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6-7 December 2010 - Transatlantic Parliamentary Forum Report

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This report is presented for information only and does not necessarily represent the official view of the Assembly. This report was prepared by Paul Cook, Director of the Economics and Security Committee.

1.   The 10th Annual Parliamentary Transatlantic Forum was held in Washington, DC on 67 December 2010. Twenty two parliamentary delegations from NATO member states participated in the discussions and one Associate delegation. Vice Admiral Anne Rondeau, President of the National Defense University (NDU) opened the Forum, welcomed the participants and made note of NDU’s ongoing work on NATO issues and its close cooperation with the NATO Defense College. NATO President, Dr. Karl A. Lamers, spoke on behalf of the NATO Parliamentary Assembly, thanked the hosts for their continued support for this, the largest gathering of European national parliamentarians in Washington in any given year, and then laid out the key themes for the conference, which followed closely on the heels both of the Lisbon Summit and mid-term elections in the United States. Robert Hunter, Member of the Executive Committee of the Atlantic Council of the United States, concluded the introduction by noting that Allied countries face a common challenge in developing capabilities without knowing exactly how or even if they will ever be put to use. This is difficult to manage technically as well as politically.  He then discussed the important role that parliamentarians will play in assessing how very scarce resources will be apportioned and the priority accorded to security matters in national budgets.  Ambassador Hunter also applauded the work of the Assembly - a view later echoed by a senior US official who said “The NATO PA is an essential part of what we have achieved together. It is the link between the Alliance and the people of our Alliance.”

2.   The conference itself was conducted under Chatham House Rules; accordingly the remainder of this report will be organized thematically and will not directly cite the remarks either of speakers or participants. The fundamental aim of the meeting, as ever, was to garner a sense of American foreign policy priorities and particularly the US government’s outlook on Alliance operations and the critical challenges of adapting to new strategic realities.




3.   US officials continue to see the Alliance as a cornerstone of American foreign policy and the security partnership with Europe.  It has created a context for security in the Balkans, provided a vital vehicle for international cooperation in Afghanistan, and built a working relationship with Russia.  Because it remains a pillar of US foreign policy, the US government is dedicated to providing budgetary support for the Alliance and, by extension, for the NATO Parliamentary Assembly.

4.   The NATO Summit in Lisbon held in November 2010 marked a critical step forward in the evolution of the Alliance. The new Strategic Concept provides a blue print for Alliance reform both in terms of missions and structures. It also charted a way forward in Afghanistan and will help put the NATO-Russia relationship on a more solid foundation. The Summit essentially ensured that the Alliance will remain relevant and effective. It also placed Article 5 at the very heart of alliance priorities while nonetheless embracing the notion that threats to security are no longer regional matters. Indeed, they are increasingly global in nature and the Alliance has now formally acknowledged this.  Cyber security, energy security, terrorism, and weapons proliferation are, in essence, global phenomena, and the response to these threats must have a global dimension.

5.   While NATO remains a regional body in terms of membership and focus, by virtue of the interests and weight of it members and the nature of the threats they confront, it will have to operate in a global context. The US is a global power and is directly engaged in maintaining the strategic balance in Asia and the Middle East; yet it sees NATO as a bedrock of the global alliance system simply because it is able to work so closely with a group of countries sharing the same democratic values and strategic vision.  Yet, NATO does not seem to be the proper framework for developing a common Asian strategy. It lacks the reach and there is no consensus to move in this direction.

6.   The NATO-EU relationship remains a serious concern for the United States. The United States wants to see far deeper cooperation between the two bodies, but that ambition has so far been frustrated.  US officials strongly support NATO Secretary General Rassmusen’s efforts to build a closer relationship between organization and supported moves at Lisbon to make this happen. 

7.   Afghanistan loomed large over the proceedings, and Allied governments agreed to a timeline to transition responsibility for the war effort from NATO to Afghan authorities by 2014. This transition will unfold based on assessments of conditions on the ground including progress in Afghan force training and readiness. Allied leaders stressed, moreover, the notion of transition should not be confused with withdrawal. Importantly, 49 countries have recommitted themselves to contributing to the effort in Afghanistan and many new contributions were announced in Lisbon.

8.   As suggested above, the Summit also marked an advance in allied relations with Russia. The two sides share a number of common security challenges including terrorism, piracy, weapons proliferations, natural disaster management and missile proliferation. Russian and NATO leaders acknowledged these common challenges in Lisbon and were able to make progress on the oft disputed theater missile defense project. There now appears to be a foundation for allied cooperation in this area as well. Of course, differences with Russia remain on a range of other issues and perhaps the most important of these is Russia’s continued occupation of parts of Georgia. Russia’s attitude towards its other immediate neighbors is also a concern - as is the human rights situation in Russia itself.

9.    At the time of the Forum, (6-7 December 2010) the Strategic Arms Reduction Treaty (START) was awaiting ratification in the United States’ Senate. Government officials, as well as leading members of the US foreign policy establishment, were urging the Senate to ratify that treaty, which it did later that month. Without START, there was no verification regime in place to determine the number and type of nuclear weapons deployed in Russia.  The new Treaty will not limit nuclear weapons research nor impede the construction of missile defense systems. It provides a means for mutual inspection and thus ensures an essential degree of transparency and stability.  The Treaty has been seen as a cornerstone for engaging the Russian government in a range of cooperative projects related to non-proliferation, and constructing a more cooperative approach on common challenges such as Iran and Afghanistan.

