Pakistan's Looming Bankruptcy

In a recent visit to Beijing, Pakistani President Asif Ali Zardari was able to secure an arms shipment from China. Pakistan hopes to arm local tribal militias, known as lashkars, with AK-47s and other light weapons to fight against the Taliban. The initiative is designed to augment the capabilities of the existing Frontier Corps, a paramilitary force that operates along the border with Afghanistan.

While the government looks to bring more guns into the restive regions of Pakistan's Northwest Frontier Province (NWFP) and Balochistan, its ability to import vital goods is dwindling. The months of political wrangling that preceded Mr Zardari's election in September have led to an full-blown economic crisis in Pakistan. Inflation is up to 25% (and in triple digits on basic food items), Pakistan's currency (the rupee) has lost 75% of its value this year, and foreign currency reserves are plummeting. Reports indicate that Pakistan has just $4.03b in cash, which can finance no more than 6 weeks of imports.

To this point, the financial crisis has drawn attention to Iceland, Ukraine, and emerging markets in Eastern Europe. Nevertheless, investors now regard Pakistan's debt as the riskiest in the world. Both Moody's and Standard & Poor's cut Pakistan's credit rating this month, citing fears that the country would default on its debt.

Local officials deny such a possibility, and claim that Pakistan will roll out an economic stabilization plan in the next few days. The country is expected to turn to the IMF (an unpopular option) and the Friends of Pakistan group (including Saudi Arabia, the US, Britain, and China) for help. Shaukat Tarin, Pakistan's finance advisor to the prime minister, told lawmakers that the country had 15 to 20 days to secure some $4b to service its debt and other payments.

Pakistan's economic predicament is the result of a high national debt (about 57% of GDP), a yawning trade deficit on account of high food and oil prices, and a decline in foreign direct investment. The country already received a $500m loan from the Asian Development Bank in early October, but is in desperate need of additional international assistance. With the global financial slowdown freezing credit lines, Mr Zardari's options are limited.

An IMF loan is particularly unpopular because it would likely carry conditions to cut spending and crack down on Taliban forces. Earlier this year, the Zardari government introduced several poverty alleviation schemes that would likely be scrapped under such budget-tightening stipulations. What is more, any escalation in the war against the Taliban carries a huge political cost for Mr Zardari. Last week, Pakistan's parliament unanimously adopted a resolution that would jump-start negotiations with Taliban fighters, and move to end military operations.

Pakistan has been faced this sort of economic squeeze before. After the oil crisis in 1974, Paris Club creditors had to restructure its national debt, left over from the secession of East Pakistan (Bangladesh). In 1999, the IMF began loans to Pakistan after the country faced international sanctions stemming from its 1998 nuclear test. Money is much tighter now, and Pakistan is considered a major player in the ongoing war against Islamic militants. Whatever rescue package emerges, it is sure to have several strings attached.

Wednesday morning brought more bad news to Pakistan. Before dawn, an earthquake in the southwestern city of Quetta killed more than 150 people and destroyed more than 20 villages. The country is literally on shaky ground.

Democratic Republic of the Congo: Behind the Crisis

In the Democratic Republic of the Congo (DRC), UN peacekeepers are often in the line of fire. Nevertheless, Monday's attacks signaled a dramatic change in the crisis. According to news reports, thousands of Congolese civilians hurled rocks at four UN offices in the eastern DRC. These heated demonstrations were designed to protest the organization's failure to stop a rebel advance on the provincial capital, Goma.

At one location, peacekeepers fired shots into the air to disperse the violent crowd. The UN Congo mission has 17,000 troops, but has struggled to bring any measure of stability to the war-torn country. In the last two months, more than 200,000 people have been forced from their homes, and the growing refugee problem is exacerbating shortages of food and medical supplies.

The most recent fighting comes on the heels of a rebel onslaught that began on August 28. The rebel leader, Renegade General Laurent Nkunda, recently vowed to seize the lakeside city of Goma, and suggested he would expand his liberation movement throughout Congo. Mr Nkunda's forces, known as the National Congress for the Defense of the People (CNDP), claim to operate in the eastern DRC so as to protect ethnic Tutsis from Hutu militiamen that escaped neighboring Rwanda after the 1994 genocide.

