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Apolloemma

September 17, 2013
The Loneliest Man in Greece
Posted by Chanan Tigay

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A bullet hole mars the window in the office of Yannis Stournaras, the finance minister of Greece. It is tempting to see it as yet another unpleasant outcome of austerity: in the face of crippling government debt, maybe he can’t afford to fix it.
But he insists that austerity has nothing to do with his decision to leave the window unrepaired; he’s kept the hole, a pot shot at a predecessor from a 2010 protest, as a “memoir” of the rough path he’s had to hew. The central figure in Greece’s economic maelstrom, Stournaras, a fifty-six-year-old economics professor, has become the face of painful deprivations—firings, tax hikes, slashed wages and pensions—as the country struggles to emerge from its fiscal troubles.
The concern about whether he has money for renovations isn’t too far-fetched. Recently, the aging wallpaper in a number of Ministry of Finance offices began to crumble, and Stournaras had the rooms painted at a cost of fifteen hundred euros. When word of this extravagance leaked, the rightist newspaper Democracy condemned him as “wasteful.” Stournaras laughed as he told me this story; his office appeared to have been furnished sometime during the first Bush Administration. It featured laminate floors, scruffy wood bookshelves, and shiny red sofas arranged in an L. In the waiting room, a month-old copy of the Financial Times grew brittle on an unused coffee table.
The underlying rot—in the walls and in the economy—long preceded Stournaras’s ascendance. And, by some measures, the belt-tightening is working: two weeks after we spoke, the government reported that the shrinking of Greece’s economy had slowed in the second quarter of this year. Yet Stournaras has, perhaps inevitably, become a target for criticism. In February, a prominent parliamentarian slammed him as “arrogant” after he questioned a prior government’s proclivity for spending. In July, another blasted the “knife he puts against our throats.” In August, a third member of Parliament threatened to seek Stournaras’s removal.
It is worth noting that the politicians unleashing these attacks were members of Stournaras’s own governing coalition, which includes the conservative New Democracy and the socialist Pasok parties, historical adversaries.
“There is no friendship at all,” said Theodore Pelagidis, an economist and friend of Stournaras’s. “Yannis is alone.”

* * *
In 2010, an alliance of international creditors known as the troika—the European Commission, European Central Bank, and International Monetary Fund—agreed to bail out Greece to the tune of a hundred and ten billion euros, on the condition that the country starve itself into solvency. When economic problems persisted, the troika agreed to a second rescue package, to be doled out in stages, this one running a hundred and thirty billion euros. By the time Antonis Samaras became Prime Minister in the summer of 2012, Greece was still living up to its reputation as “the last Soviet economy.” The bloated public sector was addicted to outsize salaries and pensions, patronage was rampant, and tax evasion seemed to outpace soccer as the national sport.
Samaras, representing the New Democracy party, was elected on a promise to slow austerity. Yet in appointing a finance minister, he chose Stournaras, an Oxford-educated economist whose work had called for public-sector reductions. Stournaras is widely seen as a straight-talking “technocrat” and not a politician. If the troika demanded austerity, he could push reforms forward without being distracted by an angry political base.
Within hours of taking office in July of 2012, Stournaras found himself across a table from representatives of the troika. They were back in Athens to decide whether to award a tranche of thirty-one and a half billion euros to a desperate Greece. This time, in return, they wanted even deeper spending cuts.
Without the billions of euros, Greece risked going broke and being forced out of the eurozone, which Stournaras believed could lead to the collapse of Greek banks and, he told me, “looting of supermarkets.” Squeezed between intense domestic pressure to roll back reductions and what he believed was economic necessity, Stournaras sided with the troika and its austerity program. “We can’t ask for anything from our creditors before we get it back on course,” he had told journalists shortly after taking office. This was not the message many ordinary Greeks wanted to hear, and their representatives in Parliament castigated him. In his defense, Stournaras reëmphasized that Greece had to show skeptical creditors that it could be trusted, by owning up to past indulgences and trying to correct them.
Negotiations with the troika dragged on for five months. Then, in November of 2012, European finance ministers gathered in Brussels for a series of dramatic meetings to determine Greece’s fate.
In Belgium, Stournaras negotiated constantly. He went two days without sleep. He quarreled with Austria’s finance minister. He communicated constantly with Samaras. “Our two mobile phones were on fire,” the Prime Minister told me.
Between meetings, Stournaras shuttled home to Athens to help cajole a reluctant Parliament into passing new austerity legislation to pacify the paymasters in Brussels. The omnibus bill would, among other things, raise the retirement age, cut pensions, and slash lump-sum payments for retirees. A vote was slated for midnight on November 8th—just in time to meet a troika deadline.
At six o’clock on the evening before the vote, Stournaras introduced an amendment that would have ended the “special salaries” enjoyed by employees at the Hellenic Parliament. The staffers revolted: their union announced an immediate strike that threatened to paralyze Parliament and prevent a vote altogether. With the troika deadline looming, Stournaras was forced to relent. He withdrew his amendment, but did not do so quietly. In an address to Parliament later that evening, he denounced the bitterly anti-austerity parties who had painted him as a puppet of the troika:

We condemn them. Because of what’s at stake tonight, and because of the urgent nature of the bill, I am forced to withdraw the amendment in question. He who has eyes let him see.

The measures passed, narrowly, setting up Greece’s moment of truth. Would it all be enough to convince the troika that Greece had changed its ways?
“I’ve called it the ‘thriller,’” said Raphael Moissis, the deputy chairman of the Foundation for Economic and Industrial Research, the think tank from which Stournaras was plucked to lead the Ministry of Finance. “We literally stayed up the night to hear whether the Europeans were going to say yes to a restructuring program for Greece, or whether they were going to say ‘the hell with you.’”
On November 27th, the troika announced that it would release the next round of loans. Greece would remain in the Eurozone. The decision was a victory for Stournaras, one step forward in what he described as a “multifaceted war.”
* * *
But was the triumph really so clear-cut?
One morning in 2009, Chris Spirou was laid off by an Athens bakery. A divorced father, he spent three months looking diligently for a job but found nothing, eventually making his way to Norway and the Netherlands to find work before returning home when his father died. After getting the boot from a friend’s trailer, he suddenly became homeless—an “indescribable” realization, he said.
“I am below zero. Wrecked. Devastated,” said Spirou, who is fifty-four. He said he feels “hate” for the people who put him in this position: members of Parliament and technocrats like Stournaras. “He doesn’t look at the political cost even if human beings are committing suicide, losing their jobs, their children are hungry.” Austerity, Spirou said, has killed the economy.
Some prominent economists echo Spirou’s analysis. Dimitri Papadimitriou, president of the Levy Economics Institute of Bard College, said that although large-scale cutbacks may in fact be reducing Greece’s budget deficit, these gains have come with “catastrophic consequences”: homelessness, suicides, unemployment, once-comfortable families reduced to rummaging through trash bins.
Other economists, meanwhile, are asking a larger question: Does austerity even work? Paul Krugman has argued that Europe’s reliance on austerity—not just in Greece—is precisely the opposite of what should be done: according to the logic popularized by John Maynard Keynes, economies falter when people stop spending, and when that happens, only governments can step in as spenders to get things going again.
Of course, given Greece’s economic woes, the country could not have implemented this theory on its own. Other Europeans, with Germany in the lead, were willing to kick in enough for Athens to close its deficits over a period of years, but they would not offer up sufficient sums for the Greeks to spend their way out of the desert. To the contrary, they insisted on cuts.
Describing the decisions he made, Stournaras, whose compact, athletic build and frequent smile made him look younger than his years, was resolute. Along with Prime Minister Samaras, he said, he fought to mitigate the pain—by cutting property taxes, for example. But even now, Stournaras—who calls himself a “reconstructed Keynesian”—believes that cuts, though upsetting, are working; unfortunately, there aren’t many other ways to reduce the public-sector deficit, and to forgo the cuts would only damage the economy further.
“But this is not something easy that you can tell the public,” he said. “That the alternative is Argentina or even Syria.”
It was muggy during my visit, and while Stournaras spoke, he wore shirtsleeves and a tightly cinched purple tie, having removed a dark suit jacket. He ticked off the government’s accomplishments: an operating budget surplus for the first seven months of this year, increased competitiveness in once-closed markets, and a slowing of the economy’s contraction. Most of which means little to the twenty-eight per cent of Greeks who are out of work, or to those who have suffered debilitating cuts to their pay and pensions.
“It’s not easy for somebody who was earning two thousand euros suddenly to earn one thousand,” Stournaras said. The cuts he has championed have affected even his own mother. “A poor woman, because my father had died very young,” he said. “So she lives on the minimum pension.”
How does that make you feel? I asked.
“Very bad,” said the father of two, his eyes now fixed on his desk. “Very bad, really.”
* * *
Stournaras was born in Athens, in 1956. His father was a Communist, he told me, whom “ultra-rightist” gangs persecuted and tried to have arrested; years later, when Stournaras was doing graduate work at Oxford, his father, who died at the age of sixty-two, asked him not to return home because he feared his own politics would haunt his son. Early on, Stournaras took up swimming and still regularly swims long distances. (He also jogs and plays ping-pong.) In his car on the way to a meeting with the Prime Minister, he told me that swimming was the best preparation he received for the rigors of his position. These days, he avoids swimming in pools, which could seem luxurious while other Greeks are forced into homeless shelters. “So I have to train myself and go to the sea,” he said. During a recent six-kilometre swim, the waters near his vacation home on the island of Syros turned rough. When I met him, he was unable to hear from his right ear.
In many ways, Stournaras is the ideal messenger for Greece’s tough news: he is respected in European economic circles, seen as someone who operates above partisan politics. Before taking office, he was a professor at the University of Athens, chairman and C.E.O. of Emporiki Bank, and advised prior governments. Stournaras was appointed to the Ministry of Finance, not elected. This gives him the freedom to make controversial decisions, but on the flip side, of course, if his policies become too unpopular, Prime Minister Samaras can summarily fire him. The afternoon before I met Stournaras, Michael Massourakis, the chief economist at Alpha Bank, told me that in choosing Stournaras, “the political parties wanted to find somebody who is nonpolitical so they can scapegoat him if things go bad.”
For the moment that seems unlikely. Although Samaras came to office on a pledge to slow austerity measures and Stournaras has supported them, the two are now friends who work together closely, meeting often, sharing jokes.
In the midst of our discussion, Stournaras’s phone rang. It was the Prime Minister.
“I have a reporter here from the The New Yorker,” Stournaras told him. “Shall I put you on?”
Stournaras activated the speakerphone setting so I could hear. Samaras—laughing knowingly—informed me that despite “previous ideological differences” he and Stournaras share a common goal: keeping Greece in the eurozone.
“That’s what I told him!” Stournaras said.
“Do you hear me, Yannis?”
“Yeah, yeah, I do.”
“Am I correct in this assessment?”
“Absolutely.”
Then Samaras quoted Neil Diamond. “You know that song that says, ‘Used-to-bes don’t count anymore, they just lay on the floor till we sweep them away?’” he said. “The idea is that differences don’t matter as long as there is a common cause that links us together.”
As Samaras spoke, Stournaras smiled appreciatively. Despite this display of seemingly genuine affection, it was hard for me to forget what I’d been told a day earlier: that for all this friendship, Stournaras could yet prove dispensable.
* * *
Greece still has a long way to go. The government is again under pressure from its lenders, with the troika evaluating the country’s economic recovery and money-saving efforts as it weighs a third bailout package. “All the low-hanging fruit has been reaped at this point,” Alpha Bank’s Massourakis said. “It has to do major things that Greek governments were not very eager to do.”
Future objectives include reforming Greece’s tax system, opening closed markets, and restructuring or even privatizing some public businesses. A new round of protest marches has already begun, with civil servants taking to the streets in late August to oppose planned suspensions and firings.
“Stournaras is very unlucky in the sense that now people are very tired,” Alexis Papahelas, the executive editor of the respected newspaper Kathimerini, said. “Every time someone hears about a reform, they think they’re going to lose part of their income.”
Compounding Stournaras’s problems, observers said, is the fact that the Samaras-led coalition, with an advantage of just five seats in Parliament,  could be sunk by even a small disagreement. And if the coalition falls apart, many believe it will be succeeded by extremists—from either the far right or the far left, a scenario Samaras called “catastrophic.”
Nonetheless, a March poll found that Stournaras’s approval rating was unusually high for a finance minister. This may reflect his penchant for directness, and his distance from the political elite that has ruled Greece for decades. When I asked Stournaras why he took his current job—and with it a large pay cut—after having rejected several prior ministerial appointments, he sounded a philosophical note. “Patriotic duty,” he responded. “It’s like being at war and you’re asked to participate and you say no. You cannot say no.”
Chanan Tigay is the author of the forthcoming book “Unholy Scriptures: Fraud, Suicide, Scandal & the Bible that Rocked the Holy City” (Ecco/HarperCollins).
Photograph of Yannis Stournaras by Louisa Gouliamaki/AFP/Getty. Photograph of bullet hole in Stournaras’s office by Chanan Tigay.

===
In 2010, an alliance of international creditors known as the troika—the European Commission, European Central Bank, and International Monetary Fund—agreed to bail out Greece to the tune of a hundred and ten billion euros, on the condition that the country starve itself into solvency. When economic problems persisted, the troika agreed to a second rescue package, to be doled out in stages, this one running a hundred and thirty billion euros. By the time Antonis Samaras became Prime Minister in the summer of 2012, Greece was still living up to its reputation as “the last Soviet economy.” The bloated public sector was addicted to outsize salaries and pensions, patronage was rampant, and tax evasion seemed to outpace soccer as the national sport.
Samaras, representing the New Democracy party, was elected on a promise to slow austerity. Yet in appointing a finance minister, he chose Stournaras, an Oxford-educated economist whose work had called for public-sector reductions. Stournaras is widely seen as a straight-talking “technocrat” and not a politician. If the troika demanded austerity, he could push reforms forward without being distracted by an angry political base.
Within hours of taking office in July of 2012, Stournaras found himself across a table from representatives of the troika. They were back in Athens to decide whether to award a tranche of thirty-one and a half billion euros to a desperate Greece. This time, in return, they wanted even deeper spending cuts.
Without the billions of euros, Greece risked going broke and being forced out of the eurozone, which Stournaras believed could lead to the collapse of Greek banks and, he told me, “looting of supermarkets.” Squeezed between intense domestic pressure to roll back reductions and what he believed was economic necessity, Stournaras sided with the troika and its austerity program. “We can’t ask for anything from our creditors before we get it back on course,” he had told journalists shortly after taking office. This was not the message many ordinary Greeks wanted to hear, and their representatives in Parliament castigated him. In his defense, Stournaras reëmphasized that Greece had to show skeptical creditors that it could be trusted, by owning up to past indulgences and trying to correct them.