10.   In sum, therefore, NATO government leaders meeting in Lisbon developed new modalities for cooperation with Russia; agreed on criteria for collective missile defense and hammered out a cooperative approach with Russia on this;  stressed the importance of expeditionary missions, the comprehensive approach to crisis management and the need to develop civilian capacities to achieve alliance goals; identified emerging threats like cyber terrorism as genuine strategic challenges to NATO members; underlined the ongoing importance of partnerships to Alliance missions and goals; reinforced the imperative of improving military capabilities even in a period of fiscal austerity, in part, by bolstering defense cooperation; and finally dedicated themselves to a transition strategy in Afghanistan, which should result in handing over control of the military effort in that country to government forces by 2014.

11.   The challenge now is to develop specific policies for achieving goals that have been written in broad brush strokes.  The specific architecture of a collective missile defense system, for example, must now be elaborated. An updated and relevant nuclear strategy must be clarified, and the modalities of collective cyber defense will have to be defined before a strategy is laid out.

12.  For many observers, the NATO Summit in Lisbon proved far more substantive than anticipated and certainly more so than previous summits, which nonetheless provided important precedents for it.  From the US perspective, the history of NATO summitry is essentially non-partisan. Republican and Democratic administrations alike have contributed to moving the Alliance forward in the wake of the Cold War’s end, and each has done so in close collaboration with US allies.  The foundation for the Lisbon Summit was also laid by a range of parliamentarians, non-governmental research institutes and experts who were directly engaged in thinking through the new Strategic Concept.

13.  It is important now to capitalize the momentum generated in Lisbon.  The Summit has provided broad blue print but a great deal of work is needed to elaborate specific implementation strategies.  Missile defense and fighting cyber terrorism come to mind as examples of challenges for which concrete solutions will not be easy.  Heads of government adopted the so-called Lisbon capability initiative which should help move the Alliance forward on these fronts.  Finding solutions to these type of strategic conundrums must also be done in a cost effective way. Governments and national parliamentarians are now challenged to find savings without sacrificing capabilities. Greater inter-allied defense cooperation including mission specialization and common procurement strategies will be essential to this effort.  Reforming NATO itself was also recognized as fundamental to preparing the Alliance for the new set of challenges it confronts.

14.  The political context for missile defense has shifted considerably in recent years in the United States.  It is no longer a highly partisan question and technological advance has made these systems far more viable.  Moreover the threat has changed. Whereas missile defense was initially conceived as a response to the strategic Soviet threat, it is now seen as a response to missile threats from countries like Iran and North Korea. The phased adaptive approach that NATO has developed will help the Alliance meet some of today’s threats while laying the ground work for responding to future threats.  Russia has a clear interest in missile defense, and ways must be developed to work with the Russian government while not giving it a veto over NATO member missile defense policies.  That said, building these systems will be expensive and will take time. 

15.  The Lisbon Summit took place at a politically delicate moment. Both Europe and the United States confront isolationist pressures in domestic politics that advocate at least a partial withdrawal from world affairs.  NATO publics are now weary of war, skeptical of nation building tasks, do not always share threat perceptions with their governments and are increasingly unwilling to allocate tax dollars for defense.  Countries on the Eastern fringe of the Alliance tend to worry more about Article 5 commitments, while others have greater concerns either about force projection beyond European shores, or about non-traditional threats including global warming and cyber warfare.  Of course, threat perceptions drive force posture and procurement strategies and so these divergent perspectives are of great potential consequence to the Alliance. 

16.  Afghanistan is also politically divisive in NATO countries. NATO has been engaged in that country for nearly a decade. The results have not been particularly satisfying, and the cost in terms of lives and treasure has been high.  The corruption and ineffectiveness of the Karzai government has alienated many citizens who are asked to sanction troop deployments and funding to support that government.   NATO governments have had trouble defining success in Afghanistan and, in any case, there is a general perception that the mission is falling short of achieving its goals. It is not surprising, in this light, that public support for the effort is waning.

17.  Threat perceptions among allied publics vary considerably and despite the terrorist attacks in New York, London, Madrid and elsewhere, there has been a degree of public complacency about the nature of the terrorist threat. Anti-immigrant sentiments are also on the rise and were a factor in recent elections in Sweden and the Netherlands, not to mention in the United States.




18.  Defense spending trends in NATO are a source of serious concern in the United States. NATO has set a 2% of GDP standard for national defense spending, but today only three or four NATO allies are hitting this target, and several of these only because GDP fell more quickly than defense outlays.  US defense spending had risen to 4.5% but is now slated to fall to 4%.  UK defense spending will likely stay above 2% and Estonia is pushing to reach this target as well. But no other countries are moving in this direction.  Thus at a time when public opinion has grown skeptical of NATO operations and defense spending in general, a fiscal crisis has set in, compelling national leaders to make ever tougher spending decisions. Defense planning becomes all the tougher in an era of scarcity and there is a greater tendency for society to take national defense for granted. Indeed, cuts may be politically inevitable so savings and efficiencies must be found to compensate.  Yet, Allied countries will still have to muster the resources needed to replenish national military inventories expended in operations.  This will not be politically easy.

