The Enormous Political Risk of Saudi Arabia’s Oil Reform

Sagatom Saha


 

On June 7, Saudi Arabia laid out its National Transformation Plan to shift away from an oil-based economy. To do so, the plan’s architect, Deputy Crown Prince Mohammed bin Salman, intends to create the world’s largest sovereign wealth fund, to float an IPO of the world’s most valuable oil company and to cut welfare for some of the world’s most heavily subsidized people. Given all of the superlatives, it’s hard not to speculate about the plan’s ambition and viability. And many have. GE has already made an enormous bet, promising to invest at least $1.4 billion in the country.

But even if he can check off all the items on his wish list, the deputy crown prince may not guarantee a prosperous future for his kingdom. By cutting subsidies and ceding some control over its oil industry, Saudi Arabia might surrender an asset rivaling oil in value: political order in a region engulfed in conflict.

The primary cause of difficulty will be the belatedness of the post-oil push. Large economic transitions are most attainable when coffers are full and revenues are high. Saudi Arabia is setting out on a path for diversification under a chronic deficit and persistently low crude prices.

To realize a diversified economy, Saudi Arabia would need to create an unprecedented private sector with six million new jobs by 2030—more if women enter the workforce in larger numbers. The oil boom between 2003 and 2013 created only one-third as many. Saudi Arabia hopes to create 450,000 non-oil jobs before 2020. However, the country needs to create 226,000 jobs a year just to accommodate new entrants.

The prospect of a smooth transition has already passed by. In past years, the kingdom could have invested its massive foreign exchange reserves into the same schemes it now hopes to realize. Instead, Saudi Arabia is using that money to plug deficits nearing $100 billion a year.

Compare that to reserves of $593 billion in February declining by $10 billion a month. Graver still, domestic fuel consumption threatens to squeeze Saudi Arabia’s only significant revenue stream: oil.

The Saudi populace relies almost entirely on domestic diesel and associated natural gas for power. Demand is growing so fast it will shave two million barrels a day from exports by 2020 at current rates. Ironically, Saudi Arabia needs these exports to finance the post-oil future.

The country has long benefited from commanding international oil markets and deriving vast revenues from its oil wealth. Now that boon is a burden.

Without a glide path, Saudi Arabia must find the investment—$4 trillion, by McKinsey’s estimate—to push Saudi Arabia toward a new economic future. Doing so could destabilize the kingdom, the world’s biggest oil exporter and a U.S. ally.

The tough timetable has already prompted several unprecedented decisions, most notably the move to float an IPO of Saudi Aramco. Even if only 5 percent of the company were sold as per current plans, it would be the largest offering in history, estimated at $100 billion.

Deputy Crown Prince Mohammed bin Salman framed the IPO in “the interest of more transparency, and to counter corruption.” Certainly, going public with even part of the company would nudge the kingdom’s finances toward transparency. This may be the problem.

Saudi Arabia, far more so than many of the region’s monarchies and autocracies, maintains an expansive, intricate patronage network of royal family members. While impossible to calculate the exact sum of “family allowances” sustaining the network, it was estimated at $37 billion in 1996 with revenues from one million barrels of oil going entirely to “five or six princes.” This figure has likely grown since.

Family stipends offer political stability in a country without direct hereditary succession and where opposing factions within the family loom large. Going public with their stipends endangers the long-standing bargain of cash for compliance.

Extraordinary letters from senior princes reveal family members have called for regime change, expressing extreme distaste for the current oil policy and the deputy crown prince himself. Opening Saudi Aramco’s books could right the country’s burgeoning fiscal deficit, but it gambles with insurrection from within the ranks.

The risk from the country’s elite is matched with risk from the general populace. Saudi Arabia has already started removing subsidies and cutting public spending. Although many of these expenditures are economic inefficiencies, they also form the basis of a payment-based social contract.

These cuts portend unrest at best, and Arab Spring turmoil at worst.

Earlier this year, Saudi construction workers torched buses in Mecca because they had not received wages in months. One former White House foreign-policy advisor said, “The conditions that produced the Arab Spring five years ago haven’t gone away, and they seem to be even more of a concern in Saudi now.”

Saudi Arabia sidestepped the wave of unrest in 2011 owing to its generous oil-financed welfare system.

Naturally, the Saudi government is introducing reform gradually, to avoid such a situation. However, cuts will need to be deeper and quicker to put the country’s finances back in order. In January, Saudi Arabia more than doubledgasoline prices. That increase only brought gasoline to only twenty-four cents a liter or about ninety cents per gallon, only a tiny step toward the goal of prices in line with the international market.

Meanwhile, the Saudi adult population will more than double in the next fifteen years, offsetting cuts to the system of payments and subsidies.

Saudi Arabia intends to phase out subsidies not only for petroleum products, but also for water and electricity over the next five years. The plan includes the introduction of sales and income taxes and cuts to government wages, meaning lower salaries for more than two-thirds of Saudis.

The first price hike for gasoline had Saudis rushing to fill their tanks within hours. What comes next could be worse. There is a long, well-established history linking subsidy cuts to political instability. Neighboring Yemen and fellow oil producer Nigeria are recent examples of countries where price hikes incited violence.

The Saudi Arabia embarking on the National Transformation Plan will therefore be different political constraints than the Saudi Arabia of the oil boom. Those expecting economic change, like the deputy crown prince, should watch for political change as well.

Sagatom Saha is a research associate for energy and U.S. foreign policy at the Council on Foreign Relations.

China’s Pivot to Putin’s Friends

Alexander Gabuev


When Gennady Timchenko — a Russian oligarch and close friend of President Vladimir Putin — was appointed chair of the Russian-Chinese Business Council, an association of more than 100 Russian and Chinese corporate players involved in bilateral trade, the longtime businessman cemented his role as the Kremlin’s point-person on China.

That same year, during Putin’s May 2014 visit to Shanghai to sign a massive $400 billion gas deal, the Russian president introduced Timchenko to Chinese President Xi Jinping as “our man for China.” Since then, Timchenko has been at the forefront of Moscow’s push to shore up economic ties with China, primarily centered on energy deals.

But more than two years after the watershed energy deal, the Kremlin’s so-called “pivot to China” has stalled. Chinese firms have been reluctant about investing in new Russian energy deals following the fall in commodity prices in 2015 and China’s own economic slowdown has seen GDP growth drop from 10.3 percent in 2010 to 6.9 percent in 2015. This has led to growing disillusionment among the Russian elite who had hoped that China might replace Europe as its top energy customer, leaving the Kremlin’s turn to Asia hanging in the balance.

It’s against this bleak backdrop that Putin will travel to Beijing on June 25 for a three-day visit to meet with Xi and discuss the future of Beijing and Moscow’s relationship, where they are expected to talk about bilateral trade, how to deal with an erratic North Korea, and “One Belt, One Road” — a massive infrastructure project championed by Xi to revive to the old Silk Road trade route.

But beyond the pomp of Putin’s visit, a different aspect of the Russia-China relationship is unfolding on the sidelines. Timchenko and a small set of elites from Putin’s inner circle have been the recipients of a series of multibillion-dollar sweetheart deals from Beijing designed to keep Putin’s clique both happy and looking east. China doesn’t look ready to invest heavily in Russia anytime soon — Russian-Chinese bilateral trade plunged from $95.3 billion in 2014 by 28.6 percent to $63.6 billion in 2015, just 1.5 percent of China’s international trade that year. But Beijing has realized that winning allies among the small group of Putin’s friends is a good way to influence the Russian president’s judgment — and keep a secure source of cheap hydrocarbons and sophisticated weapons close-by.

Timchenko — with an estimated net worth of $13.4 billion largely made in the energy sector and one of the few men believed to have Putin’s ear — is a key player in this strategy deployed by Beijing. While Chinese companies have approached investing in Russia with a cold attitude, such as the stalled Udokan copper mine and Vankor oil field projects, Timchenko has been linked to energy deals in Russia with Beijing on very favorable terms.

