31 December 2011

The `K Street Clausewitz’ Remembered

Karen Tumulty painted a pastiche of mini portraits depicting Newt Gingrich's martial prowess in the 22 December 2011 issue of the Washington Post. Unable to contain my mirth, I forwarded it to my close friend, the noted military reformer, Pierre Sprey, who replied immediately, with his usual rapier wit: 

About the only perceptive thought in this entire article is the opener. The rest of Ms. Tumulty's national security observations are as mindless as Newt himself 
What no reporter seems to have tumbled to is that Newt is dumb as an old boot. John Boyd and I had several years of "working" with him in the Congressional Military Reform Caucus, years during which Newt found it advantageous to pose as a reformer.
Within a month or so, John and I both realized that Newt had almost perfect recall of other people's intellectual-sounding ideas and phrases--and could barf them back convincingly without understanding a shred of the content. At the drop of a hat he could string together a two hour lecture on anything from concocting new war-winning technologies to optimizing grand America's strategy the 21st century. For the listening layman, the entire two hours would flow seamlessly and every idea would sound newly minted and carefully crafted. But for those of us who knew the sources of Newt's cribs, it was perfectly obvious that not one of those ideas was his, nor did he have the shallowest comprehension of any of them.
You can imagine what an intellectual giant that major general was who found Newt's Flag Officer War Fighting Course lectures so mesmerizing.
John Boyd and I also met with Newt a few times in the early 80s, when I worked in the Pentagon. To give a little background: At that time, I  was a member of a small group of Pentagon insiders who became known as the "military reformers." Boyd, a retired Air Force colonel, legendary fighter pilot, a noted airplane designer and tactician, was the spiritual leader of our merry crew. Boyd was also one of America's leading strategists and theoreticians on the art of war. Boyd and Sprey were the intellectual leaders of the movement. I was happy enough to be a foot soldier in the effort.  A short bio of Boyd can be found here; and Robert Coram's very popular book-length biography of Boyd and the inner workings of the reformers can be found here (it is still in print after 11 years and sales are now approaching 100,000).  A compendium of Boyd's famous briefings on the the nature of conflict together with the associated theory of the Observation - Orientation - Decision - Action (OODA) Loop, "A Discourse on Winning and Losing," can be downloaded here.[1]

Newt's propensity for bombastic lecturing on subjects he knew little about was immediately obvious to us all. In fact, I was so impressed by Newt's utterings I nicknamed him Neutrino after a small, almost massless, sub-atomic particle in physics. Like Newt, neutrinos are made possible by decadence -- intellectual in the case of Newt, radioactive in the case of physics; like Newt, neutrinos flit about uncontrollably at very high speeds, while producing even more  chaotic reactions that fold back on themselves -- self-destructively in the case of the Newt, or as anti-particles in the case of the physics. So, like Newt, neutrinos are very hard to make sense out of. Of course no analogy is perfect -- neutrinos have no electric charge, whereas it is very clear Newt is highly, if erratically, charged.

Quite unlike Newt, Pierre has substantive defense bona fides: fluent in German and French, as well as English; he is a widely-read polymath with degrees in mechanical engineering, french literature, and mathematical statistics. Pierre's track record has established him as a brilliant engineer and mathematician and he has been a path-breaking pioneer in analyzing the lessons of combat and how to apply them to the design of weapons.[2]    Along with Colonels Boyd and Everest Riccioni, for example, Pierre was one of the central intellectual forces evolving the design of the F-16, perhaps the most successful US fighter since the Korean War F-86.  Pierre was also the chief intellectual inspiration behind the design of the brilliantly successful and highly-feared A-10 close air support aircraft.  He has written widely on military reform as well as design, testing, and weapons acquisition issues, most recently contributing the insightful Essay 9, "Evaluating Weapons: Sorting the Good from the Bad," to the The Pentagon Labyrinth: 10 Short Essays to Help You Through It, an anthology written by nine defense insiders with over 500 years of cumulative experience. (Truth in advertising: I am author of Essay 1).

Witty as it is, Pierre's evisceration of Neutrino goes beyond mere entertainment; it is important because it brings into sharp focus a truly scary aspect of the emerging presidential election, not to mention American politics in general -- namely, the dangerous addiction to mindless warmongering that now pervades the defense debate in America, be it explicit in the case of the Republican presidential candidates  (Ron Paul excepted) or implicit in the reckless triangulations  of a weak, cynical president (discussed in my last posting).  Neutrino is one of the America's leading warmongers -- and like most of his brethren, he has never served a day in uniform. Nor has he slugged it out in the trench warfare of fixing Military - Industrial - Congressional Complex, although he slopped in the gravy of its cash flows.  Yet as Tumulty pointed out, he is lecturing our generals how to fight wars.

The James Madison, the architect of the Constitution, understood the endgame when political neutrinos short-circuit the synapses of the collective mind:
A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both. Knowledge will forever govern ignorance, and a people who mean to be their own governors must arm themselves with the power which knowledge gives. [3]
The fact that US generals invite a mental disarmament specialist like Newt to lecture them on the arts of strategy and warfighting and are then are mesmerized by his lectures says more about the intellectual and professional state of our  military leadership as it does about the Neutrino.  It goes a long way to explain (a) why our military interventions since WWII are devolving into one of history's longest strings of "incomplete successes" (to borrow Jimmy Carter's immortal reference to the disastrous Iranian hostage rescue mission made at a 29 April 1980 press conference), and (b) why the old reformers went on record for one last time by producing The Pentagon Labyrinth in 2011 and make it available, together with a huge a amount of source information, free of cost on the internet at this link.
[1] Boyd's works has been written about widely since the late 1970s and has had enormous influence in many fields.  If you doubt this, just google "OODA Loop"
[2] I used the descriptor polymath advisedly; Pierre is also the founder and chief engineer of Mapleshade Studios, considered by many audiophiles to be one of the finest and most innovative producers of sound, especially jazz.
[3] James Madison's letter to W.T. Barry (4 August 1822).

26 December 2011

Clintonizing Perpetual War

In the winter of 2002, a close friend, a liberal staffer on capital hill, asked  me if I thought the crazy fulminations of the neocons and the tough-guy rantings of an insecure President [1] could result in a war with Iraq?   My answer was something like ‘read the Barbara Tuchman’s The Guns of August and you will get a good idea of how these pressures can take on a life of their own and create a self-fulfilling prophecy.'