19.  Even more alarming perhaps is the way defense monies are being allocated.  Increasingly defense spending is about defending jobs and not building capabilities to respond to the threat environment.  An ideal defense budget should allocate 30% of the total on personnel costs, 30% on equipment, 30% on procurement and modernization and 10% on research and development, housing and other costs.  A hollowed out military defense budget pours money into salaries and neglects investment and equipment. This trend is increasingly evident in many European defense budgets. More than 16 allied nations are allocating 50% of total defense spending on personnel costs, thereby transforming national militaries into hidden jobs programs.  Belgium spends 74% of its defense budget on personnel, while Portugal and Greece allocate roughly 73%. Such spending structures make force modernization all but impossible.  Only eight NATO countries are allocating more than 20% of their defense budgets to modernization.

20.  Problems can also be seen in per capita spending patterns as well. The United States spends roughly $80,000 per soldier on modernization. Only four countries in Europe spend $40,000. The US is also spending roughly six times more than its European allies on research and development, and many European defense firms are relocating operations to the United States for this reason.  This situation is politically unsustainable and the American people feel that they are being asked to foot the bill for European security and defense.  In 2002 US defense spending was roughly 60% of total allied defense spending. Today it is 75%. Europe will need to rectify this situation if it wants to be in a position to defend its own security interests and maintain a healthy strategic partnership with the United States.

21.  The allied debate about defense spending is hardly new. Determining the trade-offs between defense spending and security as such poses a perennial challenge to allied governments. In the United States, there had long been a fiscal safety net that somewhat eased the burden of these difficult choices. In other words, the government could dig deeper into the nation’s pockets to cover essential military costs. This was the World War II model in which the government could spend whatever was necessary to overwhelm the enemy. This is no longer the case.

22.  Today the terms of the defense spending debate have been fundamentally reversed.  The American fiscal and debt profile is significantly degraded, and this is raising very serious questions about its ability to sustain its security commitments.  Americans have not accommodated themselves to this new reality, partly because defense spending has not been significantly cut and there has not been a debate about the situation.  But debt projections are such that US authorities may have no choice in the future but to reduce defense outlays.  Failure to do so could, in fact, accelerate strategic decline, and the sooner that this is internalized politically, the quicker corrective action can be taken. Wars in Afghanistan and Iraq have only added to the problem and each has cost the United States hundreds of billions of dollars.  From this point on, the American government will have to be far more intelligent about how it allocates very scarce dollars.

23.  The basic question is whether the United States can and will cut defense spending. Theoretically the answer is yes to both. But there are both serious structural and cultural problems that will make doing so very difficult. There is a serious reluctance in American politics to discuss the costs of security. For the first time ever in wartime, the United States has cut rather than increased taxes, compelling the government to borrow money internationally to pay for its wars.  This has weakened the American position internationally and left it vulnerable, particularly as its primary banker is a strategic rival, China.  National security, as President Eisenhower once suggested, is ultimately the sum of spiritual, military and economic forces.  The Americans are depleting their economy by relying on capital markets rather than using tax policy which would make the strategic choices American leaders are taking more transparent and thus more efficacious. Currently no real defense spending cuts are being undertaken, and tax cuts have just been extended. Defense Secretary Gates is looking for savings and efficiencies, but he is plowing anything he finds back into the defense budget. The United States government was not constructed to be efficient, but now it is compelled to develop a far more cost-effective approach to defense spending.

24.  There are a number of spending reductions that could produce more sustainable defense budget. Nuclear weapons, for example, could be cut significantly without undermining American security. This would reduce the enormous costs of defending and maintaining weapons that will never be used. There is also a compelling case to cut the number of US troops deployed in Europe and in Asia. Questions also need to be asked about whether it makes sense to develop new amphibious landing vehicles when these have not been used since the battle at Inchon in September 1950. The Joint Strike Fighter, the development of which has been horribly mis-managed, is significantly over cost and its strategic merits, particularly for the navy, are debatable.  The navy wants F-18s but it is being forced to accept the Joint Strike Fighter.  This is precisely the kind of luxury the United States cannot afford. The Deficit Commission suggested that the marine version of the fighter ought to be scrapped, although this invariably triggered a strong response from those interested in selling the system to the United States.  Pay and benefits must also be looked at in a new light. Means testing for heath care benefits to veterans, although politically difficult, may be fiscally essential. Health care costs have begun to consume the Pentagon’s budget and something has to be done to reduce these outlays.  If national health care reform is fully implemented and if it manages to induce savings, this too could prove helpful.

25.  The Obama Administration, however, has not indicated any willingness to retreat from American global commitments, and there is reluctance in the Democratic Party to take on the Pentagon. Ronald Reagan was better positioned politically, to push for defense spending cuts in his second term but this is more difficult for Democrats to do as they sometimes feel vulnerable on national security issues. The Obama Administration strongly argues that the United States has fundamental global interests and outlined these in its 2010 National Security Strategy paper.  These include the direct security of US citizens and allies, the preservation of an open economy, respect for universal values, and an international order that advances peace, security and opportunities for cooperation. With these broad goals in mind, the threat environment has been assessed and American defense missions defined.  Key priority mission areas include: developing the American counter-insurgency capacity and the capabilities of it allies, and defensive systems to counter missiles which are under development in countries like North Korea, China and Iran. US officials also want to develop a US long-range strike capability and quickly develop cyber and space defenses.

26.  Although the American ambition is to prevail in any conflict in which it is engaged, it also needs to narrow the number of potential conflicts in which it participates. This obliges it to work to prevent crises before costly interventions become essential. Diplomacy and development are thus critical elements of the American strategy.  Potential missions provide the criteria needed to develop the platforms the American military require. US authorities, however, acknowledge that there is strong resistance to change. Reducing outlays in one area can lead to political backlashes as strategic changes invariably result in job losses in some sectors and some regions. The US is also looking to work more closely with its allies to generate savings and efficiencies in everything from weapons acquisition to structural organization. But it is very concerned about defense spending and investment trends in Europe which render such cooperation all the more difficult. 




