile population in your midst. Rather than unite Israelis, this harsh reality became a wedge in Israeli society that still divides the country.

Iraqis face a far different and even more profound societal dilemma: "What does it mean to be Iraqi?" For that matter, is that identity even worth defending? The United States has the advantage of being half a world away from Iraq. Unlike the Israelis who are fighting in their own back yards, the Americans can and will one day return home. George Bush set the extremely lofty goal of building the first vibrant, pluralistic Democracy in the Arab Middle East. The Iraqis however, lacking the social institutions, and historical background for a cohesive pluralistic society are devolving back into the tribal affiliations that existed before the British thrust upon them the identity of "Iraq" following World War I. For Iraq, "societal peace" means first and foremost putting the loyalty to one's clan or religion behind the loyalty to a united federal government, a goal that seems to be getting further and further away.

It is much easier to focus and analyze the results of war and victory through the lens of history. Seeing clearly, and making the right decisions at the time, through the fog of war, is a much trickier prospect. Wars, however, tend to be nasty and always have consequences that we need to be mindful of. It is too late for Israel to create a peace of its choosing based on the victory of the Six-Day war and it is too late for the US to create a peace of its choosing based on the victory over Saddam Hussein. It is not too late, however to create peace on both fronts, however that peace will come at a significantly higher cost.

What is needed most now is a vision for the future more than for the present. The outline of a solution to the Arab-Israeli conflict has long been in the offing. Bill Clinton got deceptively close before leaving office in 2000, and subsequent suggestions have all looked extremely similar. What has always been missing has been strong leadership able to sell the necessary compromises to increasingly skeptical populations. Strength in leadership is also sorely missing in Iraq. The weak government is being challenged by well financed and well armed groups doing the bidding of hostile foreign powers who have a large stake in keeping just the right level of chaos in Iraq without letting that chaos spill over the borders. They know that if America can be kept occupied playing policeman that they just might be able to get away with the incredible repression of their own populations.

One thing is clear, however: If the urge to bury our heads in the sand prevails and America withdraws from Iraq, as many in the US are now urging, we will be making the same mistake Israel made following 1967. We will be choosing the easy route thinking that our work is done when it is really just beginning. Stabilizing and shaping Iraq will not be easy but the future dividends of a stable Democracy in the heart of the Middle East will be well worth our while. This is precisely why countries such as Iran are fighting so hard to make sure that does not happen. Let's make sure that 40 years from now we don't see headlines that read "America's Wasted Victory."

Special Relativity

Yaron Sarid — Sun, 15 Apr 2007 01:36:25 GMT

Einstein's theory of special relativity can be boiled down to one observation: That perception of time varies depending on the perspective of an object in motion. This observation would have come as quite a shock to Galileo (who's principle of relativity was disproved by Einstein), however any modern parent would see this as no big surprise. The speed at which one must move to take care of a child and still accomplish all that is required to move ahead in the modern urban world necessarily skews the perception of time built upon years of experience.

Relative to professional adults, a child's life moves at a rather leisurely pace. Even accounting for the responsibilities of school, homework, and family chores, ample time is still left over for social pursuits such as pulling girls' pony-tails, launching spit wads at little sisters, dodge-ball, etc... This pace undergoes its first major change around the time a teenager leaves high-school, and his parents' house in order to attend college and live in what can be referred to as "subsidized independence." Suddenly, in addition to the familiar responsibilities of schoolwork, the student is now necessarily reliant on themselves for tasks previously dependent on his parents; tasks such as buying his own top-Ramin, paying the bills for those Christina Aguilera ring tones, and possibly part-time work at the local Chik-fil-A begin to alter his perception of time. How can he accomplish all that he would like and still find time to attend the killer kegger at I-Eta-Pi?

A more fundamental shift to the perception of time, specifically that left over for leisurely pursuits, typically occurs following college at the onset of professional life. Such mundane tasks as earning a living and making money begin to seriously alter one's ability to hone their skills at World of Warcraft. Of course, time must also be set aside to tweak one's profile at e-disHarmony.com in order to bleed even more time on a multitude of over-priced restaurants, pretentious night clubs, and haughty hotties. It is amazing most twenty-something's can manage to stay awake.

