It's the Economy, and Bibi Isn't Stupid

Paul Pillar

A recent poll confirmed what other polls and many observers have noted about concerns of the Israeli public as Israel's general election next month approaches. Presented with a list of six subjects and asked which is the most important one for the government of Israel to address, 48 percent of all likely voters picked “economic issues.” Nineteen percent said it was relations with the Palestinians, 14 percent picked education, and only 10 percent chose “the Iranian threat.” Instability in the region, enlisting ultra-Orthodox, “other,” and “don't know” collectively got 11 percent. Compared with a poll that asked the same question two years ago, “economic issues” went up five percentage points and “the Iranian threat” went down two. Given how much the incumbent government unceasingly pounds away in its rhetoric on the Iranian issue and how dire a threat it portrays it to be, it may be remarkable how few respondents chose that subject.

Two salient facts about the Israeli economy provide the background to the views and concerns of Israeli citizens. First, Israel is a prosperous state with an economy that, looked at in a macro way, is admirably dynamic. Don't let that three billion in annual aid from the United States fool you into thinking that Israel needs that money; Israel is in the top 25 countries of the world in GDP per capita.

But second—and perhaps not surprisingly given that Israel has been ruled by a right-wing government for the last several years—Israel has some of the worst economic inequality among the developed countries that belong to the Organization for Economic Cooperation and Development. Israel's high-tech success has not trickled down to much of the rest of the economy. Despite the nation's overall prosperity, a good many ordinary Israelis strain to make do. This is especially true of young adults of the millennial generation, particularly with regard to finding affordable housing.

A demonstration of these patterns that was more dramatic than opinion polls came in huge street demonstrations in the summer of 2011, when many Israelis marched and chanted, “we demand social justice.” The hundreds of thousands of participants, bearing in mind the size of the Israeli population, represented a far bigger display than anything the Occupy Wall Street people were able to mount in the United States. There is a genuine opening here for the Israeli Center-Left. The Israeli public, compared to the American public, is more positively inclined toward a welfare state and more tolerant of government deficits and public sector spending.

The way Likud and the rest of the political Right counters this vulnerability is to keep trying to shift the focus by hammering away on what it presents as national security issues, keeping the Israeli public scared—notwithstanding the overwhelming regional military superiority that Israel enjoys at all levels—and portraying itself as best able to protect Israelis from what is scary.

For Benjamin Netanyahu, the specter of Iran and especially its nuclear program has been central to this political strategy. When Netanyahu comes to Washington and makes his Congressional appearance that Republican/Likud political operative Ron Dermer (aka the Israeli ambassador) arranged for him, he bolsters his domestic political standing in a couple of ways. One is that, insofar as he is successful in sabotaging any agreement to restrict the Iranian program, he can continue to fulminate about the Iranian bogeyman in as unrestrained fashion as he always has. If he can kill an agreement, he puts off the day when scaremongering about Iran gets even less of a rise out of the Israeli electorate than what the recent poll measured.

In the meantime, the speech itself enables Netanyahu to show the U.S. Congress again eating out of his hand, reassuring his voters that he has everything under control as far as U.S. politics are concerned, notwithstanding any unpleasantness with the current U.S. president. Lest there be any doubt about Netanyahu's use of Congress as an electoral prop in this way, in the last previous Israeli election in 2013, Netanyahu's political coalition broadcast a campaign ad that used footage from an earlier Congressional appearance of his, replete with several of those standing ovations from the members (and also used a clip of Netanyahu's display of his cartoon bomb before the U.N. General Assembly). The ad conveyed the message, “When Netanyahu speaks, the world listens.”

The structure of the Israeli economy thus does more harm besides making it hard for some Israelis to find housing and pay bills. It also provides an added political incentive for their government to undermine U.S. foreign policy, to constrain U.S. freedom of action in the Middle East, and to destroy the best chance the world has had to ensure that the Iranian nuclear program stays peaceful.                                       

TopicsIsrael Iran RegionsMiddle East

Better Off Alone: Sweden Makes Single Work

The Buzz

It’s hard to be single on Valentine’s Day, no matter how much Buzzfeed tries to cheer you up. But with pizza and bitter, lonely tears, you’ll pull through. There are even people who prefer being alone on the big day. The same is true for countries: across history, many have deliberately stayed out of alliances. A few have even tried to cut themselves off from the outside world entirely. It doesn’t always go well—to paraphrase an apocryphal Leon Trotsky quote, you may not be interested in the world, but the world is interested in you. Neutral Belgium and Luxembourg got steamrolled at the beginning of both World Wars. The United States and the Soviet Union were painfully drawn into the Second World War after trying to stay out. But a few countries have made single work—with Sweden among the most successful.