One such deal involved SIBUR, the dominant player in Russia’s lucrative petrochemical sector and a company co-owned by Timchenko, and Sinopec, a Chinese state-owned company and the country’s largest oil refiner. In December 2015, SIBUR sold 10 percent of its shares for $1.3 billion to Sinopec, earning Timchenko and other shareholders a welcome payday. Investing in SIBUR was particularly strategic by Beijing when considering that the company’s shareholders include Leonid Mikhelson, whom Forbes called Russia’s richest man, and Kirill Shamalov, who is Putin’s son-in-law.

Timchenko and Mikhelson have also been involved in facilitating other China deals in Russia. In March 2016, the two oligarchs sold a 9.9 percent stake in Yamal LNG, a natural gas project in the Russian Arctic, to China’s Silk Road Fund, a $40 billion fund established in December 2014 to finance One Belt One Road, for $1.2 billion. Moreover, in April 2016, both oligarchs took out $12.1 billion in long-term loans for Yamal LNG from China’s two political banks, the Export-Import Bank of China and the China Development Bank, at very favorable interest rates.

Such complimentary deals raised eyebrows among Russia watchers. Sinopec and the China Development Bank have been at the heart of an anti-corruption campaign Xi launched in 2013 to clean up the image of Chinese firms, and have recently been very conservative about their overseas investments. This is even truer for minority stakes in energy projects, particularly after the collapse of oil prices. Moreover, Timchenko and Yamal LNG were included on the U.S. sanctions lists in March 2014 following the annexation of Crimea, making them risky business partners for a bank, as BNP Paribais, which was fined in July 2014 for violating U.S. sanctions on Cuba, Iran, and Sudan, can attest.

And while Beijing has pursued Putin’s inner circle to cement Russia’s turn to the east, Putin and Xi’s relationship has blossomed too. It’s well-known that Putin, a former KGB operative, attaches great importance to individual diplomacy, preferring to rely on a friendly personal relationship with other leaders to build stronger country-to-country ties. But with figures like former German Chancellor Gerhard Schröder and former Italian Prime Minister Silvio Berlusconi no longer in office, and once-close links to German Chancellor Angela Merkel and Turkish President Recep Tayyip Erdogan destroyed by the ripple effects of the wars in Ukraine and Syria, Xi remains the only world leader of a major country that Putin can call a friend. Putin is arguably also the foreign leader with whom the Chinese President gets along with best. According to Russian and Chinese officials who spoke on the condition of anonymity, the two 63-year-old leaders’ became friends on Oct. 7, 2013, as they met on the sidelines of the APEC summit in Bali. It was Putin’s 61st birthday and the last meeting of the day for both leaders, which quickly turned into a private birthday party with celebratory toasts by Putin, Xi, and a few close aides.

But how far favorable business deals and birthday toasts can go in masking unfulfilled promises of win-win economic cooperation remains to be seen. Despite volumes of crude oil deliveries from Russia to China increasing by 33.7 percent, few benefits have been delivered. Russia has only managed to attract $560 million in foreign direct investment from China, less than 0.5 percent of China’s total outbound direct investment in 2015 and much less than the $4 billion in Chinese investment Russia received in 2013, before the Ukraine crisis. The biggest bright spot is that loans from China to Russia totaled $18 billion in 2015, making China the largest source of external financing that year, according to the Russian Central Bank. But even that is still a far cry from $261 billion that Russia was able to attract from the European Union and the United States in 2013, up until the Ukraine crisis.

Moscow is also divided on anchoring itself so firmly to China. The Kremlin has long seen Central Asia as its backyard, but China’s growing economic clout has dwarfed Russia’s in recent years. Beijing’s One Belt, One Road is undermining Russian influence in the region and edged out a Moscow-led economic project, the Eurasian Union, in the process. Beijing is certainly a much-needed partner for Moscow, but China is also a powerful competitor.

Despite this far from rosy picture of cooperation, Beijing’s cost-effective strategy of winning over the Russian president’s friends appears to be working, as Putin is believed to be discussing a long proposed free trade zone between Russia and China with Xi during his visit. The proposal has long been met with resistance in the Kremlin, but given Russia’s dire need for investment to mitigate its economic pain, Putin is looking more bullish on China than in the past. Whether Beijing can actually bring the Russian economy any financial relief is still uncertain, but in the meantime, Putin’s friends like Timchenko appear to be the major winners from the Kremlin’s “pivot to China.”

Botswana: An African Lesson in Freedom

 

Josh Gelernter

Josh Gelernter


Botswana is a true rarity: a free and prosperous post-colonial African country. Fifty years ago this month, Britain surrendered its Bechuanaland protectorate to self-rule — just as it had Northern Rhodesia (now Zambia), Tanganyika (now Tanzania), Basutoland (now Lesotho), Kenya, Uganda, Swaziland, Nigeria, Somalia, et cetera. Each of those countries ended up unfree (like Kenya), grossly unfree (like Swaziland), or a hell on Earth (like Somalia). But not Bechuanaland. Bechuanaland held free and fair elections and became Botswana, a country with free elections, a free economy, and a free press. It is a triumph of democracy — and National Review readers, the United States, and the free world should join in celebrating its 50th birthday.

The best way to understand how remarkable Botswana is is to consider its neighbor Zimbabwe, formerly Rhodesia, which became independent of Great Britain just a few months before Bechuanaland. Rhodesia declared itself independent in 1965, under an apartheid-style system of white minority rule. In anticipation of independence, a sub rosa civil war had broken out between the white minority government, the Soviet-backed Zimbabwe African People’s Union, and the China-backed Zimbabwe African National Union. After independence, the civil war intensified considerably, and it lasted until 1978, when a compromise was reached, first to include black participation in government, and then later — under British and U.N. pressure — to allow the participation of the Communist guerrilla leaders Joshua Nkomo and Robert Mugabe. International sanctions — which had been imposed in opposition to minority rule — were lifted for the newly renamed Zimbabwe’s first general election. For a moment in Zimbabwe’s difficult history, it seemed that things were looking up.

Remember: South Africa wouldn’t abolish apartheid for another decade and a half. But then — despite a large international “observer force” — Robert Mugabe began a massive campaign of voter intimidation. He won in a landslide. Among opponents of Mugabe, of corruption, and of Communism, there was an outcry. Mugabe’s response was to murder thousands of Zimbabweans. His Fifth Brigade, which had been trained in North Korea and answered directly to him, was sent to Matabeleland — western Zimbabwe, where anti-Mugabe sentiments were strongest. Over the course of a five-year anti-dissident campaign, the Fifth Brigade murdered between 20,000 and 30,000 people. Afterwards, a new constitution was written, Zimbabwe’s senate was abolished, and new parliamentary elections were held — in which Mugabe’s party won 117 of 120 seats. Mugabe matched his brazen suppression of dissent with Marxist economic reforms. When Zimbabwe’s civil war ended, its future looked bright, and its GDP growth spiked from an annual average of 5 percent (through the civil war and international sanctions) to 10.6 percent in 1980 and 12.5 percent in 1981. Under Mugabe’s leadership, it crashed to an annual average of 2.7 percent. Hoping to distract from the country’s new woes with memories of its old woes, in 1992, Mugabe instituted a mandatory land-reform program, wherein land was confiscated from white farmers and redistributed. Unfortunately, Mugabe didn’t bother to make sure the people he gave farms to were farmers. Thus Mugabe destroyed one of Zimbabwe’s last functional industries.

For the first time since the civil war, the economy dropped into negative growth: – 9 percent for the year 1992. And with agriculture ground to a halt, people began to starve. Of course, even if there had been food to buy, everyone’s money was becoming worthless. For the rest of the decade, Zimbabwe’s annual inflation rate averaged 35 percent. In 2001, it jumped to 112 percent. In 2002, it jumped to 200 percent. In 2003, to 600 percent. By 2007, it was 66 thousand percent. By the end of 2008, the inflation rate was 80 billion percent. At that point, one American dollar was worth 2,621,984,228,675,650,147,435,579,309,984,228 Zimbabwean dollars. (If you’re wondering how that number’s pronounced, it’s about two-point-six decillion.) At the 80-billion-percent inflation point, and after another grotesquely fraudulent election, in 2008 Mugabe agreed to start sharing power with some of the remaining opposition. And things stabilized somewhat. Growth is still low, but Mugabe is 92 — so maybe there’s light visible at the end of the tunnel. Of course, what difference does money make, when the police can pick you up, hold you, torture you, and kill you whenever they feel like it? In Zimbabwe, political rights are more or less nonexistent. And that’s if you’re a member of the majority.