President Obama -- perhaps inadvertently -- is playing the same game with regard to Iran by trying to neutralize his political opposition at home with a dangerous mutation of Bill Clinton's cynical triangulation strategy.  In this case, the goal of the triangulation strategy is to pull the rug out from under the Republican warmongers like Mitt Romney and Newt Gingrich.  If he can co-opt the domestic political pressures for war against Iran, Mr. Obama may well think he can better position himself for the upcoming presidential election.  But in so doing, he would be running a real risk of starting yet another ill-conceived war, whether he wants to or not. (Patrick Seale explains one way the march to war could spin out of Obama's control at this link.)  To make matters worse, Mr. Obama is a man who has demonstrated that he talks a good line but fails to deliver on his promises when under pressure -- just ask the Arabs about his Cairo speech or progressives who believed his promises about health care reform and "change your can believe in." Whether or not triangulating questions of war and peace is a question of Obama's free will is quite beside the point:  a malleable man is playing with the most dangerous kind of fire.

My last post, Beating the War Drums in Versailles on the Potomac, described the buildup of domestic political pressures to launch an attack on Iran in the name of prempting Iran's acquisition of nuclear weapons, notwithstanding the fact that there is no solid intelligence proving the Iranians have embarked on a program to acquire those weapons.  This aim of this post is to alert interested readers to another analysis in the same vein, but analyzed from a different angle.  In The Winners and Losers of US policy on Iran, an op-ed that appeared in Al Jazeera (English) on 23 December,  Jasmine Ramsey provides a useful insight in to the warmongering pressures on a president prone to appeasing his opposition for domestic political reasons.

The new year is shaping up to be a very dangerous one, because appeasing an external aggressor, like Adolf Hitler, is not the only kind of appeasement strategy that leads to war.
[1] Any president who feels it is necessary to brag about being "The Decider" is insecure by self-definition.

22 December 2011

Beating the War Drums in Versailles on the Potomac

On 12 December, I described a concatenation of warmongering pressures that were shaping the popular psyche in favor of bombing Iran. Now, in a 21 December essay [also attached below], Steven Walt describes a further escalation of these pressures -- in this case, via the profoundly flawed pro-bombing analysis, Time to Attack Iran: Why a Strike is the Least Bad Option, penned by Matthew Kroenig in January/February 2012 issue of the influentual journal Foreign Affairs.

One would think that our recent experiences in Iraq and Afghanistan and our growing strategic problems in Pakistan, not to mention our economic problems and political paralysis at home, would temper our enthusiasm for launching yet another so-called preventative war. But that is not the case, as Kroenig's analysis and the growing anti-Iran hysteria in the debates among the the Republican running for president show (Ron Paul excepted) show. Moreover, President Obama’s Clintonesque efforts to triangulate the pro-war political pressures of the Republicans, while appeasing the Israelis, may be smart domestic politics in the short term, but they add fuel to the pro-war fires shaping the popular psyche. Finally, as I wrote last January, lurking beneath the fiery anti-Iran rhetoric are more deeply rooted domestic political-economic reasons for promoting perpetual war -- reasons that have more to do with sustaining the money flowing into the Military - Industrial - Congressional Complex in the post-Cold War era than in shaping a foreign policy based on national interests.

While it is easy to whip up popular enthusiasm for launching a new war, our misadventures in Iraq and Afghanistan have shown that successfully prosecuting wars of choice are quite another matter. Nevertheless, as my good friend Mike Lofgren explains in his recent essay, Propagandizing for Perpetual War, devastating rebuttals like Walt's are likely to have little effect on the course of events.

One final point ... a surprise attack on Iran would trigger a far tougher war to prosecute successfully that either Iraq or Afghanistan. If you doubt this, I suggest you study Anthony Cordesman’s 2009 analysis of the operational problems confronting Israel, should it decide to launch a surprise attack on Iran’s nuclear facilities.

Yet, the beat goes on.

The worst case for war with Iran
Posted By Stephen M. Walt , Foreign Policy.com, Wednesday, December 21, 2011 - 4:39 PM 