Believe it or not, Sweden was once a major European power—an empire, no less, ringing the Baltic with its possessions in the seventeenth century. Yet a string of setbacks saw Sweden beaten back and, at the dawn of the nineteenth century, deprived of some of its core territories. A new approach was needed—but first, some cleanup. The Swedes joined the Sixth Coalition against Napoleon, kicked his Danish friends out of the Scandinavian Peninsula, and forcibly took the Norwegians under their wing. Sweden hasn’t done much since.

It’s gone well for the Swedes—it kept them out of the conflicts of the middle of the nineteenth century and both of the World Wars, with their most major deviation (a somewhat sympathetic approach to Germany in WWI) being abandoned when it started to hit the pocketbooks of ordinary people. Remaining neutral in the Second World War was a major achievement, given that all of Sweden’s neighbors participated in the conflict at one point or another. Keeping out wasn’t easy or cheap: the Swedes increased their defense budget more than tenfold and had to navigate both Allied and Axis demands. Yet the benefit was great: while the lands around them were torn, while cities were reduced to ash, while the Holocaust murdered millions, Sweden was safe. At the margins, they were able to extend their safety to others, taking in refugees and extending diplomatic protection to thousands of Jews inside the Third Reich.

They continued their neutral approach during the Cold War, leaning slightly to the West and weathering numerous crises, including a 1981 incident in which a Soviet submarine became trapped inside Swedish waters for days. There were costs—for example, the Swedish foreign ministry has been accused of soft-pedaling the case of Raoul Wallenberg, who had disappeared into Soviet custody at the end of WWII, in order to preserve relations with Moscow. But there were benefits, too—Sweden developed an impressive arms industry as it prepared to keep NATO and the USSR at bay, and it preserved its independence and democratic institutions at a time when many European states suffered from superpower interference in their politics.

The Cold War’s end didn’t get the Swedes out of the woods. They still face violations of their territory by Russian and NATO forces operating in the tense Baltic, and loose immigration policies are causing tension in a once-homogenous society. But Sweden’s leaders have to be commended for their approach, which delivered them into the twenty-first century as a prosperous, democratic country. This happy fate was not always in their own hands. During the World Wars and the Cold War, the great powers clashing all around them could have forced Sweden to join in. But a strong military and deft, sometimes painfully pragmatic diplomacy augmented Stockholm’s main asset: luck.

Today, Sweden’s neutral approach doesn’t mean isolation. They trade actively with the world—hello, IKEA—and carry out peacekeeping operations. Their neutral status has also allowed them to play a mediating role in international disputes—they help keep the Korean DMZ quiet, for example, and they have served as a diplomatic protecting power for several Anglophone nations in North Korea and for the British in Iran, allowing limited contact and consular services to continue through crises. Sweden is also an EU member, giving it a more salient role in foreign affairs than a truly neutral country, but even here its instinct for aloofness has served it well—the Swedish people voted to stay off the Euro in 2003.

Other countries have made the best of singledom. Finland preserved itself during the Cold War, although it enjoyed less political autonomy than Sweden; a host of others stayed out of the World Wars. Switzerland took to neutrality earlier than Sweden, and with more conviction—it didn’t even join the United Nations until 2002. But it’s also been a more cynical actor, hosting ill-gotten financial gains and the occasional fugitive from justice, and its record during the Holocaust was far from sterling. The Swedes make the stronger claim to greatness in neutrality.

Like being single on Valentine’s Day, neutrality and isolation are rarely anyone’s first choices. But Sweden has shown that a little loneliness need not be cause for tears.

John Allen Gay is an assistant managing editor at The National Interest. He tweets at @JohnAllenGay.

Image: Wikimedia Commons/Tonyingesson. CC BY-SA 4.0.

TopicsDiplomacy RegionsSweden

Silent but Deadly: Korea's Scary Submarine Arms Race

The Buzz

A number of recent events underscore South Korea’s plans to establish a formidable submarine fleet to counter North Korea and other regional security threats.

Last week, South Korea established its first independent submarine command to conduct “more integrated, efficient and stable submarine operations.”

“The launch of the submarine force command is a clear display of our will to perfectly defend our East, West and South Seas through the enhanced quality and quantity of our submarine capabilities," the Republic of Korea (ROK) Navy said in a press release announcing the command. “With the command, we have secured capabilities to more proactively deter North Korean threats by effectively controlling and managing our submarine forces ― strategic weapons systems that could stealthily strike the heart of enemy forces.”