Back in January, Mr Nkunda signed a cease-fire agreement with President Joseph Kabila. The peace, however, was short lived. The DRC government failed to incorporate critical measures into the deal (specifically neglecting CNDP concerns for Rwanda's interest), and Mr Nkunda pulled out of the agreement on February 22. It is reported that the Tutsi-led government in Rwanda has been supporting Mr Nkunda's forces since the end of the 1998-2003 DRC civil war.

Mr Nkunda, who joined the Tutsi Rwandan Patriotic Front (RPF) during that country's genocide, effectively operates as a proxy for the Rwandan government. Operating in the mineral rich North Kivu province, Mr Nkunda's forces have helped the Rwandan government gain some control of region's valuable resource trade. Such access is critical for a country where 90% of the population depends on subsistence farming.

As a consequence, Mr Nkunda's forces are as great a threat to economic security as they are to political stability in the DRC.  Violence in the region effectively forces mining extraction companies to deal with the government in Rwanda rather than in the DRC. The lack of roads and railways, as well as the risk of rebel attacks, make it nearly impossible for goods and equipment to travel across the DRC to the Atlantic coast. Instead, new mining contracts are slated to use Rwandan infrastructure.

The Congolese army shoes no signs of being able to expel Mr Nkunda's CNDP. The DRC force is a patchwork of previously defeated troops, rebel fighters, and militia groups. According to local reports, these soldiers make little more than $20 per month. Such woeful disorganization stands in direct contrast to Mr Nkunda's well-organized and better-armed outfit. What is more, part of the UN mandate in the DRC is to help disarm the Congolese army. The move is designed to help protect citizens, but appears inconsistent with realities on the ground.

It seems likely that conflict in the eastern DRC will continue until President Kabila addresses Rwanda's economic interest in the region. Natural resources are a often a mixed blessing in Africa, and the DRC is no exception. For now, the UN is planning helicopter attacks against the CNDP forces near Goma. Peacekeepers must take the necessary measures (including force) to protect Congolese civilians. But the crisis in the DRC will not be solved with bullets.

Soon there must be another round of difficult negotiations with the rebels. This time, the DRC government had better consider the interests of their neighbors.

American Attack Sparks New Controversy With Syria

Last month, American military forces encountered stiff political opposition after cross-border raids in Pakistan killed several civilians. Reports today indicate that the US has bowed to furious complaints from Islamabad, backing away from ground raids by American commandoes. As the US military eases out of one crisis, however, another cross-border sortie has sparked controversial reports across the news wires.

Syria's Foreign Minister Walid al-Muallem accused the US of "terrorist aggression" after a deadly raid killed eight civilians at the al-Sukkariah Farm. Details of the attack are still unclear, but an unnamed US official told the Agence France-Presse (AFP) that the raid on foreign fighters had been "successful." Syrian reports claim that four helicopters brought American soldiers across the border from Iraq, who then stormed a civilian building on Sunday afternoon.

The attack outraged officials in Damascus, who condemned the aggression and called for an immediate inquiry by the Iraqi government. The Cairo-based Arab League (a 22-member regional coöperative of North African and the Middle Eastern states) declared the raid a "violation which does nothing to help stability in the region and can only lead to new tensions."

Last week, Marine Major General John Kelly stated that al Qaeda operatives "live pretty openly" in Syria, and that the Syrian-Iraqi border represents an "uncontrolled" gateway for foreign fighters to enter western Iraq. Al-Sukkariah, which is just five miles from the border, lies next to the Iraqi town of al-Qaim, an al Qaeda stronghold. US commanders are concerned that the area is a vital corridor for foreign fighters entering Iraq. On October 16, Iraqi forces arrested seven Syrian militants in Baqubah (30 miles northeast of Baghdad) who were reportedly working with al Qaeda.

