Author: Emanuel Arbib

Trading Hot Air

As any experienced negotiator knows, one of the key tactics in complex negotiations, is to include in the ‘Ask’ certain items that one is happily willing to give up. Doing so enables the other side to rationalise that after all, both sides are giving up on certain issues. A top negotiator will even create a crisis item that is completely artificial, but seems very credible, in order to be able to use it as a bargaining chip.

A master negotiator is able to do this on the world stage. Benjamin Netanyahu is certainly such a master negotiator. He was able to ‘sell’ a standstill on the sovereignty issue over parts of Judea and Samaria in exchange for full recognition and relations with a key growing Arab power like the UAE. He got a top result by giving up something that either was never going to happen, or at the very least was already not actual, given that Trump has the proverbial bigger fish to fry at this time.

On the media front, Bibi scored another key ‘win.’  There are two ways to win a confrontation, the first one is to simply defeat your enemy, the other is when the enemy acknowledges your position. This is what is happening today in Israel, with the uber Liberal Haaretz daily having to admit: “In UAE Deal, Netanyahu Trades Imaginary Annexation for Real Life Diplomacy Win.” It doesn’t get sweeter than that.

Hail to the Chief?

Americans were once known to have a high degree of respect for the office of the presidency, irrespective of who was the current incumbent. In particular, there was a bipartisan understanding that ‘like him or not,’ he is the elected commander in chief. When Israeli PM Benjamin Netanyahu was asked by Congress to address them in March 2005 to discuss the topic of the imminent Iranian nuclear threat, many democrats decried the invitation, and the speech, as an affront to the presidency. Today, no more. The New York Times is of course no fan of Mr. Trump, but these days they appear to be very tame when compared to the vitriol coming out of CNN, whose journalists and anchors can’t literally go an hour without attacking, criticising, ridiculing, and disparaging their sitting president. Of course, Trump is no saint and he has faults of his own for discrediting his credibility, for which he should be appropriately criticised. The problem is that when the discredit came from a democratic president who violates the ‘sanctity’ of the Oval Office, or the other one who drew red lines and then forgot about them, we didn’t hear the respective voices or the pens of Wolf Blitzer, Roger Cohen and Thomas Friedman scolding them in anything close to the same way they daily abuse the 45th President.

The Stay at Home bill is coming

After three months of relentless Stay-at-Home/Stay Safe messages, the major Anglo-Saxon economies are beginning to understand that these measures, while thoughtful, are simply unaffordable in today’s economies. Recently the US Treasury Secretary Menuchin admitted that ‘second wave’ or no second wave, there will not be another lockdown; why? Simple, it’s not affordable. Today the UK announced that April’s GDP was down a staggering 20%+! Do you think that they will lockdown again?

Both the UK and the US have long wagered their future on the service economy. While some have been continuing to work from home, this was clearly not enough to prevent a major shock. Keeping hotels, shops, airliners, and offices shut for three months has cost us a staggering amount. The only difference between 2020 and 1929, is that this time, a combined torrent of monetary (as after 2008) and fiscal stimulus (as after FDR’s election) have sedated the patient. But the patient is now waking up and the pain is beginning to be felt. Don’t forget that the Great Depression only ended because of and after WWII.

The unfortunate truth that governments don’t want to admit is that even the wealthiest economies simply can’t afford these lockdowns and have now shot their bullets. The protracted lockdown has most certainly saved lives, but it has come at a huge cost. Consider the damage being inflicted on children staying at home, on wives being abused, on seriously ill patients not getting their essential care. As Yonathan Rosenblum brilliantly said a few weeks ago, the trade-off is not necessarily between lives and money, as the Economist put it at the beginning of the crisis. It is rather between lives and lives.

Governments should prepare for the next wave, or G-D forbid, the next pandemic, in a much more clever and cheaper way. They should protect the older population and the ones most at risk, while investing in multiplying hospital beds. If you consider that it costs $13bln to build and fit another aircraft carrier which will probably never be used, while that money could be used to build nearly one hundred  200-bed hospitals (20,000 beds in total), you can get an idea of where the funding can come from…

Irrelevance: Europe’s Eventual Demise?