Apolloemma

A Reporter at Large
The Shadow Commander
Qassem Suleimani is the Iranian operative who has been reshaping the Middle East.Now he’s directing Assad’s war in Syria.by Dexter Filkins                                                                                                                                                                                                                  


                                                                                                         

A former C.I.A. officer calls Suleimani, the head of Iran’s Quds Force, the “most powerful operative in the Middle East today.” Illustration by Krzysztof Domaradzki.

KeywordsPolitics;(Maj. Gen.) Qassem Suleimani;Iran;Quds Force;Middle East;Syria;Iraq                 



      

Last February, some of Iran’s most influential leaders gathered at the Amir al-Momenin Mosque, in northeast Tehran, inside a gated community reserved for officers of the Revolutionary Guard. They had come to pay their last respects to a fallen comrade. Hassan Shateri, a veteran of Iran’s covert wars throughout the Middle East and South Asia, was a senior commander in a powerful, élite branch of the Revolutionary Guard called the Quds Force. The force is the sharp instrument of Iranian foreign policy, roughly analogous to a combined C.I.A. and Special Forces; its name comes from the Persian word for Jerusalem, which its fighters have promised to liberate. Since 1979, its goal has been to subvert Iran’s enemies and extend the country’s influence across the Middle East. Shateri had spent much of his career abroad, first in Afghanistan and then in Iraq, where the Quds Force helped Shiite militias kill American soldiers.

Shateri had been killed two days before, on the road that runs between Damascus and Beirut. He had gone to Syria, along with thousands of other members of the Quds Force, to rescue the country’s besieged President, Bashar al-Assad, a crucial ally of Iran. In the past few years, Shateri had worked under an alias as the Quds Force’s chief in Lebanon; there he had helped sustain the armed group Hezbollah, which at the time of the funeral had begun to pour men into Syria to fight for the regime. The circumstances of his death were unclear: one Iranian official said that Shateri had been “directly targeted” by “the Zionist regime,” as Iranians habitually refer to Israel.
At the funeral, the mourners sobbed, and some beat their chests in the Shiite way. Shateri’s casket was wrapped in an Iranian flag, and gathered around it were the commander of the Revolutionary Guard, dressed in green fatigues; a member of the plot to murder four exiled opposition leaders in a Berlin restaurant in 1992; and the father of Imad Mughniyeh, the Hezbollah commander believed to be responsible for the bombings that killed more than two hundred and fifty Americans in Beirut in 1983. Mughniyeh was assassinated in 2008, purportedly by Israeli agents. In the ethos of the Iranian revolution, to die was to serve. Before Shateri’s funeral, Ayatollah Ali Khamenei, the country’s Supreme Leader, released a note of praise: “In the end, he drank the sweet syrup of martyrdom.”
Kneeling in the second row on the mosque’s carpeted floor was Major General Qassem Suleimani, the Quds Force’s leader: a small man of fifty-six, with silver hair, a close-cropped beard, and a look of intense self-containment. It was Suleimani who had sent Shateri, an old and trusted friend, to his death. As Revolutionary Guard commanders, he and Shateri belonged to a small fraternity formed during the Sacred Defense, the name given to the Iran-Iraq War, which lasted from 1980 to 1988 and left as many as a million people dead. It was a catastrophic fight, but for Iran it was the beginning of a three-decade project to build a Shiite sphere of influence, stretching across Iraq and Syria to the Mediterranean. Along with its allies in Syria and Lebanon, Iran forms an Axis of Resistance, arrayed against the region’s dominant Sunni powers and the West. In Syria, the project hung in the balance, and Suleimani was mounting a desperate fight, even if the price of victory was a sectarian conflict that engulfed the region for years.


Suleimani took command of the Quds Force fifteen years ago, and in that time he has sought to reshape the Middle East in Iran’s favor, working as a power broker and as a military force: assassinating rivals, arming allies, and, for most of a decade, directing a network of militant groups that killed hundreds of Americans in Iraq. The U.S. Department of the Treasury has sanctioned Suleimani for his role in supporting the Assad regime, and for abetting terrorism. And yet he has remained mostly invisible to the outside world, even as he runs agents and directs operations. “Suleimani is the single most powerful operative in the Middle East today,” John Maguire, a former C.I.A. officer in Iraq, told me, “and no one’s ever heard of him.”
When Suleimani appears in public—often to speak at veterans’ events or to meet with Khamenei—he carries himself inconspicuously and rarely raises his voice, exhibiting a trait that Arabs call khilib, or understated charisma. “He is so short, but he has this presence,” a former senior Iraqi official told me. “There will be ten people in a room, and when Suleimani walks in he doesn’t come and sit with you. He sits over there on the other side of room, by himself, in a very quiet way. Doesn’t speak, doesn’t comment, just sits and listens. And so of course everyone is thinking only about him.”
At the funeral, Suleimani was dressed in a black jacket and a black shirt with no tie, in the Iranian style; his long, angular face and his arched eyebrows were twisted with pain. The Quds Force had never lost such a high-ranking officer abroad. The day before the funeral, Suleimani had travelled to Shateri’s home to offer condolences to his family. He has a fierce attachment to martyred soldiers, and often visits their families; in a recent interview with Iranian media, he said, “When I see the children of the martyrs, I want to smell their scent, and I lose myself.” As the funeral continued, he and the other mourners bent forward to pray, pressing their foreheads to the carpet. “One of the rarest people, who brought the revolution and the whole world to you, is gone,” Alireza Panahian, the imam, told the mourners. Suleimani cradled his head in his palm and began to weep.

The early months of 2013, around the time of Shateri’s death, marked a low point for the Iranian intervention in Syria. Assad was steadily losing ground to the rebels, who are dominated by Sunnis, Iran’s rivals. If Assad fell, the Iranian regime would lose its link to Hezbollah, its forward base against Israel. In a speech, one Iranian cleric said, “If we lose Syria, we cannot keep Tehran.”

Although the Iranians were severely strained by American sanctions, imposed to stop the regime from developing a nuclear weapon, they were unstinting in their efforts to save Assad. Among other things, they extended a seven-billion-dollar loan to shore up the Syrian economy. “I don’t think the Iranians are calculating this in terms of dollars,” a Middle Eastern security official told me. “They regard the loss of Assad as an existential threat.” For Suleimani, saving Assad seemed a matter of pride, especially if it meant distinguishing himself from the Americans. “Suleimani told us the Iranians would do whatever was necessary,” a former Iraqi leader told me. “He said, ‘We’re not like the Americans. We don’t abandon our friends.’ ”
Last year, Suleimani asked Kurdish leaders in Iraq to allow him to open a supply route across northern Iraq and into Syria. For years, he had bullied and bribed the Kurds into coöperating with his plans, but this time they rebuffed him. Worse, Assad’s soldiers wouldn’t fight—or, when they did, they mostly butchered civilians, driving the populace to the rebels. “The Syrian Army is useless!” Suleimani told an Iraqi politician. He longed for the Basij, the Iranian militia whose fighters crushed the popular uprisings against the regime in 2009. “Give me one brigade of the Basij, and I could conquer the whole country,” he said. In August, 2012, anti-Assad rebels captured forty-eight Iranians inside Syria. Iranian leaders protested that they were pilgrims, come to pray at a holy Shiite shrine, but the rebels, as well as Western intelligence agencies, said that they were members of the Quds Force. In any case, they were valuable enough so that Assad agreed to release more than two thousand captured rebels to have them freed. And then Shateri was killed.
Finally, Suleimani began flying into Damascus frequently so that he could assume personal control of the Iranian intervention. “He’s running the war himself,” an American defense official told me. In Damascus, he is said to work out of a heavily fortified command post in a nondescript building, where he has installed a multinational array of officers: the heads of the Syrian military, a Hezbollah commander, and a coördinator of Iraqi Shiite militias, which Suleimani mobilized and brought to the fight. If Suleimani couldn’t have the Basij, he settled for the next best thing: Brigadier General Hossein Hamedani, the Basij’s former deputy commander. Hamedani, another comrade from the Iran-Iraq War, was experienced in running the kind of irregular militias that the Iranians were assembling, in order to keep on fighting if Assad fell.
Late last year, Western officials began to notice a sharp increase in Iranian supply flights into the Damascus airport. Instead of a handful a week, planes were coming every day, carrying weapons and ammunition—“tons of it,” the Middle Eastern security official told me—along with officers from the Quds Force. According to American officials, the officers coördinated attacks, trained militias, and set up an elaborate system to monitor rebel communications. They also forced the various branches of Assad’s security services—designed to spy on one another—to work together. The Middle Eastern security official said that the number of Quds Force operatives, along with the Iraqi Shiite militiamen they brought with them, reached into the thousands. “They’re spread out across the entire country,” he told me.
A turning point came in April, after rebels captured the Syrian town of Qusayr, near the Lebanese border. To retake the town, Suleimani called on Hassan Nasrallah, Hezbollah’s leader, to send in more than two thousand fighters. It wasn’t a difficult sell. Qusayr sits at the entrance to the Bekaa Valley, the main conduit for missiles and other matériel to Hezbollah; if it was closed, Hezbollah would find it difficult to survive. Suleimani and Nasrallah are old friends, having coöperated for years in Lebanon and in the many places around the world where Hezbollah operatives have performed terrorist missions at the Iranians’ behest. According to Will Fulton, an Iran expert at the American Enterprise Institute, Hezbollah fighters encircled Qusayr, cutting off the roads, then moved in. Dozens of them were killed, as were at least eight Iranian officers. On June 5th, the town fell. “The whole operation was orchestrated by Suleimani,” Maguire, who is still active in the region, said. “It was a great victory for him.”
Despite all of Suleimani’s rough work, his image among Iran’s faithful is that of an irreproachable war hero—a decorated veteran of the Iran-Iraq War, in which he became a division commander while still in his twenties. In public, he is almost theatrically modest. During a recent appearance, he described himself as “the smallest soldier,” and, according to the Iranian press, rebuffed members of the audience who tried to kiss his hand. His power comes mostly from his close relationship with Khamenei, who provides the guiding vision for Iranian society. The Supreme Leader, who usually reserves his highest praise for fallen soldiers, has referred to Suleimani as “a living martyr of the revolution.” Suleimani is a hard-line supporter of Iran’s authoritarian system. In July, 1999, at the height of student protests, he signed, with other Revolutionary Guard commanders, a letter warning the reformist President Mohammad Khatami that if he didn’t put down the revolt the military would—perhaps deposing Khatami in the process. “Our patience has run out,” the generals wrote. The police crushed the demonstrators, as they did again, a decade later.
Iran’s government is intensely fractious, and there are many figures around Khamenei who help shape foreign policy, including Revolutionary Guard commanders, senior clerics, and Foreign Ministry officials. But Suleimani has been given a remarkably free hand in implementing Khamenei’s vision. “He has ties to every corner of the system,” Meir Dagan, the former head of Mossad, told me. “He is what I call politically clever. He has a relationship with everyone.” Officials describe him as a believer in Islam and in the revolution; while many senior figures in the Revolutionary Guard have grown wealthy through the Guard’s control over key Iranian industries, Suleimani has been endowed with a personal fortune by the Supreme Leader. “He’s well taken care of,” Maguire said.
Suleimani lives in Tehran, and appears to lead the home life of a bureaucrat in middle age. “He gets up at four every morning, and he’s in bed by nine-thirty every night,” the Iraqi politician, who has known him for many years, told me, shaking his head in disbelief. Suleimani has a bad prostate and recurring back pain. He’s “respectful of his wife,” the Middle Eastern security official told me, sometimes taking her along on trips. He has three sons and two daughters, and is evidently a strict but loving father. He is said to be especially worried about his daughter Nargis, who lives in Malaysia. “She is deviating from the ways of Islam,” the Middle Eastern official said.
Maguire told me, “Suleimani is a far more polished guy than most. He can move in political circles, but he’s also got the substance to be intimidating.” Although he is widely read, his aesthetic tastes appear to be strictly traditional. “I don’t think he’d listen to classical music,” the Middle Eastern official told me. “The European thing—I don’t think that’s his vibe, basically.” Suleimani has little formal education, but, the former senior Iraqi official told me, “he is a very shrewd, frighteningly intelligent strategist.” His tools include payoffs for politicians across the Middle East, intimidation when it is needed, and murder as a last resort. Over the years, the Quds Force has built an international network of assets, some of them drawn from the Iranian diaspora, who can be called on to support missions. “They’re everywhere,” a second Middle Eastern security official said. In 2010, according to Western officials, the Quds Force and Hezbollah launched a new campaign against American and Israeli targets—in apparent retaliation for the covert effort to slow down the Iranian nuclear program, which has included cyber attacks and assassinations of Iranian nuclear scientists.
Since then, Suleimani has orchestrated attacks in places as far flung as Thailand, New Delhi, Lagos, and Nairobi—at least thirty attempts in the past two years alone. The most notorious was a scheme, in 2011, to hire a Mexican drug cartel to blow up the Saudi Ambassador to the United States as he sat down to eat at a restaurant a few miles from the White House. The cartel member approached by Suleimani’s agent turned out to be an informant for the U.S. Drug Enforcement Administration. (The Quds Force appears to be more effective close to home, and a number of the remote plans have gone awry.) Still, after the plot collapsed, two former American officials told a congressional committee that Suleimani should be assassinated. “Suleimani travels a lot,” one said. “He is all over the place. Go get him. Either try to capture him or kill him.” In Iran, more than two hundred dignitaries signed an outraged letter in his defense; a social-media campaign proclaimed, “We are all Qassem Suleimani.”
Several Middle Eastern officials, some of whom I have known for a decade, stopped talking the moment I brought up Suleimani. “We don’t want to have any part of this,” a Kurdish official in Iraq said. Among spies in the West, he appears to exist in a special category, an enemy both hated and admired: a Middle Eastern equivalent of Karla, the elusive Soviet master spy in John le Carré’s novels. When I called Dagan, the former Mossad chief, and mentioned Suleimani’s name, there was a long pause on the line. “Ah,” he said, in a tone of weary irony, “a very good friend.”

