The Power and the Money

Mosul just fell to the people we used to call the “enemy” and nobody cares

 ISIS forces just took Mosul. Mosul. Let me repeat that: Mosul. 

Worse yet, Iraqi forces fell apart in a way that reminds of Batista’s army during the tail end of the Cuban Revolution. This is bad news. Now, ISIS has been building an infrastructure in Mosul for quite some time. (The link alludes to a parallel tax system in the city.) But this is shocking. 

When you add to it evidence that ISIS is in the process of establishing a tax system in the areas under their control it gets very worrisome. 

And strangely, the TV news and the big-traffic interweb sites seem to find Eric Cantor’s loss more important. Which, of course, shows you how little we really cared about any of the things supposedly at stake in the Iraq war.

I would like to think that Americans will remain more vested in the Afghan war after the last U.S. soldiers leaves. But this is mostly because I was, you know, there. I might hope that should the Taliban retake Jalalabad we would pay a little more attention, but somehow I doubt it.

In defense of apathy, there really is no American option on the table in Iraq. Moreover, for all the parallels this isn’t Cuba in 1959 let alone Indochina in 1975; ISIS is not about to sweep into Baghdad. In a sense, then, why not ignore the news from Mesopotamia? It tastes of defeat and there is nothing to be done. 

But rational or not, that feels wrong. I am sad.

Plus ça change, plus elle ressemble à un tas de debans de rue de Brooklyn

A while ago, I discussed the problems of correctly implementing what should be, in theory, the world’s easiest counterinsurgency strategy for a country as rich as the United States: bribe your opponents. The U.S. has tried it in multiple ways; at best, it’s been a partial success, in the sense that things could be worse. But only partial. In October of last year, the Taliban hit the headquarters of the Panjshir provincial reconstruction team. When I was there in ‘06, Panjshir was quiet, well-protected by the local militia. That said, there were plenty of incidents like this, albeit not as deadly. Bribery is expensive, it is long-term, and it needs to be institutionalized (either formally or informally) in a way that aligns everyone’s incentives.

Are there lessons from history? Well, yes, but they’re not good. My co-blogger and I give you a report from 170 years ago:

The deceptive quietude of Afghanistan which followed the sharp lessons administered to the Dooranees and the Ghilzais was not seriously disturbed during the month of September 1841, and Macnaghten was in a full glow of cheerfulness. His services had been recognised by his appointment to the dignified and lucrative post of Governor of the Bombay Presidency, and he was looking forward to an early departure for a less harassing and tumultuous sphere of action than that in which he had been labouring for two troubled years. The belief that he would leave behind him a quiescent Afghanistan, and Shah Soojah firmly established on its throne, was the complement, to a proud and zealous man, of the satisfaction which his promotion afforded.

One distasteful task he had to perform before he should go. The Home Government had become seriously disquieted by the condition of affairs in Afghanistan. The Secret Committee of the Court of Directors, the channel through which the ministry communicated with the Governor-General, had expressed great concern at the heavy burden imposed on the Indian finances by the cost of the maintenance of the British force in Afghanistan, and by the lavish expenditure of the administration which Macnaghten directed. The Anglo-Indian Government was urgently required to review with great earnestness the question of its future policy in regard to Afghanistan, and to consider gravely whether an enterprise at once so costly and so unsatisfactory in results should not be frankly abandoned.

Lord Auckland was alive to the difficulties and embarrassments which encompassed the position beyond the Indus, but he was loth to admit that the policy of which he had been the author, and in which the Home Government had abetted him so eagerly, was an utter failure. He and his advisers finally decided in favour of the continued occupation of Afghanistan; and since the Indian treasury was empty ... Macnaghten was pressed to effect economies in the administration, and he was specially enjoined to cut down the subsidies which were paid to Afghan chiefs as bribes to keep them quiet.

Macnaghten had objected to this retrenchment, pointing out that the stipends to the chiefs were simply compensation for the abandonment by them of their immemorial practice of highway robbery, but he yielded to pressure, called to Cabul the chiefs in its vicinity, and informed them that thenceforth their subsidies would be reduced. The chiefs strongly remonstrated, but without effect, and they then formed a confederacy of rebellion.