If there was a time when a top down concentrated effort was needed from Brussels, the Coronavirus crisis should have been the textbook reason as to why it makes sense to have such a European overstructure.

What could central Europe have done?

Medically: enforce a similar quarantine for all the Schengen countries. Why? So that when one country reaches the peak and infection rates start receding, they will not be forced to close internal borders (intra-Europe) to stop late reacting countries’ citizens from starting the infection all over again.

Economically: create a level playing field in terms of unemployment benefits, tax breaks, rent assistance.  In addition, a synchronised quarantine that can end at roughly the same time, would allow inter block tourism and business travel to start again very quickly.

Instead, what did we get: a wide spectrum of reactions ranging from Laissez Faire to police enforced quarantine, medically. And economically we got Ms Lagarde’s stuttered response that costs markets hundreds of billions of euros.

Maybe it’s time to send all these Brussels bureaucrats home and invest the savings in the member state economies?

Statesmanship is Dead in Washington, DC.

Until not so long ago, it was considered bad practice to in any way criticise a President during a war or even a foreign military operation. Right or wrong it’s my country. No more.

Despite the fact that the repercussions of the bringing to justice arch terrorist Suleimani have so far been much better that one could expect (see about it below), the usual liberals can’t help themselves in trying to find ways to criticise the Administration. The Democrats and the media are excruciating to cross examine administration officials to look for the ‘real’ reason, or lack thereof, behind the decision to take out the Iranian general at large. Where was the evidence that American lives were at imminent risk? Which embassies were being targeted? How credible was the intelligence?

This is the macro equivalent of today’s practice in many western countries to prosecute householders who hit back at thieves and criminals who break into their property: why did the shoot? Was the intruder really dangerous? Wasn’t there another way to stop him?

The same back seat drivers will then spill hypocritical tears after terrorist attacks happen and innocent victims die: imagine if 9/11 could have been avoided by taking out the terrorists before they acted, based on compelling but perhaps not ‘liberal-proof’ evidence.

The world is a dangerous place, there are many bad players and bad states around. Ignoring evil or turning the other cheek is not going to stop tomorrow’s mass murderers, armed with lethal weapons. On the contrary, teaching them a lesson, making them think twice about moving freely, and showing terrorists and rogue countries that there are going to be consequences for foul play, will act as a deterrent. Consider the aftermath of Suleiman’s death:

  • Iran probably had to beg the Americans, via swiss channels, to let them strike at an empty airbase to pretend it was taking vengeance
  • Scores of Iranians died in the funeral processions
  • Iran downs a civilian jet, denies it did it for days and then has to admit responsibility after overwhelming evidence shows it lied through its teeth
  • The real Iranian street is furious and calls for death to its dictators
  • And counting…

Not bad for what an American Senator had the guile to call ‘the act that made America impotent!’

Only Guantanamo?

Over eighteen years after 9/11, western judiciaries are struggling to keep dangerous jihadists behind bars. In some cases, as the recent London Bridge attack showed, automatic parole systems can release dangerous terrorists after only a few years of detention. Johnson is right that these laws, made for ‘common’ criminals need to be changed to reflect the reality of thousands of islamists that only got more radicalised in prison. If you couple this with the well known phenomenon of the Syrian returnees, western nations will have to deal with a very dangerous group of people that in many cases have European passports and that have had a lot of time to coordinate with like minded terrorists both in their cells and on the net.

It is therefore no wonder then, that Guantanamo still has detainees dating from 9/11. Western democracies are facing a conflict of values: will they change the rules to keep their streets safe or will they stick to their liberal views and pay the prices with convicted jihadists being able to continue to terrorise their citizens?

The Twilight of Conservatism?

If you believe the polls, Boris Johnson has a reasonable chance of securing a parliamentary majority that should allow him to govern without a coalition. This is good news for the Conservatives as it is difficult to think of any party that would join a coalition with them, this time round. Donald (Teflon) Trump (the Economist’s nickname…) also has a realistic shot at re-election, despite an unmitigated series of faux-pas, the Mueller investigation, impeachment, etc.