In March, 2009, on the eve of the Iranian New Year, Suleimani led a group of Iran-Iraq War veterans to the Paa-Alam Heights, a barren, rocky promontory on the Iraqi border. In 1986, Paa-Alam was the scene of one of the terrible battles over the Faw Peninsula, where tens of thousands of men died while hardly advancing a step. A video recording from the visit shows Suleimani standing on a mountaintop, recounting the battle to his old comrades. In a gentle voice, he speaks over a soundtrack of music and prayers.

“This is the Dasht-e-Abbas Road,” Suleimani says, pointing into the valley below. “This area stood between us and the enemy.” Later, Suleimani and the group stand on the banks of a creek, where he reads aloud the names of fallen Iranian soldiers, his voice trembling with emotion. During a break, he speaks with an interviewer, and describes the fighting in near-mystical terms. “The battlefield is mankind’s lost paradise—the paradise in which morality and human conduct are at their highest,” he says. “One type of paradise that men imagine is about streams, beautiful maidens, and lush landscape. But there is another kind of paradise—the battlefield.”
Suleimani was born in Rabor, an impoverished mountain village in eastern Iran. When he was a boy, his father, like many other farmers, took out an agricultural loan from the government of the Shah. He owed nine hundred toman—about a hundred dollars at the time—and couldn’t pay it back. In a brief memoir, Suleimani wrote of leaving home with a young relative named Ahmad Suleimani, who was in a similar situation. “At night, we couldn’t fall asleep with the sadness of thinking that government agents were coming to arrest our fathers,” he wrote. Together, they travelled to Kerman, the nearest city, to try to clear their family’s debt. The place was unwelcoming. “We were only thirteen, and our bodies were so tiny, wherever we went, they wouldn’t hire us,” he wrote. “Until one day, when we were hired as laborers at a school construction site on Khajoo Street, which was where the city ended. They paid us two toman per day.” After eight months, they had saved enough money to bring home, but the winter snow was too deep. They were told to seek out a local driver named Pahlavan—“Champion”—who was a “strong man who could lift up a cow or a donkey with his teeth.” During the drive, whenever the car got stuck, “he would lift up the Jeep and put it aside!” In Suleimani’s telling, Pahlavan is an ardent detractor of the Shah. He says of the two boys, “This is the time for them to rest and play, not work as a laborer in a strange city. I spit on the life they have made for us!” They arrived home, Suleimani writes, “just as the lights were coming on in the village homes. When the news travelled in our village, there was pandemonium.”
As a young man, Suleimani gave few signs of greater ambition. According to Ali Alfoneh, an Iran expert at the Foundation for Defense of Democracies, he had only a high-school education, and worked for Kerman’s municipal water department. But it was a revolutionary time, and the country’s gathering unrest was making itself felt. Away from work, Suleimani spent hours lifting weights in local gyms, which, like many in the Middle East, offered physical training and inspiration for the warrior spirit. During Ramadan, he attended sermons by a travelling preacher named Hojjat Kamyab—a protégé of Khamenei’s—and it was there that he became inspired by the possibility of Islamic revolution.
In 1979, when Suleimani was twenty-two, the Shah fell to a popular uprising led by Ayatollah Ruhollah Khomeini in the name of Islam. Swept up in the fervor, Suleimani joined the Revolutionary Guard, a force established by Iran’s new clerical leadership to prevent the military from mounting a coup. Though he received little training—perhaps only a forty-five-day course—he advanced rapidly. As a young guardsman, Suleimani was dispatched to northwestern Iran, where he helped crush an uprising by ethnic Kurds.
When the revolution was eighteen months old, Saddam Hussein sent the Iraqi Army sweeping across the border, hoping to take advantage of the internal chaos. Instead, the invasion solidified Khomeini’s leadership and unified the country in resistance, starting a brutal, entrenched war. Suleimani was sent to the front with a simple task, to supply water to the soldiers there, and he never left. “I entered the war on a fifteen-day mission, and ended up staying until the end,” he has said. A photograph from that time shows the young Suleimani dressed in green fatigues, with no insignia of rank, his black eyes focussed on a far horizon. “We were all young and wanted to serve the revolution,” he told an interviewer in 2005.
Suleimani earned a reputation for bravery and élan, especially as a result of reconnaissance missions he undertook behind Iraqi lines. He returned from several missions bearing a goat, which his soldiers slaughtered and grilled. “Even the Iraqis, our enemy, admired him for this,” a former Revolutionary Guard officer who defected to the United States told me. On Iraqi radio, Suleimani became known as “the goat thief.” In recognition of his effectiveness, Alfoneh said, he was put in charge of a brigade from Kerman, with men from the gyms where he lifted weights.
The Iranian Army was badly overmatched, and its commanders resorted to crude and costly tactics. In “human wave” assaults, they sent thousands of young men directly into the Iraqi lines, often to clear minefields, and soldiers died at a precipitous rate. Suleimani seemed distressed by the loss of life. Before sending his men into battle, he would embrace each one and bid him goodbye; in speeches, he praised martyred soldiers and begged their forgiveness for not being martyred himself. When Suleimani’s superiors announced plans to attack the Faw Peninsula, he dismissed them as wasteful and foolhardy. The former Revolutionary Guard officer recalled seeing Suleimani in 1985, after a battle in which his brigade had suffered many dead and wounded. He was sitting alone in a corner of a tent. “He was very silent, thinking about the people he’d lost,” the officer said.
Ahmad, the young relative who travelled with Suleimani to Kerman, was killed in 1984. On at least one occasion, Suleimani himself was wounded. Still, he didn’t lose enthusiasm for his work. In the nineteen-eighties, Reuel Marc Gerecht was a young C.I.A. officer posted to Istanbul, where he recruited from the thousands of Iranian soldiers who went there to recuperate. “You’d get a whole variety of guardsmen,” Gerecht, who has written extensively on Iran, told me. “You’d get clerics, you’d get people who came to breathe and whore and drink.” Gerecht divided the veterans into two groups. “There were the broken and the burned out, the hollow-eyed—the guys who had been destroyed,” he said. “And then there were the bright-eyed guys who just couldn’t wait to get back to the front. I’d put Suleimani in the latter category.”
Ryan Crocker, the American Ambassador to Iraq from 2007 to 2009, got a similar feeling. During the Iraq War, Crocker sometimes dealt with Suleimani indirectly, through Iraqi leaders who shuttled in and out of Tehran. Once, he asked one of the Iraqis if Suleimani was especially religious. The answer was “Not really,” Crocker told me. “He attends mosque periodically. Religion doesn’t drive him. Nationalism drives him, and the love of the fight.”

Iran’s leaders took two lessons from the Iran-Iraq War. The first was that Iran was surrounded by enemies, near and far. To the regime, the invasion was not so much an Iraqi plot as a Western one. American officials were aware of Saddam’s preparations to invade Iran in 1980, and they later provided him with targeting information used in chemical-weapons attacks; the weapons themselves were built with the help of Western European firms. The memory of these attacks is an especially bitter one. “Do you know how many people are still suffering from the effects of chemical weapons?” Mehdi Khalaji, a fellow at the Washington Institute for Near East Policy, said. “Thousands of former soldiers. They believe these were Western weapons given to Saddam.” In 1987, during a battle with the Iraqi Army, a division under Suleimani’s command was attacked by artillery shells containing chemical weapons. More than a hundred of his men suffered the effects.

The other lesson drawn from the Iran-Iraq War was the futility of fighting a head-to-head confrontation. In 1982, after the Iranians expelled the Iraqi forces, Khomeini ordered his men to keep going, to “liberate” Iraq and push on to Jerusalem. Six years and hundreds of thousands of lives later, he agreed to a ceasefire. According to Alfoneh, many of the generals of Suleimani’s generation believe they could have succeeded had the clerics not flinched. “Many of them feel like they were stabbed in the back,” he said. “They have nurtured this myth for nearly thirty years.” But Iran’s leaders did not want another bloodbath. Instead, they had to build the capacity to wage asymmetrical warfare—attacking stronger powers indirectly, outside of Iran.
The Quds Force was an ideal tool. Khomeini had created the prototype for the force in 1979, with the goal of protecting Iran and exporting the Islamic Revolution. The first big opportunity came in Lebanon, where Revolutionary Guard officers were dispatched in 1982 to help organize Shiite militias in the many-sided Lebanese civil war. Those efforts resulted in the creation of Hezbollah, which developed under Iranian guidance. Hezbollah’s military commander, the brilliant and murderous Imad Mughniyeh, helped form what became known as the Special Security Apparatus, a wing of Hezbollah that works closely with the Quds Force. With assistance from Iran, Hezbollah helped orchestrate attacks on the American Embassy and on French and American military barracks. “In the early days, when Hezbollah was totally dependent on Iranian help, Mughniyeh and others were basically willing Iranian assets,” David Crist, a historian for the U.S. military and the author of “The Twilight War,” says.
For all of the Iranian regime’s aggressiveness, some of its religious zeal seemed to burn out. In 1989, Khomeini stopped urging Iranians to spread the revolution, and called instead for expediency to preserve its gains. Persian self-interest was the order of the day, even if it was indistinguishable from revolutionary fervor. In those years, Suleimani worked along Iran’s eastern frontier, aiding Afghan rebels who were holding out against the Taliban. The Iranian regime regarded the Taliban with intense hostility, in large part because of their persecution of Afghanistan’s minority Shiite population. (At one point, the two countries nearly went to war; Iran mobilized a quarter of a million troops, and its leaders denounced the Taliban as an affront to Islam.) In an area that breeds corruption, Suleimani made a name for himself battling opium smugglers along the Afghan border.
In 1998, Suleimani was named the head of the Quds Force, taking over an agency that had already built a lethal résumé: American and Argentine officials believe that the Iranian regime helped Hezbollah orchestrate the bombing of the Israeli Embassy in Buenos Aires in 1992, which killed twenty-nine people, and the attack on the Jewish center in the same city two years later, which killed eighty-five. Suleimani has built the Quds Force into an organization with extraordinary reach, with branches focussed on intelligence, finance, politics, sabotage, and special operations. With a base in the former U.S. Embassy compound in Tehran, the force has between ten thousand and twenty thousand members, divided between combatants and those who train and oversee foreign assets. Its members are picked for their skill and their allegiance to the doctrine of the Islamic Revolution (as well as, in some cases, their family connections). According to the Israeli newspaper Israel Hayom, fighters are recruited throughout the region, trained in Shiraz and Tehran, indoctrinated at the Jerusalem Operation College, in Qom, and then “sent on months-long missions to Afghanistan and Iraq to gain experience in field operational work. They usually travel under the guise of Iranian construction workers.”
After taking command, Suleimani strengthened relationships in Lebanon, with Mughniyeh and with Hassan Nasrallah, Hezbollah’s chief. By then, the Israeli military had occupied southern Lebanon for sixteen years, and Hezbollah was eager to take control of the country, so Suleimani sent in Quds Force operatives to help. “They had a huge presence—training, advising, planning,” Crocker said. In 2000, the Israelis withdrew, exhausted by relentless Hezbollah attacks. It was a signal victory for the Shiites, and, Crocker said, “another example of how countries like Syria and Iran can play a long game, knowing that we can’t.”
Since then, the regime has given aid to a variety of militant Islamist groups opposed to America’s allies in the region, such as Saudi Arabia and Bahrain. The help has gone not only to Shiites but also to Sunni groups like Hamas—helping to form an archipelago of alliances that stretches from Baghdad to Beirut. “No one in Tehran started out with a master plan to build the Axis of Resistance, but opportunities presented themselves,” a Western diplomat in Baghdad told me. “In each case, Suleimani was smarter, faster, and better resourced than anyone else in the region. By grasping at opportunities as they came, he built the thing, slowly but surely.”

In the chaotic days after the attacks of September 11th, Ryan Crocker, then a senior State Department official, flew discreetly to Geneva to meet a group of Iranian diplomats. “I’d fly out on a Friday and then back on Sunday, so nobody in the office knew where I’d been,” Crocker told me. “We’d stay up all night in those meetings.” It seemed clear to Crocker that the Iranians were answering to Suleimani, whom they referred to as “Haji Qassem,” and that they were eager to help the United States destroy their mutual enemy, the Taliban. Although the United States and Iran broke off diplomatic relations in 1980, after American diplomats in Tehran were taken hostage, Crocker wasn’t surprised to find that Suleimani was flexible. “You don’t live through eight years of brutal war without being pretty pragmatic,” he said. Sometimes Suleimani passed messages to Crocker, but he avoided putting anything in writing. “Haji Qassem’s way too smart for that,” Crocker said. “He’s not going to leave paper trails for the Americans.”

Before the bombing began, Crocker sensed that the Iranians were growing impatient with the Bush Administration, thinking that it was taking too long to attack the Taliban. At a meeting in early October, 2001, the lead Iranian negotiator stood up and slammed a sheaf of papers on the table. “If you guys don’t stop building these fairy-tale governments in the sky, and actually start doing some shooting on the ground, none of this is ever going to happen!” he shouted. “When you’re ready to talk about serious fighting, you know where to find me.” He stomped out of the room. “It was a great moment,” Crocker said.
The coöperation between the two countries lasted through the initial phase of the war. At one point, the lead negotiator handed Crocker a map detailing the disposition of Taliban forces. “Here’s our advice: hit them here first, and then hit them over here. And here’s the logic.” Stunned, Crocker asked, “Can I take notes?” The negotiator replied, “You can keep the map.” The flow of information went both ways. On one occasion, Crocker said, he gave his counterparts the location of an Al Qaeda facilitator living in the eastern city of Mashhad. The Iranians detained him and brought him to Afghanistan’s new leaders, who, Crocker believes, turned him over to the U.S. The negotiator told Crocker, “Haji Qassem is very pleased with our coöperation.”
The good will didn’t last. In January, 2002, Crocker, who was by then the deputy chief of the American Embassy in Kabul, was awakened one night by aides, who told him that President George W. Bush, in his State of the Union Address, had named Iran as part of an “Axis of Evil.” Like many senior diplomats, Crocker was caught off guard. He saw the negotiator the next day at the U.N. compound in Kabul, and he was furious. “You completely damaged me,” Crocker recalled him saying. “Suleimani is in a tearing rage. He feels compromised.” The negotiator told Crocker that, at great political risk, Suleimani had been contemplating a complete reëvaluation of the United States, saying, “Maybe it’s time to rethink our relationship with the Americans.” The Axis of Evil speech brought the meetings to an end. Reformers inside the government, who had advocated a rapprochement with the United States, were put on the defensive. Recalling that time, Crocker shook his head. “We were just that close,” he said. “One word in one speech changed history.”