Of course, if one manages to get through all of the adolescent and young adult trials, they are still in for a rude awakening once they finally get married. Suddenly a formerly "busy" person must find time to combine his own pursuits with that of his loving spouse. Sunday morning sleeping-in and hangover nursing make way for romantic strolls to Restoration Hardware. The decorative simplicity of "it's black, I'll take it," somehow morphs into the complexities of "matching floral prints." Allowing time to nurture a relationship as well as accomplishing all of the things previously thought important, no longer seems like a challenge worthy of running the extra mile, but rather an impossibility destined to transform the former bachelor's life.

All this, however, is mere training towards the ultimate challenge awaiting the transformation of child to man: Parenthood. Think of it like trying to train for a marathon by multiple trips to the corner liquor store for cheap beer. You may think you're getting a workout, but the real thing is likely to severely maim you.

You used to wake-up, take a shower, and go to work? Now there is no need to wake-up because you likely haven't slept in the first place. Your shower is more likely to be under drool than hot water. Going to work will still happen, but not before you packed the diaper bag, changed the baby, stubbed your toe on the "Exer-saucer" left in the middle of your hallway, packed some bottles, and changed your shirt twice from curdled spit-up. When you finally get to work -- late -- your phone will inevitably ring informing you that the baby is stuffed up and in need of emergency rhino-suction. Once that crisis is resolved, you tell your boss that he needs to wait because you need to run home to switch cars with your wife because you accidentally drove to work with the only infant car-seat and she is now stuck immobile. Upon returning to work, you realize that you missed your East-Coast deadline and that the Pacific Rim is now beating down your neck to make sure that the TPS reports are being submitted on time.

Your after-work relaxation time at the gym is similarly interrupted by panicked cries that the baby might have a temperature and to please stop at the local Wrong-Aid to pick up the latest advance in rectal thermometer. Finally home at 10:00pm you find baby mischievously smiling at you as if everything preceding that moment was actually some elaborate ruse to bring you home for "play-time," and that nothing what-so-ever is actually wrong at all. After half an hour's rousing game of "peek-a-boo" you've given up on all the work you were going to do at home and even on the few minutes you were hoping to spend reading the day's news. Too tired to even watch the week's installment of American Idol's Surviving Apprentice, you decide maybe you're better off getting some sleep. Once again you begin the ritual of preparing bottles, changing the baby, preparing him for sleep so that perhaps he'll let you get some. By the time all of this is done and your teeth are brushed and ready for bed, you hear the familiar "waaaaa-aaaaahhhhh!" Rushing into his room to see if anything's wrong you again get that familiar mischievous grin, "is it play time?"

If every action has an equal and opposite reaction (Newton's 3rd Law of Motion), then having a baby necessarily means no longer having time for anything else. Throughout your life adding more responsibility seemed to coincide with somehow moving just a little bit faster or sleeping just a little bit less and somehow managing to squeeze most everything in. Children make this careful balance a sheer impossibility. Something's got to give.

Einstein called it correctly: Time and space are relative. The faster you move through your personal space, the less time you seem to have for things you used to think were important. Thankfully, parenthood also brings with it the realization that suddenly nothing is more important that using your precious time for the development and amusement of your child.

Prisoner's Dilemma

Yaron Sarid — Mon, 12 Feb 2007 07:10:07 GMT

Do you remember the "Prisoner's Dilemma?" The classic game of philosophy and economic game theory involves 2 "players" who have a choice to make. Imagine our players are both being held (separately) on suspicion of a crime. The District Attorney makes each prisoner an offer: "Confess to the crime, and if your accomplice remains silent I'll let you turn state's witness and go free while your accomplice does the time." If both players confess, both will do time; however if both players remain silent, the prosecution will have nothing and both will serve minimal time on reduced charges.

The dilemma the prisoner's face is that either one will likely do better if they choose to confess, yet both will do better if they cooperatively remain silent. Unable to communicate however, neither player necessarily trusts the other and is likely to act in their own self interest, rather than the cooperative self interest and as such receive a worse outcome.

The Israelis and Palestinians seem to be locked in a Prisoner's Dilemma of their own right now over the governance of the Palestinian Authority. Both have a choice to make: work together and peacefully build a solution to one of the most vexing problems in the Middle East, or act alone and hope the other side stays silent. Like the prisoner's dilemma, each side has an advantage with their own constituencies if they choose to go it alone, but face huge difficulties if the other side chooses the same. Though working together will likely yield the most promising result, neither side trusts the other and as such is most likely to choose their own (temporary) self-interest at the expense of the better cooperative outcome.