Things are — somehow — even worse if you’re not. Mugabe has said, “no white person will be allowed to own land” in his country. He has said some white farmers were so bad, “you would think they were Jews.” (There are only 120 Jews in Zimbabwe.) He says that gay people are “subanimal”; that they “behave worse than dogs and pigs.” “If you see people parading themselves as Lesbians and Gays,” said Mugabe, “arrest them and hand them over to the police.”   But let’s leave Mugabe’s Marxist paradise behind and hop back across the border to Botswana. Despite having to make its own way after escaping colonialism, like so much of Africa and the world, Botswana has a higher GDP per capita than several countries in Europe. (Zimbabwe has a GDP per capita only slightly higher than Afghanistan’s.) Botswana’s GDP has grown steadily ever since independence — during which time its people have enjoyed both the presence of a free market and the absence of corruption.

According to the Heritage Foundation, Botswana has a freer economy than Norway, Spain, and Belgium. (Zimbabwe’s economy is freer only than Venezuela’s, Cuba’s, and North Korea’s.) And, more importantly, if any citizen of Botswana objects to any of that — if he’d like, say, a Botswanan Bernie Sanders in office — he could write an op-ed, hold a rally, or go vote. All without fear of arrest or reprisal. Botswana is a free country in a tragically unfree world. It’s not perfect (if you’re reading this, Botswana — you could treat your Bushmen better); nonetheless, in its own way, it’s a light unto the nations: a testament to democracy’s power to overcome any challenge — even the adversity that accompanied the birth of most modern African nations. Perhaps even more acutely, it’s a testament to every Botswanan leader — every Botswanan George Washington — who could have seized power like Mugabe and destroyed his country, but chose instead to respect the rule of law and let his country thrive. Happy birthday, Botswana. And many more.

 

Religion’s Wicked Neighbor

nytimes opinion logo

David Brooks


Barack Obama is clearly wrong when he refuses to use the word “Islam” in reference to Islamist terrorism. The people who commit these acts are inflamed by a version of an Islamist ideology. They claim an Islamist identity. They swear fealty to organizations like ISIS that govern themselves according to certain interpretations of the Quran.

As Peter Bergen writes in his book “The United States of Jihad,” “Assertions that Islamist terrorism has nothing to do with Islam are as nonsensical as claims that the Crusades had nothing to do with Christian beliefs about the sanctity of Jerusalem.”

On the other hand, Donald Trump is abhorrently wrong in implying that these attacks are central to Islam. His attempt to ban Muslim immigration is an act of bigotry (applying the sins of the few to the whole group), which is sure to incite more terrorism. His implication that we are in a clash of civilizations is an insult to those Muslims who have risked and lost their lives in the fight against ISIS and the Taliban.

The problem is that these two wrongs are feeding off each other. Obama is using language to engineer a reaction rather than to tell the truth, which is the definition of propaganda. Most world leaders talk about Islamist terror, but Obama apparently thinks that if he uses the phrase “Islamic radicalism” the rest of us will be too dim to be able to distinguish between the terrorists and the millions of good-hearted Muslims who want only to live in fellowship and peace.

Worst of all, his decision to dance around an unpleasant reality is part of the enveloping cloud of political correctness that drives people to Donald Trump. Millions of Americans feel they can’t say what they think, or even entertain views outside the boundaries laid down by elites, and so are drawn to the guy who rails against taboos and says what he believes.

The fact is that 15 years after 9/11 we still haven’t arrived at a true understanding of our enemy. How much is religion involved in jihadism, or psychology, or politics?

And the core of our confusion is that we are unclear about what a religion is, and how it might relate to violence sometimes carried out in its name.

For clarity on that question, it helps to start with William James’s classic work, “The Varieties of Religious Experience.” In that book, James distinguishes between various religious experiences and “religion’s wicked practical partner, the spirit of corporate dominion, and religion’s wicked intellectual partner, the spirit of dogmatic dominion, the passion for laying down the law.”

In other words, there is the spirit of religion and, frequently accompanying it, its wicked neighbors, the spirit of political and intellectual dominion.

It seems blindingly obvious to say, but the spirit of religion begins with a sense that God exists. God is the primary reality, and out of that flows a set of values and experiences: prayer, praise, charity, contrition, grace and the desire to grow closer toward holiness. Sincere faith begins with humility in relation to the Almighty and a sense of being strengthened by his infinite love.

In some sense the phrase “Islamic radicalism” is wrong because terrorism is not a radical extension of this kind of faith. People don’t start out with this kind of faith and then turn into terrorists because they became more faithful.

The spirit of dominion, on the other hand, does not start with an awareness of God. It starts with a sense of injury and a desire to heal injury through revenge and domination.

For the terrorist, a sense of humiliation is the primary reality. Terrorism emerges from a psychic state, not a spiritual one. This turns into a grievance, the belief that some external enemy is the cause of this injury, rather than some internal weakness.

This then leads to what the forensic psychologist Reid Meloy calls “vicarious identification” — the moral outrage that comes from the belief that my victimization is connected to the larger victimization of my group.

It’s only at this point in the pathway that religion enters the picture, or rather an absolutist, all-explaining political ideology that is the weed that grows up next to religion. Bin Ladinism explains all of history, and gives the injured a course of action that will make them feel grandiose and heroic. It is the human impulse for dominance and revenge that borrows righteous garb.

For the religious person it’s about God. For the terrorist, it’s about himself. When Omar Mateen was in the midst of his rampage, he was posting on Facebook and calling a TV station. His audience was us, not the Divine.

Omar Mateen wanted us to think he was martyring himself in the name of holiness. He was actually a sad loser obliterating himself for the sake of revenge.

Before Obama leaves office, here’s what he should do about Iran

Washington Post

Zalmay Khalilzad and James Dobbins

Zalmay Khalilzad was U.S. Ambassador to Afghanistan, Iraq and the United Nations under President George W. Bush.  James Dobbins was a Special Envoy to Afghanistan under Bush and Obama.


America’s relationship with Iran poses a classic geopolitical dilemma. Iran is an important regional power that pursues adversarial policies with its neighbors and represses its people at home. Yet the United States can only address key issues affecting U.S. interests if it engages Tehran wherever possible. As it did vis-à-vis the Soviet Union during the Cold War, the United States needs to pursue policies designed to preclude regional hegemony and to create a balance of power in the region, while also expressing support for human rights and engaging Iran diplomatically.

If the chaos in the Middle East is to be calmed, the United States will have to work not just with traditional partners but also with competitors. Iran has contributed to the sectarian polarization of the Middle East and the conflicts that region has fostered, but it isn’t the sole cause of these. Washington and Tehran are at loggerheads over Syria, but they support the same governments and leaders in both Afghanistan and Iraq.

To enable productive engagement, the United States will have to work with its partners in the region to establish a favorable balance of power. This means continuing its military deployments and arms sales to ensure the security of the Persian Gulf, while asserting its rights under the new nuclear agreement to prevent Iran from making covert progress toward a weapon. At the same time, the United States should start planning a policy framework to deter Iran from restarting nuclear programs once certain restrictions in the agreement lapse. Finally, the United States and its partners must jointly compete against Iran in Iraq and Syria.

Such efforts will better position the United States to engage Iran to settle regional conflicts and defeat the Islamic State. Each of us led discussions with Iran during the administration of George W. Bush, and we were able to achieve limited understandings in some areas and even active cooperation in others. The Bonn Agreement, which established the post-Taliban interim government in Afghanistan, was the apogee of this cooperation, and it would have been difficult, if not impossible, to achieve without Iran’s support. Notably, this success occurred in the context of the active assertion of U.S. power against the Taliban. The United States can likewise craft policies to shape the political and military contexts in Iraq and Syria.