Before the meetings fell apart, Crocker talked with the lead negotiator about the possibility of war in Iraq. “Look,” Crocker said, “I don’t know what’s going to happen, but I do have some responsibility for Iraq—it’s my portfolio—and I can read the signs, and I think we’re going to go in.” He saw an enormous opportunity. The Iranians despised Saddam, and Crocker figured that they would be willing to work with the U.S. “I was not a fan of the invasion,” he told me. “But I was thinking, If we’re going to do it, let’s see if we can flip an enemy into a friend—at least tactically for this, and then let’s see where we can take it.” The negotiator indicated that the Iranians were willing to talk, and that Iraq, like Afghanistan, was part of Suleimani’s brief: “It’s one guy running both shows.”

After the invasion began, in March, 2003, Iranian officials were frantic to let the Americans know that they wanted peace. Many of them watched the regimes topple in Afghanistan and Iraq and were convinced that they were next. “They were scared shitless,” Maguire, the former C.I.A. officer in Baghdad, told me. “They were sending runners across the border to our élite elements saying, ‘Look, we don’t want any trouble with you.’ We had an enormous upper hand.” That same year, American officials determined that Iran had reconfigured its plans to develop a nuclear weapon to proceed more slowly and covertly, lest it invite a Western attack.
After Saddam’s regime collapsed, Crocker was dispatched to Baghdad to organize a fledgling government, called the Iraqi Governing Council. He realized that many Iraqi politicians were flying to Tehran for consultations, and he jumped at the chance to negotiate indirectly with Suleimani. In the course of the summer, Crocker passed him the names of prospective Shiite candidates, and the two men vetted each one. Crocker did not offer veto power, but he abandoned candidates whom Suleimani found especially objectionable. “The formation of the governing council was in its essence a negotiation between Tehran and Washington,” he said.
That exchange was the high point of Iranian-American coöperation. “After we formed the governing council, everything collapsed,” Crocker said. As the American occupation faltered, Suleimani began an aggressive campaign of sabotage. Many Americans and Iraqis I interviewed thought that the change of strategy was the result of opportunism: the Iranians became aggressive when the fear of an American invasion began to recede.
For years, Suleimani had sent operatives into Iraq to cultivate Shiite militias, so, when Saddam fell, he already had a fighting force in place: the Badr Brigade, the armed wing of a Shiite political party called the Supreme Council for the Islamic Revolution in Iraq. The Party’s leaders so thoroughly identified with the Iranian revolution that Badr’s militiamen had fought alongside Iranian forces in the Iran-Iraq War.
The Badr Brigade spent much of its time carrying out revenge killings against Baathists, and largely held its fire against the Americans. But another Iranian-backed militia—the Mahdi Army, headed by the populist cleric Moqtada al-Sadr—began confronting the Americans early. In August, 2004, after the Americans launched a particularly bloody counteroffensive, I walked through a makeshift graveyard in the holy city of Najaf, south of Baghdad, and found dozens of shallow graves, each marked by a tiny glass jar containing a slip of paper with the fallen fighter’s name and address. Many of them were marked “Tehran.”
Suleimani found Sadr unpredictable and difficult to manage, so the Quds Force began to organize other militias that were willing to attack the Americans. Its operatives trained fighters in Iran, sometimes helped by their comrades in Hezbollah. Suleimani’s control over some of the Iraqi militias at times appeared to be total. At one point, a senior Iraqi official, on a trip to Washington, publicly blamed the Supreme Leader for escalating the violence in Iraq. Soon after returning to Baghdad, he told me, he received messages from the leaders of two Iraqi Shiite militias. Both posed the same question: Do you want to die?
In 2004, the Quds Force began flooding Iraq with lethal roadside bombs that the Americans referred to as E.F.P.s, for “explosively formed projectiles.” The E.F.P.s, which fire a molten copper slug able to penetrate armor, began to wreak havoc on American troops, accounting for nearly twenty per cent of combat deaths. E.F.P.s could be made only by skilled technicians, and they were often triggered by sophisticated motion sensors. “There was zero question where they were coming from,” General Stanley McChrystal, who at the time was the head of the Joint Special Operations Command, told me. “We knew where all the factories were in Iran. The E.F.P.s killed hundreds of Americans.”
Suleimani’s campaign against the United States crossed the Sunni-Shiite divide, which he has always been willing to set aside for a larger purpose. Iraqi and Western officials told me that, early in the war, Suleimani encouraged the head of intelligence for the Assad regime to facilitate the movement of Sunni extremists through Syria to fight the Americans. In many cases, Al Qaeda was also allowed a degree of freedom in Iran as well. Crocker told me that in May, 2003, the Americans received intelligence that Al Qaeda fighters in Iran were preparing an attack on Western targets in Saudi Arabia. Crocker was alarmed. “They were there, under Iranian protection, planning operations,” he said. He flew to Geneva and passed a warning to the Iranians, but to no avail; militants bombed three residential compounds in Riyadh, killing thirty-five people, including nine Americans.
As it turned out, the Iranian strategy of abetting Sunni extremists backfired horrendously: shortly after the occupation began, the same extremists began attacking Shiite civilians and the Shiite-dominated Iraqi government. It was a preview of the civil war to come. “Welcome to the Middle East,” the Western diplomat in Baghdad told me. “Suleimani wanted to bleed the Americans, so he invited in the jihadis, and things got out of control.”
Still, Iran’s policy toward the Americans in Iraq was not entirely hostile—both countries, after all, were trying to empower Iraq’s Shiite majority—and so Suleimani alternated between bargaining with the Americans and killing them. Throughout the war, he summoned Iraqi leaders to Tehran to broker deals, usually intended to maximize Shiite power. At least once, he even travelled into the heart of American power in Baghdad. “Suleimani came into the Green Zone to meet the Iraqis,” the Iraqi politician told me. “I think the Americans wanted to arrest him, but they figured they couldn’t.”
As both sides sought an advantage, the shifting allegiances led to uncomfortable, sometimes bizarre encounters. The leaders of the two main Kurdish parties, Massoud Barzani and Jalal Talabani, met regularly with both Suleimani and the Americans. While the Kurds’ relationship with the U.S. was usually warm, their ties to Iranian leaders like Suleimani were deeper and more complex; the Iranian regime had sheltered Iraq’s Kurds during their war with Saddam. But it was never an equal relationship. Kurdish leaders say that Suleimani’s objective has always been to keep Iraq’s political parties divided and unstable, insuring that the country stayed weak: the Iran-Iraq War was never far from his mind. “It is very difficult for us to say no to Suleimani,” a senior Kurdish official told me. “When we say no, he makes trouble for us. Bombings. Shootings. The Iranians are our neighbors. They’ve always been there, and they always will be. We have to deal with them.”
A senior intelligence officer in Baghdad recalled visiting Talabani at his house during a trip to northern Iraq. When he walked in, Qassem Suleimani was sitting there, wearing a black shirt and black jacket. The two men looked each other up and down. “He knew who I was; I knew who he was. We shook hands, didn’t say anything,” the officer said. “I’ve never seen Talabani so deferential to anyone. He was terrified.”

In the years after the invasion, General McChrystal concentrated on defeating Sunni insurgents, and, like other American commanders in Iraq, he largely refrained from pursuing Quds Force agents. Provoking Iran would only exacerbate the conflict, and, in any case, many of the agents operated under the protection of diplomatic cover. But, as the war dragged on, the Iranian-backed militias loomed ever larger. In late 2006, McChrystal told me, he formed a task force to kill and capture Iranian-backed insurgents, as well as Quds Force operatives.

That December, American commandos raided the compound of Abdul Aziz al-Hakim, a powerful Shiite politician, and found General Mohsen Chizari, the head of operations for the Quds Force. According to “The Endgame,” by Michael Gordon and Bernard Trainor, the commandos detained Chizari, sending shock waves through Baghdad. “Everybody was stunned,” a former senior military commander told me. “All the Iranians were stunned. We had broken the unwritten law.” Nuri al-Maliki, the Iraqi Prime Minister, demanded that the Americans turn over Chizari. When they did—reluctantly—Maliki released him. After the incident, the American Ambassador told Maliki that the next time they caught an Iranian operative they were going to keep him.
A month later, McChrystal received reports that General Mohammed Ali Jafari, the head of Iran’s Revolutionary Guard, might be in a convoy heading toward the Iraqi border. According to other intelligence sources, Suleimani was riding with him. A group of Kurdish fighters were waiting to welcome them when they crossed over. McChrystal decided to allow the Iranians to cross the border. “We didn’t want to get into a gunfight with the Kurds,” he said.
McChrystal’s men tracked the convoy as it drove a hundred miles into Iraq, to the Kurdish city of Erbil, and stopped at a nondescript building, which had a small sign that read “Consulate.” No one knew that such a consulate existed, but the fact that it did meant that the men inside were operating under diplomatic cover. The Americans moved in anyway, and took five Iranians into custody. All were carrying diplomatic passports, and all, according to McChrystal, were Quds Force members. Neither Suleimani nor Jafari was there; they had evidently broken off from the convoy at the last minute and taken refuge in a safe house controlled by the Kurdish leader Massoud Barzani. “Suleimani was lucky,” Dagan, the former Mossad chief, told me, referring to the raid. “It’s important to be lucky.”
Nine days later, five new black S.U.V.s pulled up to the gates of the Karbala Provincial Center, in southern Iraq. The men inside spoke English, wore American-style uniforms, and flashed I.D.s, and so they were allowed through the gates. In the compound, they jumped out of their vehicles and ran directly to a building where American soldiers were working. They killed one and captured four, ignoring everyone else. In a few hours, the four captives were dead, shot at close range.
The raid was carried out by Asa’ib Ahl al-Haq, one of the Iranian-backed militias. American officials speculated that Suleimani had ordered the raid, in response to the capture of the Quds Force operatives in Erbil. Within two months, the Americans had killed the alleged leader of the attack and rounded up several of the participants. One of them was Ali Musa Daqduq, a Hezbollah commander who had trained in Iran. At first, Daqduq pretended to be unable to speak, and the Americans nicknamed him Hamid the Mute. But after a time, they said, he started talking, and told them that the operation had been ordered by Iranian officials. For the first time, American commanders publicly pointed to Suleimani. At a press conference, Brigadier General Kevin Bergner said, “The Quds Force knew of and supported planning for the eventual Karbala attack that killed five coalition soldiers.”
As the covert war with Iran intensified, American officials considered crossing into Iran to attack training camps and bomb factories. “Some of us wanted very badly to hit them,” a senior American officer who was in Iraq at the time told me. Those debates lasted well into 2011, until the last American soldiers left the country. Each time, the Americans decided against crossing the border, figuring that it would be too easy for the Iranians to escalate the fighting.
Around the same time, Suleimani struck up a correspondence with senior American officials, sending messages through intermediaries—sometimes seeking to reassure the Americans, sometimes to extract something. One of the first came in early 2008, when the Iraqi President, Jalal Talabani, handed a cell phone with a text message to General David Petraeus, who had taken over the year before as the commander of American forces. “Dear General Petraeus,” the text read, “you should know that I, Qassem Suleimani, control the policy for Iran with respect to Iraq, Lebanon, Gaza and Afghanistan. And indeed, the ambassador in Baghdad is a Quds Force member. The individual who’s going to replace him is a Quds Force member.” After the five American soldiers were killed in Karbala, Suleimani sent a message to the American Ambassador. “I swear on the grave of Khomeini I haven’t authorized a bullet against the U.S.,” Suleimani said. None of the Americans believed him.
In a report to the White House, Petraeus wrote that Suleimani was “truly evil.” Yet at times the two men were all but negotiating. According to diplomatic cables revealed by WikiLeaks, Petraeus sent messages through Iraqi officials to Suleimani, asking him to call off rocket attacks on the American Embassy and on U.S. bases. In 2008, the Americans and the Iraqi Army were pressing an offensive against the Mahdi Army—Moqtada al-Sadr’s Shiite militia—and, in retribution, the militia was bombarding the Green Zone regularly. Suleimani, who sensed a political opening, sent Petraeus a message lamenting the situation and saying that he had assigned men to apprehend the attackers. Petraeus replied, “I was born on a Sunday, but it wasn’t last Sunday.” Eventually, Suleimani brokered a ceasefire between Sadr and the government.
At times, Suleimani seemed to take pleasure in taunting his American counterparts, and stories of his exploits spread. In the summer of 2006, during the thirty-four-day war between Israel and Hezbollah in Lebanon, the violence in Baghdad appeared to ebb. When the fighting ended, the Iraqi politician told me, Suleimani supposedly sent a message to the American command. “I hope you have been enjoying the peace and quiet in Baghdad,” it read. “I’ve been busy in Beirut!”

In a speech in 1990, Khamenei said that the mission of the Quds Force is to “establish popular Hezbollah cells all over the world.” Although that goal has not been met, Hezbollah has become the most influential force in Lebanon—a military power and a political party that nearly supersedes the state. Some experts on the region believe that it has grown less dependent on Iran as it has matured. But, at a dinner in Beirut last year, Walid Joumblatt, a Lebanese politician, complained that Hezbollah’s leaders were still in thrall to Tehran. “You have to sit and talk with them, but what do you say?” he said to me. “They don’t decide. It’s Khamenei and Qassem Suleimani who decide.”