Take for example the recent internecine fighting among the Palestinian factions. Hamas and Fatah, the two most important groups within the Palestinian territories have recently been clashing, violently, over ostensible control of the Palestinian authority. Currently Fatah, in the form of Mahmoud Abbas, controls the presidency of the PA and as such is seen to be Yassir Arafat's political heir. Hamas, however controls a majority in parliament and the Prime Ministership, and as such is currently seen as the rulers of the PA. Neither side has been willing to work with one another and have been involved in killing senior operatives of the other's faction in order to try to gain the upper hand. Clashes between Hamas and Fatah gunmen have killed 130 Palestinians since May, and cease-fires have repeatedly broken down. The latest fragile truce came Sunday, after four days of fighting killed 30 people.

In an attempt to end the factional fighting, King Abdullah of Saudi Arabia arranged a summit meeting in Mecca (overlooking Islam's holiest shrine) between the three major players in Palestinian politics: Fatah's Mahmoud Abbas (Authority President), Hamas' Ismail Haniyeh (Authority Prime Minister), and Khaled Meshal, the exiled terrorist running Hamas from Damascas. The three agreed to a power-sharing agreement for the authority that should end the fighting, for now, however Abdullah's goals were more far reaching: He aimed to end the International embargo on financial aid to the Palestinians and thus gain recognition for the Hamas government.

Financial sanctions were imposed after Hamas failed to adhere to the main tenets of the Mid-East quartet. The quartet (The U.S., E.U., U.N., and Russia) have repeatedly stated that the Palestinian Authority must a. Renounce violence b. Recognize Israel, and c. abide by past Palestinian authority agreements. None of these basic tenets were agreed to in Mecca. Just prior to the summit, Islamic Jihad sent a suicide bomber into a bakery in the Southern Israeli resort town of Eilat, killing 3 innocent civilians. "A spokesman for Hamas praised the bombing as a natural response to Israeli military policies in the West Bank and Gaza Strip, as well as its ongoing boycott of the Hamas-led Palestinian government. 'So long as there is occupation, resistance is legitimate," said Fawzi Barhoum, a Hamas spokesman in Gaza.'" As for recognizing Israel, Nizar Rayyan, a Hamas spokesman, was explicit. "We will never recognize Israel," he told Reuters in Gaza. "There is nothing called Israel, neither in reality nor in the imagination." Lastly, with regards to abiding by past PA agreements, "The platform agreed to Thursday says the new government pledges to "respect" previous deals, instead of "abide by" them, as Abbas initially demanded. It makes no reference to recognizing Israel or renouncing violence."

What Hamas is saying is that it wants International money aimed at easing the suffering of the Palestinians, however that it doesn't agree at all about how that suffering should be alleviated. While the world community has sought a peaceful two-state solution to the Israeli/Palestinian conflict, Hamas sees only one possible end to the violence: one Islamic state encompassing the current Palestinian territories and the whole of Israel. Any accommodations they might make in exchange for gains on the road to that aim are merely temporary. They are willing to "respect" past agreements for now, if it means an accommodation with Fatah and perhaps a resumption of International Aid, but as Fathi Hamas, a Hamas leader in Gaza's Jebaliya refugee camp told a few thousand supporters: "Our battle with the Israeli enemy is still on." He then urged militant groups to resume attacks against Israel, and denied that Hamas would respect past peace deals. 'We will be the spearhead of jihad ... to defend Palestine and Arab and Muslim nations,' he said."

The Prisoner's Dilemma has two implicit assumptions: 1.) That the players are unable to collude (ie. communicate) and that 2.) The players have the same goal (ie. to minimize incarceration). Clearly the Israelis and Palestinians have been able to communicate. In game theory, this would mean that the players would choose the cooperative course every time in order to maximize their benefits. The Palestinians have chosen to miss virtually every opportunity at cooperation, whether rejecting 97% of the pre-1967 lines at Camp David with Bill Clinton in 2000; by firing hundreds of Qassam missiles into Israel after it withdrew completely from the Gaza strip in 2005; and now by choosing not to abide by the very agreements with Israel that created the Palestinian Authority in Oslo in 1993. Unfortunately, as Hamas has made clear many times, its goals are not the same as for the Israelis. While Israel would like to see an endgame where a Palestinian state lives with it side by side in Peace, Hamas states clearly in its charter that "Israel will exist and will continue to exist until Islam will obliterate it, just as it obliterated others before it." That is an entirely different sort of dilemma.