The Blues in Britain and the Reds in America had better treasure this new lease of life, if they indeed get it, since the long term demographics are very tricky on both sides of the pond.  We will examine the UK first given that elections are around the corner….In Britain, were it not for the peculiar characteristics of Corbyn, which in normal circumstances shouldn’t even be allowed to run for local counsellor in east London, Labour has a much better set of demographic trends going for it. It has a strong base of many ethnic groups that will vote Labour no matter who runs (apparently close to 80% of Muslims, a fast growing segment of the population, vote Labour) plus a very strong backing from new and young voters who are looking forward to free higher education, though it is not clear paid by whom.

The message from the demographics is clear…getting a blue candidate to win future elections will keep on getting more difficult.

Styles and electoral systems

Political styles should reflect the electoral systems of each nation. There are two broad kinds of electoral systems, proportional and “winner takes all.”  Most European countries have typically favoured the former, while Anglo-Saxon nations (Great Britain, USA) have favoured the latter.

Example: Trump knows that he will never win certain states, like for example New York and California. They are hugely democratic, and the chances that a candidate like him will win over democrats, like for example Reagan did in the eighties, is nil. But he knows that he must win big in certain other states, in the south and Midwest, that are traditionally red (republican) and that are more prone to like his rhetoric and policies. Look for him to campaign next year on the issues that his constituents like and ignore or even antagonise the voters that will not vote for him in any case. At the end of the day, as recent elections have demonstrated, the presidency is won by a majority of the electoral college, not of the popular vote. This favours partisan politics.

Other countries using the proportional systems have different dynamics: every vote counts and has a direct effect in the number of MPs a party or candidate wins. Overly partisan politics may backfire.

Take for example Israel’s recent elections. PM Netanyahu ran a very aggressive campaign targeting his voter base. His gambit was that there are enough sympathetic voters around in the country to give him and his coalition a winning majority. This time, however his tactics backfired, energised his opponents, and created enough ‘anyone but Netanyahu’ voters to dilute his coalition from exactly 50% to 46%. Even with his impressive accomplishments on the economic and diplomatic fronts of the last decade, Bibi has learned that indeed in Israel, every vote counts!

Winds of War(s)

When you read a vaguely positive editorial/op-ed on Trump in the New York Times you know that he must be doing something right…

Earlier this year, the NYT had to grudgingly admit that Trump’s position on the China trade issue is correct, needed, and if anything late in implementing from the US’s point of view. Everyone knows that China got away very easy by playing the underdog two decades after it became a top industrial power. Someone had to say stop, and Trump was the only US president that lived up to the obligation to do so.

The other issue is Iran. Though the NYT and most of the liberal press still regret Trump’s abrogation of the “Iran cash for nuclear delay plan,” there is a clear indication that his policy of exerting maximum economic pressure whilst taking a prudent military stance, is a very clever strategy. Perhaps if his predecessors had imposed real biting sanctions like Trump is doing now, Iran would have caved in much earlier…perhaps. In any case, as the ayatollahs are now saying, Trump has boxed them in by a war with economic weapons. Starting a real war is now going to be a choice that Iran will have to make and take the responsibility to start. To paraphrase another NYT op-ed, the US has a great hand and is playing it well!

Europe’s new dawn

Last week’s European elections drew one of the largest turnouts in recent memory. Even in the UK the turnout was higher than at the last elections, in this case probably to mark the protest vote. In mainland Europe however, two distinct results are discernible. Firstly, there still seems to be a small plurality in favour of Europe. Mainstream parties have held their own enough to keep a social democrat majority in Brussels. However, the second takeaway is the continued march of the populists in many European countries such as for example, Italy, France, and of course the UK.

Old institutions are hard to break, and it is still far from certain that the European commission, the only European organ that really counts, will change enough to reflect the new trends in the electorate. Key issues to disentangle include: the fiscal compact that the med nations are looking for and that Germany abhors; a common immigration policy with teeth and resources, the rolling back of some of the more ambitious European dreams of full integration, that fly in the face of the significant rise of local nationalisms.