27.  As suggested above, arms control matters were discussed at some length at the Forum. The START Ratification issue was a particularly salient matter, and officials communicated that its ratification remains a top priority for the US government. For the past year, the United States has had no inspectors operating in Russia due to the expiration of the previous treaty.  The new treaty will lower the number of nuclear missiles and launchers, enhance transparency and ensure that extended deterrence remains viable.  The US military leadership has supported this treaty as have six former Secretaries of State and Defense.

28.  President Obama laid out a broad vision of a non-nuclear future in his April 2010 Prague speech and the START Treaty is only a first step in that direction. That Treaty represents a step toward greater nuclear force reductions, and the goal ultimately is to include tactical nuclear weapons in the arms control process.  US officials admit that the ideas laid out in Prague will take years to achieve and will require the cooperation of many states, including some which are currently moving in ways that undermine these goals. These goals are also consistent with the new Strategic Concept insofar as it calls for a nuclear review within the Alliance and an assessment of the prospects for missile defense.  But the Obama Administration wants to move quickly to de-emphasize the role of nuclear weapons. As long as they are the bedrock of deterrence, he has argued, there is a greater risk of proliferation - a risk that could see non-state actors and terrorist states seeking access to these weapons.  At the same time, nuclear weapons must be safe, secure and reliable.  The US is testing weapons at its Nevada test site for these reasons, but not through nuclear explosions. The US is currently engaged in a test moratorium and the administration hopes to have the Nuclear Test Ban Treaty ratified.  Correspondingly, the US has taken a strong stance against North Korea’s nuclear program and US officials do not want to enable that country’s negative and threatening behavior and it sees the resolution of its allies and partners like China and Russia on this mater as very important.

29.  There have been three arguments against the START talks. Some have suggested that it secretly constrains missile defense, which US officials insist it does not. They argue that the Treaty simply distinguishes, in its preamble, between offensive and defensive forces, but notes as well that this is a statement of an existential fact and not a constraint. The second criticism is that it would constrain stockpile modernization programs.  This too is not the case and the Treaty would simply help cope with huge stockpiles of obsolete nuclear weapons, which are very costly to maintain.  At the same time, the Administration is dedicated to constructing more modern facilities. It has discussed this extensively with members of the US Senate.  Finally there are concerns about the verification regime. The last START Treaty was negotiated during the Cold War and its implementation has helped both sides develop a deep reservoir of knowledge about inspection regimes and techniques. This knowledge helped shape the recent negotiations and the verification procedures therein are, as a result, very reliable and, indeed, mark an improvement over the preceding regime in the estimation of the administration.  The preamble of the START Treaty also suggests that other states should eventually be engaged in strategic arms reduction processes.  But the key ambition now must be to reduce the huge overhang of missiles left over from the Cold War. 

30.  Although conventional arms control matters have not received a great deal of attention since the signing of the CFE Treaty in 1990, these issues are now under active review.  The 1990 treaty was designed to stabilize security in Europe and to do so, in part, by developing agreements to rid the continent of excess conventional weapons and to ensure that conventional force deployments would build rather than detract from continental security.  Today most of the signatories of that treaty are deploying military forces with far fewer conventional weapons, and the treaty is partly responsible for this.

31.  Russian force deployments, however, have been a problem. In 2007, Russia suspended CFE implementation and refrained from providing data on its forces.  Although the situation is unchanged in Moldova, Russia now has deployed two brigades to Abkhazia and South Ossettia in Georgia. Russia makes no declaration on its force movements and there has been no progress on the situation in Moldova and Georgia.  There are also growing concerns about Russian exercises in the Baltic region which are not transparent and are seen as threatening.

32.  From the Russian side, there are also concerns about NATO activities.  It frequently evokes the well worn argument that NATO enlargement poses a threat to national security and demands that further enlargement be accompanied by conventional force reductions.  The Russians have been particularly upset about force limitations on its southern flank which, it argues, prevents it from moving forces on its own territory. They want these limitations lifted.  But the United States and other countries are worried about the potential for Russia to mass forces in this fragile region. Russia has also complained about US base agreements with Romania and Bulgaria. All of this has made the CFE talks quite tense.

33.  The US had sought to cut a deal giving Russia some of what it seeks while asking Russia for full CFE compliance in Moldova and Georgia, but this initiative fell apart after the war in Georgia in August 2008. Russia then demanded an additional treaty above and beyond the changes made to the original treaty in 1990. US negotiators would not accept this.

34.  This past year, US officials took up the issue with its allies in order to develop a fresh approach to conventional arms talks in Europe.  The US was contemplating another grand bargain which could produce a CFE III to address 21st century requirements if Western concerns would be embraced in the bargain.  A NATO negotiating position has been developed, although 36 countries will ultimately be engaged in the talks. NATO members would like to see a short statement of principles in the treaty that would both include a commitment to maximum transparency and embrace the concept of restraint. The treaty would have to reaffirm the principle of host nation consent on stationing troops on national territory.  There is also an expectation that Russia would comply with the old CFE agreement.  The Allies would also demand information about Russian force deployments in order to ensure a transparent negotiating process. Although a number of non-NATO countries have been very open to this approach, Russia has not embraced it.  Russia does not seem to understand that it must comply with CFE strictures to begin the negotiating process.  From the American perspective there will be no softening of the US position with regard to Georgia and Moldova. If anything, the CFE talks would provide it with another means to communicate its fundamental concerns to Russia.  The CFE cannot solve the final status on border issues, but it can deal with the status of forces in a consensual manner.  The goal of the framework talks is thus to bind Russia to committing itself to transparency, and Georgia would have to consent to this before any treaty was submitted to the US Senate.  Otherwise it would be dead on arrival. It is worth noting that the fall-out from the Georgian war is also causing Russia problems in acceding to the World Trade Organization (WTO). Ultimately the United States has no intention of ratifying the changes that Russia has sought to impose by force in Georgia.  