A Troubling Vista on the Horizon

Yaron Sarid — Thu, 25 Jan 2007 23:26:51 GMT

Long time readers are well aware of this column's aversion to the prevalence of Digital Right's Management (DRM) schemes in many of today's consumer electronics. Far from being a tool only to prevent unlawful copying, DRM has been used by companies to stifle competition, prevent innovation, and protect monopolistic behavior. Until recently, a consumer's best protection against most DRM'd products has been to simply "vote with their wallets" and not to buy a particular item. Unfortunately, the biggest threat to your digital freedom is now coming from a behemoth of technology that can hardly be ignored: Microsoft. The new Vista operating system that will soon be standard issue on the millions of PC's sold worldwide is virtually crippled by content protection and DRM.

In the wake of peer to peer file sharing programs in the late 1990's, the major media companies have gone on a crusade to incorporate tighter copy protection and what is euphemistically called "Digital Rights Management (DRM)" into virtually any technology that uses digital media. From the media company's perspective DRM is a gift that keeps on giving. Not only does it prevent media consumers from sharing content with one another, it also forces them to buy and re-buy media over and over again for each digital device that introduces a new format to the marketplace. Short on cash? No problem, simply release the same old content in a new format and consumers will have to buy it all over again!

The New York Times recently published an Op-Ed, Ga dgets as Tyrants, in which the author related the question of a 12 year old attending CES (the consumer electronics show in Vegas) who wondered "why do I have to buy my favorite game five times?" Anyone with the wildly popular Apple iPod knows that songs they buy from iTunes won't play on any non-Apple device. In fact, Apple has made so much money from this scheme that they are planning on extending it to their recently announced "iPhone," to which the New York Times responded: "Want an iPhone? Beware the iHandcuffs" Are you unlucky enough to have bought a Microsoft Zune? Songs you purchase for that device won't play anywhere else either, nor will music you purchased for your previous Microsoft devices play on Zune. More and more, technology companies are tying their gadgets to proprietary media formats that are useless anywhere else, forcing the consumer to buy and re-buy their favorite media.

Unfortunately for consumers, these "digital shackles" placed on them by an alliance of technology and media companies not only prevent the use of purchased content on competitors' gadgets, they also prevent a person from enjoying the full potential of the media they purchase. Sony, and other music companies have crippled many of their new CD releases to the point that they won't play in most automobile CD players. There are signs, however that consumers might be fighting back and simply not buying content that makes their lives more difficult. EMI recently announced that they are "reviewing" their DRM policy and are currently producing discs with no DRM.

The movie industry, however, has taken the opposite approach. With the CSS "protection" on DVD's long cracked, the Motion Picture Association of America (MPAA) has fought diligently to impose much stronger protection on the new high definition formats that are set to debut in 2007 including Blue-Ray and HD-DVD. Viewed as successors to the DVD, these high definition formats will be replete with new DRM schemes aimed to ensure that the discs are used only in the ways the studios explicitly allow. The studios were not content with protection only on the disc itself however and worked with Microsoft to ensure that your PC could not be used for nefarious purpose either.

The new Microsoft Operating System, known as Windows Vista, comes with numerous DRM "protections" built right in. Consumers, however, may find some of these protections troubling. For instance, Vista literally cripples your computer by disabling access to certain interfaces whenever "protected content" is being placed. Such common devices as S/PDIF (a digital audio transfer mechanism), and YPbPr (a high end component video interface) are literally turned off by Vista when "protected content" is played because those interfaces predate the new operating system and don't contain any copy protection mechanisms. Vista also actively degrades some video and audio quality. According to Chris Mellor of Techworld magazine, Vista is crippled by content protection:

"Vista has another playback quality reduction measure. It requires that 'any interface that provides high-quality output degrade the signal quality that passes through it if premium content is present. This is done through a "constrictor" that downgrades the signal to a much lower-quality one, then up-scales it again back to the original spec, but with a significant loss in quality.' If this happens with a medical imaging application then artifacts introduced by the constrictor can 'cause mis-diagnoses and in extreme cases even become life-threatening.'"

