This Sunday, Steve Croft of 60 Minutes reported on the state of the insurgency in Pakistan, explaining it as a concerted attempt by Islamists to take over that nation. He even spoke to President Zardari:

Asked how important it is to stop extremism, President Zardari told Kroft, "It’s important enough. I lost my wife to it. My children's mother, the most populist leader of Pakistan. It's important to stop them and make sure that it doesn't happen again and they don't take over our way of life. That's what they want to do."

..."Right now, you have a situation in the Swat area. It’s only three hours from Islamabad where the Taliban is very strong there," Kroft remarked. "How did that happen?"

"It's been happening over time. And it's happened out of denial. Everybody was in denial that they're weak and they won't be able to take over. That, they won't be able to give us a challenge. And our forces weren't increased. And therefore we have weaknesses. And they are taking advantage of that weakness," Zardari explained.

Also on Sunday, news came of Pakistani attempts to sign a truce with the Taliban, one that would involve Sharia supplanting Pakistani national laws there. Pakistani officials deny any disconnect between Zardari's warning of an existential threat and the peace deal: "We are not compromising with militants, instead trying to isolate the militants, and for that I do not think America will have any objection," said Pakistan Foreign Minister Shah Mahmood Qureshi - but previous such truces, which were meant to end Islamist terror attacks which have plagued Pakistan, have swiftly collapsed because the Taliban know they are winning and can keep demanding concessions. Large chunks of Pakistan are now in Taliban control, and there seems to be no will in the ruling Pakistani feudal elite to seriously contest that.

Indeed, the will of the Pakistani elite may well be largely in favor of Taliban control. A disconnect between word and action exists whether Pakistani officials want to admit it or not and it shouldn't be forgotten that the Taliban and other regional Islamist militant groups are largely the making of Pakistan's ISI spy service and army in the first place. Pakistan has long conducted its foreign policy in the region by the use of these proxies and may now have "gone native", casting in their lot with their creations while pretending otherwise to ward of Western anger and to gain US military aid. Chair of the Joint Chiefs Admiral Mullen thinks he's building trust with Zardari - the most corrupt politician in a land rife with them - and Army chief Kyani - who was the head of the ISI while their Lashkar-e-Taiba carried out a 2006 bombing spree in Mumbai and planned the 2008 attacks. One wonders how someone so gullible could rise to his position.

Even so, reaching for the military as the right hammer for every nail, especially every Pakistani nail, is unwise. Over 80% of Pakistanis see the "War on Terror" as a Western concern, one their feudal leaders have un-necessarily enmeshed themselves in. Poking the hornets nest with a stick accomplishes nothing except stirring up hornets and if the US keeps poking Pakistan, intelligence analysts have warned, its most likely just to turn that disaproval into outright anger and hasten an extremist takeover.

Meanwhile, across the border in Afghanistan, the hawks' plan for a generations-long occupation there is hitting some snags too. President Karzai has lost patience with Western leaders who talk about caring but don't seem to care enough to stop causing civilian casualties. He's indicated that he'd like to see a timetable for withdrawal and in return the Obama administration has indicated it would like to see him gone, replaced by someone more malleable and (hopefully) less corrupt in the wrong ways. Karzai said Sunday that he believed rumors about his alleged drug-lord brother were being circulated by the US to drive Karzai himself from office and he's doing some outreach to the Russians instead.

The Af/Pak knot isn't getting any easier to unentangle, but one thing is for sure - saying "trust us, we're the good Romans", as Admiral Mullen and others advocate, isn't going to help cut it.

Crossposted from Newshoggers

Over at the old Abu Aardvark blog site, Marc Lynch is keeping his del.icio.us bookmarks going. There, he notes Michael Goldfarb's Weekly Standard post entitled "Inheriting Victory In Iraq" and comments:

this is the moment for which conservatives have been preparing for the last year and a half: sustaining the illusion of "victory" just long enough to be able to blame Democrats for "losing Iraq" when things go wrong. Get ready.