These details all suggest a rather troubling picture, in which Iraqi insurgents have a viable supply chain through Syria. Nevertheless, the timing of this American attack is curious. Violence in Iraq has abated in recent months. Sunni insurgents, who once aimed at US troops, are now fighting against jihadists from al Qaeda (a nominally Sunni organization). Moreover, the raid comes at the very end of the Bush administration's term in office, at a time when European allies are attempting to increase their ties with Damascus.

One would hope American foreign policy were above parting shots, but this administration has continually seen Syria as an irritant in the region. In addition to disagreements over foreign fighters in Iraq, Washington resents the cozy relationship Damascus has with Iran, its recent arms deal with Russia, its incessant meddling in Lebanon, and its suspected nuclear program. Back in September 2007, Israeli Air Force fixed-wing fighter jets bombed a nuclear facility in Dayr al-Zur, in the northeastern part of Syria, with tacit consent from the US.

Perhaps surprisingly, that attack led to the start of Turkish-mediated peace talks between Israel and Syria. These negotiations are still ongoing, but current events threaten any foreseeable conclusion. On the one hand, the political crisis in Jerusalem threatens to derail any progress. The new Kadima party leader, Tzipi Livni (who had been a central figure in the peace deal), failed to secure a new governing coalition and called for new elections at the start of next year. The upcoming vote would likely see the more hawkish Benjamin Netanyahu, who has opposed the peace negotiations, become prime minister.

At the same time, the American attack erodes the sort of diplomatic credibility that the US (and thus Israel) has in any peace negotiations. Washington is openly ambivalent about a potential deal between Jerusalem and Damascus, but the raid may be interpreted a final indictment of the Syrians. Such behavior seems irresponsible. As with Iran, the US needs Damascus to bring stability to the Middle East.

Once again, it will be left to the next president to pick up the pieces and start again. In this region of the world, unfortunately, it is a familiar task. 

Iraq: Status of SOFA

In times of crisis, the democratic process is often bypassed in favor of political expedience. In the United States, the financial turmoil has given Treasury Secretary Henry Paulson vast fiduciary powers, many of which are unimaginable in calmer economic seas. In Iraq, a rapidly approaching security deadline may compromise parliament's oversight of Prime Minister Nouri al-Maliki.

The UN mandate which allows the US military presence in Iraq is set to expire in December. Previously, such year-to-year mandates had been approved by the UN Security Council, without Iraqi input. At the end of 2007, internal pressures for an American withdrawal were irresistible. Mr Maliki was forced to open bilateral negotiations with the US, in the hopes that a new status of forces agreement(SOFA) could be reached.

Media outlets have received various drafts of the new SOFA, but the final document is still unsigned. Indeed, there are significant objections from Iraqi members of parliament, the influential Moktada al-Sadr, and major figures from the Supreme Islamic Iraqi Council (SIIC). In September, Sunni religious leaders issued a fatwa declaring that the agreement should be rejected. The array of opposition presents a significant hurdle to both American and Iraqi officials trying to hammer out a deal.

Text from an earlier leaked agreement may provide Mr Maliki with a quick, if highly controversial, way to sidestep such political obstacles. The agreement reportedly states that the document becomes effective once "diplomatic memos confirming all constitutional procedures have been met in both countries are exchanged." The Bush administration has taken the approach that the SOFA is a bilateral executive matter not subject to congressional review. It appears Mr Maliki could take a similar approach in Iraq, thus cutting out his opponents.

The Iraqi PM is in a curious position. He knows that rising nationalism and anti-American sentiment will eventually force all US troops from his country. He also knows that his own political future is highly dependent on short-term military support from the Americans. Thus, the agreement outlines a window of opportunity during which Mr Maliki can consolidate his position as an Iraqi strongman.

The SOFA states that US forces will pull back from Iraqi cities and villages by June 30, 2009 and then fully withdraw by December 31, 2011. It is a convenient timeline for Mr Maliki. American troops will be largely out of sight by next summer, allaying heated concerns among Sadrists, but still able to support the prime minister in the foreseeable future. Interestingly, Mr Maliki appears uninterested in the sort of broad reconciliation process that the US is pushing. Issues of oil revenue sharing, federalism, provision of services, disputed territories, and aid to refugees have failed to gain traction within the Maliki administration. Instead, the prime minister appeals to the US for help amassing his own power. 