If you'd like to read a textbook example of war-mongering disguised as "analysis," I recommend Matthew Kroenig's forthcoming article in Foreign Affairs, titled "Time to Attack Iran: Why a Strike Is the Least Bad Option." It is a remarkably poor piece of advocacy, all the more surprising because Kroenig is a smart scholar who has done some good work in the past. It makes one wonder if there's something peculiar in the D.C. water supply.
There is a simple and time-honored formula for making the case for war, especially preventive war. First, you portray the supposed threat as dire and growing, and then try to convince people that if we don't act now, horrible things will happen down the road. (Remember Condi Rice's infamous warnings about Saddam's "mushroom cloud"?) All this step requires is a bit of imagination and a willingness to assume the worst. Second, you have to persuade readers that the costs and risks of going to war aren't that great. If you want to sound sophisticated and balanced, you acknowledge that there are counterarguments and risks involved. But then you do your best to shoot down the objections and emphasize all the ways that those risks can be minimized. In short: In Step 1 you adopt a relentlessly gloomy view of the consequences of inaction; in Step 2 you switch to bulletproof optimism about how the war will play out.
Kroenig's piece follows this blueprint perfectly. He assumes that Iran is hellbent on getting nuclear weapons (not just a latent capability to produce one quickly if needed) and suggests that it is likely to cross the threshold soon. Never mind that Iran has had a nuclear program for decades and still has no weapon, and that both the 2007 and 2011 National Intelligence Estimates have concluded that there is no conclusive evidence that Iran is pursuing an actual bomb. He further assumes -- without a shred of evidence -- that a nuclear-armed Iran would have far-reaching geopolitical consequences. For example, he says that other states are already "shifting their allegiances to Tehran" but doesn't offer a single example or explain how these alleged shifts have anything to do with Iran's nuclear program.
He also declares, "With atomic power behind it, Iran could threaten any U.S. political or military initiative in the Middle East with nuclear war." Huh? If this bizarre fantasy were true, why couldn't the former Soviet Union do similar things during the Cold War, and why can't other nuclear powers make similar threats today when they don't like a particular American initiative? The simple reason is that threatening nuclear war against the United States is not credible unless one is willing to commit national suicide, and even Kroenig concedes that Tehran is not suicidal. Nuclear weapons are good for deterring attacks on one's own territory (and perhaps the territory of very close allies), but that's about it. They are not good for blackmail, coercive diplomacy, or anything else. And if Kroenig is right in warning that an Iranian nuclear weapon might lead others to develop them too, then Iran would end up being deterred by the United States, by Israel, and by some of its other neighbors too. (As I've noted before, Iran's awareness of this possibility may be one reason why Tehran has thus far stayed on this side of the nuclear threshold.)
Kroenig also declares that a nuclear-armed Iran would force the United States to "deploy naval and ground units and potentially nuclear weapons across the Middle East, keeping a large force in the area for decades to come." But why? Iran's entire defense budget is only about $10 billion per year (compared with the nearly $700 billion the United States spends on national defense), and it has no meaningful power-projection capabilities. Thus, contrary to what Kroenig thinks, containing/deterring Iran would not add much to U.S. defense burdens. The Persian Gulf is already an American lake (from a military point of view), and Washington already has thousands of nuclear weapons in its own arsenal. Given how weak Iran really is, containing or deterring them for the foreseeable future will be relatively easy.
The key point is that Kroenig offers up these lurid forecasts in a completely uncritical way. He never asks the probing questions that any security scholar with a Ph.D. should axiomatically raise and examine in a sophisticated manner. Instead, his article is a classic illustration of worst-case analysis, intended to make not going to war seem more dangerous than peace.
When he turns to the case for using force, however, Kroenig offers a consistently upbeat appraisal of how the war would go. (Needless to say, this is not the kind of analysis one would expect from a Georgetown professor.) He knows there are serious objections to his proposed course of action, and he works hard to come up with reasons why these concerns should be not be taken seriously. What if Iran has concealed some of its facilities? Such fears are overblown, he thinks, because our intelligence is really, really good. (Gee, where have we heard that before?) What about facilities that are hardened or defended? Not an insurmountable obstacle, he maintains, and in any case there are plenty of other facilities that are aboveground and vulnerable.
 Isn't there a danger of civilian casualties? Well, yes, but "Washington should be able to limit civilian casualties in any campaign." What if Iran escalates by firing missiles at U.S. allies, ordering its proxies to attack Israel, or closing the Strait of Hormuz to oil shipments? Not to worry, says Kroenig, "None of these outcomes is predetermined," and the United States "could do much to mitigate them." (Of course, none of the scary outcomes that Kroenig says would accompany an Iranian bomb are "predetermined" either.) Doesn't starting a war increase the risk of regional conflict, especially if Iran retaliates and Americans or Israelis die? Maybe, but not if the United States makes its own "redlines" clear in advance and if it takes prudent steps to "manage the confrontation." To do this we have to be willing to "absorb Iranian responses that [fall] short of these redlines" and reassure the mullahs that we aren't trying to overthrow them (!). Bombing another country is a peculiar way to "reassure" them, of course, and it's a bit odd to assume that those wicked Iranians will be cooperative and restrained as the bombs rain down. Won't Iran just reconstitute its nuclear program later, and possibly on a crash basis? It might, but Kroenig says that we would have bought time and that whacking the Iranians really hard right now might convince them to give up the whole idea. Or not.
You see the pattern: When Kroenig is trying to justify the need for war, he depicts an Iran with far-reaching capabilities and dangerously evil intentions in order to convince readers that we have to stop them before it is too late. But when he turns to selling a preventive war, then suddenly Iran's capabilities are rather modest, its leaders are sensible, and the United States can easily deal with any countermeasures that Iran might take. In other words, Kroenig makes the case for war by assuming everything will go south if the United States does not attack and that everything will go swimmingly if it does. This is not fair-minded "analysis"; it is simply a brief for war designed to reach a predetermined conclusion.
And let's be crystal clear about what Kroenig is advocating here. He is openly calling for preventive war against Iran, even though the United States has no authorization from the U.N. Security Council, it is not clear that Iran is actively developing nuclear weapons, and Iran has not attacked us or any of our allies -- ever. He is therefore openly calling for his country to violate international law. He is calmly advocating a course of action that will inevitably kill a significant number of people, including civilians, some of whom probably despise the clerical regime (and with good reason). And Kroenig is willing to have their deaths on his conscience on the basis of a series of unsupported assertions, almost all of them subject to serious doubt.
Kroenig tries to allay this concern by saying that the main victims of a U.S. attack would be the "military personnel, engineers, scientists, and technicians" working at Iran's nuclear facilities. But even if we assume for the moment that this is true, would he consider Iran justified if it followed a similar course of action, to the limited extent that it could? Suppose a bright young analyst working for Iran's Revolutionary Guards read the latest issue of Foreign Affairs and concluded that there were well-connected people at American universities and in the Department of Defense who were actively planning and advocating war against Iran. Suppose he further concluded that if these plans are allowed to come to fruition, it would pose a grave danger to the Islamic Republic. Iran doesn't have a sophisticated air force or drones capable of attacking the United States, so this bright young analyst recommends that the Revolutionary Guards organize a covert-action team to attack the people who were planning and advocating this war, and to do whatever else they could to sabotage the forces that the United States might use to conduct such an attack. He advises his superiors that appropriate measures be taken to minimize the loss of innocent life and that the attack should focus only on the "military and civilian personnel" who were working directly on planning or advocating war with Iran. From Iran's perspective, this response would be a "preventive strike" designed to forestall an attack from the United States. Does Kroenig think a purely preventive measure of this kind on Iran's part would be acceptable behavior? And if he doesn't, then why does he think it's perfectly OK for us to do far more?

21 December 2011

Democracy & Truth in the Post-Information Era

My close friend Mike Lofgren writes an important essay describing the nature of 'truth' in the Orwellian echo chamber that is closing the American mind in the 21st Century.