35.  US military leaders believe that the Taliban’s momentum has been reversed everywhere in Afghanistan—(although a US government report issued immediately after the Forum suggested that while progress has been made in Helmand, Kandahar and other areas of intense fighting, the situation has, in fact, worsened in the north.) In any case, US officials reported that the surge of coalition forces has generally made a positive difference on the ground and has helped shift momentum.  Yet problems persist in part because of the very uncertain situation in Pakistan. It is difficult to assess the military situation comprehensively during the winter because fighting simply tails off.  Only in May and June will coalition commanders be positioned to take stock of the overall situation.  It is also important to recognize that Afghanistan has only been the top priority for American leaders for two to three years as Iraq was long seen as posing the more critical challenge to American interests.  Afghanistan is finally receiving greater attention and resources and that is one reason why US commanders expect the situation to improve.

36.  US leaders will not even mention the notion of an exit strategy and generally use the term “transition strategy” to describe the goals of coalition forces.  The strategy has also shifted from one aimed at defeating the insurgency to one premised on protecting the population.  General McChrystal had ordered troops to put the breaks on the application of kinetic force and the approach to the war fundamentally shifted. Now Coalition forces spend a great deal of time trying to understand the country’s tribal structures and to establish positive working relations with these. This is the first step in implementing a protection strategy.  It is also essential for coalition forces to understand how power works in Afghanistan, who the real decision makers are, and what the resource needs of communities and regions might be.  These are some of the factors with which commanders are now challenged to cope.

37.  Closer scrutiny of the developments in the country reveals interesting and tactically important information.  For example, between 60 and 70% of the insurgents are fighting with the Taliban not for them.  Many are engaged in the fight for economic reasons or because of local grievances.  Only 30% are driven by ideology.   Those are the forces that the coalition most wants to target because grievances can presumably be settled while ideology tends to be more intractable. The Haqquani network operates east of Kabul and is providing fighters with safe havens, ideological support, command and control, and funding. There is also clear evidence that elements of Pakistan’s Directorate for Inter-Services Intelligence (ISI) is providing guidance and support to these insurgents.

38.  The Taliban has provided very little to the  people in the regions where it predominates with one important exception: swift justice. In a country where justice of any kind is often not available and where corruption is a pervasive problem, the Taliban’s capacity to deliver Sharia-premised adjudication cannot be discounted, and it poses a real challenge to the government and to the coalition. This makes it incumbent on national and local governments to meet this challenge and the coalition must support this. Building roads and schools is simply not enough.

39.  Prevailing in the battles for Kandahar and Central Helmand province have been the key priorities for the coalition. The effort has obviously had a military component, but the civilian aspects are also critical. US aid officials have worked closely with their counterparts from the EU and from the coalition to ensure that there is coordination on the aid front as well as on the military front.  This effort is seen by many in Washington as just as important as the military effort if not more so.  The US has also developed a civilian crisis response team to deal with sudden and unanticipated civilian crises in Afghanistan. The construction and stabilization effort has had to build in collaborative links with the military in order to ensue that the counterinsurgency strategy is broadly based and effectively able to respond to unanticipated increases in violence.  The key is ensuring that services are delivered to the public, but who delivers those services also matters. There is an American instinct to try to get the job done and to plug all the gaps, even if that means doing so unilaterally. But it is essential that Afghan authorities take on these responsibilities.  Their “ownership” is critical to effective counterinsurgency.  The US is accordingly working very hard to support the Afghan national development strategy.   The United States is now contributing $4 billion a year to support Afghan development in priority areas like education, health services, agriculture and governance.  It is also undertaking a range of local community development projects.

40.  Development officials must also take on board the fundamental diversity of the country. The rural south of Afghanistan is very poor and dominated by tribal structures. The literacy rate for men is 10% and only 1% for women (conditions are fundamentally different in the big cities).  The south is dominated by the Pashtuns and nothing gets done if the mores of those tribes are not factored into the policy. In this regard, working with the Shuras or tribal representational bodies is critical.  One of the key challenges in the region lies in determining who owns land and who controls water.  Irrigation systems are vital to making land productive, but decades of war and the near absence of a functioning judicial system makes it very difficult to determine ownership.   Enabling effective administration and government is an essential element of the coalition effort. Sometimes this can be as mundane as building radio towers so that government messages get to the millions of people living in remote hinterlands. These can help the government communicate in a strategic way to its own people.  Fostering dialogue between government authorities and their people is critical to building trust.  This is a top priority of the American aid effort. Coalition militaries are preparing soldiers in a much more realistic manner based on lessons learned. Coalition militaries are now far more sensitive to cultural norms including matters like the normal hierarchy of villages and how women ought to be addressed. This is critical to building trust. Force and personnel rotation is a constant problem for Western forces cooperating in Afghanistan. Just as lessons are learned, those who learn those lessons are returned home. This increases the likelihood that lessons are not being fully internalized.  There is thus a structural problem of continuity which must be constantly resisted. It is hardly unique to this war. It is often said that the Vietnam conflict was a one year war fought seven times over.  There are also still problems of aid coordination among donor countries.