He's right, of course. The faction fights and social cracks in Iraq pretty much guarantee more violence at some point and it won't matter a damn how many US troops (or even whether there are any at all) are there or not when the next outbreak of Iraq's cyclical boodfeud hits. It might be Kurds vs Shia, Shia vs Sunni, Sunni "Sons" vs Sunni Iraqi Islamic Party or Shia Sadrists vs Shia Badrists - but it won't matter a damn to Republicans that all Bush and Petraeus ever did was paper lightly over those cracks, only enough to bring Iraqi violence down to a per-capita equivalent of a 9/11 a week. It's still true that the US needs to withdraw before those feuds that Bush blew the lid off by invading can finally resolve themselves and it's still true that, for pro-occupation conservative pundits, it'll still be Obama's fault.

(Even if the Iraqi leadership wants the US to leave.)

Crossposted from Newshoggers

Yet another from the over-stuffed cabinet of Iraq invasion and occupation "nobody could have anticipated" files. And another sign that all is not the rosy victory that the right would wish us to believe it is. (h/t Kat)

Marine Maj. Gen. John F. Kelly told The Associated Press that his greatest "mission failure" was his inability to bring together the government in Baghdad and the Sunnis in Anbar to take advantage of the steep decline in violence.

"What the Iraqi government in Baghdad should have done is said Anbar is getting peaceful, let's commit," Kelly told the AP in a telephone interview from his headquarters southwest of Baghdad, as he begins to make preparations to hand over command of 23,000 Marines next month to Maj. Gen. Richard T. Tyron.

"It drives me to distraction," he said. "I would count it as a mission failure."

Reconciliation? Meh, not so much. The many faction feuds and sectarian rivalries which helped make Iraq so bloody are still there, just tamped down for a while - hopefully long enough for the US to declare victory and (pretend to) withdraw. I'm mostly OK with that, since it's the Iraqi people's "pottery barn" and it should always have been their perogative to break it more or mend it as they see fit. I just wish the US government, politicians, militrary and mainstream media would be honest about it.

By the time it flares up again, US leaders appear to be hoping, those troops left in Iraq will be rebranded as trainers and securely inside fortified bases where they can get on with their original primary mission, as conceived by neo-whatevers from left and right, of being the US dog in the Gulf manger.

And I fully expect the Obama administration's strategy for Afghanistan to be doing exactly the same thing there.

The Surge in Iraq essentially became a plan to bribe militants with guns and barrowloads of cash to not attack US troops and that left the core corruption, graft and incompetencies of the Iraqi government untouched and thus left the seeds of future conflict while temporarily tamping down violence to a level which would still horrify anyone West of Beirut. The planned surge in Afghanistan is likely to do the same there.

Want to be a provincial police chief? It will cost you $100,000.

Want to drive a convoy of trucks loaded with fuel across the country? Be prepared to pay $6,000 per truck, so the police will not tip off the Taliban.

Need to settle a lawsuit over the ownership of your house? About $25,000, depending on the judge.

“It is very shameful, but probably I will pay the bribe,” Mohammed Naim, a young English teacher, said as he stood in front of the Secondary Courthouse in Kabul. His brother had been arrested a week before, and the police were demanding $4,000 for his release. “Everything is possible in this country now. Everything.”

Kept afloat by billions of dollars in American and other foreign aid, the government of Afghanistan is shot through with corruption and graft. From the lowliest traffic policeman to the family of President Hamid Karzai himself, the state built on the ruins of the Taliban government seven years ago now often seems to exist for little more than the enrichment of those who run it.

It's utterly unclear how 30,000 extra American soldiers in the South are intended to remedy this situation - and if corruption remains untouched then allied forces will have to remain there in perpetuity to ensure any level of cohesive governance at all. Thus the two greatest drivers of the Taliban's resurgent insurgency will remain intact and anything done in Helmland takes on the character of an extended game of whack-a-mole.