Chuck Spinney

DECEMBER 20, 2011

Are Our Rulers Stupid, or Do They Think We’re Stupid?
Propagandizing for Perpetual War
by MIKE LOFGREN, Counterpunch
According to the Congressional Research Service, the United States has appropriated $806 billion for the direct cost of invading and occupying Iraq. Including debt service since 2003, that sum rises to approximately $1 trillion. The White House estimates the number of U.S. military wounded at 30,000; the web site icasualties.org states that U.S. military fatalities from the Iraq war now stand at 4484. It is impossible to estimate precisely the numbers of Iraqi civilian deaths, but they are frequently cited as being in excess of 100,000. There are now around two million internally displaced Iraqis in a country of 30 million inhabitants. As United States armed forces (but not up to 17,000 State Department employees, contractors and mercenaries) leave the country, Iraq is plunging into a sectarian and ethnically-fueled political crisis. Even if it survives that crisis and remains a unitary state, it will almost certainly be pulled closer to the orbit of Iran, our bogeyman du jour.
In view of the crippling costs both human and financial as well as the strategic and moral disaster the invasion of Iraq precipitated, what sort of verdict do you think our leaders – leaders representing a presidential administration ostensibly opposed to the invasion and promising hope and change – bother to offer us? While junketing in Turkey on December 17, Secretary of Defense Leon Panetta told the press the following:
"As difficult as [the Iraq war] was, I think the price has been worth it, to establish a stable government in a very important region of the world."
One’s only reaction to this statement is to blink in disbelief and wonder: is Panetta that stupid, or does he think that we, the supposedly self-governing citizens of this country, are that stupid? The kindest thing one can conclude is that this is some sort of throw-away line intended to provide solace to the families of those killed, or consolation to survivors who were maimed. But that is pretty thin gruel; one imagines those people, and their kin, have formed their own opinions about what happened and do not require a patronizing justification. And, in any case, if it was “worth it,” why shouldn’t we keep doing it, not only in Iraq but all over the world? Perpetual war for stable government, one might call it.
Another explanation that comes to mind is the propaganda aspect of it: some government hacks really do believe if they repeat something over and over, no matter threadbare or false, a large number of people will believe it. Republicans have used this technique for years, and it appears Democrats are well on their way to equaling them in mastering it. It seems to be at least a partially successful tactic: after all the bloodshed and the waste, a plurality of 48 percent of Americans still believes invading Iraq was the right decision, according to a Pew Research survey.
But, as Honest Abe said, you cannot fool all of the people all of the time. That same survey showed 46 percent, almost as many, believed it was the wrong decision. But even here, Panetta’s statement, and countless other ridiculous statements by government officials, are not without their utility. Most of us think of propaganda as brainwashing – as convincing people to believe something they would otherwise disbelieve. But we may underrate another, more subtle, utility of political propaganda.
In one of his wartime essays, George Orwell remarked on some of the patently ridiculous claims of totalitarian propaganda. In his view, the point wasn’t whether it was believable or not; in fact, the more ridiculous the better. The point was that government functionaries got to make the statement knowing full well it was ludicrous; news organizations dutifully printed it as if it were fact; and the public sphere was blanketed with the absurd propagandistic claim. As Orwell said about the goosestep march of totalitarian armies: yes, it looks ridiculous, but you dare not laugh.
That is the underrated objective of false government claims: even when they do not convince, they demoralize. Panetta’s statement will receive respectful coverage in the mainstream media; satraps of the establishment like David Gregory or Bob Schieffer will not argue with him on the Sunday morning talk shows beyond at most a very polite demurral; for all intents and purposes he will get away with it. And no ordinary citizen will ever be in a position to get in his face and tell him he’s shilling for destructive policies that are bankrupting us.
Because that’s how democracy, and truth, work in the United States these days.
MIKE LOFGREN retired in June 2011 after 28 years as a Congressional staffer. He served 16 years as a professional staff member on the Republican staff of the House and Senate Budget Committees.

18 December 2011

Will Germany Kill the Goose that Laid the Golden Egg?

Since the middle of the 19th Century, the central questions in European politics have been been have been the closely connected questions of nationalism and the rise of German power.  As my good friend and eminent historian Gabriel Kolko shows in the brilliant essay attached below, the post war solutions of NATO and the European Union, together with the exigencies of the Cold War, put these questions on hold, but their fundamentals remained, sleeping beneath the surface, and today, the conflicting questions of nationalism and German power are again coming to the fore to create ominous problems for Europe and the world.  

There can be no question that, until 2007 or so, the European Union -- particularly the opening of borders, the free flow of labour and capital, the disappearance of tariffs, and diminution of non-tariff trade restrictions, etc. combined to make life better for the mass of average Europeans.  Standards of living rose steeply and social services improved in parallel.  This was particularly evident in the poorer EU countries on the southern rim.  I saw and experienced this astounding improvement in the quality of life on a very personal level, living on a sailboat in southern Europe since the summer of 2005.  I will never forget the comment made to me by an Italian psychologist in Calabria in 2006, which is the heart of the provincial south of Italy, "It is a great time to be a European." To be sure, he was an educated member of the upper middle class, and not representative of the average Calabrian, but it struck me that this Calabrian saw himself as a European.  It was not very long ago, that such a person would only loosely consider himself to be an Italian, not to mention a European.

But the EU also benefitted the richer countries of northern Europe, especially Germany, which became the world's largest export economy, in part due to the industriousness of the German people, but also in part because of the advantages bequeathed to Germany by the world's largest duty free zone.  German banks, among those of other countries, also benefitted enormously from the debt-driven, global hyper-capitalism.

That achievements in Germany, as well as Europe, are now  at risk, in part because the contradictions implicit in the rise of neoliberal economics created the worldwide debt crisis and are now distorting the response to that crisis, but also because of hubris in the European project itself.  As Kolko shows below, it is becoming clear that, within this context, Germany is again evolving a hegemonic policy that, in effect, is struggling to 'have its cake and eat it too.' The most outward manifestations of this evolution can be seen in the effort to save the Euro by attempting to intensify the EU's integration by increasing reliance on a kind of German neo-Calvinist economics.  One irony in the integration crisis not mentioned by Kolko is that the proximate cause of the political rigidity aggravating the debt crisis -- the Euro -- was adopted just when advances in electronic banking were drastically reducing, if not eliminating, the practical advantages of a common currency, yet the adaption of the common currency placed member governments in fiscal straight jackets.  Had the Euro not been adopted, and everything else remained the same, Spain could have devalued the Peso, Italy the Lira, etc, but then those devaluations would have increased value of the Mark and created discomfort in Germany -- which brings us back to Kolko's analysis.