During the Obama administration, contacts with Iran have focused most heavily on nuclear issues. But these contacts occur irregularly, involve a small circle of individuals and tend to address only the most urgent issues. Secretary of State John F. Kerry may have Iranian Foreign Minister Mohammad Javad Zarif on speed dial, but there is only so much that two very busy men can accomplish. In any case, Kerry will likely be leaving office in a few months, and the U.S.-educated Zarif will eventually do the same. There is no guarantee their successors will establish the same kind of rapport. U.S. policy should not be dependent on their doing so.

That’s why before he leaves office, President Obama should take steps to enhance communications between the two countries. The most obvious move would be to reestablish normal diplomatic relations. It is not clear that the Iranian regime would be ready to go this far, however, and such a step would be quite controversial in the United States as well.

Short of that, however, the Obama administration and the Iranian government could assign middle-ranking U.S. and Iranian diplomats to the interests sections of the embassies that already represent each to the other. It is worth noting that the United States had a substantial diplomatic presence in Cuba before the resumption of full diplomatic relations last year. An even more modest measure would be for the United States to simply allow Iranian diplomats accredited to the United Nations in New York to travel to Washington on occasion. Such a gesture might be reciprocated by Iran, allowing visits by U.S. officials based in Dubai, where the United States maintains an office that monitors Iranian affairs.

U.S.-Iranian engagement should certainly focus on the battle against the Islamic State, but it should also focus on the pathways to stabilizing the region. The United States should seek to help Saudi Arabia, Turkey and Iran come to an understanding regarding Iraq and Syria and to explore a Westphalia-like agreement to curb sectarian and geopolitical conflict. Such an agreement will not occur without active mediation from the outside. Currently, only the United States can play that role.

In addition, Obama should not ignore the aspirations of the Iranian people, many of whom hope for greater freedom and contact with the world. Human rights issues should be part of the agenda for any enhanced engagement. Also, the United States should facilitate private travel between the two countries for students, scholars and ordinary citizens. The best way to do this would be to resume direct commercial flights between the two countries. This step would be of particular benefit to the hundreds of thousands of Iranian Americans and their many relatives in Iran.

None of these steps would resolve the many differences between the United States and Iran on their own. Better communication does not always yield accommodation. But better communication always yields better information, and better information always permits, even if it cannot guarantee, better policy. It is difficult to see how the Middle East can be stabilized without engaging and coming to some understandings with Iran.

The Slow Death of the Syria Cease-Fire Brings a Hybrid War With Russia Closer

World Post

Alastair Crooke


BEIRUT — Gradually, the mist of ambiguity and confusion hanging over Syria is lifting a little. The landscape is sharpening into focus. With this improved visibility, we can view a little more clearly the course of action being prepared by Iran, Russia and the Syrian government.

Russia is emerging from an internal debate over whether the U.S. is truly interested in an entente or only in bloodying Russia’s nose. And what do we see? Skepticism. Russia is skeptical that NATO’s new missile shield in Poland and Romania, plus military exercises right up near its border, are purely defensive actions.

Iran, meanwhile, is studying the entrails of the nuclear agreement. As one well-informed commentator put it to me, Iran is “coldly lethal” at the gloating in the U.S. at having “put one over” Iran. Because, while Iran has duly taken actions that preclude it from weaponizing its nuclear program, it will not now gain the financial normalization that it had expected under the agreement.

It’s not a question of slow implementation — I’ve heard directly from banks in Europe that they’ve been visited by U.S. Treasury officials and warned in clear terms that any substantive trade cooperation with Iran is closed off. Iran is not being integrated into the financial system. U.S. sanctions remain in place, the Europeans have been told, and the U.S. will implement fines against those who contravene these sanctions. Financial institutions are fearful, particularly given the size of the fines that have been imposed — almost $9 billion for the French bank BNP a year ago.

In principle, sanctions have been lifted. But in practice, even though its sales of crude are reaching pre-sanctions levels, Iran has found that, financially, it remains substantially hobbled. America apparently achieved a double success: It circumscribed Iran’s nuclear program, and the U.S. Treasury has hollowed out the nuclear agreement’s financial quid pro quo, thus limiting Iran’s potential financial empowerment, which America’s Gulf allies so feared.

Some Iranian leaders feel cheated; some are livid. Others simply opine that the U.S. should never have been trusted in the first place.

And Damascus? It never believed that the recent cease-fire would be a genuine cessation of hostilities, and many ordinary Syrians now concur with their government, seeing it as just another American ruse. They are urging their government to get on with it — to liberate Aleppo. “Just do it” is the message for the Syrian government that I’ve heard on the streets. A sense of the West being deceitful is exacerbated by reports of American, German, French and possibly Belgian special forces establishing themselves in northern Syria.

All this infringement of Syrian sovereignty does not really seem temporary but rather the opposite: there are shades of Afghanistan, with all the “temporary” NATO bases. In any case, it is no exaggeration to say that skepticism about Western motives is in the air — especially after Ashton Carter, the U.S. defense secretary, raised the possibility of NATO entering the fray.

As Pat Lang, a former U.S. defense intelligence officer, wrote last week:

The Russians evidently thought they could make an honest deal with [U.S. Secretary of State John] Kerry [and President] Obama. Well, they were wrong. The U.S. supported jihadis associated with [Jabhat al-Nusra, al Qaeda’s Syria wing] … merely ‘pocketed’ the truce as an opportunity to re-fit, re-supply and re-position forces. The U.S. must have been complicit in this ruse. Perhaps the Russians have learned from this experience.

Lang goes on to note that during the “truce,” “the Turks, presumably with the agreement of the U.S., brought 6,000 men north out of [Syria via the] Turkish border … They trucked them around, and brought them through Hatay Province in Turkey to be sent back into Aleppo Province and to the city of Aleppo itself.” Reports in Russian media indicate that Nusra jihadists, who have continued to shell Syrian government forces during the “truce,” are being commanded directly by Turkish military advisers. And meanwhile, the U.S. supplied the opposition with about 3,000 tons of weapons during the cease-fire, according to I.H.S. Jane’s, a security research firm.

In brief, the cease-fire has failed. It was not observed. The U.S. made no real effortto separate the moderates from Nusra around Aleppo (as Russian Foreign Minister Sergei Lavrov has affirmed). Instead, the U.S. reportedly sought Nusra’s exemption from any Russian or Syrian attack. It reminds one of that old joke: “Oh Lord, preserve me from sin — but not just yet!” Or in other words, “preserve us from these dreadful jihadist terrorists, but not just yet, for Nusra is too useful a tool to lose.”

The cease-fire did not hasten any political solution, and Russia’s allies — Iran and Hezbollah — have already paid and will continue to pay a heavy price in terms of casualties for halting their momentum toward Aleppo. The opposition now has renewed vigor — and weapons.

It is hard to see the cease-fire holding value for Moscow much longer. The original Russian intention was to try to compel American cooperation, firstly in the war against jihadism and, more generally, to compel the U.S. and Europe to acknowledge that their own security interests intersect directly with those of Moscow and that this intersection plainly calls for partnership rather than confrontation.

The present situation in Syria neither facilitates this bigger objective nor the secondary one of defeating radical jihadism. Rather, it has led to calls in Russia for a less conciliatory approach to the U.S. and for the Kremlin to acknowledge that far from preparing for partnership, NATO is gearing up for a hybrid war against Russia.

It is also hard to see the cease-fire holding any continuing value for Tehran either. While the Iran nuclear agreement seemed to hold out the promise of bringing Iran back into the global financial system, such expectations seem now to be withering on the vine. As a result, Iran is likely to feel released from self-imposed limitations of their engagement in Syria and in other parts of the Middle East. Damascus, meanwhile, only very reluctantly agreed to leave its citizens in Aleppo in some semi-frozen limbo. Iran and Hezbollah were equally dubious.

All this suggests renewed military escalation this summer. Russian President Vladimir Putin will probably not wish to act before the European summit at the end of June. And neither would he wish Russia to figure largely as an issue in the U.S. presidential election. Yet he cannot ignore the pressures from those within Russia who insist that America is planning a hybrid war for which Russia is unprepared.