Hezbollah’s leader, Hassan Nasrallah, has endorsed the concept of Velayat-e Faqih, which recognizes Iran’s Supreme Leader as the ultimate authority, and he has acknowledged the presence of Quds Force operatives in Lebanon. From 2000 to 2006, Iran contributed a hundred million dollars a year to Hezbollah. Its fighters are attractive proxies: unlike the Iranians, they speak Arabic, making them better equipped to operate in Syria and elsewhere in the Arab world. Working with the Iranians, they have either launched or prepared to launch attacks in Cyprus, Azerbaijan, and Turkey.
They don’t always act together. After a Hezbollah operative attacked a tour bus filled with Israelis in Bulgaria, last July, American authorities learned that Suleimani had asked his subordinates, “Does anyone know about this?” No one did. “Hezbollah acted on its own in that one,” an American defense official told me. Nonetheless, the Quds Force appears to have been involved in a number of the most significant moments in Lebanon’s recent history. In 2006, Nasrallah ordered a group of his fighters to kidnap Israeli soldiers—an operation that the Middle Eastern security official told me was carried out with Suleimani’s help. A brief but fierce war ensued, in which the Israel Defense Forces destroyed much of Lebanon. “I don’t think Suleimani expected that reaction,” the official said.
The question of Iranian influence in Lebanon resurfaced in 2011, when the United Nations-backed Special Tribunal for Lebanon charged four senior members of Hezbollah with assassinating the former Lebanese Prime Minister, Rafik Hariri, in 2005. Hariri, a Sunni, had been trying to take Lebanon out of the Iranian-Syrian orbit. On Valentine’s Day, he was killed by a suicide truck bomb whose payload weighed more than five thousand pounds.
Prosecutors identified the alleged Hezbollah assassins by means of “co-location analysis”—matching disposable cell phones used at the time of the murder with other phones that belonged to the suspects. They refrained from indicting Syrian officials, but, they said, they had convincing evidence that Assad’s government was involved in Hariri’s killing. A senior investigator for the Special Tribunal told me that there was also reason to suspect the Iranians: “Our theory of the case was that Hezbollah pulled the trigger, but could not and would not have done so without the blessing and logistical support from both Syria and Iran.” One of the phones believed to have been used by the killers had made at least a dozen calls to Iran before and after the assassination. But investigators told me that they didn’t know who in Iran was called, and that they couldn’t persuade Western intelligence agencies to help them. As it turned out, the agencies knew quite a bit. The senior intelligence officer told me that Iranian operatives were overheard talking minutes before the assassination. “There were Iranians on the phones directing the attack,” he said. Robert Baer, a former senior C.I.A. official, told me, “If indeed Iran was involved, Suleimani was undoubtedly at the center of this.”
Meanwhile, the four Hezbollah suspects in the killing have disappeared. One of them, Mustafa Badreddine—Imad Mughniyeh’s brother-in-law and a longtime Hezbollah bomb maker—was spotted in Syria by the rebels, who say that he is fighting for Assad.

On December 22, 2010, James Jeffrey, the American Ambassador to Iraq, and General Lloyd Austin, the top American commander there, issued a note of congratulations to the Iraqi people on the formation of a new government, led by Prime Minister Nuri al-Maliki. The country had been without a government for nine months, after parliamentary elections ended in an impasse. The composition of the government was critical; at the time of the election, there were still nearly a hundred thousand American troops in the country, and U.S. commanders were still hoping to leave a residual force behind. “We look forward to working with the new coalition government in furthering our common vision of a democratic Iraq,” the two men said.

What Jeffrey and Austin didn’t say was that the crucial deal that brought the Iraqi government together was made not by them but by Suleimani. In the months before, according to several Iraqi and Western officials, Suleimani invited senior Shiite and Kurdish leaders to meet with him in Tehran and Qom, and extracted from them a promise to support Maliki, his preferred candidate. The deal had a complex array of enticements. Maliki and Assad disliked each other; Suleimani brought them together by forging an agreement to build a lucrative oil pipeline from Iraq to the Syrian border. In order to bring the cleric Moqtada al-Sadr in line, Suleimani agreed to place his men in the Iraqi service ministries.
Most remarkable, according to the Iraqi and Western officials, were the two conditions that Suleimani imposed on the Iraqis. The first was that Jalal Talabani, a longtime friend of the Iranian regime, become President. The second was that Maliki and his coalition partners insist that all American troops leave the country. “Suleimani said: no Americans,” the former Iraqi leader told me. “A ten-year relationship, down the drain.”
Iraqi officials told me that, at the time of Jeffrey’s announcement, the Americans knew that Suleimani had pushed them out of the country but were too embarrassed to admit it in public. “We were laughing at the Americans,” the former Iraqi leader told me, growing angry as he recalled the situation. “Fuck it! Fuck it!” he said. “Suleimani completely outmaneuvered them, and in public they were congratulating themselves for putting the government together.”
The deal was a heavy blow to Ayad Allawi, a pro-American secular politician whose party had won the most parliamentary seats in the elections, but who failed to put together a majority coalition. In an interview in Jordan, he said that with U.S. backing he could have built a majority. Instead, the Americans pushed him aside in favor of Maliki. He told me that Vice-President Joe Biden called to tell him to abandon his bid for Prime Minister, saying, “You can’t form a government.”
Allawi said he suspected that the Americans weren’t willing to deal with the trouble the Iranians would have made if he had become Prime Minister. They wanted to stay in Iraq, he said, but only if the effort involved was minimal. “I needed American support,” he said. “But they wanted to leave, and they handed the country to the Iranians. Iraq is a failed state now, an Iranian colony.”
According to American and Iraqi former officials, Suleimani exerts leverage over Iraqi politics by paying officials, by subsidizing newspapers and television stations, and, when necessary, by intimidation. Few are immune to his enticements. “I have yet to see one Shia political party not taking money from Qassem Suleimani,” the former senior Iraqi official told me. “He’s the most powerful man in Iraq, without question.”
Even Maliki often feels like a prisoner of the Iranians. Exiled by Saddam, Maliki lived for a short time in Iran, but then moved to Syria—in part to escape Iranian influence, Iraqis who know him say. Crocker said that Maliki once told him, “You can’t know what arrogance is until you are an Iraqi Arab forced to take refuge with the Iranians.” The Iraqi politician, who is close to both men, told me that Maliki resents Suleimani, and that the feeling is mutual. “Maliki says Suleimani doesn’t listen,” he told me. “Suleimani says Maliki just lies.”
Still, Maliki may be amply repaying Suleimani for his efforts to make him Prime Minister. According to the former senior intelligence officer, Maliki’s government is presiding over a number of schemes, amounting to hundreds of millions of dollars a year, to help the Iranian regime outwit Western economic sanctions. A prominent Iraqi businessman told me that Iranian-backed agents regularly use the Iraqi banking system to undertake fraudulent transactions that allow them to sell Iraqi currency at a huge profit. “If the banks refuse, they are shut down by the government,” he said.
The other main source of revenue for the Iranians is oil, officials say: Maliki’s government sets aside the equivalent of two hundred thousand barrels of oil a day—about twenty million dollars’ worth, at current prices—and sends the money to Suleimani. In this way, the Quds Force has made itself immune to the economic pressures of Western sanctions. “It’s a self-funding covert-action program,” the former senior intelligence officer said. “Suleimani doesn’t even need the Iranian budget to fund his operations.”

Last December, when Assad’s regime appeared close to collapse, American officials spotted Syrian technicians preparing bombs carrying the nerve agent sarin to be loaded onto aircraft. All indications were that they were plotting an enormous chemical attack. Frantic, the Americans called leaders in Russia, who called their counterparts in Tehran. According to the American defense official, Suleimani appeared to be instrumental in persuading Assad to refrain from using the weapons.

Suleimani’s sentiments about the ethics of chemical weapons are unknown. During the Iran-Iraq War, thousands of Iranian soldiers suffered from chemical attacks, and the survivors still speak publicly of the trauma. But some American officials believe that his efforts to restrain Assad had a more pragmatic inspiration: the fear of provoking American military intervention. “Both the Russians and the Iranians have said to Assad, ‘We can’t support you in the court of world opinion if you use this stuff,’ ” a former senior American military official said.
The regime is believed to have used chemical weapons at least fourteen times since last year. Yet even after the enormous sarin attack on August 21st, which killed fourteen hundred civilians, Suleimani’s support for Syria has been unbending. To save Assad, Suleimani has called on every asset he built since taking over the Quds Force: Hezbollah fighters, Shiite militiamen from around the Arab world, and all the money and matériel he could squeeze out of his own besieged government. In Baghdad, a young Iraqi Shiite who called himself Abu Hassan told me that he was recruited to fight by a group of Iraqi men. He took a bus to the Iranian city of Mashhad, where he and three dozen other Iraqis received two weeks of instruction from Iranian trainers. The men travelled to the Shiite shrine of Sayyidah Zaynab, near Damascus, where they spent three months fighting for the Assad government, along with soldiers from Hezbollah and snipers from Iran. “We lost a lot of people,” Abu Hassan told me.
Suleimani’s greatest achievement may be persuading his proxies in the Iraqi government to allow Iran to use its airspace to fly men and munitions to Damascus. General James Mattis, who until March was the commander of all American military forces in the Middle East, told me that without this aid the Assad regime would have collapsed months ago. The flights are overseen by the Iraqi transportation minister, Hadi al-Amri, who is an old ally of Suleimani’s—the former head of the Badr Brigade, and a soldier on the Iranian side in the Iran-Iraq War. In an interview in Baghdad, Amri denied that the Iranians were using Iraqi airspace to send weapons. But he made clear his affection for his former commander. “I love Qassem Suleimani!” he said, pounding the table. “He is my dearest friend.”
So far, Maliki has resisted pressure to supply Assad overland through Iraq. But he hasn’t stopped the flights; the prospect of a radical Sunni regime in Syria overcame his reservations about becoming involved in a civil war. “Maliki dislikes the Iranians, and he loathes Assad, but he hates Al Nusra,” Crocker told me. “He doesn’t want an Al Qaeda government in Damascus.”
This kind of starkly sectarian atmosphere may be Suleimani’s most lasting impact on the Middle East. To save his Iranian empire in Syria and Lebanon, he has helped fuel a Sunni-Shiite conflict that threatens to engulf the region for years to come—a war that he appears happy to wage. “He has every reason to believe that Iran is the rising power in the region,” Mattis told me. “We’ve never dealt him a body blow.”
In June, a new, moderate President, Hassan Rouhani, was elected in Iran, promising to end the sanctions, which have exhausted the country and demolished its middle class. Hopes have risen in the West that Khamenei might allow Rouhani to strike a deal. Although Rouhani is a moderate only by Iranian standards—he is a Shiite cleric and a longtime adherent of the revolution—his new administration has made a series of good-will gestures, including the release of eleven political prisoners and an exchange of letters with President Obama. Rouhani is in New York this week to speak at the United Nations and, possibly, to meet with Obama. The talks will surely center on the potential for Iran to restrain its nuclear program, in exchange for relaxed sanctions.
Many in the West are hoping that Iran will also help find an end to the grinding war in Syria. Assad’s deputy prime minister recently offered the possibility of a cease-fire, saying, “Let nobody have any fear that the regime in its present form will continue.” But he did not say that Assad would step down, which the rebels have said is a necessary condition of negotiations. There have been hints from powerful Iranians that Assad isn’t worth holding on to. In a recent speech, the former President Hashemi Rafsanjani said, “The people have been the target of chemical attacks by their own government.” (After a leaked recording of the speech caused a stir in Iran, Rafsanjani denied the remarks.) But a less sympathetic regime in Syria would split the Axis of Resistance, and radically complicate Iran’s partnership with Hezbollah. In any case, the Iranian regime may be too fragmented to come to a consensus. “Anytime you see a statement coming out of the government, just remember there’s a rat’s nest of people fighting underneath the surface,” Kevan Harris, a sociologist at Princeton who has studied Iran extensively, told me. As Rouhani tries to engage the West, he will have to contend with the hard-liners, including Suleimani and his comrades, who for more than a decade have defined their foreign policy as a covert war on the U.S. and Israel. “They don’t trust the other side,” Harris said. “They feel that any concession they make will be seen by the West as a sign of weakness.”
For Suleimani, giving up Assad would mean abandoning the project of expansion that has occupied him for fifteen years. In a recent speech before the Assembly of Experts—the clerics who choose the Supreme Leader—he spoke about Syria in fiercely determined language. “We do not pay attention to the propaganda of the enemy, because Syria is the front line of the resistance and this reality is undeniable,’’ he said. “We have a duty to defend Muslims because they are under pressure and oppression.” Suleimani was fighting the same war, against the same foes, that he’d been fighting his entire life; for him, it seemed, the compromises of statecraft could not compare with the paradise of the battlefield. “We will support Syria to the end,” he said. ♦

Apolloemma

September 23.2013
Merkel Triumphant, But Will She Lead Europe?
Posted by John Cassidy
  




Just a few hours after celebrating her election to a third term as Germany’s Chancellor by dancing to “Days Like These,” an anthemic song by the German punk band Die Toten Hosen, Angela Merkel was back to her usual self on Monday morning: low-key, deliberate, and schoolmarmish. “Thoroughness goes before speed,” she said in answer to questions about how long it would take her to form a new  administration, which will probably include representatives of the center-left Social Democratic Party (SPD), as well as her own party, the center-right Christian Democratic Union. “Germany needs a stable government, and we will fulfill this task.”

Doubtless, she will. Merkel has built her career on providing solid, predictable, and unspectacular leadership. Widely seen in the rest of Europe as the “Iron Lady” who insisted that countries such as Greece, Portugal, and Ireland adopt grinding austerity policies that have resulted in deep recessions and mass unemployment, she is viewed inside Germany as a stolid and incorruptible defender of the national interest—hence her nickname “Mutti,” or “Mom.” With the Christian Democrats and their Bavarian sister party gaining a healthy plurality of the vote in Sunday’s election, she joined  Konrad Adenauer and her mentor Helmut Kohl as the third postwar Chancellor to win a third term of office.
From an international perspective, that is mixed news. On the plus side, it is reassuring for the rest of the world to have a moderate, unflappable, and well-respected figure like Merkel running Germany, which is now clearly first among equals in the European Union. (France and Britain, the union’s two other major powers, are both led by unpopular first-term politicians.) On the other hand, Merkel’s leadership during the euro crisis has been less than inspiring. Mindful of German voters’ concerns about rescuing southern Europeans that they view as shiftless, she has adopted a policy of one step forward, one step back—reluctantly agreeing to bailouts of countries like Greece and Portugal, but refusing to rush through measures that would help the E.U. get ahead of the problem, such as introducing Keynesian stimulus policies in well-off countries (Germany included) and constructing a workable banking union. Without the emergency intervention of the European Central Bank, which is led by an Italian, Mario Draghi, the euro zone might well have broken apart.

The hope in other European capitals is that Merkel, now that she has successfully negotiated the election, will be more proactive in seeking to bring about an end to the crisis. But if that’s going to happen, she didn’t give any indication of it Monday. “Our European policy course, at least on the part of the [Christian Democratic] Union, will not change,” she said. Still, the markets will be watching the formation of a new government and, in particular, to whether Merkel retains Wolfgang Schaeuble, a conservative opponent of all things Keynesian, as her finance minister.

Having lost the support of the Free Democratic Party, which didn’t hit the five per cent of the vote threshold to get seats in the Bundestag, Merkel needs to persuade the SPD—or even the Greens—to join a  “Grand Coalition.” Either of the leftist parties could demand the finance ministry as the price of joining a coalition. (The SPD’s leader, Peer Steinbrück, who was the finance minister under Merkel from 2005 to 2009, has said he won’t serve in such a government again.) If Merkel showed a readiness to replace Schaeuble, it would signal she is willing to be more flexible on economic matters, which would be all to the good.