Chuck Spinney


Lessons from the 20th Century
Why Euro Plan Is Doomed to Fail
by GABRIEL KOLKO, Counterpunch
There are extremely important differences between this decade and the period after the First World War and through the early 1930s.
The most crucial is that no fascist or Communist or revolutionary threats exist now if the great economic powers do not meet the economic challenges before them. Today the political and economic contexts are fundamentally different in crucial regards but still inordinately complex and dangerous.  Now, nations will only face the unpredictable political consequences that always arise when economies break down. But fascism and bolshevism were a catastrophe for the status quo and led to World War Two.  For a time the Nazis aborted the threat of the left in Germany and this won them a great deal of business support.   Although there are many right-wing nativist movements today that may very well benefit from economic turmoil, there are important differences between contemporary yahoos in the U.S. and Europe and the fascists.
But today the world economies are in a crisis, nominally involving the “euro” nations but even more the nature and future of world economic power.  This crisis involves the United States—which was crucial in the interwar period—but also China, India, Brazil, and other nations which had no economic clout whatsoever in the world economy between the two wars.  The 1920s were complex in unique ways, which the draconian Versailles Peace Treaty of June 1919 guaranteed it would be both politically and economically, especially for Germany, which ultimately went Nazi, which in turn led to the Second World War. But today’s Middle East owes a great many of its problems to the settlements reached at Versailles—which broke up the Ottoman Empire and drew the borders of the new states capriciously and with almost no regard for the region’s ethnic and religious character.
Stephen V. O. Clarke was a research officer at the Federal Reserve Bank of New York—which has a uniquely important responsibility for many official U. S. foreign economic transactions—and then became a quite conventional professor of economics at Princeton. His most notable work was a 1967 monograph on the New York Fed, “Central Bank Cooperation, 1924-1931.”  Its circulation must have been very small; its prose and charts do not lend themselves to easy reading.
It caused few waves in the world–whether academic or larger—when printed, and Clarke never became known as a great economist, as did John Kenneth Galbraith (Galbraith’s thesis dealt with the bee industry in California). Clarke was not, by Ivy League standards, productive or a “star” academic.
His esoteric monograph is now very relevant and timely because the powerful nations of the world are today being called upon to cooperate to save the euro currency; they share a common need to solve a critical economic problem.  They were also asked to resolve many similar issues in the 1920s, but each has distinctive differences, the most important being that Germany was very weak and in a defensive position by virtue of having lost the First World War; today it is economically the strongest nation in Europe.  In both periods the stakes were very high.
Clarke’s work is based on the papers, phone conversations, and records of the principals involved; in this regard alone it is unique because he had access to these sources, which makes him especially insightful and authoritative. The New York Fed did not publish it thinking they had a potential best-seller in this extremely technical monograph but because it believed it would learn something about the genesis of one of the world’s great economic–and political—failures, and therefore how to avoid another like it. It makes its intent very clear in the bank president’s foreword to the work.  While conceding that the differences between the 1920s and the present were great, he still believed Clarke’s study contained much that was of contemporary relevance, especially how each of the men involved in the 1920s negotiations had to balance his nation’s objectives and interests with the needs of an international system.  In my opinion, this conflict of national and internationalist goals is also the way to understand today’s crisis in the euro bloc.
If the euro collapses the results will be far-reaching in terms of its failure leading to more dire economic consequences, and this may in turn make European domestic politics nastier as well. Right-wing parties are very likely to grow stronger. Clarke discusses, in great detail, how the major economic powers negotiated during the 1920s–and how and why they ultimately failed by 1931, when exchange controls were imposed on the franc, pound, mark—and the world economy broke up and stayed that way until the U. S. defined the postwar rules.  America too was mired in the Great DepressionClarke states, correctly, that domestic politics played a crucial role in the United Kingdom as well as Germany, in making cooperation even more difficult after 1929. He also concedes that New York wanted to replace London as the financial capital of the world.
Even taking into account the crucial differences between the period he covers and our own—above all the political context–it is extremely interesting to see how and why nations relate to each other when they have shared problems.  They did so very badly during the interwar period and they are very likely to do so now—and for many of the identical reasons. Domestic politics are very likely to play a crucial role in the current crisis in the nations that have the biggest deficits, and Europe’s political leaders, whether from poorer or wealthier nations, are not  likely to commit political suicide if they can avoid doing so –which the German plans for reform are effectively asking the leaders of Greece, Portugal, and other nations to do.
So far, the euro’s fate remains unclear until some indefinite time in the future, even though I believe that the present role it plays is highly unlikely to continue, but the European Union may fail. The euro crisis is complex in unique ways, and the Germans are playing a very convoluted nationalist game, but it requires nations to lose an important measure of their economic sovereignty, and the evidence from the interwar years—indeed, from much of recent history for that matter–suggests they are very unlikely do so.
Since Clarke’s monograph is the only account of this crucial period we have that is based on the private papers or records of many of the principals, we are compelled to consult this obscure record if we want some inkling how, and why, the men and women negotiating the fate of the euro bloc are likely to behave.  If precedent gives any insights then they are likely to fail; the rulers of the world’s leading economies simply did not realize the horrors that would ensue because no one could predict them; nationalism and the notion of national interests blinded them in the inter-war period; and it blinds them today in much the same manner.  The major difference is that Germany, unlike after the First World War, is now the most powerful country in Europe and we must consider the extent to which Germany is using the euro crisis to advance its own power by hiding it behind a pan-European façade that mobilizes and disciplines Europe’s nations on behalf of its interests and gives it leverage in dealing with the rest of the world.
The New York Fed was optimistic, hoping that knowledge would lead to an avoidance of the same errors occurring again. The United States never learned, politically, militarily, or economically, at least to the extent that it affected actual action, the lessons of past errors.  After the Korean war, many American leaders resolved never again to fight a land war in Asia, but they did exactly that in Vietnam and Afghanistan, where they lost outright or failed to win a decisive victory. In Iraq, at best, they have stalemated, perhaps even lost a decade-old war.  We shall see.
The process whereby the men who rule the United States, Great Britain, and other powerful nations make the same mistakes over again can be gleaned, to some great extent, from Clarke’s now-ignored work. Forgetfulness, misjudging the risks in action or inaction, peer pressures, national hubris and interests above all…. all, to varying degrees play some role.  The important point is that states have sought to cooperate on crucially important economic matters in the past and they have failed to do so, and often “succeeded,” as in the cases of the United States and NATO and the now defunct SEATO and CENTO alliances, only to eventually find that its organizational schemes can also be encumbrances as well as tying up nations that might wander from U. S. control.
For Germany the euro crisis is an opportunity to undo the economic results of defeat in two World Wars and use a pan-European ideology to create a Europe that is susceptible to German domination.  But most nations in Europe will likely eventually resist this effort to be led, and the European Union is likely to disappear; what will follow after is anyone’s guess. In the process of going for broke, the Germans are  using their formidable ability to raise demands on the various nations in the European Union, and they are also likely to see the euro disappear. A period of uncertainty, if not chaos, will then follow.
Germany goes for broke. 
Germany lost two world wars and it now has the most powerful economy in Europe, and Angela Merkel wants it, de facto and probably intentionally, to undo the onus of losing two world wars, thereby establishing Germany in a position of economic supremacy capable of dictating to the rest of Europe how to manage its internal economic affairs.  The legacies and fears of the past will have to be overcome, and the nation-state and nationalism are not likely to disappear, the events that traumatized europe over the past decades are not forgotten by some countries—no matter how weak and small they are.  It is true that most nations’ leaders,  nominally at least, say they want to go along with the German project, although France is also likely to see a good part of its electorate refuse to implement what the Germans demand as desirable economic policy.  Indeed, even Sarkozy may not be able to follow the strict, conservative economic conditions the present german government is now demanding.
Merkel says  “if the euro fails, europe fails.” but she assumes that the Germans will define success or failure.  This is a form of blackmail because the failure of the euro, which is highly likely to have negative consequences, is not necessarily going to be the catastrophe Merkel implies.  Many nations suffered economically with the euro, which is not a magic economic wand or sacrosanct.  Pan-european ideologies as a façade for Germany asserting national power, in the long run, is the greatest danger now confronting Europe.  Merkel is using Germany’s economic clout, and if Europe adopts the measures to implement her program–they have already accepted them in principle—Germany will be able to deal with other powerful nations much more as an equal by  citing its ability to define for most other European states the course they should take.