The Russia commentator Eric Zuesse encapsulated some of these concerns, writing that “actions speak louder than words.” Earlier this month, he notes, the U.S. refused to discuss with Russia its missile defense program:

Russia’s concern is that, if the ‘Ballistic Missile Defense’ or ‘Anti Ballistic Missile’ system, that the U.S. is now just starting to install on and near Russia’s borders, works, then the U.S. will be able to launch a surprise nuclear attack against Russia, and this system, which has been in development for decades and is technically called the ‘Aegis Ashore Missile Defense System,’ will annihilate the missiles that Russia launches in retaliation, which will then leave the Russian population with no retaliation at all.

Zuesse goes on to argue that the U.S. seems to be pursuing a new nuclear strategy, one that was put forward in 2006 in a Foreign Affairsarticle headlined “The Rise of Nuclear Primacy,” and scrapping the earlier policy of “mutually assured destruction.” The new strategy, Zuesse writes, argues “for a much bolder U.S. strategic policy against Russia, based upon what it argued was America’s technological superiority against Russia’s weaponry — and a possibly limited time-window in which to take advantage of it — before Russia catches up and the opportunity to do so is gone.”

So, what is going on here? Does the U.S. administration not see that pulling Russia into a debilitating Syrian quagmire by playing clever with a cease-fire that allows the insurgency to get the wind back in its sails is almost certain to lead to Russia and Iran increasing their military engagement? There is talk both in Russia and Iran of the need for a military surge to try to break the back of the conflict. Does the U.S. see that ultimately such a strategy might further entangle it — just as much as Russia and Iran — in the conflict? Does it understand Saudi Arabia’s intent to double down in Syria and Turkish President Recep Tayyip Erdogan’s political interest in continuing the Syrian crisis? Does it judge these very real dangers accurately?

No, I think not: the political calculus is different. More likely, the explanation relates to the presidential election campaign in the U.S. The Democratic Party, in brief, is striving to steal the Republican Party’s clothes. The latter holds the mantle of being credited as the safer pair of hands of the two, as far as America’s security is concerned. This has been a longstanding potential weakness for the Democrats, only too readily exploited by its electoral opponents. Now, perhaps the opportunity is there to steal this mantle from the Republicans.

All this hawkishness — the American shrug of the shoulders at making Iran feel cheated over the nuclear agreement; at Russia, Iran and Damascus seething that the Syria cease-fire was no more than a clever trap to halt their military momentum; at the psychological impact of NATO exercising on Russia’s borders; at the possible consequences to Obama’s refusal to discuss the ballistic defense system — all this is more likely about showing Democrat toughness and savvy in contrast to Donald Trump.

In short, the Democrats see the opportunity to cast themselves as tough and reliable and to transform foreign policy into an asset rather than their Achilles’ heel.

But if all this bullheadedness is nothing more than the Democratic Party espying an apparent weakness in the Trump campaign, is this foreign policy posturing meaningful? The answer is that it is not meaningless; it carries grave risks. Ostensibly this posture may appear clever in a domestic campaigning context, where Russia is widely viewed in a negative light. But externally, if the Syrian cease-fire comes to be viewed as nothing more than a cynical ploy by the U.S. to drag Russia deeper into the Syrian quagmire in order to cut Putin down to size, then what will likely follow is escalation. Hot months ahead in Syria. Russia will gradually reenter the conflict, and Iran and Iraq will likely increase their involvement as well.

Firefighters try to extinguish a fire after airstrikes in Idlib, Syria on June 12. (Abdurrahman Sayid/Anadolu Agency/Getty Images)

There are those in the U.S., Turkey and the Gulf who would welcome such a heightened crisis, hoping that it would become so compellingly serious that no incoming U.S. president, of either hue, could avoid the call to do something upon taking office. In this way, the U.S. could find itself dragged into the maw of another unwinnable Middle Eastern war.

We should try to understand the wider dangers better, too. Baiting Russia, under the problematic rubric of countering Russian “aggression,” is very much in fashion now. But in Russia, there is an influential and substantial faction that has come to believe that the West is planning a devastating hybrid military and economic war against it. If this is not so, why is the West so intent on pushing Russia tight up into a corner? Simply to teach it deference? Psychologists warn us against such strategies, and Russia finally is reconfiguring its army (and more hesitantly, its economy) precisely to fight for its corner.

As another noted Russia commentator, John Helmer, noted on his blog on May 30, the new NATO missile installations in Eastern Europe “are hostile acts, just short of casus belli — a cause of war.” According to Reuters, Putin warned that Romania might soon “be in the cross hairs” — the new NATO missile installations there will force Russia “to carry out certain measures to ensure our security.”

“It will be the same case with Poland,” Putin added.

Did you hear that sound? That was the ratchet of war, which has just clicked up a slot or two.

Press the reset button on the refugee crisis

Preethi Nallu

Slogans were plentiful at last month’s humanitarian summit in Istanbul. There was hope too, that the meeting would serve as a compelling prelude to the UN conference on refugees and migrants scheduled for New York in September. But all the hosts could muster – after three years of consultations with about 27,000 people across 153 countries – were vague commitments towards intentionally broad “core” basic principles.

The imminent problem was clear to every participant. The current rate of movement of people across borders is a consequence of globalisation and the unequal distribution of wealth and stability. With about 80 per cent of the world’s population expected to live in conflict-prone areas over the next decade, global strife will continue to outpace the humanitarian systems in place to deal with them.

The consultations that led to the Istanbul summit – the result of 400 written submissions over several years – prescribe reform of the humanitarian sector and changes to international law to cope with the current crises. From addressing displacement induced by climate change to the intensifying wrath of conflicts that permeate boundaries of nation states, the approaches that were put in place after the Second World War are clearly in need of a major overhaul.

But it was hard not to feel the folly of sitting at the closing ceremony of the summit last month. As the historical gateway between Asia and Europe since the time of Byzantium, Istanbul was a fitting venue to address the rapid migration flows from different directions that have triggered today’s global refugee crisis. Turkey is home to the world’s largest refugee population, with more than 2.8 million Syrian men, women and children. Anywhere up to 500,000 Syrians live in Istanbul alone.

But the mounting accusations against Turkey of shooting at civilians fleeing attacks by the Syrian regime and ISIL, made the venue less comfortable. If Turkey’s plans to build “smart” shooting towers at its borders are implemented, it will have concocted a ruthless and dystopian approach to mitigating migration.

Efforts to control migration have proved unwieldy, expensive and ineffective, with few deportations from Greece and even fewer admissions into the EU under the one-in-one-out deal. Dismayed humanitarian workers report an uneasy impasse as refugees biding their time to embark on boats have gone into hiding for fear of being detained. Others choosing alternate routes, including women and children, have disappeared, becoming even easier prey for traffickers.

With Italy eclipsing Greece with the number of arrivals over April and May, a centrally organised response system – one that minimises deaths at sea, offers humane reception to those arriving on the shores of Europe and, better yet, options of applying for asylum without having to undertake dangerous crossings – warranted explicit acknowledgement at the summit.

The 130 bodies that washed up on the Libyan coast in the days following the summit and the more than 1,040 deaths over the last two weeks should put us all to shame. Yet the declarations coming from the summit’s panels were vague, non-committal and underwhelming.

Gathering governmental and non-governmental organisation on a common platform is not without its merits. But by failing to delineate clear roles and responsibilities and skirting the basic acknowledgement that the most powerful participants have the most influence, the summit failed to address the elephants in the room that have made themselves at home.

For the UN to deliver aid during conflict, states must adhere to international humanitarian laws. For aid to be effective, the UN must become more efficient with its on-ground operations.

Several organisations have monitored these failings, but almost none are explicitly discussed. Doing so would mean pointing to specific violations by states and assessing the failures of the UN. It is equally important to acknowledge that the failures of the UN-led humanitarian system are rooted in its subordinate role to the nation-states that are its primary patrons.

The off-the-record conversations in Istanbul between sectors and among people who would otherwise not meet could turn out to be a worthy investment, especially as the trajectory is now pointing towards the New York summit.