Regional analysts suggest that Iran, for better or worse, has had a heavy hand in the negotiations. With leverage over the Sadrists, the Shiite Daawa party, and the SIIC, Tehran is a major stakeholder in Iraq's political process. On Tuesday, head of the US joint chiefs-of-staff Admiral Michael Mullen said the Iran was doing its best to scupper the status of forces agreement. This is unlikely. Iran certainly enjoys America's struggles in Iraq, but would like to see a strong Shiite government (à la Mr Maliki) ruling in Baghdad. A phased withdrawal gives the Iranians a relatively stable neighbor and a chance to gradually ramp up its formal influence in Iraq. 

American frustrations with the Iraqi political process are now palpable. US Defense Secretary Robert Gates said that American forces would have to "basically stop doing anything" if the SOFA was not signed. Such overt pressure on Mr Maliki and his government cannot help the process. Only the Kurds (some 15% of the population) and small fraction of US-backed Sunni and Shiite political groups actually want American troops to remain in Iraq. Last weekend, 50,000 protesters marched from Sadr City to Baghdad demanding an immediate end to the US occupation.

Back in 2007, British troops were convinced by the Maliki government that their presence in Basra was an irritant in the spiraling violence. Those forces pulled out of major population centers and concentrated at the airport, a move that was seen to have positive effects on security. American officials should understand that an overwhelming visible (or audible) presence in Iraq is counterproductive to its objectives. Efforts to coerce the parliament into passing the SOFA will surely backfire, in the face of concerns about national sovereignty.

There are some serious issues in this new document: sweeping immunity for US troops, coördinated command and control with the Iraqis, and the end of unilateral searches, detentions, and arrests by the American military. The obvious sensitivity of these issues does not lend itself to bluster from ranking officials. The clock is running, but this is no time to be rash.

Watch This Space: Mexico

According to a leaked letter from Britain's Home Office to Prime Minister Gordon Brown, crime levels in the UK are set to rise on account of the economic downturn. Similar forecasts have been made in the US, as major cities face the prospect of swelling unemployment rolls and financial hardship. Indeed, the grimmer economic outlook across the globe has a knock-on effect on existing social problems.

Mexico is a particularly interesting example. On the one hand, there are some positive statistics on the Mexican economy that should allow the government to manage the current financial meltdown. The fifth largest country in the Americas ran a balanced budget in 2007 and a modest national public debt, which is about 23% of Mexico's GDP (compared to more than 60% in the US). Mexico also began to diversify its export markets in 2007, which bolstered economic security against oil market fluctuations.

Nevertheless, there are two critical forces at work that threaten to undermine recent gains. First, government revenues are highly dependent on taxable profits in the oil market. As the price of crude falls, Mexico's largest oil producer, Pemex, is cutting back production. Through August, yearly production had fallen close to 10%, a move that will likely cost some $20m. Production shortfalls have a downstream effect on the federal government, which sees 40% of its revenue come from Pemex royalties. 

In April, President Felipe Calderón sent his Congress an energy reform bill, which would have allowed private foreign oil companies to operate refineries in Mexico. The legislation would have brought much needed capital into the country and helped offset high input costs in the energy market. Instead, members of the Senate energy committee voted earlier this week to block Mr Calderón's plan. The prevailing sentiment among opposition lawmakers was that the deal would send too much of Mexico's oil wealth to foreign business elites. 

Second, Mexico's private sector is intimately connected to the US economy. More than 80% of Mexico's exports are sold to American consumers, and with its neighbor sliding into recession commercial traders are sure to encounter slumping demand. Mr Calderón's government recently injected billions of dollars into the economy to sure up the peso and guarantee commercial paper. Mexico has a mere 7.4% external debt (when measured as a percentage of GDP), which means that the country is largely protected against rapid peso devaluation. Still, the global economic contraction will bear its toll.