So far, Merkel has gotten nominal agreement for her plans from all the 27 nations that are members of the European Union who are members save Great Britain, but too many crucial specifics remains unresolved  for me to say she has attained victory.  The British, anxious to preserve the key role of the “City” in world finance, stayed out of the new agreement even though it nominally is in the European Union but does not use the euro as a currency.  The British government also dislikes foreigners dictating their economic objectives and the means to attain them, as the Germans are doing. Prime Minister David Cameron has slight control over his Conservative Party, and the same will be true of other political leaders in democratic countries—ranging from France to Greece and Italy or Sweden–who cannot simply dictate rules to their parties or people.  The problem is that there is too much democracy within Europe for technocratically-minded schemes. If a national law violates the new fiscal discipline, the Germans want the European Court of Justice, which sits in Luxembourg, to declare it illegal.  Abstractly, this means that national parliaments and key legislative bodies can no longer make economic policy.
Unfortunately for the Germans, wherever a nation requires they somehow ratify something as far-reaching as this transfer of the right to define legitimacy, time will be lost and the public of that nation may not approve the new rules.
Besides, there are so many existing debts in Europe to refinance—1.1 trillion euros in 2012 alone—and no one is sure where the money will come from or who has the authority to loan it, that Merkel won time—perhaps a year—for the continuation of the euro. (Even Germany and France are in debt; Moody’s just downgraded its ratings of the three largest French banks because they own too many Italian and Greek government bonds).  The agreement reached the weekend of this past December 9th is essentially to return to the fiscal rules agreed upon at Maastricht in 1991 and which were never enforced in the first place–and are unlikely to be applied now.  For political reasons—too much democracy—they are likely to fail again.  The euro crisis is scarcely over and Ms. Merkel has won a pyrrhic victory. That her real objective is to rebuild Germany’s power through, and via Europe, will become more evident as time goes on and the members of the coalition of nations that now support her, France especially, will fall apart.
There are many sources of opposition to the new European Union treaty, ranging from most of the Conservative Party in Britain to Leftists in Greece, Italy, Spain, and elsewhere, who will oppose the  austerity measures the new European accord now calls for.  Cameron is concerned about the City of London maintaining its dominance over finance, and anti-foreign sentiment also motivates many Conservatives; Leftists see no reason why social welfare benefits, from hospitals to education, should be slashed just to meet Merkel’s demands.  And of the 17 nations that ratified measures conforming to Merkel’s criteria, nine insist on their national parliaments or legislative bodies being consulted before they give the final approval to her proposals.  Italy or Greece are not among these nine and large demonstrations against the new agreement have already occurred in both places.
Merkel  is  unlikely to succeed, and here Clarke’s discussion is instructive.  There were essentially four major players in the 1920s, but the European economic union is far larger and more complex. Nominally, it has 28 members.  Nation-states may not be the ideal form to organize the world but they are a fact we probably can do nothing about now. Attempts to impose supranational authority–ranging from central bank cooperation in the 1920s to the United Nations–have generally failed or have been used by nations, such as the U. S. and NATO, to impose their hegemony on others.  NATO was also established to allow West Germany to rearm, creating a framework that looked able to control the rebuilding of Germany in the immediate post-war era, when in the name of fighting Communism the U. S. shipped Hitler’s rocket scientists and torture  experts to the U. S. and had the intelligence network under General Reinhard Gehlen, who had worked for the Nazis as chief of intelligence on the Eastern Front, go to work for it.  Allegedly, he received a pension from the CIA when he retired.
Reconstructing Germany’s dominant role in Europe is very much an integral part of the debate on the euro. Many nations, Great Britain excepted (and Switzerland, of course), nominally go along with Merkel’s threats and visions for the moment, and many non-German businessmen find having a common currency good for their exports.  What she advocates is an established aspect of all conservative economics: balance the budget. Hungary and Sweden, which do not use the euro, are lukewarm at best. Poland, as well, is skeptical of the German approach, which is very conservative.  The U.S.  government immediately declared that the German-inspired principles were good but the problems that the euro faced had to be confronted in the next days, which was certainly not the case.  President Obama himself, and the chairman of the Joint Chiefs of Staff, said the problems the euro faced had to be dealt with immediately, not next year, and there was, as the chairman of the U.S. Joint Chiefs of Staff, put it,  a risk of “civil unrest and the breakup of the union” in the abstract approach it was now taking.
Merkel is not going to attain her objectives if the U S opposes her, but even if it is neutral her plans simply will not overcome the obstacles in her path.
No sooner than the European Union members met in Brussels on December 8, declaring an agreement, crucial people—like MarioDraghi, the new head of the European Central Bank, began disputing what the bank will and can do, clarifying his earlier statements in ways that looked like a reversal. Whether existing European Union institutions are sufficient to deal with a much broader spectrum of financial needs and issues must now resolved.,  Else the EU must also create new ones,. Germany and France say the existing institutions will suffice, but whether or not other nations in the EU agree is not clear.  The British, led by a Conservative government, in any event, refuses to go along with the new deal and it remains to be seen how many existing European political leaders are ready to lose elections just to implement the draconian economic rules the Germans and French want to impose. Britain will have no voice in drafting a new agreement among EU members and, indeed, may get out of the EU entirely.
Like most accords dealing with such complex matters, the details are crucial. Those agreed upon in Brussels the weekend of December 9 simply leave too many questions of implementing an agreement hanging. In nine of the 17 national parliaments of the governments involved, parliamentary votes are required (Ireland. for example), a time-consuming process likely to be very contentious—basic economic questions and the welfare of nations will be involved. As even Nicholas Sarkozy admits, “Time is working against us,” but states ratifying the new agreements will take time doing so.  There is still democracy to thwart the dreams of technocrats in Brussels. France and Italy, from the Left as well as the Right, have been places where strikes and protests abound when the European Union imposes its diktats..
The British, in any case, will not go along with the new European accord—they never entered the euro bloc anyway—and the I M F has raised the question whether it, despite its experience telling poorer countries how to run their economies if they want I M F loans,  has the power or the resources to help save the euro bloc. Britain may no longer have a veto power over E U decisions–it may not be a member of the Union at all.  Cameron has to work this out with his divided government bloc, and it may fall too on this question. Politics can decide matters in the U K as well.
Nations talked to each other throughout this past century but in the final analysis, as the Clarke monograph shows, they acted with the national interest foremost in their calculations and motives.  They did so in the 1920s and the Germans are doing so now.  Some things never change, especially in world affairs
European Union members have often reached agreements but these accords have generally not been honored—in a word, they come apart and do so fairly quickly.  Germany now has the leverage to get most of them to go along with a formula–which is mainly old-fashioned economics—that defines it. It assumes wealth is a sign of virtuous behavior, if not, in its Calvinist version, God’s grace, and which many Europe’s leaders are for, in theory if not practice. But will Europe’s political rulers honor this agreement any more than they have honored past ones?  The U. S. government, for reasons that are dubious, also thinks the German approach is too shortsighted, but Ms Merkel had her way in Brussels and asserted German power.
What is more than likely is that the euro crisis will continue for a very long time and the accord reached at Brussels will soon come apart because fear of Germany is still strong in many countries of Europe. National policies and the legitimate desire of nations to define their economic needs based on their own priorities and the institutions of democracy—which Ms. Merkel’s solution flouts as if they are no longer  relevant compared to the fiscal conservatism that underlies the German approach.  Moreover, the German formulae for ending the crisis by balancing budgets and the like may not work on its own terms and the framework for it succeeding may not exist, as Draghi and others have warned.  Creating a new one will take a great deal of time..
Europe’s  nations have agreed on an ostensibly new framework of principles–one that in fact is very much like the one agreed upon 20 years ago—and which also did not agree on concrete methods to implement it or a time frame.  Even Merkel admits that formulating tangible measures to put her proposed solutions in force may take years.  There is the rub.
In any case. the new agreement has so far failed to assure the financial markets on which Merkel is relying.  After the new agreement, stocks fell, the value of the euro fell, and borrowing costs to Spain and Italy continued to rise. The rating services–such as Standard & Poors, Moody’s, and the like—were not impressed by the Brussels agreement and plan to re-examine their ratings of the 27 members of the European Union.  France is likely to lose its AAA rating and Sarkozy’s reelection chances have been hurt, probably badly, by supporting the German view on the future of the euro.  Sarkozy expects all the European Union members, save Britain, to ratify the new accords by next June.  That is consummate optimism.  A great deal can and will happen before then.
Ms. Merkel is playing a very high stake game—and nominally won this round—but the British and American governments disagree with both the means and ends of her effort, and the people of much of Europe have yet to be heard from.  History is still very important.
Ms. Merkel is more than likely to fail in her ambitious plans.
GABRIEL KOLKO is the leading historian of modern warfare. He is the author of the classic Century of War: Politics, Conflicts and Society Since 1914Another Century of War? and The Age of War: the US Confronts the World and After Socialism. He has also written the best history of the Vietnam War, Anatomy of a War: Vietnam, the US and the Modern Historical Experience. His latest book is World in Crisis