Making use of the conversations that emanated in Istanbul will require getting into finer details, from managing borders and establishing early warning systems to analysing successful cases of the integration of refugee populations through freedom of movement.

Change must take place at all levels of the international humanitarian system with improving emergency response as the first tenet of that transformation. The overhaul must be all encompassing: from the UN’s lack of accountability to the bureaucratic mazes of governments and the gaps between the visions emanating from the headquarters of humanitarian organisations and the realities on the ground.

With the Mediterranean crossings by migrants climbing towards an ever-higher apex, the timing of the summit and the lead up to New York is in fact propitious. But, how do we best harness this sense of urgency? The only way forward is to hit the reset button.

When the Caliphate Crumbles: The Future of Islamic State affiliates

War on the Rocks

Clint Watts

Panic over which future Islamic State affiliate should be of chief concern rises each day as the Islamic State loses turf in Iraq and Syria and foreign fighters flee. This panic should be muted, though, as all Islamic State affiliates are not created equal. A scary jihad map from al Qaeda last decade looks remarkably similar to a scary Islamic State map today. The names change but the places largely remain the same. Much like al Qaeda affiliates eight years ago after jihadi battlefields in Iraq and Afghanistan cooled, only a few Islamic State affiliates will grow while many others wane. Anticipating which Islamic State affiliates will rise and fall in the coming years requires a deeper examination of the current construct of each affiliate, the bonds that bring affiliates closer to the Islamic State, the convergent and divergent interests between headquarters and the affiliates, and a long-term outlook for each region. Examining these factors across 16 current or potential affiliate regions paints a dire picture for the Islamic State as an enduring cohesive global terrorist organization. Its strongest current affiliates in North Africa and the Arabian Peninsula face stiff competition from local rivals and rising counterterrorism pressure. For the Islamic State to endure beyond Iraq and Syria, its options are few and depend more on its ability to self-finance than any other factor.

All Affiliates Are Not Created Equal

Islamic State affiliates; referred to by the group as wilayats (provinces), like their al Qaeda parallels come in different shapes and sizes. Will McCants, Senior Fellow at the Brookings Institute and author of ISIS Apocalypse, characterizes Islamic State affiliates in three ways:

  • Statelet — a governate that holds territory and operates like a state
  • Insurgency — a governate that occupies territory, but cannot always hold it, and is unwilling or unable to perform the functions of a state
  • Terrorist Organization — a governate that holds no territory and can only operate clandestinely

As an example, the Islamic State’s three wilayats in Libya represent statelets, its Boko Haram affiliate in Nigeria represents an insurgency, and its wilayats in Saudi Arabia only qualify as terrorist organizations. This affiliate landscape is dynamic; the status of all affiliates remains in flux. The Islamic State’s strongest affiliate in Libya sustained losses just this week. To illustrate the different types of affiliates currently composing the Islamic State brand, I’ve assessed each affiliate and its current status in a chart below (Figure 1). In some cases, regions host terrorist groups pledged to the Islamic State that have not been designated formally as wilayats. I describe these areas that produce high numbers of foreign fighters or suffer large amounts of Islamic State-inspired violence as “Horizon Wilayats” that may emerge over time as official provinces.

ISIS affiliates Figure 1

The Bonds That Bind 

Three years ago, counterterrorism debates ignited over a rumored conference call in which Ayman al-Zawahiri presided over a global gathering of al Qaeda affiliates. News of this communications session initially sparked the familiar chirp of pundits: al Qaeda is growing stronger, it’s winning, it’s on the march. But this terrorist communication was confused for commitment and allegiance at a time when al Qaeda’s network instead began to crumble. Bonds were not strengthening, but breaking. Affiliate pledges and communications provide only weak indicators of terrorist collaboration. The stronger bonds that bind terrorists together and suggest true coordination between a headquarters are physical, not merely virtual.

Similarly, today’s Islamic State social media propagation across a wide range of affiliates has been interpreted as a strong sign of its growing network. Electronic communication and sharing suggest coordination, but represents only one of the softer, weaker bonds surfacing in the open source. Pledging bay’at (allegiance) to the Islamic State proves the most obvious indicator, but the speed and nature in which Islamic State Central confirms bay’at tells more about the relationship. Following allegiance, collaborative social media work naturally occurs, but the specifics can be telling. Some affiliates broadcast in lockstep with headquarters, while others, either lacking routine communication with headquarters or sufficient technical production capability, broadcast only sporadically.

True allegiance, whether to al Qaeda or the Islamic State, occurs when terrorists physically collaborate on battlefields. Those affiliates closer to the head shed in Syria and Iraq naturally build tighter relationships with leadership. As seen with al Qaeda in the Islamic Maghreb (AQIM), one of the first affiliates to rebrand as al Qaeda last decade, failed digital communication and collaboration with al Qaeda Central (AQC) in Pakistan during the group’s surge in 2012likely contributing to the group’s decline. Affiliates in West Africa, the Horn of Africa, and Southeast Asia have always struggled to get equal attention as compared to those more proximate to the bosses. Beyond social media posts, affiliates best emulating the headquarters will duplicate their administrative governance documents. Islamic State wilayats in Libya and Yemen have duplicated governance policies closely mirroring law in Syria and Iraq. Physical relationships always prove the most telling. Countries with large volumes of foreign fighters surfacing in Syria and Iraq will have more and stronger connections with the Islamic State over the long term. Affiliates enjoying tighter relationships with headquarters will also receive investments in money and men to help sustain or grow their emirate and generate high profile attacks.

Above all, the movement of headquarters’ leaders from Syria and Iraq to an affiliate signals strategic calculation effectively done only through an in-person meeting. Drone strikes outside of Pakstan, Iraq and Syria or surprising Delta Force raids provide some of the only open source clues of affiliate connections to those outside of government intelligence circles. During al Qaeda’s move to affiliates, key operatives were unsuccessfully dispatched to capitalize on the Arab Spring and secreted into the Khorasan Group among Jabhat al-Nusra. Al Qaeda in the Arabian Peninsula (AQAP) dispatched envoys to al Shabaab, providing some of the first overt signs of the Somali group’s official connection to al Qaeda. The recent U.S. airstrike killing an Iraqi stationed in Libya, Abu Nabil, suggests the Islamic State now follows a similar pattern.

The Converging and Diverging Interests Of Terrorist Affiliates

Beyond the strength of bonds that bring militants together, a deeper examination of the converging and diverging interests between the Islamic State and its blossoming affiliates will signal which battlefields show promise beyond Syria and Iraq. Those affiliates expanding the brand and providing the group future options will be favored over those former al Qaeda affiliates reaching for the Islamic State’s fame.

The Islamic State accrues straightforward benefits accepting affiliates. After declaring a caliphate, receiving bay’at pledges from global affiliates became a signature way for the Islamic State to demonstrate its rise over its former overlords in al Qaeda. The Islamic State orchestrated the first pledges for maximum propaganda value by pulling in support from former al Qaeda strongholds such as Algeria and Afghanistan. Affiliates have also become a vehicle for achieving success with minimal effort. The Sinai wilayat downed a Russian airliner, providing the Islamic State brand effortless success and increased media content and distribution benefiting both parties. Depending on the environment, a good wilayat can provide potential financial support over the longer term, an expanded set of recruits to join the ranks in Syria, and may even serve as a future safe haven for the Islamic State should its current caliphate evaporate. Both Yemen and Syria served this purpose for al Qaeda over the last decade as its leaders expired in Pakistan. The Islamic State also benefits if affiliates can provide access to specialized skills, equipment, and even targets (such as Westerners). Most importantly, a good affiliate will energize global supporters. Al Qaeda’s affiliates over the last decade demonstrated that Arab affiliates closer to the ideological heartland inspire global supporters in ways African and Asian affiliates sprinkled around the periphery cannot.