However, extending cycles of violence until the point where they dropped off the medias radar worked in Iraq and gave the US an excuse to head (mostly) for the exits. The same might be true in Afghanistan. Matt Yglesias writes:

What I do think it’s worth reflecting on is what a big deal it really turns out to have been that the Bush administration screwed up back in the winter of 2001-2002 and failed to capute Osama bin Laden, Ayman al-Zawahiri, Mullah Omar, and the rest of the top al-Qaeda / Taliban leadership. Had we done that, I think we still would have been under a general moral and prudential obligation to try to assist the people of Afghanistan. But transforming Afghanistan into a prosperous, stable government with an effective central authority has always been a tall order. And if we’d achieved our core security objectives back six and a half years ago, then the stakes would be much lower if down the road foreign troops started to wear out their welcome for whatever reason. We could just leave.

Foreign troops have already worn out their welcome - even Karzai is looking for a timetable nowadays. But we're no closer to "a prosperous, stable government with an effective central authority" than we've ever been in Iraq - just as the Kurds or the federalist/seperatists of Basra - yet we're still leaving. It occurs to me that an Obama administration might look to re-engineer the exit from Iraq for Afghanistan. Paper over the cracks for long enough if they can, declare victory and visibly leave, while repurposing a large part of any occupation forces as "trainers". Then, of course, any later collapse isn't officially our fault for invading in the first place...

Crossposted from Newshoggers

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Sarah Chayes went to Afghanistan to report for National Public Radio just a few weeks after 9/11, then stayed to become one of the few Westerners running a business there. In a recent op-ed for the Washington Post she wrote that the big problem in Afghanistan isn't the resurgence of the Taliban. That's just a symptom of an epidemic of government corruption and the consequent failure of the rule of law, a gap which the Taliban are doing a better job of filling than either Karzai's government or US-led military forces.

In an interview with Bill Moyers on Friday, she expanded on her article.

SARAH CHAYES: Our democracy is famous for one thing in particular, checks and balances. That was the genius of the American system.

BILL MOYERS: Rule of law.

SARAH CHAYES: Rule of law but also recourse. If one branch of government is abusing you, you've got other branches of government that you can turn to.

BILL MOYERS: And Afghanistan?

SARAH CHAYES: Doesn't. So what we've really done is set up a kind of monopoly on the exercise of power. I mean, it's the opposite of what everything that we consider to be democracy, we've allowed an abusive concentration of power in the hands of, in particular, the executives, be it, in particular, on a local level like the provincial governors and their acolytes. Because we've convinced ourselves and often we have to - by "we" I mean us and our NATO allies - convince our own public opinion that this is a democratically elected representative government of Afghanistan in order to justify the sacrifices in money and troops and things like that. But the Afghans see it differently. The Afghans say you brought these people in here. We repudiated-

... SARAH CHAYES: The ordinary population. The people I work with are villagers. They're semi-literate, illiterate, these are really ordinary men and women. And they all are telling me, "You brought these people back into Afghanistan. We had repudiated them in the early 1990s. We knew what these people are. They're"-

BILL MOYERS: Warlords, right?

SARAH CHAYES: Yes. Yes.

BILL MOYERS: The criminal class.

SARAH CHAYES: Exactly. So you brought them in and now you're backing them up. And you are making it impossible for us to make our voices heard and to have any leverage on the behavior of these people.

The Obama administration has said that it will dramatically increase the US military presence in Afghanistan, and Admiral Mike Mullen told reporters in Kabul on Saturday that there will be up to 30,000 more US troops in the country by midsummer. Which will go some way to treating the symptom - that resurgent Taliban presence - but won't get at the underlying causes at all. Instead, those troops will help prop up the criminals and warlords currently in charge of the official Afghan government (even President Karzai's brother is widely accused of being heavily involved in the opium trade but protected by the government) while continuing to alienate the common Afghan people through indiscriminate attacks on civilians. In turn, the Taliban's hand will continue to strengthen as people turn to what is actually the lesser of two evils - and the whole cycle renews itself indefinitely.

Thanks as ever, to Heather for the vid clips.

The Deciderer, according to the Three Amigos

There's a lot of fluff about bi-partisan agreement, withdrawing to leave a democratic Iraq and the "successes" of the last two years in an op-ed by John McCain, Joe Lieberman and Lindsey Graham in the Washington Post today. But there's only one important bit.