The new command will be headquartered at Jinhae Naval Base in South Gyeongsang and will have a fleet of 13 submarines with ambitious plans to expand in the coming years. South Korea is just the sixth country to have an independent submarine fleet after U.S., Japan, France, Britain and India, South Korean media outlets reported. Other local media reports said that Rear Adm. Upper Half Youn Jeong-sang, a former deputy naval operations commander, would head up the new command, which will be tasked with “maintaining deterrence against the North, conducting wartime missions to strike strategic enemy targets, and protecting sea lines of communication.”

Indeed, on Thursday of this week the South Korean military announced it is developing a new comprehensive submarine operation plan. “The comprehensive operation plan on submarine capabilities to be based upon the existing one aims to counter not only threats by North Korea but potential danger to be posed by neighboring countries," an anonymous ROK Joint Chiefs of Staff (JCS) official told Yonhap News Agency. “The military will also continue to develop precise and powerful underwater weapons to attach them to our submarines.”

The announcement of the revised operations plan coincided with Adm. Choi Yun-hee, the chairman of the JCS, visiting the new submarine command. Speaking to sailors at the command, the chairman instructed them to take a “one shot, one sink" mentality.

"As our military's key capabilities in operational and strategic terms, the submarine command needs to materialize the proactive and offensive concept of operation suitable for the combat circumstances of our time," Choi said, according to Yonhap.

South Korea’s submarine push comes at a time when there is growing concern about North Korea’s undersea capabilities. North Korea is believed to have over 70 submarines, many of them midget subs, but also around 20 Russian-built 1,800-ton Romeo-class submarines. There is also growing concern that North Korea is seeking submarine launched ballistic missiles (SLBMs), which theoretically could be armed with nuclear warheads in the future.

Even before these concerns began to surface, South Korea had been amassing a formidable undersea fleet. As noted above, Seoul currently boasts thirteen submarines. Nine of these are 1,200-ton Chang Bogo class diesel-electric attack vessels that are the export versions of the German Type 209 class submarines. According to Naval Technology, the Chang Bogo class has a single hull and “a length of 56 m, a beam of 6.2 m and a draft of 5.5 m.” In terms of weaponry, the Chang Bogo class vessel boasts eight 533 mm tubes and 14 Surface and Underwater Target (SUT) Mod 2 torpedoes, each of which has a range of 28 km. Some of them can also fire Harpoon cruise missiles and all can hold mines instead of torpedoes. Their diesel-electric propulsion system enables them to travel at a maximum speed of 22 knots when submerged, with a range of 595 km.

Since 2007, South Korea has commissioned four 1,800-ton Son Won-Il class Type 214 submarines (and launched a fifth), which hold a number of advantages over the Type 209 vessels. For one thing, the Type 214 submarines are equipped with Air Independent Propulsion (AIP), which allows them to stay submerged for two weeks at a time. They also have a diving depth of 400 meters, although their underwater speed is reportedly only about 20 knots. Their ISUS 90 submarine combat systems allow the Type 214 vessels to engage 300 targets simultaneously.

The navy has also said it will commission five more of the Type 214 submarines by 2019. The following year it will begin work on the first of nine indigenous 3,000-ton submarines, which will be capable of launching ballistic missiles.

Image: Craig P. Strawser, U.S. Navy

TopicsSecurity RegionsAsia-Pacific

Ukraine or the Rebels: Who Won in Minsk?

The Buzz

Comparing the “Package of Measures to Ensure the Implementation of the Minsk Accords” to the Protocol Document submitted by the representatives of the Donetsk and Lugansk Peoples Republics, it is readily apparent that the document signed on February 12 is largely based on the rebels’ proposals.

The only omission worth noting is the absence of any mention of ending the military campaign in the East, which is referred to by Kiev as the Anti-Terrorist Operation (ATO). This is understandable, since it is highly unlikely that such a measure could pass in the Ukrainian parliament, where several influential political actors, including Prime Minister Arseny Yatsenyuk, Interior Minister Arsen Avakov, and the former speaker, now head of the National Security and Defense Party, Oleksandr Turchinov, are on record as committed to military victory in Donbass.

The most significant rebel achievement was getting Kiev to recognize a second de facto demarcation of force line, and a withdrawal of forces to the maximum line of separation of forces, which will now be between 70 and 140 kilometers. This concession by Kiev allowed the negotiations to proceed without getting bogged down in disputes over territory which, in any case, are supposed to be resolved by the Law on “Temporary status of local self-administration in certain regions of Donetsk and Luhansk oblast,” commonly referred to as the Law on Special Status.