From the affiliate’s perspective, pledging to the Islamic State brings a mixture of self-interests, some of which may be more of detriment than benefit to the headquarters. Those first affiliates pledging to the Islamic State largely consisted of breakaway al Qaeda middle managers frustrated by local lack of progress who sought promotion. Frustrated, relatively unknown background players formed wilayats in Afghanistan and Algeria to directly challenge longtime al Qaeda strongholds. Hardliners and violent young bucks broke from al Qaeda in the Arabian Peninsula to form a Yemeni wilayat. These new affiliates benefited by connecting to the Islamic State, whose unprecedented media machine amplified its new local group. Should they fail, these new Islamic State upstarts could retreat to a safe haven in Syria and Iraq.

Breakaway faction interests in Algeria, Afghanistan, and Yemen do not hurt headquarters like those long-lasting terror groups who glom onto Islamic State fame while offering little to the global brand. As seen with al Shabaab, which clung to a merger with al Qaeda after its fortunes waned in 2012, some affiliates jump to the Islamic State to reinvigorate their dying efforts. Ansar Bayt al Maqdisi, now the Islamic State’s Sinai wilayat, likely serves as a similar example. Naturally, resource-strapped affiliates may seek out the Islamic State for money and resources, draining the headquarters’ coffers. Today, many selfish Islamic State affiliates, particularly those in Nigeria and Southeast Asia, have clamored for the Islamic State to allow them to keep local manpower at home and possibly incentivize global fighters to relocate as the war in Syria and Iraq declines.

Factors Driving Future Islamic State Growth

The Islamic State’s headquarters, should it crack under coalition pressure over the next year, will face a similar dilemma as al Qaeda did during the Pakistani drone siege of 2009 to 2011: Where should they move to survive and thrive?Regardless of the bonds and ainterests that help describe the relationship between the Islamic State and its affiliates, three factors will largely influence where the Islamic State seeks a new homeland. First, the Islamic State proved able to break away from al Qaeda largely because it was self-financed. Moving forward, those affiliates able to generate their own revenue will have a significant advantage in the post-caliphate era. Second, as seen by post-Bin Laden al Qaeda’s failed emirates in Yemen, Somalia, and the Sahel, affiliates facing less counterterrorism pressure in the near term will have a greater chance of surviving over the longer term. Third, affiliates in many countries face a range of jihadi competitors. Wilayats with less competition will likely prove more fruitful for the Islamic State as they can conserve resources by avoiding battle with their former al Qaeda brothers.

The chart below evaluates 27 factors noted in the above discussion weighted and compared across 16 affiliate regions. Factors were informed by open source indicators I populated, foreign fighter data discussed in “Beyond Syria and Iraq, The Islamic State’s HR Files Illuminate Dangerous Trends,” and a comparison of expert judgments. I relied on the godfather of Islamic State administration, Aymen al-Tamimi, to understand where governance practices were being shared, used the work of Charlie WinterJ.M. Berger, and Aaron Zelin to assess social media collaboration, and leaned on Will McCants for comparing affiliate constructs. The horizontal axis assesses perceived bonds between affiliates and the headquarters. The vertical axis depicts the degree to which an affiliate’s interests converge with that of the Islamic State. Arrows show the affiliate’s future outlook, either positive or negative depending on potential revenue, counterterrorism pressure, and jihadi competition.

Three clusters of affiliates naturally arose after evaluation of more than two dozen factors. Those affiliates with the tightest bonds and convergent interests with Islamic State headquarters (upper right quadrant of Figure 1 “al Qaeda Rivals”) represent locations with long histories of jihadi violence and were some of the first to pledge to the Islamic State and challenge al Qaeda. The outlook for “al Qaeda Rivals” seems dim as they struggle against a combination of challenges: local jihadi competitors, international counterterrorism efforts, intense state opposition, and financial challenges. The Islamic State’s most promising affiliate in Libya suffered a serious setback this week losing their prized port of Sirte.

On the opposite end of the spectrum, several “Bandwagon” affiliates offer a better outlook since they face fewer local rivals, weaker counterterrorism pressure, better ability to self-finance. Yet Indonesia, the Philippines, Somalia, and Nigeria have the weakest bonds with the Islamic State. Comparatively few foreign fighters from these locales have traveled to Syria. Disloyal al Qaeda affiliate Boko Haram and the Somali splinter emerging for the Islamic State often pursue wanton violence that ultimately proves detrimental to the greater brand. Invigorated Indonesian and Filipino terror groups, now Islamic State devotees, show little difference from their al Qaeda-supporting forms of a decade ago. All of these affiliates pledge to either the Islamic State or al Qaeda to bolster their own image and keep their troops at home. Finally, these “Bandwagon” affiliates have never drawn significant global support and would likely be the least preferred travel destinations of most surviving Islamic State foreign fighters, who for the most part will differ ethnically from these peripheral groups.

In between the “al Qaeda Rivals” and “Bandwagon” affiliates are “Morphing” existing and future affiliates. Those “Morphing” include two affiliates from historical jihadi conflict zones on the decline. Russians from the Caucasus joined the Islamic State in Syria largely because their efforts were crushed at home. AQIM splinters joining the Islamic State immediately after declaration of the caliphate have largely been routed by the Algerian government and outpaced by their previous AQIM overlords.

Emerging areas may provide possible alternatives with greater viability compared to traditional affiliates. Islamic State-inspired violence has sprung up in Bangladesh; though the outlook there appears positive for jihadis, the country lacks tight linkages with Syria and Iraq. Central Asia provided a significant uptick in foreign fighters to Syria, and jihadi-inspired violence hit Kazakhstan this week. Meanwhile, Lebanon not only produces a high rate of foreign fighters to Syria, but also offers an easy transit point from Syria.

Al Qaeda affiliates may have a marginally better outlook than the Islamic State

The Islamic State’s options for reconstituting in an affiliate appear bleak, should it need to scale back in Syria and Iraq. All of its fountains of support across North Africa, the Middle East, and Asia face stiff local competition or mounting counterterrorism pressure. More importantly, the Islamic State’s vaunted caliphate-funding model may quickly become the group’s lynchpin if it moves from state to affiliate and from conventional army to insurgency and terrorism. With no turf to govern, there will be no spoils to take, necessitating a shift to donations and black market operations. The Islamic State has employed off-putting violence, alienating many potential donors. Al Qaeda, on the other hand, always measured its violence in part to prevent the loss of its core financial donors. Al Qaeda’s approach endures to this day, as seen by Qatari kingpins powering the al Qaeda affiliate in Syria, Jabhat al Nusra. Over time, Islamic State affiliates will struggle under competition because no affiliate, at present, seems to govern on sufficient scale to replenish this funding stream, and their type of violence will be unlikely to attract committed donors. Islamic State affiliates will be dependent on black market spoils that often turn local populaces against terrorists in ways more legitimate taxes and donations do not.

What to look for as the caliphate crumbles?

Financial outflows from Syria and Iraq, the dispatching of Iraqi Islamic State envoys, and the emigration of foreign fighters (already underway) will provide the most illustrative signals of the post-Islamic State terrorism landscape. The most indicative data will come from the roughly 15% of Islamic State foreign fighter survivors I estimate will be unable or unwilling to return home. These “floating” fighters lacking roots to a homeland affiliate will be inclined to choose the most promising global affiliates for safe havens. As noted last week, Europeans will be the most important tell and will be inclined to mix with those of similar ethnicity and language. For example, French and Belgian foreign fighters may be better suited for North Africa or Lebanon.

Central Asian, Russian, and Chinese fighters will be another important contingent to watch should they choose to resettle with an Asian group known for attracting foreign fighters, such as the Khorasan wilayat or possibly more likely the Islamic Movement of Uzbekistan (IMU). In the coming months, some Islamic State affiliates will decline and be absorbed by other affiliates in a natural process of consolidation and reconstitution. As an example, recent news suggests Sinai wilayat members may already be relocating to Libya. Ideological leaders represent the bishops of the Islamic State chessboard, and their movement from the caliphate will confirm the game is up. Keep an eye on their travel. If they choose to leave Syria and Iraq, they will be the last to go and will only move to the safest of affiliates — those most amenable to continuing the Islamic State’s vision for governance.