12 December 2011

Is Iraq Headed for a Crackup?

The attached report by Patrick Cockburn, one of the best reporters now covering the Middle East, describes the growing tensions in Iraq over the question of sharing its oil wealth among its constituent regions. Specifically, Exxon is cutting an independent oil drilling deal with the Iraqi Kurds in northern Iraq despite the objections of the Iraqi central government in Baghdad.  Although Cockburn's report is important in its own right, and I urge you to read it carefully, the implications become even more ominous when they viewed in a larger historical context:

The long view of history is likely to record the greatest 'sins' of Iraq, Iran, and Libya prompting interventions by the West have been related to the control of oil -- not nuclear weapons; not any communist leanings during the Cold War; not support of worldwide terrorism.  

Each country committed the unforgivable sin of being governed at one time by nationalistic leaders who believed the oil under each country belonged to that country and should be controlled by the government of that country -- therefore, these leaders had to be removed: 
  • Iran - Mohammed Mosaddegh, a popularly elected Prime Minister of Iran, and a modernizer and social reformer, removed by a CIA/MI6 coup in August 1953. 
  • Iraq - Saddam Hussein, a murderous neo-Stalinist dictator, but also a modernizer and social reformer (e.g., major achievements in women's rights and education), removed by military force in 2003. 
  • Libya - Muammar Qaddafy, a quirky tribal dictator, but also a moderniziner and social reformer (e.g., major achievements in women's rights and education) removed by military force in 2011.  
One short-term common denominator in these imposed regime changes was that, regardless of how the regime change was justified or rationalized, the nationalist leader was replaced by a more compliant government that agreed to an opening of that country's oil fields to exploitation by privately owned western oil companies.  

While history does not repeat itself, memories of the past do condition events in the future.  Over the longer term, perceived wrongs are not forgotten, and such interventions can provoke blowbacks, which in turn provoke counteractions that further enmesh the intervening party in a growing welter of increasingly complicated conflicts.  

In the case of Iran, for example, the 1953 coup eventually backfired in 1979, when  Reza Shah Pahlavi was overthrown by the Islamic revolution led by the Ayatollah Khomeini.  Khomeini then established a regime retook control of Iran's oil fields, among other things.  But the Iranian game is not over, and the historical pattern of move and countermove is in play, with the nationalist (Islamic) regime of Iran again in the West's crosshairs, allegedly because of its nuclear ambitions and support of international terror.  Nevertheless, the glittering temptations of re-privatizing Persian oilfields are lurking in the background, attracting the private oil interests of the West like flies to honey.  

It is too early to tell if or how blowback will unfold in Libya or Iraq, and the histories, cultures, and the unfolding conditions in these countries are very different from those in Iran.  The privatization of Libya's oil fields is just beginning.  On the other hand, as Cockburn points out, a process of divide-and-conquer privatization is well underway in Iraq; and it is already creating potentially explosive ramifications.   

Furthermore, in Iraq, the potential for a regional blowback from the privatization of Iraq's oilfields is complicated by the unique detritus left over from the destruction of the Ottoman Empire, including the hypocritical colonialist assumptions implicit in 1919 Versailles Treaty, the empty promises of Woodrow Wilson's 14 Points, and the nationalist assumptions implicit in the 1923 Treaty of Lausanne  (see summary & text) which established the boundaries for the modern Turkish nation -- which in fact were a fait accompli imposed on the Allies by the stunning military accomplishments of Kemal Ataturk. In so doing, Ataturk (1) nullified the cynical Anatolian partition plan envisioned by the Allies in their stillborn 1920 Treaty of Sèvres and (2) forced the British to renege on their promise to give the Kurds an independent nation in what is now southeastern Turkey (but significantly the British did not include the oil rich Kurdish regions in Iraq in their promise of Kurdish nationhood), among other things.  

Thus the Exxon maneuver has the potential for inflaming the still unresolved Kurdish Question is all sorts of ways.  The the map hints at this complexity by telling use Kurds live,  and interested readers will find a short but excellent historical summary of the Kurdish question here.  

There are 20 million or so Kurds, and they are probably the world's largest ethnic group without their own nation.  While they are a tribal based society, and are by no means unified, their nationalist aspirations and minority rights have been ignored -- sometime brutally -- since the Treaty of Lausannne nullified the question of Kurdish statehood.  This has been true especially for the areas now encompassed by eastern Turkey and northern Iraq, but oppression has also occurred in Syria and Iran.  

The 2003 invasion of Iraq reinvigorated the Kurds' separatist ambitions once again.  But this time, the ambitions are being fueled by the oil wealth described below by Cockburn.  The emergence of an economically viable Kurdish nationalism changes the separatist game fundamentally.  Moreover, the increased the restiveness of the outlawed Kurdish Workers Party (PKK) in Turkey despite Turkeys recent efforts to accommodate itself Kurdish demands, threatens to spill over to destabilize and provoke violent reactions in Turkey as well as Iraq (see here for a recent example of this dynamic in action) -- and perhaps even Iran and Syria.  Interested readers can go here for a contemporary Turkish point view or here for a contemporary Kurdish point view on the separatist question.