When he assumed office in 2006, Mr Calderón made drug interdiction a high priority for his administration. As is often the case in Mexico's counter-narcotics effort, the results are patchy. Mr Calderón is now fighting a drug war against well-organized, well-financed cartels across the entire country. And the social backdrop against which this struggle takes place may well deteriorate. As US companies cut low-wage jobs, many migrants are likely to return home to Mexico. The influx of young, unemployed men and women could be soaked up by drug traffickers and ultimately destabilize the country.

On a tactical level, Mexico will have to reëvaluate its national security priorities. Emergency monetary policies might trump drug interdiction. At some point, Mexico may inform the US that it is happy to assist in such operations, just not willing to pick up the tab. Recent drug-related killings in Tijuana (where victims showed signs of torture), attacks by cartels at the US-Mexican border, and a high-profile prison escape in May all portend major problems for governments in Mexico City and Washington alike. 

For the moment, world leaders are focused on how to rescue the financial system. It will not be long, however, before they are called to fix a host of simmering social problems.

In Sudan, Justice Struggles to Bring Peace

Last week, the Sudanese government arrested one of the leaders of the janjaweed militia that is responsible for the horrific violence in Darfur. Ali Kushayb, known as the "colonel of colonels," was taken into custody last Monday as Sudanese officials planned to investigate his role in the country's notorious western region.

At first blush, the arrest seems like a positive step in the peace effort that has known little progress since fighting began in Darfur back in 2003. Last year, the International Criminal Court (ICC) charged Mr Kushayb with crimes against humanity and demanded that Sudan extradite him for prosecution. Sudan refused, repeating its claim that the country will conduct its own trials for war crimes suspects.

The decision to corral Mr Kushayb signals a shift in the coöperative will of the Sudanese government. Nevertheless, the arrest is a product of political self-interest. On July 14, chief prosecutor for the ICC, Luis Moreno-Ocampo, leveled ten criminal charges against Sudanese President Omar al-Bashir, including genocide, war crimes, and crimes against humanity. This indictment, coupled with increasing international pressure to tamp down violence in the region, has forced the Khartoum government to change its tack with the ICC. 

Several analysts have noted, however, that Mr Kushayb's arrest is effectively a compromise on a compromise. In August, France apparently offered to defer Mr Bashir's prosecution in exchange for the arrest of Ahmad Harun, a government minister facing an ICC indictment on war crimes. Under Article 16 of the ICC's Rome statute, the five permanent members of the UN Security Council (P-5) have the authority to freeze a prosecution for 12 months. Unwilling to detain a ranking government official, the Sudanese government looks to buy time with a militia leader. 

The distinction between Messrs Harun and Kushayb is important, if largely academic. On the one hand, there is massive collusion between government officials in Darfur and the brutal janjaweed forces, which act as an inchoate paramilitary unit. One might confuse an indictment against a militia leader with the incrimination of the state apparatus. And yet, Mr Bashir refuses to acknowledge the responsibility that members within his own government have in the violence. Khartoum is at once complicit in the Darfur attacks and largely unable to bring its perpetrators under control.  

There is now considerable discussion on the merits of an Article 16 deal. In recent months, both France and Britain have given tentative support for such a proposal, although both countries insist on high standards of coöperation from Mr Bashir's government. The US, which never signed the ICC treaty on principle, has pushed for a harder line against Khartoum, and both presidential candidates have promised to confront the genocide in Darfur. 

Advocates of the Article 16 proposal suggest that the indictment further isolates Mr Bashir. In response, the Khartoum government might limit the access of African Union-UN peacekeepers in Darfur, expel humanitarian aid workers, and reconsider the tenuous Comprehensive Peace Agreement (CPA) signed in 2005. The CPA, which forged a deal between the Government of Sudan and the Sudan People's Liberation Movement, ended nearly 20 years of civil war between the north and south. 

Critics argue that these concerns assume the existence of a functioning peace process. That is to say, P-5 should only freeze Mr Bashir's indictment if the current diplomatic  trajectory is worth saving. Recent attacks on the Kalma refugee camp and across North Darfur suggest that the current strategy is ineffective, if not entirely in vain. In addition, human rights groups are concerned that an Article 16 deal would only embolden Mr Bashir's intransigence. 