Although the euro crisis is currently contained, it hasn’t gone away. Much has been made of the fact that, for the first time since 2011, the euro zone’s economy expanded slightly in the second quarter of this year. But outside of Germany and France, many European countries are still in a recession. Some are stuck in a depression. In Greece, the unemployment rate is 27.5 per cent; in Spain, it is 26.3 per cent; in Portugal, it is 16.4 per cent; in Italy, it is twelve per cent.

Although the bond markets are calm, that could change quickly. During the coming months, the E.U. is due to negotiate new financing deals with two of the bailed-out countries—Ireland and Portugal—and it might well have to provide more relief to Greece, which is still a basket case. Meanwhile, Spain is threatening to split apart, and Italy is facing yet more political turmoil, with the finance minister of the coalition government threatening to resign if his colleagues go ahead and flout E.U.-imposed  targets for the budget deficit. All this is happening while the E.U. is supposed to be stepping up preparations for a banking union and more political integration.

Merkel, in typical fashion, has expressed support for more vigorous action to end the crisis, while holding back on pressing specific measures. For example, she supports a banking union, which would see big financial firms regulated on an E.U.-wide basis, but she is wary of setting up a system in which German taxpayers would be obliged to bail out stricken banks in other countries. As a price of closer economic integration, her government has suggested that all states in the euro zone be forced to sign “competitiveness contracts,” which oblige them to reform their labor markets and welfare systems as Germany did ten years ago.

France and other countries regard such proposals as infringements on their national sovereignty, which, of course, they are. But with xenophobic feelings rising in Germany—in Sunday’s election, a new anti-euro party, Alternative for Germany, won almost five per cent of the vote—Merkel will be wary of making any concessions that alienate the burghers who reelected her. Which, once again, raises the issue that Timothy Garton Ash, the British historian, referred to as “The New German Question” in a recent issue of The New York Review of Books: “Can Europe’s most powerful country lead the way in building both a sustainable, internationally competitive eurozone and a strong, internationally credible European Union?”

Since the beginning of the euro crisis, I have been a bit more sanguine about Europe’s prospects than many American commentators. For as long as I can remember—and that goes back to 1973, when the United Kingdom, Denmark, and Ireland joined the dear old European Economic Community—the union, community, or whatever you want to call it, has been in some sort of crisis. Somehow, though, it stumbles along and survives. And that’s no accident; despite the rise of Euroskepticism in some countries, Germany included, there remains a strong commitment to making Europe work.
Today, however, the challenges are greater than ever. First, there is the lingering economic depression on the periphery of the euro zone. Then there is the question of how to manage a club that has grown very rapidly, and which now extends from the Atlantic to the Russian border. The euro zone encompasses seventeen nations. The E.U. includes those seventeen and another ten. And more countries, such as Turkey, Serbia, and Macedonia, are banging on the door to get in.

In making such a diverse community cohere and prosper, leadership and vision are sorely needed. Like George H. W. Bush, Merkel, the Prussian prelate’s daughter, has always struggled with “the vision thing.” This is a woman who has just campaigned on the slogans “No experiments” and “Solid finance”: asking her to turn into Goethe, or even Willy Brandt, is too much. But she’s shown she can lead. From persuading a reluctant Bundestag to support the bailouts of Greece and other countries to announcing, in the wake of the Fukushima accident, that Germany would decommission all of its nuclear power stations, she has displayed a keen tactical sense, an ability to disarm her opponents, and, where necessary, a willingness to surprise.

Until now, Merkel has displayed her political talents largely on the domestic level. Now, it’s time for her to apply them on the international stage, and also to reaffirm to her countrymen and countrywomen why ensuring that the E.U. survives and prospers is very much in their self-interest. Germany already has a “Mutti.” Europe needs one, too.

Photograph by Julian Stratenschulte/picture-alliance/dpa/AP Images.

Apolloemma

Negotiating Syria by GeorgePacker                                                                                                                                                                                                                     
eptember 30, 2013                                                               

                                                                                                         

                                            



      

Every year, the United Nations issues hundreds of solemn documents, written in the clotted prose of international bureaucracy, and they disappear without a trace, while horrors continue unabated. Last week’s “Report on the Alleged Use of Chemical Weapons in the Ghouta Area of Damascus on 21 August 2013” might prove the exception. Its language is studiedly neutral, its conclusions deliberately limited, but its findings are devastating and could mark a turning point in Syria’s civil war. Under severe time constraints, due to the fighting, U.N. investigators interviewed and examined thirty-six survivors in two locations. The oldest was sixty-eight; the youngest was seven. Many had lost at least two family members; a pair of brothers were the only survivors among forty relatives who all lived in the same building. The warheads contained sarin nerve gas, which is twenty-six times as deadly as cyanide, at a capacity of more than fifty litres—much greater than expected. “Chemical weapons have been used in the ongoing conflict between the parties in the Syrian Arab Republic, also against civilians, including children, on a relatively large scale,” the report’s authors concluded, in the passive voice. Then they allowed themselves a single expression of feeling: “This result leaves us with the deepest concern.”

By prior agreement, the report assigns no responsibility. But an appendix on munitions provides hard evidence on two of the warheads used—ballistics, angles of trajectory, compass bearings, artillery ranges—which turns the passive voice active and leads to one culprit. Independent calculations by C. J. Chivers, of the Times, and Josh Lyons, of Human Rights Watch, conclude that those warheads were launched from the government stronghold above Damascus, almost certainly by loyalist forces.
In plain language, President Bashar al-Assad, along with other members of his regime, is a war criminal. His patron, President Vladimir Putin of Russia, has been exposed as a liar. Putin’s recent Times Op-Ed, while pledging allegiance to the U.N., asserted that “there is every reason to believe” that poison gas “was used not by the Syrian Army, but by opposition forces.” This has been the Russian line from the first hours after the attacks, and, as soon as the U.N. report was released, Russian officials tried to repudiate its findings, though they have yet to offer any contrary proof.
In the dominant Washington view, President Obama has been outmaneuvered into complying with Syria and Russia by his own bumbling. There’s plenty to criticize in the Administration’s confusion and indecision throughout the war. Still, the United States has strategized or lucked its way into the most auspicious moment to negotiate a political solution since the war began. As a result of U.S.-Russian talks, Assad will be obliged to rid himself of chemical weapons in the coming months (the first deadlines are coming up fast), and, if he dissembles or delays, a U.N. resolution, with Russia’s approval, will mandate punitive consequences, though not likely military ones. Americans who wanted missile strikes now argue that dealing with Assad legitimatizes and perpetuates him. History offers a different view: when diplomacy, supported by sanctions and force, or the threat of it, persuades tyrants to back down, they have a way of growing weaker, sometimes terminally. (Ask Slobodan Milosevic or Muammar Qaddafi.)
Meanwhile, Iran’s new President, Hassan Rouhani, has a new policy of engagement. On the eve of his visit to New York, for the opening session of the U.N. General Assembly, he published an op-ed of his own, in the Washington Post. Unlike Putin’s, it was straightforward as well as shrewd. “I announce my government’s readiness to help facilitate dialogue between the Syrian government and the opposition,” Rouhani wrote. Iran is deeply implicated in the war, and its participation in talks would be an essential condition for any settlement. Where the piece criticizes unilateralism (“Security is pursued at the expense of the insecurity of others, with disastrous consequences”), most readers will assume that Rouhani is complaining about American wars, but the shot may also have been aimed at his own country’s military hard-liners. Without naming names, he also strongly condemned the use of chemical weapons in Syria. During the Iran-Iraq War, some hundred thousand Iranians were gassed by Saddam Hussein’s forces, with the connivance of the U.S., and moral outrage at poison gas runs deep in Iran. Negotiations over Syria would test Rouhani’s commitment to the latest dictator to use it.
A political solution leading to a new Syrian government has always been the Administration’s official policy, but Obama has shown little energy in pursuing it. To envision such a thing at this late hour raises a thousand vexing questions. The war began as a popular uprising against an oppressive government, but it has devolved into an existential struggle involving ethnic groups, religious sects, and foreign fighters, and some of the rebel commanders have committed war crimes, too. The fighting will go on for a long time, inflaming the whole neighborhood, and any tenable solution will require Syria’s Sunnis, Alawis, Christians, and Kurds to believe that there will be a safe and fair place for them in a new order. Those groups, along with their regional backers, will have to give up the dream of victory, perhaps recognizing that a common enemy—the Sunni extremists in the rebels’ midst—may pose the greatest threat of all. It’s much harder to imagine this outcome after years of slaughter.
Obama might be tempted to regard the past few weeks in Syria as a crisis averted. But, without making some sort of deeper commitment—negotiating corridors for humanitarian aid, appointing a high-level envoy—it will be difficult to bring leverage to the negotiating table. In recent days, the more pragmatic rebels have fought extremists near the Turkish border, and the opposition coalition has condemned the brutality of jihadi groups. These conflicts might suggest to some a way for the U.S. to provide arms and training to the moderates, yet further entanglement of that sort would be fraught with risk, and the public has shown no more appetite for it than the President has.
What the authors of the U.N. report call “the deepest concern” lies at the heart of a generation-long debate in foreign affairs. Do the strong have a responsibility to protect the weak? The mass murder in Ghouta raised the question again. This time, Obama answered in the affirmative, but he also answered as the leader of a democracy, and the people told him no: they were tired, they had their own troubles, they didn’t want to take on anyone else’s. Americans are living in the long shadow of Iraq, where the light of international concern seems unable to get in. Even Obama’s yes offered little comfort to Syrians: he would fire missiles (“unbelievably small” but not “pinpricks”); America would uphold an “international norm”; and then the real killing would continue. The latest debate over the use of force has passed, while the war goes on. What remains on the table is the use of politics. ♦


          ILLUSTRATION: Tom Bachtell
====
1. Do the strong have a responsibility to protect the weak?
2. By Prior agreement, the report assigns no responsibility. But on appendix on munitions provides hard evidence on two of the warheads, used- ballistics, angles of trajectory, compass bearings, artillery ranges-which turns the passive vice avtive and leads to one culprit.
3. In plain language, Bashar al-assad, along with other members of his regime, is s war criminal. His patron, president Vlodimir Putin of Russia, has been exposed as a lier. Putin's recent Times Op-Ed, while pledging allegiance to the U.N., asserted that "there is every reason to believe" that posion gas "was used not by Syrian Army, but by opposition forces," These has  been the Russian line from the first hours after the attacks, and, as soon as the U.N. report was released, Russian officials tried to repudiate its findings, though they have yet not to offer any contrary proof.
4.Amermicans who wanted to missile strikes now argue that dealing with Assad legitimites and perpetuates him. History offers a different view: when diplomacy, supported by sanctions and force, or the threat of it persuades turants to back down, they have a new of growing weaker, sometimesly terminally.
5. Any tenable sollution will require syria's Sunnis, Alawis, Christians, and Kurds to believe that there will a safe and fair place for them in a new order. These groups, along with their regional backers, will have to give up the dream of victory, perhaps recognizing that a common enemy-the Sunni extremists in the rebel's midest, may pose the greatest threat of all.

Apolloemma

October 9, 2013
Should Money Go Digital?Posted by Kyle Chayka

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“There is no problem on this earth that can’t be solved,” Peter Diamandis declared on Sunday, in Las Vegas.
Diamandis is a Silicon Valley gadfly best known for creating the X Prize, an award for designing the first functional, private spaceship. He was giving a keynote speech at Money2020, a conference about the future of money. His tan skin and slicked-back hair glowed as if he had partaken of the Google life-extension research that he evangelizes. Name a problem, and Diamandis believes it can be fixed, from the challenge of hauling a lot of people into space to that persistent über-problem, death.
The presumption at Money2020 is that money, as people use it today, comes with its own set of problems. It takes up space, is relatively hard to transfer from one person to another, and moves slowly through the financial system. In other words, it’s primed for the tech industry’s favorite noun: disruption.
Money2020’s presenters had a lot of high-tech solutions for money’s challenges: “mobile wallets” that help customers use their smartphones to pay digitally at stores rather than with cash or cards; “gamified” savings accounts (as in, accounts that incentivize saving with game-like rewards); and digital checkout counters for brick-and-mortar stores.
The conference attracted big companies like Google, Visa, and PayPal along with smaller upstarts, which created a dynamic of gentle rivalry. Among the larger companies, Google, PayPal, and Square are launching their own mobile wallets. Some startups are taking a similar approach.
“The competition is plastic, and plastic makes for a really good experience,” Mike Abbott, the C.E.O. of a mobile-wallet company called Isis, explained during his keynote address. Abbott hopes to get people to put their credit cards on their phones. With his product, you carry around an image of your credit card that serves the same purpose as the card itself; all you have to do is tap your phone to an in-store device to pay. (Of course, the store has to adopt Isis-friendly technology first.)
Other companies are even more offbeat. Paul Aitken is the C.E.O. of borro.com, an online-only lending platform that offers loans against luxury goods like watches, antiques, and art. “We target clients who have wealth tied up in assets but have cash issues,” Aitken explained. Essentially an online pawnshop, borro.com takes possession of the goods until the loan is repaid—a business as old as time, now moving to the Internet.
Another attendee, Gabriel Sukenik, wore a pin on his lapel displaying the symbol for bitcoin, the algorithm-based “digital currency” that is unregulated, untaxed, and traded online. Bitcoin’s supporters say a major advantage is that, because it doesn’t have to pass through currency exchangers who each take a cut of the sum, it’s cheaper to transfer money around the globe. This saves billions of dollars that are usually lost to intermediaries, particularly in the case of remittances sent home by workers abroad.
Sukenik is the director of Coinapult, a service that transfers bitcoins via e-mail and text messages and is attracting some unorthodox clients. Credit-card companies often charge higher fees to pornography providers, and PayPal has threatened to stop working with publishers of “obscene” content. So some porn companies are accepting bitcoin “because it’s not charged super high,” Sukenik explained. The same goes for gambling sites, where a foreign player might choose to bet bitcoins rather than wire money through a bank and get slapped with big fees.
At the beginning of the conference, Diamandis indulged in a version of what the critic Evgeny Morozov calls technological solutionism: the zealous belief that technology can fix any problem, even ones that don’t really exist. And yet the biggest issue facing digital-payment companies may simply be that the technology that’s already out there—cash and cards—is too good.
Purely digital transactions are great for those who can adopt them, but for the luddites or the unconvinced, money remains stuck in the traditional world of big banks and leather billfolds. “We’re just very comfortable with our banking system now,” Colleen Dorwart, a senior manager at the outdoor-gear outlet Cabela’s, said during a panel on gift cards.
And there’s a downside to trying to overhaul tried-and-true technologies: the upstart replacements need to work out some kinks of their own.
The conference, which runs through Thursday, comes the week after the shutdown of Silk Road, an illicit marketplace that used bitcoins as an anonymous medium of exchange. In fact, the Silk Road shutdown could help the currency gain more mainstream credibility by cutting down on illegal usage, as Brian Patrick Eha wrote on Saturday. U.S. government representatives recently met with bitcoin supporters to better understand the currency.
The conference panelists in a session called “Bitcoin 101” were nonplussed about the Silk Road shutdown and the possibility of regulation for bitcoin. “Regulatory compliance is a positive; it protects the consumer side,” Megan Burton, the C.E.O. of the CoinX digital-currency exchange, said. Yet bitcoins retain a certain mystique. Outside the panel, the C.E.O. of a bitcoin-related firm pulled out a small wallet filled with physical coins worth around ten thousand dollars, drawing a small crowd of gawkers.
In any case, the question of whether cash should continue to exist or must be disrupted out of existence by innovative companies masks a deeper reality, beyond the hype of venture capital. Physical currency, in the form of seashells, or tobacco, or salt, has existed as long as civilization, and is likely to persist, complemented but not replaced by new technologies.
Even some of the conference attendees were skeptical of all the excitement around replacements for cash and credit cards. Henry Helgeson, the C.E.O. of Merchant Warehouse, which acts as a middleman between mobile-payments companies and retail businesses, expressed some doubt while perched near a Starbucks inside the conference hotel. “There’s already a good system for consumers being able to pay,” he told me. “Putting a credit card on a phone doesn’t really add value. This is bubble 2.0 territory here.”
Then he strode away from the conference back toward the busy coffee shop, where greenback bills remained abundant.
Photograph by Andrew Harrer/Bloomberg via Getty.