In other words, installing Windows Vista on your computer can literally cripple your computer and significantly degrade the software and hardware you use. The problem is, that unlike choosing not to buy a Microsoft Zune or Apple iPod, consumers can hardly choose not to buy Vista as it will be installed automatically (and priced into) virtually every new PC sold after January 30, 2007. Vista is likely to become the defacto operating system standard whether you like it or not.

Through intensive lobbying, media companies have gotten legislation passed that supports much of their restrictive behavior. The Digital Millennium Copyright Act (DCRM) restricts a consumer's ability to circumvent copy protection, even for the purpose of making legal backups of their own purchased products. The proposed FCC broadcast flag aims to create restrictions on how consumers can view and record broadcast television. Even legislation passed to protect user rights has been attacked by media companies. The 1996 Telecom act required cable companies to make available "cable cards" to consumers who do not wish to use the restrictive set top boxes that are now so ubiquitous. While legally mandated, many cable companies either do not make them available, or make cable cards very difficult to acquire.

All of these restrictive practices and DRM schemes are threatening to stifle the very innovation that encouraged the gadgets they are now used on. If Sony had its way in the famous Betamax Case, devices such as the VCR and Tivo might never have gotten off the ground. Creative use of technology has been a hallmark of innovation in the United States. Consumers free to use their legally purchased items as they wish, rather than how the content owner's wish have repeatedly created new markets and new companies that have led to unprecedented growth in technology markets. The current restrictions being imposed on us by media companies, hardware designers, and software giants have gone too far.

It's time to push for legislation that reestablishes the principles of "Fair Use" for consumers and to prevent media companies from shoving DRM down our unwilling throats. For too long congress has bent to the lobbying of the media companies to the detriment of consumers. Curbing the trend towards DRM will not only encourage new innovations in technology, it can also seriously reduce the cost of many consumer electronics by making unnecessary the huge expenditures in new forms of protection being developed by media companies. Of course copyright laws need to be protected and copyright owners have every right to profit from the content they create. They do not have the right, however, to cripple our computers and tell us how, when, and where to use the media we purchase.

Universal Health Care Shortages

Yaron Sarid — Thu, 18 Jan 2007 03:16:48 GMT

In his state budget proposal this week, California Governor Arnold Schwarzenegger proposed one of the most ambitious and sweeping changes ever in the state's social welfare system by proposing universal health care coverage for everyone in California. Modeled somewhat after Governor Mitt Romney's program in Massachusetts, the California scheme similarly mandates insurance for all, but differs significantly from the Mass. model in how it will be paid for. While both governors should be lauded for bringing the problems in the health care system to the forefront of public attention, the plans need to be examined very carefully so that they don't do more harm than good.

Schwarzenegger's plan is based on three major platforms: A.) Prevention, Health Promotion, and Wellness B.) Cover All Californians C.) Affordability and Cost Containment. Each of these platforms is based on a real deficiency in the current system, however many of the proposed plans to solve these deficiencies have some major flaws that need to be addressed.

In his bid to increase prevention, health promotion, and wellness, the governor proposes "structuring benefits and providing incentives/rewards to promote prevention, wellness and healthy lifestyles" through public and private programs. He also advocates "establishing a national model for the prevention and treatment of diabetes; preventing medical errors and health care acquired infections; reversing obesity trends; and continuing the battle against tobacco use." All of these sound like good things, however his proposed budget allocates $150m in state funds to accomplish all this and expects the federal government to match the rest (a theme often repeated in the estimated budget for the proposal). Furthermore he wants insurers to be "required to offer a health benefit package that includes incentives/rewards programs, including premium reduction."

The governor's wellness programs are aimed at reducing the overall cost of health insurance by increasing the fitness of Californians, however their efficacy would take decades to determine while the costs of the programs would be borne immediately. The aim of keeping costs down to ensure the longevity of health care programs and their availability are admirable but likely highly optimistic.

The central pillar of the universal health care plan is the goal of covering all Californians. According to the UCLA health care survey, of approximately 36 million Californians, there are an estimated 6.5 million people uninsured at any one time. The same study, however claims that of these, 1.5 million people are insured within 4 months, which means that they are likely to be between jobs. Of the remaining 5 million: 2 million are those who have the financial means to purchase insurance and choose not to; 1 million are in the US illegally; and 1 million are those who are just above the state limits for Medi-Cal and cannot afford insurance on their own. The governor's plan would make health insurance mandatory, imposing penalties for those who do not purchase a plan and subsidies for those who want to but cannot otherwise afford it.