If there is one thing the Wars of the Yugoslavian Succession ought to have taught the sclerotic elites shaping US foreign policy in the post-cold war era, it is that breaking up an ethnically diverse country previously held together by an iron hand does not necessarily improve protections of minority rights.  Just ask the Serbs in Northern Kosovo who have roots roots in the region reaching back a thousand years whether or not Kosovo's independence has improved their lot in life.

My guess for the future of Iraq and its immediate environs: Add oil to this volatile Kurdish Question, and we ain't seen nuttin yet. And that, dear reader, is why, if you have not already done so, you ought to read Cockburn's report.  


Published on Friday, December 9, 2011 by The Independent/UK

Exxon's Deal with the Kurds Inflames Baghdad
The oil giant has defied Iraq's government by signing up to drill in disputed territory
by Patrick Cockburn

The great Iraqi oil rush has started to exacerbate dangerous communal tensions after a major oil company ignored the wishes of the central government in Baghdad and decided to do business with its main regional rival.
The bombshell exploded last month when Exxon Mobil, the world's largest oil company, defied the instructions of the Baghdad government and signed a deal with the Iraqi Kurds to search for oil in the northern area of Iraq they control. To make matters worse, three of the areas Exxon has signed up to explore are on territory the two authorities dispute. The government must now decide if it will retaliate by kicking Exxon out of a giant oilfield it is developing in the south of Iraq.
Political leaders in Baghdad say the company is putting the unity of their country at risk. Hussain Shahristani, the Deputy Prime Minister in charge of energy matters, told The Independent in an interview in Baghdad that any oil or gas field development contract in Iraq "needs the approval of the federal government, and any contract that has not been presented to the federal government has no standing and the companies are not advised to work on Iraqi territory in breach of Iraqi laws".
Baghdad has had oil disputes before with the Kurdistan Regional Government (KRG), but the present row is far more serious because it is the first time "Big Oil" has moved into Kurdistan, showing that at least one of the major oil companies is prepared to disregard threats from the government of Nouri al-Maliki. Previously, only small independent foreign oil companies, without other interests to protect in the rest of the country, have risked signing contracts with the Kurds.
"Exxon Mobil was aware of the position of the Iraqi government," says Mr Shahristani, a former nuclear scientist who was tortured and imprisoned by Saddam Hussein. "We hear from the American government that they've advised all American companies, including Exxon Mobil, that contracts should not be signed without the approval of the federal government."
Whatever the prospects of finding oil in the north of Iraq, observers are surprised that Exxon is prepared to hang its future in Iraq on the outcome of the power struggle between Iraqi Kurdistan and the central government. Control of the right to explore for oil and exploit it is crucial to the authorities on both sides since they have virtually no other source of revenue.
The Kurds have won a degree of autonomy close to independence since the fall of Saddam, and the ability to sign oil contracts without reference to Baghdad will be another step towards practical independence and the break-up of Iraq. A parallel would be if the Scottish government were to sign exploration contracts in the North Sea without consulting London.
What makes the Exxon-KRG deal particularly inflammatory, says Mr Shahristani, is that three of the six blocs where Exxon is planning to drill are understood to be "across the blue line – that is outside the border of the KRG". This means they are in the large areas in northern Iraq disputed between Arabs and Kurds since 2003, but where the Kurds have military control.
The government must now decide if it will make good on its threats and replace Exxon at a mammoth oil field called West Qurna 1 at the other end of the country, north of Basra. Iraqi oil officials hint that Royal Dutch Shell might replace the American company.
Both sides have much at stake. The Iraqi government is totally reliant on its oil revenues to pay its soldiers, police force and civilian officials. It needs vast sums to rebuild the country after 30 years of war, civil war and sanctions. In 2009, it began to expand its oil industry by signing contracts with firms such as BP, Royal Dutch Shell and Exxon to boost production in under-exploited and poorly maintained fields.
These companies thereby gained access to some of the largest fields in the world, each with reserves of more than five billion barrels. Vast sums are being invested, mostly around Basra in the south of Iraq. Oil output, now at 2.9 million barrels a day, is due to rise to a production capacity of 12 million b/d by 2017, potentially putting Iraq on a par with Saudi Arabia as an oil exporter.
Mr Shahristani is pleased with progress so far, saying that what "we are doing in Basra is at least five times larger than the largest oil projects in the history of the oil industry so far."
Sitting in his vast office in a cavernous palace originally designed for one of Saddam's senior lieutenants, he holds up a chart showing the surging production from the Rumaila oilfield of 1.4 million b/d, more than Britain's entire current output of crude from the North Sea.
Iraqis are split on whether Exxon is being cunning or naive. 
  1. One explanation is that the oil company feels so powerful, or so essential to Iraqi oil development, that it can disregard the Iraqi government. 
  2. An alternative argument is that Exxon is dissatisfied with the West Qurna 1 deal and so does not mind walking away from it and looking for oil elsewhere. 
  3. A third is that the company got suckered by the Kurds.
Iraqi Arabs know that the Iraqi Kurds want to control as much of Iraq's oil reserves as possible to buttress their independence. Less easy to understand is why Exxon should willingly make its activities a central issue in the Arab-Kurdish confrontation which has for so long destabilised Iraq.
Flashpoint: Iraqi military bases
The transfer of Iraq's military bases [as US leaves] to local control is another flashpoint between the Kurdistan Regional Government and Baghdad, and some fear the dispute may boil over when US forces pull out at the end of the year.
Last month saw a tense standoff between the Iraqi army and local Kurdish forces at a US airbase in the northern city of Kirkuk, an oil-rich area long a point of dispute. The Kurdish police force reportedly blocked an army team from entering the base for an official handover from the US, unhappy that it was being transferred to Baghdad.
In an effort to calm the drama, the US ambassador, James Jeffrey, met Kirkuk's Governor, Najmaldin Karim, and Iraq's Prime Minister, Nouri al-Maliki, in the capital.
"We did not want a situation where we ended up shooting at each other," said Mr Karim.
The situation was defused when the central government made assurances that the base would be used for civilian aircraft only, a key demand of the Kurds.
However, once the base is handed over to Iraqi control, Washington will have little control over whether Baghdad sticks by its verbal agreement. Indeed, Ali Ghaidan, the commander of Iraq's ground forces who led the army team that eventually entered the base, has since publicly ruled out the possibility of the base being turned into a civilian airport – saying it is of too much strategic importance to Iraqi forces.
Reports of Kurdish security forces, known as peshmerga, bolstering their presence in Kirkuk have raised questions over how long the lid can be kept on this simmering conflict.