Gen. Odierno was the operational architect of the surge in 2007, when he served as deputy to Gen. Petraeus, as well as of the tribal engagement strategy that persuaded Sunnis to abandon the insurgency and join our side. Gen. Odierno -- as the current commander on the ground -- is the person whose judgment should matter most in determining how fast and how deep a drawdown can be ordered responsibly.

This is the same General Odierno who recently forgot his place in the chain of command, saying that he had no intention of sticking to the U.S. agreement with Iraq which says all U.S. troops must be withdrawn from Iraqi cities by the summer. He also hinted that the 2011 final withdrawal date might be ignorable, saying "Three years is a very long time."

The Maliki government was quick to respond that it expected the letter of the status of forces agreement to be adhered to. But Bush administration loyalist Odierno, by indicating that the U.S. would continue to try to bend treaties and deals all out of shape instead of sticking to its word, has badly damaged Obama's political capital abroad before the President Elect has even taken office. It's off a piece with other military statements, as Gareth Porter reported on Thursday:

Gen. David Petraeus, now commander of CENTCOM, and Gen. Ray Odierno, the top U.S. commander in Iraq, who opposed Obama's 16-month withdrawal plan during the election campaign, have drawn up their own alternative withdrawal plan rejecting that timeline, as the New York Times reported Thursday. That plan was communicated to Obama in general terms by Secretary of Defence Robert M.Gates and Chairman of the Joint Chiefs of Staff Admiral Mike Mullen when he met with his national security team in Chicago on Dec. 15, according to the Times.

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Ray McGovern: If Obama gets this wrong, Afghanistan will be his Vietnam.

At a meeting in Paris on Sunday, top-level representatives of Afghanistan, its neighbours and world powers met to agree to put the country to rights.

"There can be no long-term security and peace in the region without a stable, secure, prosperous and democratic Afghanistan," they said in a statement released after a one-day conference in Paris.

The envoys "expressed their support for existing initiatives to reinforce cooperation between Afghanistan and its neighbours (and) committed to the effective implementation of these initiatives."

But, apart from a vague agreement "to work more closely to strengthen border security as a key component of counter-narcotics and counter-terrorism," no concrete measures were announced.

All talk and no action, especially when you consider that the most significant neighbor, Pakistan, needs to be "a stable, secure, prosperous and democratic" nation first before Afghanistan can become one -- and no one has a blessed clue how to accomplish that in the teeth of an entrenched feudal and military elite who see Afghanistan as simply the biggest of their decades-long proxy battlegrounds with another neighbor, India. The third significant neighbor, Iran, didn't even turn up in Paris because Sarkozy was dumb enough to repeat the old lie about Ahmadinejad wanting to wipe Israel off the map. That'll help.

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Finally, Iraqi authorities have confirmed the date of long-postponed provincial elections. There will be a roughly two month campaign season and elections on January 31.

Here's where the games start in earnest, because the Green Zone elites are in serious trouble if the elections go forward without a "guiding finger on the scales", so to speak:

According to a survey published by an Iraqi NGO, the Al-Amal Association, only 22.7 percent of 12,000 people polled in 11 provinces said they will vote for religious parties or blocks.

Voting for independent candidates is deemed a priority for 26.3 percent of the surveyed public of 11,000 Iraqis, while 23.7 percent said they will select democratic and secular blocks.

In the last provincial elections, in December 2005, religiously-affiliated parties won all the seats in the councils, with the exception of the Kurdish region and Kirkuk.

Expect every dirty trick in the book, from ballot stuffing to candidate assassinations to voter supression at gunpoint. And remember that secular candidates were meant to do a lot, lot better than they actually did in every set of Iraqi elections so far - for pretty much the same reasons.

More, the date sets aside four provinces, pointing up the "Kurdish Problem":

First scheduled for October 1, the polls were postponed when the national parliament struggled to pass an election law because of concerns over the disputed oil-rich northern province of Kirkuk.

The January ballot will be held in only 14 of Iraq's 18 provinces after the new law excluded Kirkuk and the three Kurdish provinces of Arbil, Dohuk and Sulaimaniyah.