Apolloemma

October 10, 2013
The Real Reason for Israel’s Brain DrainPosted by Ruth Margalit

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On a visit to Eastern Europe last week, Yair Lapid, Israel’s telegenic finance minister, wrote a defiant yet innocent-seeming Facebook post: “A word to all of those who are ‘fed up’ and ‘leaving for Europe,’,” he began,

I happen to be in Budapest at the moment. I came to give a speech in parliament against anti-Semitism and to remind them how my father was almost murdered here because the Jews had no state of their own; how my grandfather was killed in a concentration camp; how my uncles were starved; how my grandmother was saved from a death march at the last moment. So forgive me if I’m a little impatient with those who are willing to throw away the only country the Jews have because it’s easier to live in Berlin.

Lapid’s harsh words appeared to be directed at the subjects of a highly rated new documentary show, which examines the lives of Israelis living abroad. The show is called “The New Yordim,” the last word being a semi-derogatory term in Hebrew used to describe expatriates. Yordim means “those who descend,” as opposed to olim, people who immigrated to Israel, or, literally, “those who ascend.” The charged terminology provides a clue into how divisive the phenomenon of uprootedness is—and has always been—in Israeli society. (Yitzhak Rabin once called Israeli expatriates “a debris of weaklings.”)
At first glance, the numbers seem to justify the alarm: more than half a million Israelis, or about seven per cent of the population, live abroad, according to the Central Bureau of Statistics. The majority resides in the U.S. or in Canada, but recent years have also seen a booming Israeli community take root in Europe, especially in Berlin. The expatriates tend to be young and educated, in search of graduate degrees or better-paying jobs—part of the famous “brain drain” that is changing the entire developed world and against which many politicians have railed.
The truth behind these numbers paints a different picture, however: the statistics define as an expatriate anyone living overseas for at least a year. (I am one of them, and so, by the way, is Lapid, who spent several years in the U.S.) Yet, ask these people where they see themselves in five or ten years, and many of them would not flinch before answering: in Israel. Their reasons for leaving are largely financial or educational. Yes, some settle down in their adopted countries, but a surprising number of them come back. In 2010, for example, fifteen thousand Israelis left the country, but ten thousand returned. These extended trips abroad, therefore, represent a stepping stone for many Israelis, a prolonged layover on a journey whose final destination is Israel. (Some fields of work, admittedly, make it easier to return than others. In academia, the situation in Israel is dire. Two of this year’s Nobel Laureates in chemistry, which was announced yesterday, are Israeli citizens who had left the country; one of them complained that he couldn’t find tenure.)
Yet Lapid chose to ignore the financial squeeze that was driving Israelis away. If, in writing his diatribe, he was hoping to ride a wave of shared indignation, he could not have predicted that the tide would swiftly shift and come crashing over him.
“Mr. Lapid, before you talk about Zionism, when was the last time you had to worry about making ends meet?” one Haaretz op-ed writer asked. In another highly circulated blog post, the journalist Amir Mizroch pounced on Lapid’s familial reference: “You talked about your parents? Well let me tell you about my parents, and the parents of many other young people I know here in Israel,” Mizroch wrote. “Our parents come out of retirement so that they can help us; they take out mortgages on houses they already own; they buy groceries for us, they babysit our children because we have to work two jobs, and because daycare, like everything else in this country, is exorbitantly expensive.”
These commenters, and many others, articulated the findings from a fascinating recent survey by the financial newspaper Calcalist: eighty-seven per cent of Israelis over the age of twenty-five are financially dependent on their parents. That’s a startling figure that requires some unpacking.
First, by “financial support,” the survey doesn’t mean an occasional gift, such as a one-time cash infusion to make up for rent or a celebratory check for graduation. Researchers explicitly reported that it represents a steady, monthly flow of money from parents to their children, worth an average of twenty-five thousand dollars a year.
Second, as opposed to what many might think, most of the parents who support their children aren’t wealthy; the money they regularly give represents between fifteen and twenty-four per cent of their income (often coming directly out of their pension funds or social security).
Last, and perhaps most importantly, by “children” the survey, in fact, means nothing of the kind: those being backed by their parents are not the twenty-something millennials we hear about in the U.S., who move back home while searching for work, but rather people in their thirties and forties, many of whom have children of their own—and even careers. The point isn’t that they’re not working, but that they can’t keep up with the steep rise in the country’s cost of living.
While wages in Israel have stagnated over the past decade, on the heels of a 2001 recession, prices have continued to go up. The uptick is most widely felt when it comes to housing: in the U.S., it takes three years of work on average for someone to be able to buy an apartment, while in Israel it takes almost eight, according to statistics from the Taub Center for Social Policy Studies. People’s ability to afford food has eroded, too. In 2005, for example, the price of dairy products in Israel was six per cent higher than in other Western countries; by 2008, it was forty-four per cent higher. Several factors account for these shifts, such as rich foreign nationals buying secondary homes in Israel and pricing locals out of the market (the seafront in Tel Aviv is now known as a ghost town because of all the apartments that stand empty, awaiting their French, Russian, or American owners). The rising price of food has been caused, in part, by the lack of competition in manufacturing and distribution, in which a few large conglomerates are able to keep prices high. But all this only exacerbates the skewed mechanism already at work: what the young generation can’t afford, the older generation is forced to pay for.
It’s a reality that I encounter in Israel all the time. Most of my friends—women and men in their late twenties and early thirties, who have jobs, and Master’s degrees or Ph.D.s—still rely on their parents to help them out with rent. Those with children have unwritten agreements whereby their parents shoulder a chunk of the child-care expenses, or else the parents are ferried across the country on certain days to babysit their grand-children. Many of my friends are postponing having kids altogether, to avoid the soaring costs. And, yes, some choose to move abroad.
It’s easy to write these people off as spoiled, or to argue that their parents are enabling the situation, but the findings show that that’s not the case: Calcalist found that the more money that Israelis earn, the less they rely on their parents. Financial dependence, in other words, is not a luxury; it’s a necessity.
Calcalist interviewed a forty-year-old Israeli engineer. His wife is employed, as well, but with four young children, they have had to turn to both sets of parents for help: his parents chip in about three hundred dollars a month, and hers help out with large expenses. “I went to the army, I pay my taxes, I feel like I’m doing everything right,” he said. ”It’s really frustrating. I just can’t see us managing on our own.”
Photograph by Dan Materna/MAFRA/isifa/Getty.

Apolloemma

October 8, 2013
Why America Needs a Stock-Market CrashPosted by John Cassidy

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A week into the partial government shutdown, and there’s still no end in sight to America’s latest self-inflicted fiscal crisis. The two sides, in particular the House Republicans, appear to be getting even more intransigent, and the October 17th deadline for a possible breach of the debt ceiling is now looming. Having just returned from a long-ago arranged six-day trip to Europe, I thought I must have missed at least one significant effort to reach a resolution. In fact, practically nothing had happened since I left, save that both sides have continued to talk past each other. Absent an unexpected softening in attitudes over the next few days, it may well take some outside intervention to break the deadlock.
Had this situation arisen in the not-so-distant past, it’s conceivable that some older, wiser heads from both parties would have gotten together and hashed out a deal that allowed each side to claim victory. But given the G.O.P.’s lurch to the right, and the White House’s understandable reluctance to buckle in the face of reckless brinkmanship, such a statesmanlike solution is difficult to envisage. Something more drastic is needed, and my candidate is a stock market crash.
I’m not talking about a cruncher on the scale of Black Monday, in October of 1987, when the Dow plummeted by twenty-three per cent in a single trading session. (An equivalent move now would lop about thirty-three hundred points off the index.) But I am talking about something significantly bigger than the market slippages we’ve seen in the past few days. (The market fell by 136.34 points on Monday, and closed at 14,936.24.) How large it might be, nobody can say for sure. But if the market fell by, say, three or four hundred points for three days in a row, and then lurched down another eight hundred points, or even a thousand points, the effect would be salutary.
How can I say that? Tens of millions of Americans would grow alarmed about their 401k plans. On Wall Street, there would be margin calls, liquidity runs, and other disturbing developments that inevitably accompany market breaks. Rumors would start to spread about the health of various financial institutions. You don’t have to subscribe to a tail-wags-the-dog view of finance and politics to believe that this would lead to a rapid change of thinking, and of behavior, in Washington.
One reason that we can be confident that a shift would come about is that, just five years ago, something pretty similar happened. In September, 2008, at the height of the post-Lehman financial crisis, an unlikely coalition of conservative Republicans and liberal Democrats voted down Hank Paulson’s TARP bank bailout. Wall Street promptly went lulu, dropping almost eight hundred points in a day, and that did the trick. Despite some bleating and harrumphing, echoes of which we hear to this day, the House promptly reversed course and voted for the seven-hundred-billion-dollar bill that the Bush Administration had proposed.
Since 2008, of course, the House G.O.P. has gotten considerably more extreme, and it is now confronting a Democratic President rather than a Republican one. That’s why we might need an even bigger fall in the market than we had in 2008. In the face of a single day of heavy losses, the members of the G.O.P.’s Tea Party faction might well say “So what?,” and the Republican leaders might continue to cavil to them. What is needed is something genuinely frightening, which would give John Boehner and his colleagues a reason and a rationale for overruling the ultras.
It might seem a bit extreme to wish a big loss on the retirement accounts of America’s savers and investors, myself included. But taking a relatively modest hit now would be much preferable to allowing the House to posture and procrastinate for another couple of weeks. By then, the United States could be facing the prospect of a genuine run on Treasuries and the dollar—the result of which would make a thousand-point drop in the Dow look like a mere wobble.
To be sure, things have come to a pretty pass when a nation that thinks of itself as the world’s greatest democracy has to rely on a conniption in the markets to discipline its unruly and irresponsible representatives, but that’s about where we are. As evidenced by what happened in 2008, it’s where we’ve been for some time. Back then, it was perfectly clear that some sort of government bailout was necessary to arrest the financial panic and head off a possible depression. But because such a course of action was ethically and morally toxic, our divided and fragmented political system couldn’t carry it through until the markets intervened.
Today, the situation is less grave than it was in September, 2008, but it’s fundamentally similar. In order to maintain a functioning government, Congress needs to finance the programs it has enacted. In order to protect the good standing of the United States and underpin the reserve status of the dollar, the Treasury Department needs to be able to raise money that can be used, among other things, to pay the country’s creditors. A bit of bedlam in the markets could help accomplish both of these tasks. If, in the wake of a mid-sized Wall Street crash, White House officials and House Republican leaders did sit down to talk, it’s practically inconceivable that they wouldn’t reach an arrangement about the debt ceiling as well as the shutdown: U.S. investors and foreign creditors would demand that the two things were settled simultaneously.
The danger, of course, is that things could get out of hand. Once a big financial market, such as the stock market, starts to break down, there’s no saying where things can end up. If the falls aren’t addressed promptly, self-reinforcing cycles can quickly develop, leading to more selling and more panic: that’s what we saw in 2008, when the market for subprime-mortgage bonds imploded.
In this case, though, there is less danger of a self-reinforcing collapse. What we are dealing with isn’t the bursting of a speculative bubble or some other economic pathology: it is posturing and mischief-making on the part of a relatively small group of Washington politicians.
Once the markets started tanking, investors, the banks, and the media would besiege Congress for action. The political environment would change drastically. Refusing to acknowledge reality, including the reality that every country has to pay its creditors or face ruin, would no longer be an option. Within days, or even hours, the two sides would come up with some face-saving device to calm the markets. (Finding a more lasting solution would still be a big struggle.)
To sum up, Congress needs adult supervision. Since the President can’t provide it and the Republican leadership won’t, the market might well have to step in and do the job. Such a resolution wouldn’t be pretty, but history suggests it would be reasonably effective. And once the immediate crisis was resolved, the market would probably recovery pretty sharply.
Photograph by Daniel Acker/Bloomberg/Getty.