The Ghilzai chiefs were the first to act. Quitting Cabul, they occupied the passes between the capital and Jellalabad, and entirely intercepted the communications with India by the Khyber route.

Macnaghten did not take alarm at this significant demonstration,regarding the outbreak merely as “provoking,” and writing to Rawlinson that “the rascals would be well trounced for their pains.” Yet warnings of gathering danger were rife, which but for his mood of optimism should have struck home to his apprehension. Pottinger had come down from the Kohistan, where he was acting as political officer, bent on impressing on him that a general rising of that region was certain unless strong measures of prevention were resorted to ...

Bad news from Afghanistan: In order to bribe people not to fight, you have to make sure that they stay bribed

 There is no shortage of bad news from Afghanistan. One new piece appeared in today’s New York Times. President Karzai has decided to abolish a northern militia currently paid for by NATO. This is a problem.

The above photo is not of members of the Afghan National Army. It is of Panjshiri militiamen in 2006, guarding the headquarters of the Panjshir provinicial reconstruction team. (In unrelated news, the Panjshir PRT was recently attacked by Taliban suicide bombers.) Afghanistan is loaded with armed militia, including the ones that make up the anti-government forces collectively referred to as the “Taliban.”

One strategy for establishing peace in a wartorn country is to bind armed militia to the state. You basically bribe people not to fight you, the government, or each other. In the process, you hope that you create lasting institutions that can create, over time, a legitimate chain of command that can permanently integrate (and subordinate) the formerly warring factions into the state. It is slow, it is painful, it can undercut other nation-building goals, but it is nonetheless vital to get it right. We botched it badly in Iraq, and paid quite a price. Of course, if you are going to bribe people not to fight ... sorry, integrate armed men into state institutions ... then you have to make sure that they stay bribed. That means that you (be it the local government or foreign overlords) have to make a credible commitment that the flow of benefits will continue as long as the militia obeys orders. By cutting off the flow of NATO money, Karzai has simultaneously undercut NATO’s ability to strike bargains and his own status as a credible partner.

There are reasons for President Karzai’s decision. Members of the Critical Infrastructure program (and the “Afghan Local Police” more generally, as the integrated militia are called) have been known to extort the citizenry, and they are not inside the chain of command of the Afghan National Police. The problem? Taking them off the NATO payroll is not going to get them to stop extorting the citizenry, or bring them under government control. Quite the reverse, actually. It is a dumb decision, and it bodes ill for other places in Afghanistan (like Panjshir) where independent militia have been de facto bought off.

It isn’t all bad. Karzai has (under pressure!) agreed to allow the Taliban to set up an office in Qatar from which peace negotiations can be conducted. But the President of Afghanistan isn’t exactly showing himself to be steadfast negotiating partner, and the decision to defund the Critical Infrastructure program bodes ill for the country’s post-American future.

POSTSCRIPT: There is some evidence that NATO was botching the integration programs, at least in the north. (The programs I saw in Panjshir in 2006 were well-run, but Panjshir is a special case on multiple levels.) Some salaries have not been paid. (This was a huge problem for the Afghan National Police in Nangarhar province back in ‘06; we dealt with it using a system much like the one that doesn’t seem to be working for the Afghan Local Police in Kunduz province.) The German government is worried about the lack of the long-term program to integrate the militias into the state’s chain of command. (The report to the German legislature can be found here.) Finally, here is the U.S. military’s investigation (written, surprisingly, by a one-star!) into allegations of human rights abuses by the Afghan Local Police, with recommendations for increasing American “command, control, and influence” over them. Of course, if the program is disbanded by the Afghan national government, then any hope of getting the militia under control goes out the window ...

Afghanistan gets an oil industry, and China (for once!) gets a good deal

 Ten years ago, the United States went to war in Afghanistan as retaliation for the destruction of the World Trade Center in New York by terrorists linked to (and protected by) the Afghan government. Seven years ago, the United States went to war in Iraq for reasons that remain somewhat unclear, but which many think had something to do with oil. T. Boone Pickens went so far as to complain to Congress: “They’re opening them (oil fields) up to other companies all over the world ... We’re entitled to it. Heck, we even lost 5,000 of our people, 65,000 injured and a trillion, five hundred billion dollars. We leave there with the Chinese getting the oil!”