Elections in the three Kurdish provinces will not be held until after March 2009 and the existing multi-communal council will continue to administer the province of Kirkuk.

Kirkuk is the biggest potential flashpoint in Iraq nowadays and the Kurds are using every trick they can think of to write their own writ in the areas they claim. Right now, they're digging their heels in and refusing to consider amendments to the Constitution, which have been seen as just as important to reconcilliation attempts as these elections.

I just don't see these elections, and the subsequent protracted playing out of Kurdish differences with the rest of the country, as being violence free. The question really is how bad will it be and how much will resultant bad blood retard rather than advance reconcilliation. There's no easy fix, but at least there's now a firm, Iraqi-imposed, exit date for the US and its coalition allies. I always found it ridiculous that the Pottery Barn rule had been reinterpreted as "we broke it, so we get to tell you how to run your store from now on".

Crossposted from Newshoggers

And it's 1..2...3..what are we not fighting for?

Via Kevin Drum comes a piece in the NYT looking at the powderkeg of factional tensions in Mosul.

The Shiite-led government of Prime Minister Nuri Kamal al-Maliki is squeezing out Kurdish units of the Iraqi Army from Mosul, sending the national police and army from Baghdad and trying to forge alliances with Sunni Arab hard-liners in the province, who have deep-seated feuds with the Kurdistan Regional Government led by Massoud Barzani.

....“It’s the perfect storm against the old festering background,” warned Brig. Gen. Raymond A. Thomas III, who oversees Nineveh and Kirkuk Provinces and the Kurdish region. Worry is so high that the American military has already settled on a policy that may set a precedent, as the United States slowly withdraws to allow Iraqis to settle their own problems. If the Kurds and Iraqi government forces fight, the American military will “step aside,” General Thomas said, rather than “have United States servicemen get killed trying to play peacemaker.”

As one of Drum's commenters notes:

As I recall it, the program was: (1) increase troop levels (2) to reduce the violence to make space for (3) political reconciliation that will provide the foundation for (4) a reduction in violence not dependent on American troops (5) that will enable us to gradually withdraw without having to worry about whether Iraq will blow up again.

We never got past step 2. Now the reckoning.

That reckoning will involve violence, in more than one place and between more than just two factions, in the lead up to Iraq's provincial elections. The only real question is: how bad will it get? I totally understand Brig. Gen Thomas' wish not to have his people die policing a civil war six years into the U.S. occupation but doesn't this blow wide open the conservative talking point, so beloved of both Bush and McCain, that US troops have to stay in Iraq to help prevent such violence? Why are we still there?

Of course, if there's no new status of forces deal by January Thomas' plans become moot, since it's likely US forces would be confined to base anyway. In fact, they're using the threat of exactly that to try to strongarm Iraqi into accepting an agreement it isn't happy with. McClatchy reports:

The U.S. military has warned Iraq that it will shut down military operations and other vital services throughout the country on Jan. 1 if the Iraqi government doesn't agree to a new agreement on the status of U.S. forces or a renewed United Nations mandate for the American mission in Iraq.

Many Iraqi politicians view the move as akin to political blackmail, a top Iraqi official told McClatchy Sunday.

In addition to halting all military actions, U.S. forces would cease activities that support Iraq’s economy, educational sector and other areas _ "everything" _ said Tariq al Hashimi, the country’s Sunni Muslim vice president. "I didn’t know the Americans are rendering such wide-scale services."

Hashimi said that Army Gen. Ray Odierno, the top U.S. military commander in Iraq, listed “tens” of areas of potential cutoffs in a three-page letter, and he said the implied threat caught Iraqi leaders by surprise.

But if the US military is planning to stay out of any faction fights anyway, just how much of a threat is that?

Crossposted from Newshoggers

Syria has released footage it says is of U.S. helicopters on their way to an attack inside Syrian on Sunday.