Mr Moreno-Ocampo's decision to prosecute the Sudanese president is as historic as it is controversial. The move represents the ICC's first indictment of a head of state. Recall Liberia's former president Charles Taylor and the late Serbian president, Slobodan Milosevic were both tried by ad hoc war crimes tribunals. With respect to Mr Bashir's case, legal scholars are analyzing a new theory of liability, called "joint criminal enterprise" (JCE). From this perspective, it may be difficult for the Office of the Prosecutor to marshall specific evidence that Mr Bashir is directly linked to the genocide, but he may be held responsible for acts by another.

In the process, Mr Moreno-Ocampo is changing the focal point of his indictments. The ICC has directed much of its attention to Africa (causing more than a little unease among the African Union), but had yet to levy charges against the state. In previous indictments in Uganda, the Democratic Republic of the Congo, and the Central African Republic, Mr Moreno-Ocampo went after rebel leaders and did not challenge government officials. The decision to indict Mr Bashir is likely the result of pressure from the US, UK, and France to address the deteriorating situation in Darfur. 

Nevertheless, the 1998 Rome statue requires the prosecutor to determine if the actions of the court are in the interest of the victims. Under Article 53, Mr Moreno-Ocampo is obligated to refrain from prosecution if there is substantial evidence that the Darfur victims would suffer on account of judicial action. Against the backdrop of these stipulations, debates about the "peace-and-justice" balance continue to swirl around the ICC.

On Sunday, Mr Moreno-Ocampo told Al Arabiya news channel that the ICC has taken preliminary steps toward opening investigations of war crimes in Georgia and Afghanistan. The potential legal action could implicate local officials as well as international parties in Russia and the United States. Mr Bashir's indictment has proven to be a complex foreign policy issue for each member on the Security Council. Should the ICC turn around an indict any Russians or Americans, the court's proceedings will surely receive even greater scrutiny by P-5.

OPEC Calls Emergency Meeting

Under normal circumstances, OPEC would like to wait until after the US presidential election before announcing any controversial cuts in production. Any glance at the headlines will reveal these are far from ordinary times. Amid the financial crisis that has wiped trillions of dollars off equity exchanges worldwide, oil futures have halved since their peak in July. With prices dipping below $70 per barrel this week, OPEC called an emergency meeting for next Friday.

In recent months, crude oil has been trading primarily on concerns of supply disruptions. Violence in the Niger delta and damaging hurricanes in the Gulf coast helped lead a dramatic rise in prices over the summer. Now futures trade on fears of economic collapse. The global slowdown has eroded demand and lead to increasing inventories at refineries. US government data this week showed unexpectedly large stockpiles of crude oil and gasoline. Crude inventories were up 5.6 million barrels (against 1.9 million forecast) and gasoline inventories were up 6.97 million barrels (more than twice the 3 million expected).

Fears of recession and poor economic forecasts have undermined commodity prices across the board. Platinum, palladium, and zinc were all down double-digit percentage points, and even the secure metals (gold and silver) faced considerable losses. Margin calls on trading positions have put significant selling pressure on all commodities, but oil futures seems particularly vulnerable. Hedge funds, who rode their investments on oil futures to record profits, are now having to unwind their positions to meet their banking covenants. 

Many analysts say that these "forced liquidations" are skewing the market. Nevertheless, if refiners are not buying oil, there is no natural price floor. Even as OPEC hints at a production cut of 1 million barrels per day, the measure is unlikely to generate a price spike. In 1997, the Asian financial crisis (a fairly localized event) lead to a 10% decrease in global oil demand and a 3/4 drop in futures to around $8 per barrel. By comparison, current economic conditions resemble a massive earthquake (with an epicenter in the US and Western Europe) sending aftershocks spanning the globe. OPEC has reason to be gravely worried. 