Having controlled territory to this point, the Islamic State has been able to stockpile cash, although coalition airstrikes have recently taken quite a toll on this reserve. In preparation for a move or to survive in general, the Islamic State will increasingly transfer funds to other locations. Analysts should watch for increased hawala transfers from the Levant to affiliates, increased money laundering through black market connections in Turkey, Lebanon, and Iraq, and even financial sheltering via social media applications and digital currencies leveraging the Islamic State’s global network of supporters.

Lastly, of all locations, Lebanon may be the most important to watch. A fragile state close to Syria, Lebanon is producing high rates of foreign fighters, faces floods of refugees, lacks a strong international counterterrorism presence, faces constant sectarian strife, and sits proximate to every jihadi’s common enemy, Israel. Lebanon, moreso than any other country, seems an ideal opportunity for the Islamic State should the caliphate end. Much like the American withdrawal from Iraq six years ago, the Islamic State’s demise, when it comes, won’t spell the end of jihad — just the close of a chapter and the start of a new one somewhere else.

Modi’s Visit to Washington

Wilson Center

Michael Kugelman

Narendra Modi’s Washington rehabilitation is complete. That’s the chief takeaway from the Indian prime minister’s three-day visit to the U.S. capital. His agenda included a sit-down with President Barack Obamaaddressing a joint session of Congress; and meetings with top CEOs, the World Bank director, several U.S. Cabinet members, and Washington think tankers.

Mr. Modi received a hero’s welcome from elected officials when he arrived at the U.S. Capitol on Wednesday, and his address to Congress drew multiple standing ovations. Many people hugged the prime minister as he entered and exited. Mr. Modi has come a long way in a short time; a decade ago, he was persona non grata in Washington. He was denied a visa to the U.S. in 2005 because officials thought that he hadn’t done enough to stop anti-Muslim riots in the Indian state of Gujarat in 2002 when he was chief minister there. After he was elected prime minister two years ago, the Obama administration opted not to ban the leader of a rising democratic power critical to U.S. interests. Rather than hold a grudge, Mr. Modi impressed upon Washington his desire to deepen bilateral relations. He won over the Obama administration relatively easily, but not until this trip did he demonstrate the respect he has earned in Congress—which has been the source of several tension points, thanks to lawmakers’ criticism of India’s human rights record and visa policies that New Delhi has lambasted as discriminatory to Indian workers in the U.S.

As I wrote Monday, a major objective of both leaders was for this trip to amplify the countries’ shared valuesconvergent interests, and depth of the relationship. This was meant to help signal that U.S.-India ties are poised to remain strong whoever is elected in November. Both the joint statement issued after Mr. Modi’s meeting with the president and the prime minister’s congressional address referred to a “natural” and “indispensable” relationship; joint bedrock beliefs in freedom and democracy; and similarities between both nations’ founders. One of the largest applause lines in Mr. Modi’s  speech was his reference to the 3 million-strong Indian-American community, which is often cited by both governments as a natural bridge.

For all the talk of defense as the pillar of the U.S.-India relationship, climate change occupies an increasingly critical position as well. Climate change and “clean energy” were a long section of the joint statement, which pledged stepped-up collaborations with U.S. financing of and technology for more environmentally-friendly energy in India. The Modi administration has interest in low-carbon energy projects (though it has not said explicitly that it will pursue emissions-reduction policies). Perhaps in part because of the public health consequences of India’s air-pollution levels, New Delhi no longer reflexively argues that it has a right to pollute for economic development. India’s greater receptivity to mitigating climate change is a boon for bilateral relations.

The trip produced deals on energy and educational exchanges, but final terms were not reached on the biggest pending projects—significantly, a plan to have Westinghouse help build nuclear reactors in India advanced but isn’t complete; also still pending is an accord allowing the U.S. and India to use each other’s military facilities for refueling and repairs. Additionally, while the joint statement said the United States would join the Paris Agreement climate accord this year, it said only that New Delhi would “work toward this shared objective.” The Obama administration wants India to formally join the accord before the U.S. presidential election, moving the agreement one step closer to enforcement (at which point nations cannot opt out for a period of four years, so the next U.S. president would not be able to withdraw).

For Mr. Obama’s legacy and for the good of the overall relationship, U.S. and Indian officials will want to reach closure soon on other pending initiatives.

The opinions expressed here are solely those of the author.

 

Berlin calls Erdogan’s bluff on refugees

Politico

MATTHEW KARNITSCHNIG & TOM MCTAGUE

 

Angela Merkel’s top adviser on Europe dismissed threats by Turkish leader Recep Tayyip Erdoğan to pull out of the EU’s refugee deal with Ankara as “bluster,” according to leaked British diplomatic cables.

Erdoğan, who has vowed to upend the refugee pact if the EU doesn’t make good on its promise to grant Turks visa-free travel, has a greater interest in keeping the deal alive than allowing it to collapse, Merkel adviser Uwe Corsepius told a senior British diplomat in Berlin, according to the diplomatic cables seen by POLITICO.

“Uwe Corsepius told me today that the EU should remain calm,” the British diplomat reported back to London on May 13. “While Erdoğan still had the ability, in theory, to generate a surge in the refugee flow, his threats were just bluster. It was in Erdoğan’s strategic interest to keep the relationship with the EU working.”

The Corsepius cable was signed WOOD, suggesting it was written by Sebastian Wood, the British ambassador to Berlin.

Europe cut a deal with Ankara in March to provide billions of euros in aid, and grant Turkish citizens a visa waiver as early as this summer, in exchange for Turkey’s commitment to reduce the flow of refugees heading to Europe.

Since then, Turkey has signaled it wouldn’t accept a European requirement to reform its controversial anti-terror laws, sparking a heated back-and-forth between Ankara and European capitals.

Though little known outside of official circles, Corsepius — who previously served the senior-most civil servant at the Council of the European Union in Brussels — plays a key role in shaping Merkel’s European policies and has been deeply involved in negotiations with Turkey.

The Corsepius cable was written before recent tensions emerged this month between Berlin and Ankara over the German parliament’s decision to declare the Ottoman Empire’s 1915 massacre of Armenians a genocide.

Nonetheless, the communication helps explain Merkel’s tempered response to Ankara’s persistent taunts. The cable suggests Berlin has concluded that Erdoğan needs Europe just as much as Europe needs Turkey.

“EU accession and visa liberalization remained strategic goals for Turkey,” the diplomat paraphrases Corsepius as saying.

Berlin’s strategy is to draw the process out, in part to allow the tempers on both sides to calm. “We can keep this under control,” Corsepius adds, according to the cable.

Georg Streiter, a spokesperson for the German government, told POLITICO that he was not familiar with the cables in question.

Refugee numbers down

“Absolutely nothing has changed regarding the German position,” Streiter said, referring to the EU-Turkey deal.

Indeed, despite the heated rhetoric, Turkey has continued to honor its end of the bargain. The number of refugees crossing the Aegean to Greece has declined sharply in recent months.

To keep the deal alive, Berlin would likely be willing to grant Turkey further concessions, the British diplomatic cable concludes.

“Despite the tough public line, there are straws in the wind to suggest that in extremis the Germans would compromise further to preserve the EU/Turkey deal,” the cable says. “Officials have shown some interest, behind the scenes, in thinking about possible compromise formulations on the anti-terror law.”

The batch of cables, which include a detailed analysis of how the U.K. should position itself on the Turkey question, offer a rare, unfiltered glimpse of the behind-the-scenes diplomatic maneuverings between Europe’s capitals. A spokesman for the U.K. foreign office said the telegrams were “reports from our diplomatic posts, not statements of British government policy.”

One of the cables, sent from the British embassy in Ankara on May 5, sparked controversy in the U.K. after being leaked to the Sunday Times.

The telegram suggested that to keep Erdoğan on-side, the U.K. government should consider setting up its own visa-free scheme, dropping travel restrictions for Turkish “special passport” holders. About 1.5 million Turks currently have such passports, which are supposed to be for officials, civil servants, teachers and their families, the paper said.

The suggestion was jumped on by the Brexit campaign as evidence of secret negotiations to open the U.K.’s borders to Turks — an allegation furiously rejected by Downing Street.

Karnitschnig reported from Berlin and McTague from London. Janosch Delcker contributed to this article.