The post headline is taken from NBC's Richard Engel in Baghdad, describing special forces crossing the border into Syria on Sunday, the first time U.S. forces have invaded Syrian territory in all these years occupying Iraq. The U.S. military, in an officially unofficial leak to the AP, are claiming hot pursuit of Al Qaeda fighters out of Iraq and have said little else about it other than that the U.S. is "taking matters into its own hands". Syrian eyewitnesses are claiming that US forces shot and killed seven men and a woman, perhaps even abducting two, while the Syrian government are taking it a step further and alleging children died too. So far, though, the only funerals that have been held were for the seven dead men, which locals and the Syrian authorities say were simply construction workers (and which Fox News' Mike Tobin, pulling faux facts unsupported by evidence or even official U.S. statements out of his ass, says were known Al Qaeda operatives).

What is certain among the conflicting reports is that U.S. forces have now ignored international laws and trespassed on sovereign territory in Pakistan and Syria in pursuit of dodgy intelligence, in both cases with reasonably credible reports of civilians wrongly slain. Technically, these are acts of war and only U.S. military might prevents them becoming so. We know that Bush has ordered that he must personally approve any incursion into Pakistan, and it seems that he must have done so for this Syrian trespass too, one that is unique in all the time that the U.S. has occupied neighbouring Iraq.

So why? Why now? Well:

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Amy Goodman talks with Nir Rosen about his Taliban embed.

Nir Rosen imbedded with the Taliban for his latest report on Afghanistan, out now in Rolling Stone. His experiences included almost being executed by a fanatical Taliban local warlord, but he came away with the conclusion that adding more troops to Afghanistan won’t work, and that we should prepare an exit strategy.

Simply put, it is too late for Bush's "quiet surge" — or even for Barack Obama's plan for a more robust reinforcement — to work in Afghanistan. More soldiers on the ground will only lead to more contact with the enemy, and more air support for troops will only lead to more civilian casualties that will alienate even more Afghans. Sooner or later, the American government will be forced to the negotiating table, just as the Soviets were before them.

"The rise of the Taliban insurgency is not likely to be reversed," says Abdulkader Sinno, a Middle East scholar and the author of Organizations at War in Afghanistan and Beyond. "It will only get stronger. Many local leaders who are sitting on the fence right now — or are even nominally allied with the government — are likely to shift their support to the Taliban in the coming years. What's more, the direct U.S. military involvement in Afghanistan is now likely to spill over into Pakistan. It may be tempting to attack the safe havens of the Taliban and Al Qaeda across the border, but that will only produce a worst-case scenario for the United States. Attacks by the U.S. would attract the support of hundreds of millions of Muslims in South Asia. It would also break up Pakistan, leading to a civil war, the collapse of its military and the possible unleashing of its nuclear arsenal."

In the same speech in which he promised a surge, Bush vowed that he would never allow the Taliban to return to power in Afghanistan. But they have already returned, and only negotiation with them can bring any hope of stability.

John McCain's strategy - following the Bush administration in handing policymaking to General Petraeus - isn't going to work any better. Talking our way to an exit from the doomed adventure in Afghanistan really is the only way out of that grim trap.

Spencer Ackerman calls Rosen's report an instant classic of war reporting and I totally agree. Just read it, ok?

Crossposted from Newshoggers

McClatchy reports that the new National Intelligence Estimate on Iraq is almost complete and that it " warns that unresolved ethnic and sectarian tensions in Iraq could unleash a new wave of violence, potentially reversing the major security and political gains achieved over the last year," directly contradicting John McCain's claims in Tuesday's debate that the Surge has been a success and victory has been attained.

That's not a major surprise to anyone who follows events in Iraq without neocon rose-tinted glasses. Deep conflicts between the central government and Kurdish region, Awakening groups and Sadrists have all been put on a knife-edge by expectations for the upcoming provincial elections, which have been gerrymandered to keep the existing incumbents in the Green Zone in power. The Turks are looking down a gunbarrel at the Kurds and the Awakening is looking at losing its source of income - being paid not to be insurgents - while even the Green Zone elites are falling out among themselves over Maliki's newfound Napoleon complex. The chances of Iraq lasting another year without another significant outbreak of violence are small to none.

All of those sources of conflict are outlined in the draft NIE, according to more than "a half-dozen officials" who spoke to McClatchy on condition of anonymity because NIE's are very restricted circulation documents.