41.  Corruption is seen as a key driver of conflict and a joint civil/military task force is now focused on rule of law issues.  There have been many corruption cases and some of these at a very high level. Coping with this requires the development of a functioning justice system, training prosecutors in case management techniques and generally supporting efforts to increase government accountability.  US officials claim that great strides have been made on this front although others suggest this particular challenge can only be dealt with over the long term.  Some progress has been made in undermining the country’s trade in opium.  The geographic area for poppy cultivation has been dramatically reduced and most production is now focused in Helmand.  Many regions have effectively abandoned the poppy trade and this is helping them develop their economic foundations. The old eradication approach to the problem has been loosely discredited. Only poor farmers are hurt in such campaigns. They have no emotional attachment to poppy but only grow it because it requires little water, it poses few transport challenges as drug gangs take care of this side of the business, and they have few other options. Growing poppy is proscribed by many Islamic teachings even if the Taliban is providing the industry protection and deriving benefit from it. The police pose another set of problems and here the capacity issue is of concern.  Many policemen are illiterate and so the challenge is fundamental there. Many policemen are more loyal to their tribe than to the State and this too undermines the rule of law.  Police wages have been tripled but this by itself is not going to solve the problem.




42.  The US government is addressing the challenge of Middle East peace on several fronts. There are top-down political negotiations to build a comprehensive peace which are engaging Syria, Lebanon and Israel.  There is also an effort to build the institutions for peace. The United States is now working with both the Palestinians and the Israelis to forge a framework agreement for talks. US officials continue to insist that they do not accept the legitimacy of the Israeli settlements, which have been a sticking point in launching the talks, and continues to communicate this to Israeli officials. The Obama administration has pushed for a moratorium on settlement construction to help get peace talks underway. The US wants to move ahead on the critical matters shaping final status including territory, refugee return, the status of Jerusalem, and security. 

43.  The parties did begin to focus on these matters in meetings held in Washington this past September 2010, when direct talks began. There were three rounds of talks with two days spent in Washington followed by meetings in Sharm el Sheikh (Egypt) and Jerusalem. The two leaders spent nearly 15 hours in direct one-on-one talks.  They addressed many of the key issues, but did not make a agreement.  This established an important precedent but it is important to get the parties back to the table to continue the process.  There is clearly room for agreement. All sides agree on the notion that a two state solution should result in a secure Israel and an independent and viable Palestine. 

44.  The US also hopes to make some gains with Syria. Success here could be a game changer and the US has put the good offices of Turkey to work on this front. Lebanon today, however, is under a great deal of stress and Iranian intervention there has been destabilizing. Syria could help alter this situation but first the United States will need to begin a more constructive dialogue with Iran.  Syria has the potential of playing a very positive role in regional peace, or it could simply retreat to the Iranian axis which would undermine the prospect for regional peace.

45.  Gaza and the rule of Hamas there remains a major challenge to the peace process. The Americans consider Hamas a terrorist organization that remains adamant in its refusal to recognize Israel. This obviously adds a degree of complexity to the peace process.  Some kind of general reconciliation within Palestine will be essential. It is highly unlikely that a Palestinian government under the control of Hamas would move on peace. One problem with the Israel blockade of Gaza is that it gave Hamas a near monopoly on tunnel trade through Egypt and enhanced its leverage over Gaza. Easing that blockade has helped reduce that leverage.

46.  Iran currently poses perhaps the greatest challenge to regional security. US policy is focused on changing Iran’s behavior. When President Obama took office in January 2009, Iran seemed to be on the march. Its leverage and reach in the Middle East had risen substantially and its nuclear program had made important strides.  US influence on Iran was limited; not talking to Iran had become a goal in itself and this had led to a policy dead end.  The new Administration felt that engagement with Iran was essential as this would give US authorities an opportunity to explain exactly how it viewed Iran’s rights and obligations on the nuclear front.  In essence the US administration wants to communicate that Iran has the potential for a brighter future, but this will be unattainable if its government continues to seek to develop a nuclear weapons capability.  Those costs need to be made very clear to Iran and in a direct fashion. The lack of dialogue between Iran and the United States has made this difficult to do and undermined America’s capacity to assess the internal dynamics of Iranian politics.

47.  Today the situation has evolved substantially. A set of significant and comprehensive sanctions have been imposed on Iran, and the UN Security Council has called them to account.  Because of internationally agreed sanctions, it has even become difficult for Iranian shipping to gain access to reinsurance, and this is undermining the country’s capacity to engage in normal commercial activities. Sanctions are also affecting Iran’s capacity both to import refined petroleum into the country and to invest in the energy sector. The goal is to demonstrate tangibly to Iran that it cannot operate in isolation and must play by accepted international rules.  It is important to note, moreover, that the United States, China, Russia and Europe have been united on these points.  The Russians have cancelled missile sales to Iran and have come to see Iranian nuclear weapons aspirations as profoundly destabilizing.   They too are communicating to Iranian officials that this matter must be addressed.  South Korea, Japan, Canada and Australia have also backed the ban on reinsurance and this has really begun to have an impact on Iran and its leadership.