Yet, it should be noted that the proposals presented by the rebels in their Protocol Document made a number of significant concessions to Kiev at the very outset. Among these:

– No mention of federalism or autonomy. The rebels even used Poroshenko's own term—"deep decentralization"—to define regional self -government.

– No mention of language, cultural, or religious rights;

– Specific dates for the withdrawal of forces, passage of the Law on Special Status, and passage of an amnesty law. These laws have already been passed by the parliament, just not signed into law and implemented;

– The holding of internationally monitored local elections under Ukrainian law , specifically the Law on Special Status;

– OSCE monitoring of border between Ukraine and Russia now under rebel control, after full implementation of the peace plan.

It so happens that language rights, a key issue in this conflict, were added into the notes in the Package of Measures, but they were already mentioned in the Law on Special Status.

Thus, one might say that, while the latest accords follow the blueprint laid out by the rebels, that blueprint was already quite favorable to Kiev. Angela Merkel suggests that this was due, at least in part, to Putin’s pressure on the rebels.

The most vexing issue that now remains is whether the sides are actually willing to withdraw to their respective demarcation lines. Power abhors a vacuum, and, frankly, it is surprising that some sort of external peacekeeping forces were not a part of this agreement. Their absence is clearly a weak point, since the implementation of the original Minks accords broke down almost immediately because of the unwillingness of the parties to disengage.

Second, there is the broader question of President Poroshenko’s ability to deliver on the promised constitutional reforms, which involve decentralization and special status for these regions. In fact, his foreign minister already appears to be walking away from this crucial commitment.

There is intense political infighting within the current parliamentary coalition and, at this point, it is hard to imagine a majority in the Rada agreeing to designate which territories fall within the Law of Special Status, and therefore where local elections under Ukrainian law ought to be held. Point Four of the “Package of Measures,” however, stipulates that this must be done within thirty days, and this will be the first real test of the political feasibility of these accords.

Will this new agreement prove to be the long awaited road map to peace in Ukraine? Past evidence suggests that it will not. The willingness of the conflicting parties—Kiev and Donbass—to reach a settlement is still absent. The key to success lies, first, in placing a peacekeeping buffer force on the ground between the two armies; and second, in the willingness of the members of the Trilateral Contact Group to put direct pressure on their respective constituencies (the EU and United States on Kiev; Russia on Donbass) to abide by the political and economic portions of this agreement.


TopicsDiplomacySecurity RegionsBelarusUkraineEuropeRussia

Does Russia Need a Chinese Bailout?

The Buzz

Russia’s foreign exchange reserves have fallen by nearly one-third since October 2013; they’ve fallen 20 percent just since September 2014.  Whereas the country still has over $300 billion in reserves, about $150 billion of this may be illiquid; it also has close to $700 billion in external debt.

Whom would Russia turn to for dollars in a crisis?

The IMF is the most obvious place.  The IMF approved lending to Russia of about $35 billion (SDR 24.8 billion) in the 1990s. With the sort of “exceptional” access that the Fund has granted to Greece, Portugal, Ireland, and Ukraine, Russia could potentially borrow up to $200 billion today, as shown in the figure above.  But when it comes to Russia, the United States and Europe are not in a generous mood at the moment.  Moscow would almost surely want to look elsewhere.

What about its new BRICS friends?  Putin had said in 2014 that the new BRICS Contingent Reserve Arrangement (CRA) “creates the foundation for an effective protection of our national economies from a crisis in financial markets.”

Russia could potentially borrow up to $18 billion through the CRA.  But here’s the rub: it can only do so by being on an IMF program.  Without one, Russia could only borrow a mere $5.4 billion – chicken-feed in a crisis.  In fact, borrowing such a pitiful sum might only precipitate a crisis by hinting that one was coming.

What about China?  Here, things get interesting.  Under a central-bank swap line agreed in October, Russia could borrow up to RMB 150 billion – the equivalent of $24 billion at current exchange rates. China’s Commerce Minister Gao Hucheng has reportedly said the swap line could be expanded.

What would Russia do with RMB, though?  Why, sell them for dollars, of course – as Argentina has likely been doing.  China might be happy for Russia to do so, as it would put downward pressure on the RMB without implicating Beijing in “currency manipulation.”

“Russia plays an indispensable role as a strategic partner of China in the international community,” according to a December 22 editorial in China’s Global Times. “China must hold a positive attitude to help Russia out of this crisis.” In short, China may well have both economic and geopolitical reasons for offering Russia a helping hand.

This post first appeared on the Council on Foreign Relations’ Geo-Graphics blog.

Image: Flickr/World Economic Forum

TopicsEconomics RegionsAsia-PacificEurope