Pickens wasn’t really correct about Iraq, but he nailed it in ... Afghanistan. In 2004, the USGS published a report examining the resources of the Amu-Darya basin, most of which is in Turkmenistan and Uzbekistan, but part of which extends in Afghanistan’s northern provinces. In 2006, the USGS made a more detailed survey of the resources on the Afghan side of the border. They estimated that the Amu-Darya fields might hold as much as 141 million barrels of oil, which is not a lot ... but the nearby Afghan-Tajik fields likely held 1.4 billion barrels (and might hold as much as 3.6 billion) which is.

In 2009, the Afghan government decided to put the smaller Amu-Darya blocks out to bid. The winner of the bid would be the company that offered the most favorable production sharing agreement (PSA) to the Afghan government. The offer would have to include (a) an offer of a fixed royalty percentage on all production; (b) a specific additional percentage for known fields in the blocks; and (c) a second specific percentage for unknown fields discovered after the bid. As standard for most PSAs, the winner would get 100% of the revenue until they covered their exploration and development costs, including interest. The real reward, of course, wouldn’t be Amu-Darya, but the much bigger Afghan-Tajik fields.

No points for guessing who won: the China National Petroleum Company (CNPC). CNPC beat Australia’s Buccaneer Energy, the U.K.’s Tethys Petroleum, and Pakistan’s Shahzad International.  According to Afghan sources, CNPC offered a 15% royalty, a 30% PSA share (referred to by the FT as a “corporation tax on profits,” which isn’t quite correct but does capture the basic idea) and the construction of a $300 million refinery. (Afghanistan consumes about 1.7 million barrels per year. A ballpark estimate of a refinery capable of processing all domestic consumption comes to a bit less than $50 million ... the implication being that the CNPC refinery is going to be intended to export to neighboring countries.

Three things are interesting about the deal. The first is that the Chinese appear to have gotten a pretty good deal: unless their marginal costs turn out to be astronomical (which is unlikely in a conventional onshore field with next-to-no exploration risk), a 45% government take after cost recovery is not bad at all. The second is that there isn’t any evidence of Chinese sweeteners, in the form of cheap development loans. This is not a loans-for-oil deal of the type signed with Russia or elsewhere. In a sense, then, this contract represents a change from previous Chinese deals, which generally involved overpaying for access to oil. Whether that change is going to be sustained is, of course, a completely different issue. The third is that any later disputes can be taken to the International Centre for the Settlement of Investment Disputes (ICSID), even though China and Afghanistan lack a bilateral investment treaty. ICSID is a remarkably powerful organization even when wielded against large and powerful states — if no big country has yet reneged on an ICSID judgment (although Argentina may change that) a small country like Afghanistan, highly dependent on World Bank funding and American assistance, is extremely unlikely to resist.

Americans will be responsible for creating the institutions (both inside an outside Afghanistan) that give foreign companies the certainty they need to invest, but Americans show no sign to getting any of the fruits of that investment.  The Afghan War, in short, was clearly not about oil. The Afghan peace, however, if there is to be such a thing, just might be.

The limits of empire

 The world really needs a good game-theoretic model of informal empire.  I suppose Bruce Bueno de Mesquita already has one, but I’d like to see something more specific. 

What’s informal empire?  Well, if “empire” happens whenever one sovereign state exerts its authority over an area previously under a different sovereignty (or none at all) then that empire is “formal” when the imperial state exerts its authority through a bureaucratic chain-of-command that runs from the imperial executive through the local government and down to the person in the street in the new territory.   (Similarly, an empire has formal characteristics if judicial decisions can be appealed upwards to courts in the center, or if the imperial legislature can pass laws for the subordinate territory.) 