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    Isn't it amazing how quickly Iraq has slipped down the list of defining issues for the presidential election, after every pundit in the country originally opining that it would be the defining argument to be fought? Of course, since those pronouncements we've had Georgia and the progressively chillier disagreement with Russia, we've had Afghanistan and especially Pakistan go to hell in a handbasket and we've had the economy do an impression of Chernobyl. Oh, and the Witchfinder from Alaska.

But there are still stormclouds on the Iraqi horizon, no matter that the Right wants to declare a whole new Mission Accomplished banner day. The Sunni Awakening is getting restless, the Shiite majority still have nasty internal feuds to resolve and the Kurds...well, Bush's bestest Iraqi allies throughout the occupation still have a damn good chance of being the spark that sets off a regional powderkeg. The Turks have already come very close to getting embroilled in an Iraqi mess when they sent a large force across the border last winter against Kurdish PKK separatist terrorists and are already set to do it again. The danger was always that the Kurds' military, the peshmerga, would turn out to resist the incursion and drag the Iraqi central government in too leaving the US torn between ripping up either the NATO alliance or years of Iraqi occupation.

So it was interesting recently to see an interview with Ahmet Davutoglu, the chief foreign policy aide to Turkey's prime minister, on the Council For Foreign Relations' website a few days ago. He warned that recent optimism on Iraq in the United States overlooks significant, dangerous problems which remain unresolved and set out a viewpoint that says Iraq should be seen as a Yugoslavia on the verge of breakdown.

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    I keep reading about the Republican Eric Cantor's plan being better than Paulson's Folly because it says banks, financial firms and other investors holding toxic mortgage securities would pay premiums to the Treasury to finance the insurance coverage. The idea is that institutions holding higher-risk securities would require higher premiums and the whole thing would involve the investment houses forking over instead of the taxpayer.

Huh? This whole plan relies on most people thinking "insurance" just flies out of the heavenly spheres fully formed. But no-one knows how much these toxic debts are worth and it seems to me that if no-one can set a fair price for buying them outright, then no-one can set a fair premium for them. The premium, following good insurance practice, given that these debts are toxic and pretty much certain to result in payouts anyway, should be as near to the costs of just taking them on outright as makes no difference anyways. Think of it as just a form of gambling - you don't give decent odds to someone betting on a sure thing. That is, the costs of insurance will be exactly the same to the taxpayer in 2008 dollars as the costs of the Paulson bailout - just kicked down the road instead of right now. By which time, inflation and prospects for the dollar being what they are, they'll cost one heck of a lot more. And along the way, the Republican plan will have drained some more liquidity out of the financial system and helped finance house along the road to insolvency as the banks will have to reserve money to pay premiums that they could be lending to Main Street USA at financially sound terms instead.

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    Remember how over the weekend Hank Paulson was on all the bobblehead shows saying that the bailout should extend to foreign firms trading in the US and how he was going to put together a Coalition Of The Bankrupt with other major nations for his bailout plans?

Europe's not interested in buying toxic debt from sinking companies.

Ulrich Wilhelm, spokesman for Angela Merkel, the German chancellor, said there was no need for “a measure along the lines of what has been decided in the US”. Peer Steinbrück, the German finance minister, also made clear after a telephone conference with his contemporaries in the G7 group of leading nations that Berlin did not need to set up a rescue package.

...The French government also said it did not plan to set up a toxic asset fund or contribute to the US scheme. British officials said they had already instigated a special liquidity scheme, but like France and Germany they did not intend to pursue a toxic asset fund.

The European Commission made clear it was not planning any emergency measures.

That's a wee bit of a problem for Paulson's plan, and signals exactly how much confidence European governments have in it. And the reason they have so little confidence in Hanks plan is simple - it won't solve the underlying problem which is that too many banks have sailed too close to the wind and are now insolvent. Solving that problem would require recapitalizing those banks and getting credit flows unfrozen again - which would cost yet more untold hundreds of billions and would again reward bad actors for their sins but at least would help people other than the fat-cats at those major banks.

Without such a recapitalization, though, the light at the end of the tunnel is still the oncoming train of recession.

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