Daily Archives: August 12, 2010

Jeffrey Goldberg’s article for The Atlantic, “The Point of No Return”, is a remarkable piece of journalism. It analyses in great depth whether Israel will soon attack Iran’s nuclear facilities, and puts the chances at better than 50-50. I think the piece is an amazing intellectual coup. It takes an issue of enormous importance, a decision on which the history of our times could pivot, which has been on people’s minds for ages–and through prodigious reporting and force of analysis makes everything that has been written on the subject up to now seem completely inadequate. I can’t think of anything else quite like it.

It is possible that at some point in the next 12 months, the imposition of devastating economic sanctions on the Islamic Republic of Iran will persuade its leaders to cease their pursuit of nuclear weapons. It is also possible that Iran’s reform-minded Green Movement will somehow replace the mullah-led regime, or at least discover the means to temper the regime’s ideological extremism. It is possible, as well, that “foiling operations” conducted by the intelligence agencies of Israel, the United States, Great Britain, and other Western powers—programs designed to subvert the Iranian nuclear effort through sabotage and, on occasion, the carefully engineered disappearances of nuclear scientists—will have hindered Iran’s progress in some significant way. It is also possible that President Obama, who has said on more than a few occasions that he finds the prospect of a nuclear Iran “unacceptable,” will order a military strike against the country’s main weapons and uranium-enrichment facilities.

But none of these things—least of all the notion that Barack Obama, for whom initiating new wars in the Middle East is not a foreign-policy goal, will soon order the American military into action against Iran—seems, at this moment, terribly likely. What is more likely, then, is that one day next spring, the Israeli national-security adviser, Uzi Arad, and the Israeli defense minister, Ehud Barak, will simultaneously telephone their counterparts at the White House and the Pentagon, to inform them that their prime minister, Benjamin Netanyahu, has just ordered roughly one hundred F-15Es, F-16Is, F-16Cs, and other aircraft of the Israeli air force to fly east toward Iran—possibly by crossing Saudi Arabia, possibly by threading the border between Syria and Turkey, and possibly by traveling directly through Iraq’s airspace, though it is crowded with American aircraft.

Putting aside what Israel will do, what should it do — and (a separate issue) what should the US want it to do? Goldberg goes into these questions very carefully and says he is deeply ambivalent. After reading the piece, you will know this is not because he has failed to think things through. There are no good answers.

It is no help to point this out, but one wonders about what might have been. As Goldberg relates, Israel’s calculations, and Iran’s, would be quite different if the United States itself could credibly threaten to attack unless Iran abandons its weapons programme. But even if America chose to make that threat, could it make it credible short of actually carrying it out? If not for Iraq, the answer might have been yes. If that war had never been fought, if it had been prosecuted successfully, if the allegation that Iraq was developing WMDs had not been exploded (thus denying legitimacy to the venture, successful or otherwise), then a US threat to use force in Iran’s case might have been credible enough to work. Because the Iraq war turned out so badly, because the rationale offered for it turned out to be a mistake, because the US appetite for more of the same is zero, Iran may very well calculate that any US threat will be a bluff, and will call it.

When you have finished reading Goldberg’s piece–but, do yourself a favour, not before–also take a look at the articles discussing it by Fred Kaplan on Slate and by Flynt and Hillary Leverett at Foreign Policy.

I admire this level-headed piece by the IMF’s Olivier Blanchard and Carlo Cottarelli. The debate on the need for further fiscal stimulus in the US and elsewhere has indeed, as they argue, become needlessly ideological and extreme. The choice is not about stimulus or austerity. It is about how far to front-load the fiscal adjustment, and how far to persist with it when circumstances permit.

[S]ome clearly prefer more front-loaded consolidation, others less. Front-loaders point to the need to maintain credible fiscal policy, which is hard to gain and easy to lose. They note that market perceptions of fiscal health can shift in a heartbeat, so countries must move pre-emptively.

Back-loaders respond that, if hasty adjustment derails growth, credibility will also be a casualty. To use Larry Summers’ apt expression, recent growth numbers show that advanced economies have not yet achieved escape velocity. Withdrawing fiscal accommodation too early could therefore jeopardise the recovery, especially when – measures announced this week by the Fed notwithstanding – the monetary policy arsenal has been effectively drained. When private demand picks up, they argue, consolidation will be easier and safer.

Fortunately, there is a path through these thorns. Front-loading can be avoided if moderate adjustment today comes with further savings in the future. And such options are available, desirable and, in many cases, more politically feasible than front-loaded spending cuts.

Yes. Blanchard and Cottarelli also underline another important point.

Today’s debt problems, therefore, result not from how fiscal policy was managed during the crisis, but rather from how it was mismanaged before the crisis. Advanced countries entered the crisis with some of the highest public debt ratios ever reached in the absence of a major war. A basic fiscal policy lesson of sowing in good times and reaping in bad times was ignored.

This matters not because one wants to know who to blame for what has happened–although it is as well to keep that in mind. It matters because, once this crisis is behind us, it will be essential to prepare for the next. Imagine going into the next Great Recession with levels of public debt at anything like currently projected long-term levels.

It will be a mistake to move too soon. And I don’t know if I agree with the article when it calls for “an initial downpayment”, at least so far as the US is concerned: the US has room for additional short-term stimulus. But refusing even to discuss longer-term consolidation until the economy is back on its feet is an even bigger mistake.

Partly in response to criticisms by Joe Romm, here and here, I’ve revised my recent posts on the fall-out from Climategate. I was sloppy with quotation marks, and I have tried to clarify what I said at certain points. The revised posts are here and here.

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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