Since 1898, the United States has generally eschewed formal empire.  The exceptions are Haiti in 1915-34, the Dominican in 1916-24, Japan in 1945-52, Germany in 1945-55, Okinawa in 1945-72, and Iraq in 2003-04.  (The European Union exercises formal authority over parts of the governments of Bosnia and Kosovo.)  The U.S. has relied on a combination of treaty arrangements, sanction mechanisms, and moral suasion to get its satraps to do what the government of day wants them to do.  The famous SOFAs kinda sorta sometimes formalize quasi-imperial arrangements by giving U.S. troops special privileges inside host countries, including sometimes the right to shoot people, but that is not the same thing as giving the American government the right to give local bureaucrats direct orders under the threat of unemployment or imprisonment.

Sometime informality works and sometimes it doesn’t.  Right now, informal empire has hit its limits in Afghanistan and Honduras.  The U.S. can’t make President Karzai crack down on corruption, form a coalition with Abdullah, or negotiate with the Taliban.  Considering both the number of troops we’ve got running around the country and the number of dollars we pour into its government budget, the lack of influence (let along control) is pretty depressing.  What kind of an empire is that?

In Honduras, the recent agreement between Micheletti and Zelaya appears to have collapsed.  The Honduran legislature has not voted to reinstate Zelaya, and Micheletti is continuing his modus operandi of “what the hell?” by picking a fight over who will lead the interim cabinet until Congress votes.  Washington may be able to pick something up out of this mess, but U.S. leverage is limited.  Aid is suspended and visas were as well until recently; stronger sanctions, meanwhile, will just sock it to a lot of very poor people.  We could give up and run out the clock, which would be the best option if the rest of the hemisphere agreed.  They don’t, so something had to be done, and a few days ago it looked as though the Secretary of State had done it, by brokering a solution.

Only now Micheletti keeps going off the reservation, and there seems to be no quiet easy way to keep him on it.  There is still something a little ridiculous about the lack of American leverage.  What kind of an empire is this?

Not much of one, actually.  To be honest, I suspect that the U.S. will be able to knock some sense into Micheletti.  If pushed, I’d bet on the agreement coming back to life.  But still, the limits of informality are clear.  Even in Afghanistan, let alone Honduras, local political actors are autonomous, and the threats that the U.S. could use to sanction them are not credible. 

Running an informal empire is complicated, and running a formal one is often impossible.  The implications are left as an exercise for the reader. 

Not-so-secret prisons at Bagram

  This, if accurate, is un-American and must be stopped.  I was not aware that the U.S. held prisoners at Bagram who were captured outside Afghanistan.  That is wrong.

While I think the decision to keep the torture photos under wraps is a mistake, I am not so sure of my position as to become upset about it.  No laws are being violated, and the administration's propaganda rationale is quite valid.  In addition, I also think that it would be a bad idea to extend habeus corpus to prisoners taken in Afghanistan as long as there is an active rebellion under way.  Denying those rights during a rebellion does not violate American law nor American tradition nor a decent respect of the opinions of mankind.  Finally, I have no problem with American forces swooping down and arresting somebody outside the United States, even in violation of the jurisdiction in which the swooping occurs.  After all, even now, two decades later, and despite all the gray, it still seems to me that Bush the Elder's decision to invade Panama and arrest Manuel Noriega was the right thing to do. 

But I have a serious problem when the swoopee is not transferred to an American federal court but rather transported to an extraterritorial outpost and held with no judicial protections whatsoever.

I understand why the President wants to punt on the Bagram issue.  I am supremely cynical, and unlike many of his early supporters I found the man an attractive candidate early on because I beleived that he was even more supremely cynical in the sort impersonal way that makes for successful presidencies.  But cynicism has its limits.  He does not have my support on the fate of the Bagram detainees captured outside the Af-Pak theater, and they should be tried in American courts or released.   

Institutions at Odds

Around this time last year I was in Afghanistan.  I was there with some U.S.-run provincial reconstruction teams, some where you could walk around and eat in the locals’ homes; some where the “security situation” (read: RPG attacks) meant the PRTs reconstructed very little.  It was ... educational.   

I wrote the below essay (among other, less interesting things on the same topic) after I returned.  It’s an attempt to put my thoughts in order, although upon re-reading I think it might be more informed by my historical research about the Philippines than anything that I saw first-hand.  Be warned:  it’s long, and I don’t know if it really makes any sense.  At some point I’ll publish it, I suppose, but right now I’m still too confused. 

Comments and suggestions would be very helpful.