Some journalists have called falling oil prices the "silver lining" of the financial crisis. Economists argue that such a precipitous collapse could signal a more worrisome phenomenon: deflation. When oil futures recede on account of waning demand, the price often falls below the cost of production. As a result, producers and refiners may be forced to lay off workers and shut down their facilities. Such economic contraction will have significant effects on political stability in OPEC nations, which are hugely dependent on the hydrocarbon sector. 

Qatari Oil Minister Abdullah al-Attiyah, the current head of OPEC, said the cartel will cut at least one million barrels "or more. Prices have fallen a lot, and we need to take measures." The same officials that were recently swimming in petro-dollars, buying up swaths of real estate in New York, are now scratching their heads. For anyone who thought oil futures would serve as a hedge against the equities collapse, the last few weeks have offered unpleasant evidence to the contrary.

Next week's meeting will be most interesting on a political level. It is easy to play along when oil is at $147 per barrel, but how will the member states behave in tough times? Saudi Arabia is the key player, but it will have to respect the domestic pressures in countries like Iran and Venezuela. If nothing else, perhaps this meeting will provide its own October surprise.

Last Chance for Transatlantic Agenda-Setting

Last month, Her Majesty's Secretary of State for Foreign and Commonwealth Affairs made an interesting point about the American election in November. In a conversation with the Council on Foreign Relations, David Miliband stated, "I think you can make a pretty good case that this is the last US presidential election that gives the winner the chance, with the European Union, to use the transatlantic alliance to forge and define a global foreign policy agenda." 

For the past few weeks, commentators have describe the American economy as being on the brink of collapse. So too, it seems, is the prospect of American exceptionalism. Mr Miliband was careful to note that the US is still the only global superpower and may well remain "superordinary" for the next 20 years. And yet, he suggests it is practically impossible that the transatlantic relationship will be able to set an inclusive global agenda in eight years. 

This is not to say that the alliance will be irrelevant. Washington's partnership with capitals across Europe will help set a hemispheric agenda, still with significant economic and military resources. But the idea that the West's global supremacy can continue, even its its current diluted form, fails to recognize the critical changes in the international system. Within Europe, this new order might seem more familiar: multipolarity defined nineteenth-century international relations from the Napoleonic Wars to the Crimean War. For the US, however, the systemic overhaul will be more jarring. 

There are several factors that currently frustrate America's effort to set the global "rules of the road." Some are the result of organic shifts in the centers of power. Mr Miliband explained these transitions as moving from West to East, from national to international institutions, and from governments to people. This revolution is fueled by technological innovation, which has created a global consciousness and connectedness among previously isolated populations. 

Other factors stem from imperial overreach. The political, economic, and military foundations of American authority are strained on account of failed domestic and foreign policy. For decades, the US has been living beyond its means. The national debt is hurtling towards $10t, against a $14t economy. American families have picked up the same spendthrift habits, as household debt now exceeds 133% of disposable income. 

Such profligacy has been underwritten by foreign central banks. The current financial crisis has burned overseas investors that bought American debt, and they will surely think twice before extending further loans. The looming budgetary strains will cause a significant reassessment of national priorities (foremost, defense and entitlement programs) for policy makers in Washington.

America's behavior outside its borders is equally disturbing. In response to the 9/11 attacks, the Bush administration launched an open-ended war that ostensibly combined national security and national building. Unfortunately, the campaigns in Afghanistan and Iraq have done little of either. While certain military pressures have compromised al Qaeda's core leadership, a heavy American footprint in the Middle East has inflamed anti-American sentiment and homegrown jihadists across the globe. 

America's war on terror has been compromised by a certain reckless audacity. Can one really expect to forcibly export democracy to the Islamic world, which numbers some 1.4 billion people? The challenge of bringing order, stability, and the protection of individual rights to the Middle East, and indeed much of the developing world, is critically important. But in the years to come, this will be a multilateral project.

As a result, Europe and America will have to work with other nations to tackle the issues of shared global risk. Within the UN Security Council, China and Russia have repeatedly frustrated efforts to set an agenda for Sudan, Burma, and Zimbabwe. More recently, P-5 member states have failed to speak with one voice on nuclear non-proliferation and the International Criminal Court. Leaders in the US and the EU must work with rising powers so as to preserve the fundamental legitimacy of multilateral institutions. 