Apolloemma

Remember: A Country Is Not a Company

                by Stephen Kinsella  |                  11:03 AM March 25, 2013       

The UK’s Chancellor of the Exchequer commended his budget to the House of Commons last week to help create a country that “wants to be prosperous, solvent and free.” Discussing Greece, Germany’s Angela Merkel said “The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece, and the danger that it hits everyone, or at least a number of other countries, is very big”
Marc Chandler of Brown Brothers Harriman wrote recently “the less solvent you are, the more sovereignty you have to give up.” In recent years Iceland, Ireland, Greece, Portugal, Spain, Italy, and Cyprus have flirted with national insolvency, been termed ‘insolvent’ by the markets, and many have had to relinquish some of their sovereignty as a result.
You are insolvent when you can’t pay your debts. Households and firms have struggled with insolvency for centuries. Insolvency is usually a balance sheet concept based around the valuation of assets. When the value of your assets is less than the value of your liabilities, you are insolvent. Usually you work out a repayment schedule with your creditors via a restructuring process.
For countries the notion of national insolvency is a newer, and potentially very misleading, idea. Countries aren’t corporations. Technically almost every country would be insolvent if if was asked to pay all of its debt using its available assets. All governments in practice secure their national debts on their abilities to levy taxes. You can’t really repossess a country, in fairness. When a sovereign borrows too much, it either pushes the debt into the future by rolling over its debt, or  failing that, defaults on some or all of the debt. The history of sovereign debt is in fact the history of sovereign default. Defaults tend to happen, in bursts, about every 30 years or so. But before the current crisis, very little attention was paid to this idea of national insolvency. There are very few mentions of national insolvency during the East Asian crisis of the late 1990s, for example.
In fact national borrowing on the modern scale really only began around the seventeenth century. Before that in the monarchical era, so-called “court bankers” provided cash-strapped sovereigns with loans and quite often served as royal tax collectors and handled other fiduciary matters for them. Monarchical debts, when they were paid, were usually paid at the people’s expense. For example the land now known as Pennsylvania was given by the Crown to William Penn to repay a 16,000 pound debt. With the passing of the monarchical governance structure, responsibility for a nation’s debt moved from the rulers to the ruled. Henceforth these were the people’s debts, issued by a national bank, the Bank of England — in return for the privilege of producing its own banknotes — on behalf of the people, to their elected rulers.
I believe the analogy between national finances and insolvency is damaging. If politicians and policy makers believe their country is, literally, insolvent, then they behave differently towards their creditors. For politicians of debtor states, suddenly vast privatizations make sense, because of course you’re selling some of your remaining assets. Suddenly the will of the people of the debtor nation becomes secondary to the will of the nation’s creditors. Suddenly democracy is an expensive irrelevance in the face of an overwhelming technocratic desire for a speedy, and market-friendly, solution. There are many examples, but two come easily to mind: Europe’s fury in 2011 when then-Prime Minister of Greece George Papandreou threatened to put his country’s bailout terms to a referendum, and more recently when the Cypriot parliament refused to pass a law which would levy a deposit tax on ordinary citizens with less than 100,000 euros in the bank. When the deal to bailout Cyprus was finally done, the Financial Times reported markets rising as “the plan does not need approval from the Cypriot parliament.” Super.
Creditor countries calling the tune by which debtor countries dance is not a new invention. But using the language of insolvency to do so is new. So when and why did it happen?
The single European currency project, in depriving member states of the ability to issue their own currency, has created the conditions for something close to national insolvency when economies slump. With high debt-to-national output ratios, current account deficits, fiscal deficits, and, putting it mildly, shaky banking systems, the debtor countries of Europe look very much like insolvent firms to the markets. Their sovereign power to issue currency is gone, meaning only painful deflation through the wage channels are possible. Leaving the currency union is very, very costly. The solution is national austerity. Indeed, in some cases, like Cyprus, Ireland, and Italy, the banking systems are so big relative to the rest of the economy as to make the sovereign itself almost vestigial.
The saving of the banking system and the system as a whole is the prime concern of Europe’s policy makers —  typically representing the interests of creditor countries —  but what will take its place? A more or less autocratic system of coercion is the logical outcome of these policies. They come from using ideas like national insolvency to reduce the grip a people have on their sovereignty.
But there is no asset valuation concept in the founding documents of any nation state; nor should there be.

Apolloemma

A Cross of Rubber

By PAUL KRUGMAN

Published: January30, 2011

Last Saturday,reported The Financial Times, some of the world’s most powerful financialexecutives were going to hold a private meeting with finance ministers inDavos, the site of the World Economic Forum. The principal demand of theexecutives, the newspaper suggested, would be that governments “stop banker-bashing.” Apparentlybailing bankers out after they precipitated the worst slump since the GreatDepression isn’t enough — politicians have to stop hurting their feelings, too.

But the bankers alsohad a more substantivedemand: they want higher interest rates, despite the persistence of very highunemployment in the United States and Europe, because they say that low ratesare feeding inflation. And what worries me is the possibility that policymakers might actually take their advice.

To understand theissues, you need to know that we’re in the midst of what the InternationalMonetary Fund calls a “two speed” recovery, in which some countries arespeeding ahead, but others — including the United States — have yet to get outof first gear.

The U.S. economy fellinto recession at the end of 2007; the rest of the world followed a few monthslater. And advanced nations — the United States, Europe, Japan — have barelybegun to recover. It’s true that these economies have been growing since thesummer of 2009, but the growth has been too slow to produce large numbers ofjobs. To raise interest rates under these conditions would be to undermine anychance of doing better; it would mean, in effect, accepting mass unemploymentas a permanent fact of life.

What about inflation?High unemployment has kept a lidon the measures of inflation that usually guide policy. The Federal Reserve’spreferred measure, which excludes volatile energy and food prices, is nowrunning below half a percent at an annual rate, far below the informal targetof 2 percent.

But food and energyprices — and commodity prices in general — have, of course, been rising lately.Corn and wheat prices rose around 50 percent last year; copper, cotton andrubber prices have been setting new records. What’s that about?

The answer, mainly,is growth in emerging markets. While recovery in advanced nations has beensluggish, developing countries — China in particular — have come roaring backfrom the 2008 slump. This has created inflation pressures within many of thesecountries; it has also led to sharply rising global demand for raw materials.Bad weather — especially an unprecedented heat wave in the former Soviet Union,which led to a sharp fall in world wheat production — has also played a role indriving up food prices.

The question is, what bearing should all of thishave on policy at the Federal Reserve and the European Central Bank?

First of all,inflation in China is China’s problem, not ours. It’s true that right nowChina’s currency is pegged to the dollar. But that’s China’s choice; if Chinadoesn’t like U.S. monetary policy, it’s free to let its currency rise. NeitherChina nor anyone else has the right to demand that America strangle its nascenteconomic recovery just because Chinese exporters want to keep the renminbiundervalued.

What about commodityprices? The Fed normally focuses on “core” inflation, which excludes food andenergy, rather than “headline” inflation, because experience shows that whilesome prices fluctuate widely from month to month, others have a lot of inertia— and it’s the ones with inertia you want to worry about, because once eitherinflation or deflation gets built into these prices, it’s hard to get rid of.

And this focus hasserved the Fed well in the past. In particular, the Fed was right not to raiserates in 2007-8, when commodity prices soared — briefly pushing headlineinflation above 5 percent — only to plunge right back to earth. It’s hard tosee why the Fed should behave differently this time, with inflation nowherenear as high as it was during the last commodity boom.

So why the demand forhigher rates? Well, bankers have a long history of getting fixated on commodityprices. Traditionally, that meant insisting that any rise in the price of goldwould mean the end of Western civilization. These days it means demanding thatinterest rates be raised because the prices of copper, rubber, cotton and tinhave gone up, even though underlying inflation is on the decline.

Ben Bernanke clearlyunderstands that raising rates now would be a huge mistake. But Jean-ClaudeTrichet, his European counterpart, is making

hawkish noises — andboth the Fed and the European Central Bank are under a lot of external pressureto do the wrong thing.

Theyneed to resist this pressure. Yes, commodity prices are up — but that’s noreason to perpetuate mass unemployment. To paraphrase William Jennings Bryan,we must not crucifyour economies upon a cross of rubber.

Financial executives metin Davos. They claimed that financial minister should not bashing them. Onemore substantive question is they want to policy makers will raise interestsrates. They says the reason for raising interest rates is that many commoditiesprices soar and there is inflation pressure from emerging nations.

But Krugman says hedisagree with this recommends. He explicit his reasons are:

1.    Inflationis China’s problem, not U.S.’s. U.S. do not have any responsibility to bootChinese economy while strangling its own nascent economic recovery.

2.    Someprices change wildly from month to month. Federal Reserve should pay moreattention the inertia prices because once they get into the inflation trend, itis not easy to get rid of. In this respect, Fed have done a good job in thepast two years. But under the huge pressure this time, it may make a bigmistake.

So the conclusion Krugman get is that he hope Fed and theEuropean Central Bank should resist this pressure and do not raise interestrates. I will recite the last sentence to end my own summary:

         To paraphrase William Jennings Bryan, wemust not crucify our economies upon a cross of rubber.

Apolloemma

A Tale of Two Moralities

By PAUL KRUGMAN

Published: January 13, 2011

On Wednesday, President Obama called on Americans to "expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy, and remind ourselves of all the ways our hopes and dreams are bound together." Those were beautiful words; they spoke to our desire for reconciliation.

But the truth is that we are a deeply divided nation and are likely to remain one for a long time. By all means, let’s listen to each other more carefully; but what we’ll discover, I fear, is how far apart we are. For the great divide in our politics isn’t really about pragmatic issues, about which policies work best; it’s about differences in those very moral imaginations Mr. Obama urges us to expand, about divergent beliefs over what constitutes justice.

And the real challenge we face is not how to resolve our differences — something that won’t happen any time soon — but how to keep the expression of those differences within bounds.

What are the differences I’m talking about?

One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net — morally superior to the capitalism red in tooth and claw we had before the New Deal. It’s only right, this side believes, for the affluent to help the less fortunate.

The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That’s what lies behind the modern right’s fondness for violent rhetoric:

many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.

There’s no middle ground between these views. One side saw health reform, with its subsidized extension of coverage to the uninsured, as fulfilling a moral imperative: wealthy nations, it believed, have an obligation to provide all their citizens with essential care. The other side saw the same reform as a moral outrage, an assault on the right of Americans to spend their money as they choose.

This deep divide in American political morality — for that’s what it amounts to — is a relatively recent development. Commentators who pine for the days of civility and bipartisanship are, whether they realize it or not, pining for the days when the Republican Party accepted the legitimacy of the welfare state, and was even willing to contemplate expanding it. As many analysts have noted, the Obama health reform — whose passage was met with vandalism and death threats against members of Congress — was modeled on Republican plans from the 1990s.

But that was then. Today’s G.O.P. sees much of what the modern federal government does as illegitimate; today’s Democratic Party does not. When people talk about partisan differences, they often seem to be implying that these differences are petty, matters that could be resolved with a bit of good will. But what we’re talking about here is a fundamental disagreement about the proper role of government.

Regular readers know which side of that divide I’m on. In future columns I will no doubt spend a lot of time pointing out the hypocrisy and logical fallacies of the "I earned it and I have the right to keep it" crowd. And I’ll also have a lot to say about how far we really are from being a society of equal opportunity, in which success depends solely on one’s own efforts.

But the question for now is what we can agree on given this deep national divide.

In a way, politics as a whole now resembles the longstanding politics of abortion — a subject that puts fundamental values at odds, in which each side believes that the other side is morally in the wrong. Almost 38 years have passed since Roe v. Wade, and this dispute is no closer to resolution.

Yet we have, for the most part, managed to agree on certain ground rules in the abortion controversy: it’s acceptable to express your opinion and to criticize the other side, but it’s not acceptable either to engage in violence or to encourage others to do so.

What we need now is an extension of those ground rules to the wider national debate.

Right now, each side in that debate passionately believes that the other side is wrong. And it’s all right for them to say that. What’s not acceptable is the kind of violence and eliminationist rhetoric encouraging violence that has become all too common these past two years.

It’s not enough to appeal to the better angels of our nature. We need to have leaders of both parties — or Mr. Obama alone if necessary — declare that both violence and any language hinting at the acceptability of violence are out of bounds. We all want reconciliation, but the road to that goal begins with an agreement that our differences will be settled by the rule of law.

===

1.        Empathy n. the ability to understand other people’s feeling or problems.
On Wednesday, President Obama called on Americans to “expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy, and to remind ourselves of all the ways we hopes and dreams are bound together.”
2.        Red in tooth and claw: characterized by or displaying brutal emotion, or violent behavior
3.        Imperative n. formal an idea or belief that has a strong influence on people, making their behavior in a particular way.
Moral imperative: 道德准则
4.        Pine for v. if you pine for a place or for something, you miss it a lot and wish you could be there or have it again.
5.        Hypocrisy n. when someone pretend to have a certain beliefs or opinions that they do not really have.
6.        New Deal (新政)： A program of economic and social changes that was introduced in the U.S. by President Franklin D. in 1933, in order to help people who had lost their jobs or their property as a result of the Great Depression. It included money for farmers to borrow and am important program of public works.

=====
1.        For the great divide in our politics isn’t really about pragmatic issues, about which polities work best.
2.        One side of American politics consider the modern welfare state-a private enterprise economy, but one in which society’s winners are taxed to pay for a social safety net-morally superior to the capitalism red in tooth and claw we had before the New Deal. It is only right, this side believes, for the affluent to help the less fortunate.
The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That is what lies behind the modern right’s fondness for violent rhetoric: Many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.
I need to say sometimes I think those liberalistic believers show their arrogant attitude towards the less fortunate.
3.        When people talk about partisan difference, they often seem to be implying that these difference are pretty matters that could be resolved with a bit of good will. But what we are talking about here is a fundamental disagreement about the proper role of government.
4.        In future columns I will no doubt spend a lot of time pointing out the hypocrisy and logical fallacies of the “I earned it and I have the right to keep it” crowd. And I will also have a lot to say about how far we really are from being a society of equal opportunity, in which success depends solely on one’s own efforts.
5.        It is not enough to appeal to the better angels of our nature. We need to have leaders of both parties-or Mr. Obama alone in necessary- declare that both violence and language hinting at the acceptability of violence are out of bounds. We all want reconciliation, but the road to that good begins with an agreement that our difference will be settled by the rule of law.

Summary:
Krugman declared the underlying reason of U.S. divide partisan system: the left thinks that the affluent should be taxed for more money and should help the less fortunate; the right thinks taxing the wealthy to support others amounts to a kind of theft and taxes is a tyrannical imposition on their liberty. He also pointed out that People should not accept the violence of this division. One possible way to solve this gap is through the rule of law.
And another information is comments about the New Deal. President Franklin D., to get America out of the Great Depression, established a social safety net and a welfare state. New Deal includes borrowing money to rural Americans and important program of public work.