The issue of affordability and cost containment is the last major component of the plan and it is here where things get the most murky. The governor estimates that his plan will cost approximately $12 - $15 Billion dollars and will save approximately $10 Billion in costs that are already in the system but accounted for out of the general fund. This is mostly payments to hospitals for emergency services provided by law but not paid for by patients, something the governor's office calls the "hidden tax on all Californians." Even if the governor's numbers are accurate and not wildly optimistic, his tax proposals to pay for them only account for about $5.5 billion with the rest to be made up by Federal and local governments.

The problem with this plan is that in attempting to propose a "bold new initiative," many details that are either highly unrealistic or potentially disastrous have been seemingly overlooked.

The governor estimates that only about 1 million Californians are uninsured and here illegally and expects the cost of insuring them to be about $2 billion. The funds to cover this are supposed to be split evenly between Federal and local governments, neither of which have made any commitment to provide these funds. Even if the money were budgeted, it is extremely likely that far more than 1 million people would line up to take advantage of free government health care and the figure certainly doesn't take into account potential increases in the number of undocumented workers.

As for the majority of the plan that is to be funded by the state, Schwarzenegger proposes three new taxes (actually fees in order to avoid the 2/3 vote necessary in the legislature for new taxes) as follows: Doctors will be required to pay 2% of gross revenue (not profits), and hospitals 4% of gross revenue. Businesses with 10 employees or more will be required to offer their employees health insurance, or pay the state 4% of their total payroll in lieu of insurance. The problem here is that both the taxes on doctors and hospitals will be passed on to the health care consumer thus making the cost of care immediately higher. Businesses having to decide what to do about insurance for their employees will be faced with some difficult choices: If a company is just above the 10 person threshold, it might make sense to simply let go of a few employees rather than face exorbitant health care costs. Larger companies who pay significantly more than 4% of payroll towards better health care might find it cost effective to simply pay the tax and shift the health care burden entirely to the state. This will likely become even more attractive as health care costs continue to rise year to year. It would be ironic if in attempting to increase employee health insurance, the state actually ends up causing many California businesses to drop their insurance plans altogether.

Another potentially major draw back from this plan is the likelihood that care could be adversely affected by it. The reason for this is Economics 101: Supply and Demand. The governor's plan establishes a series of caps on insurance costs including a 15% maximum on administration, reduced premiums for those in his wellness programs, and caps on what can be charged for services. On the other hand, many of his proposals significantly increase the cost of care: Mandating that insurance companies accept everyone including the old and infirm, forcing insurers to pay more to out of network providers, and providing low-income individuals affordable coverage. This has the effect of significantly increasing demand (universal coverage) while keeping price points artificially low (caps). Any first year economic student can tell you that this would effectively reduce the amount of available supply (care providers). Rather than ensure that more hospitals will stay open and more care would be available, it is far more likely that this scheme will lead to fewer doctors practicing in the state (as their compensation would be lower) and that wait times for care in the hospitals available would likely increase significantly. Far from simply an academic exercise, this is precisely what has happened in most countries that have tried socialized health care or universal health plans.

The California plan has many positive aspects to it. Insuring all Californians increases the actuarial pool among the healthy and the sick thereby spreading the risk throughout the entire population. While this will necessarily raise the total cost of insurance, it should decrease the per capita cost significantly. Furthermore, if everyone necessarily has insurance, hospitals will be spared the enormous costs of paying for emergency care for the uninsured. Of course, these costs are already subsidized by the taxpayer so shifting the cost to insurance will simply be another way to account for the same money. The benefit will be if people actually use their insurance for preventative care and thus save on necessarily expensive emergency care.

Rather than presenting his plan as a fait-acompli, Schwarzenegger wisely stated that "My proposal is a beginning. I look forward to a vigorous and open debate. Everything will be on the table and I want to hear from everyone. If we have the will - and I believe that we do - we can heal our broken system." The plan as currently presented has some major flaws, but its goals are noble and potentially solvable. Whether or not we have the will -- or the political stomach -- to accomplish a workable universal health care system remains to be seen.