48.  The Iranian nuclear program today is progressing more slowly than some had originally suspected.  The number of centrifuges operating today is fewer than in 2009 and there have been a number of system break downs.  Yet they are making progress on other fronts. The last IEA report indicated that the Iranians now have 3 tons of enriched uranium and could soon have enough low enriched uranium to manufacture three nuclear bombs.  But they would have to convert this material and doing so would expose them to detection. The international community is closely monitoring this situation.

49.  At the same time, the US government has indicated its willingness to talk and in December the five-plus-one talks began again. The US insisted that the nuclear issue be included in the agenda.  Iran, however, continues to be unresponsive on this front and has, for example, refused to answer basic IEA questions about its nuclear program.  Last year, Iranian authorities made a commitment on their research reactors, to discuss nuclear weapons issues and to open their facilities for inspections.  To date, they have met none of these three commitments.

50.  Some have sought to equate Iran’s nuclear program with that of Israel’s and on this point the American Administration takes strong exception.  Iran is the only country in the region that has expressly vowed to exterminate another state - Israel. The US utterly rejects this logic. Moreover, if Iran did manage to build a nuclear weapons capacity, this would act as a trigger for region-wide proliferation.  This is a threat not only to the United States but to the rest of the region and to Europe.  Regional concerns about this are mounting as the recent publication of diplomatic cables through Wikileaks has revealed; this concern is hardly an American fabrication as some have claimed. Yet, the US wants to offer Iran a way out of its dilemma and for this reason is keeping open the prospect of talks.

51.  Israeli concerns are also a factor here. The Israeli government wants the Iranian nuclear question handled through diplomacy, but it is also clear that Iran’s nuclear ambitions pose a potential existential threat to the Israeli state and society. The government would indeed be prepared to act if the international community and Iran fail to solve this problem. Israel is watching Iran’s infrastructure development very closely, and it could well act if it felt that Iran’s nuclear program was somehow on the cusp of reaching a point of no return.




52.  US-Russian relations have undergone an important shift over the past two years and the “reset” policy has brought clear benefits to both sides. The US-Russian bilateral commission has a number of substantive working groups on everything from agricultural collaboration to nuclear security and the fruits of improved relations are evident in the work of some of these bodies. Russia has recently cancelled the sale of S-300 missiles to Iran and is now tangibly supporting the coalition mission in Afghanistan. It is also allowing its own territory to be used to move coalition equipment into the Afghan theater. Russia has a very strong interest in curtailing the flow of heroin from Afghanistan into its territory and this is also providing a foundation for cooperation.  President Obama has stressed to the Russians that American and coalition forces are making tremendous sacrifices for outcomes that will ultimately benefit Russia as well as the rest of the international community and Afghanistan. He has used this argument to appeal for Russian support.  Currently half of the non-lethal supplies delivered to ISAF pass through Russian territory so this is an essential supply line for the war effort. President Medvedev seems to recognize, far more than did his predecessor, that Russia has a profound interest in solid relations with the West and is supporting this very practical cooperation.

53.  That said, there are problems in the relationship. There has been backsliding on human rights protection in Russia and this will continue to be a source of internal instability in Russia and of external tensions.  This can make it politically difficult to engage with Russia even on practical matters of shared interest.  The continued and illegal presence of Russian troops on Georgian territory is also a very serious concern to US officials and it imposes a limit on relations with the West and with the United States.

54.  In hindsight, many Russian elites now see the Georgian war as a massive failure. Russia was isolated after the war and this undermined many of its ambitions and its interests. China failed to endorse Russia’s attempt to alter the borders and this has strongly undermined Chinese-Russian relations. China is very wary of unilateral attempts to change national borders and sees the Georgian war as re-establishing a very bad precedent. It is interesting that President Medvedev has totally changed the tone and direction of Russian foreign policy in recent months. Under Putin, Russian foreign policy had grown aggressively anti-Western, but Medvedev has profoundly reoriented the goals and direction of Russian policy and it is now far more focused on Russian interests rather than archaic notions of traditional enemies.  Profound military reform could generate even more benefits.  Russia is quietly moving from a mass Soviet style army to a rapid deployment force. Twenty thousand battle tanks have been scrapped. Russian officials do not speak much about this process, but it will have important political and foreign policy implications and is a sign of a modernizing impulse in Russia itself and within the military.

55.  There is a joke circulating in Russia about national politics: there is in Russia a Putin Camp and a Medvedev Camp and many want to know in which camp Medvedev himself resides.  The joke points to the key question in Russian politics. Medvedev cannot ignore Putin and he works hard to ensure that Putin does not actively reject the policies he is implementing. Putin is extremely powerful and his people control several key ministries and oil companies.  Putin clearly harbors ambitions to return to the presidency but Medvedev may as well. Medvedev talks about democraticization, judicial and criminal reform and corruption. He has begun to move against some of the bastions of Putin’s power.  He sacked the Mayor of Moscow as well as the President of Tartarstan. This suggests that Medvedev is a force to be reckoned with.  But there are limits to what he can do.  Putin appointed Medvedev because he thought he would be a weak and easy to manipulate figurehead. He is not proving to be and a rivalry is shaping up with important potential consequences for the country’s future.

56.  The global economic crisis has hit Russia hard. In 2009 GDP fell by roughly 8%, more than any other G 20 country. It is now growing at only 4%. Despite eight years of fiscal conservativism, the budget deficit now stands at 4.5% of GDP. That there are few revenues to be had via privatization has made this new reality all the more evident.  Yet, oil prices, currently near US$90 barrel are very high and even this is not sufficient to lower the burdens on the Russian economy. Reform will be essential.  Indeed, corruption is so pervasive that even in the boom years, Russia’s government funded virtually no important infrastructure projects. Its road system, as a result, remains totally inadequate.

57.  Russia remains a country of tremendous potential but modernization is essential. If Medvedev is the leader who speaks most often of the need for change and reform, Prime Minister Putin is the most resistant to the notion. He is entirely focused on the oil industry and utterly resists reform. The country is paying a high price for his resistance.  The current policy of engagement with Russia allows the United States to engage in a way that encourages reform in Russia. It is interesting that President Bush met Mr. Putin 28 times and after each meeting, the bilateral relationship seemed to get worse. President Obama has had only one breakfast meeting with Mr. Putin and apparently does not want to deal with him. His preferred partner is Medvedev, and the relationship seems to be working. START Ratification is very important as it demonstrates to the Russians that positive engagement with the United States can be rewarding. The West has, in fact, grown far more relaxed about Russia’s nuclear policies and there were hardly any objections to the recent Russian purchase of a Canadian company that controls most of the nuclear supply to the United States. Had a Chinese company made that purchase, there would have been a far greater reaction.

58.  Russian attitudes on environmental policy are now driven in part by an ambition to reduce profligate patterns of energy consumption.  The goal is to increase energy efficiency by 40%. This will require sustained attention and massive investment.  Meanwhile global warming is opening up Russia’s arctic regions to shipping and unprecedented economic activity. One fifth of the world’s unknown gas deposits may lie in Arctic regions, and the Russians are moving quickly to put themselves in a position to exploit this.  The signing of a border delineation agreement with Norway is a manifestation of their ambitions. The US is at a significant disadvantage in this game, in part, because it has never ratified the Law of the Sea Treaty.

59.  On the energy front, Russia is paying a high price for the lack of investment in its energy reforms which have been very poorly managed in Putin’s system.  The energy sector has been totally corrupted and some in Russia have estimated that President Putin himself may be personally worth $30-40 billion—a treasure trove acquired surreptitiously through front companies and a range of obscure dealings. The system is corrupt and as long as it is, it will not be an engine for Russian economic development. If Medvedev wants to change the system, he should be supported.




60.  The Forum took place on the heels of the mid-term elections and much of the conversation focused on how divided government in the United States will shape domestic politics and American foreign policy. There is a great deal of global interest in American politics but there is not a great deal of clarity and, of course, the new Congress has not yet been seated. Clearly the Republican agenda and the agenda of many of the new members elected this past November diverge fundamentally from that of the Obama Administration. This promises a high degree of conflict over the next two years. It is still too early to discern exactly how this conflict will be played out, but it is important to recognize that in the House of Representatives, the Republicans will now control the Committees and will set their agenda.  They will likely use the power of subpoena to probe alleged weak points of Administration policies and tie it up with a range of investigative hearings and procedural delays. The issue focus will also shift. Under Republican leadership, for example, global warming will not likely be the subject of hearings and that is why the outgoing committee has taken so much testimony on this issue from the scientific community. Their goal clearly is to get that testimony on the record before the change of leadership takes place.

61.  The Republicans have stated that they hope to reverse the health care policies of the Administration, but this will be very hard for them to achieve. Their strategy will be to tie it up by imposing all manner of hurdles on it and denying funding where possible.   The economy, however, should remain the top priority for both chambers of the Congress, but both parties are also positioning themselves for Presidential elections in two years.  How to deal with the burgeoning budget deficit will be one of the most contentious and important challenges. It will be up to the President to take the lead on this and it will require looking at sacred cows like Medicare and reconsidering US tax policies. Both parties are so dug in on these issues that progress could be very hard to achieve.

62.  The challenge for many new members of Congress will be to transition from a revolutionary platform to a governmental one. Some of these new members are taking seats previously held by Blue Dog Democrats. While the Blue Dogs played a bridging role between the Republicans and Democrats in the House, some of the incoming members have expressly vowed not to do so. This likely heralds a far more polarized Congress and could pose problems for the majority party in the House which needs to establish its governing credentials over the next two years.  General election voters could well be alienated by revolutionary politics whether these emanate from the right or the left. 

63.  It is interesting that with the United States heavily engaged in two wars, defense and security policies were really not an issue in the recent elections. The economy was the primary focus. The absence of a serious national discussion about these wars has become a problem as voters are quickly tiring of the sacrifices and the slow pace of progress.   Meanwhile, the Republicans are developing a narrative to describe the Administration as weak in foreign and defense policy even though the Administration has, in fact, increased the deployment of troops into Afghanistan and raised defense spending.  The Republicans are also going to push the Obama Administration to ease pressure on Israel and this will deny the Administration a source of leverage that it needs to advance the peace process.  It has factions respectively asserting traditional internationalists, isolationists and assertive nationalist lines of thought.

64.  Finally the recent elections mark an important shift in the balance of political power in Washington, but they should not necessarily be seen as a harbinger of what will transpire in the coming presidential elections. Many young voters and minority groups stayed away from the polls in the recent elections. These groups tend to vote Democratic and were strongly mobilized during the Obama campaign. It is too early to say if the President will be able to pull this off again, but it is likely that the voters in the next elections will, on average, be less old and less white. This could be a factor in the outcome, but the decisive factor perhaps, will be how the parties position themselves on key national challenges and how they actually govern over the next two years.





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