Toward the end of his conversation, Mr Miliband reminded his audience that America is "still a country with huge ability to be a force for good around the world." There is an air of embarrassment about American foreign policy, but the US is still a major architect of the global foreign policy agenda. Clearly, Americans and Europeans will find it more difficult to shape the international system down the road. In the next eight years, however, they must work together to encourage all nations to become responsible stakeholders in the global order. 

Such an assignment will require more than a little political dexterity for leaders in Europe and the US. If America is to seize this final window of opportunity, the next president must first rehabilitate European alliances. The world faces an increasing number of challenges that have no military solution. As a result, there must be a significant investment in diplomatic efforts on both sides of the Atlantic. 

Weekend Update

Power-sharing talks in Zimbabwe are falling apart, as President Robert Mugabe has assigned critical ministries to his own Zanu-PF party. While the opposition MDC has control over economic affairs, Zanu-PF controls the all-important security elements of the police and military. South African President Thabo Mbeki had helped broker the agreement, but he was ousted two weeks ago.

The US announced on Saturday it would remove North Korea from a state sponsors of terrorism blacklist. The North made headlines last week when it threatened to resume its nuclear program, but a deal was struck in recent days outlining a series of verification and disclosure measures.

Finance ministers from Canada, France, Germany, Italy, Japan, UK, and the United States are meeting in Washington this weekend to solve the global financial crisis. The G-7 pledged to take "any necessary steps" to loosen up the credit and money markets. On Friday, Italy's Economy Minister threatened not to sign the draft statement, calling for stronger language of support. The road ahead is still rough.

Looking ahead:

US General Patraues warns of a potential uptick in ethnic violence in Iraq.

GM and Chrysler are in preliminary talks regarding a potential merger that would reshape the American auto industry.

The Federal Reserve issues its so-called Beige Book on Wednesday, outlining the health of the US economy. Needless to say, it should be a page turner.

Also on Wednesday, OPEC issues its monthly report on the oil market and US producer prices are released. 

New Wheelings and Dealings With Libya

At the moment, the most interesting fiduciary transactions are taking place on a global scale as governments attempt to prop up failing banks. Still, there are some exceptions. Yesterday Libya began making payments into a nearly $2b "humanitarian fund" to compensate the families of American victims killed in terror attacks during the 1980s.

An unclassified, though "substantial," deposit has been made into a US government account, which signals that start of a financial agreement between American and Libyan officials reached back in August. That deal stated that once Libya paid the full $1.8m compensation it would receive immunity from any additional terrorism-related cases.

Two decades ago, Libya was involved in three high-profile terrorist attacks that earned the North African state pariah status among the international community. In 1986, the La Bella discotheque in Berlin (a popular locale among American servicemen) was bombed, killing two US soldiers and injuring 50. In 1988, Pan Am Flight 103 exploded over Lockerbie, Scotland en route to New York, killing all 269 people on board. The following year, a French airliner UTA Flight 772 crashed due to an explosion over the Saharan desert. Once again, all 170 passengers and crew were killed.

The Libyan government has consistently failed to clarify outstanding claims about its involvement in these attacks. Libyan nationals stood trial in each case, but there are lingering questions about the role of Colonel Muammar Gaddafi and his intelligence services. Nevertheless, American officials describe the initial down-payment into the humanitarian fund as a good faith effort by Mr Gaddafi's government. These recent negotiations are part of the gradual normalization of diplomatic relations between the US and Libya, which started in 2006. 

For its part, the US will also contribute some $300m to the fund. In the wake of the discotheque bombings, President Ronald Reagan ordered Operation El Dorado Canyon, in which the US military launched retaliatory air strikes against Libya. American forces bombed targets in Tripoli and the Benghazi region, killing military personnel and 15 civilians. The Bush administration has claimed that tax payer dollars will not be used to make the payment, though it remains unclear what alternative sources would be tapped.

Libya is also scrambling to find financiers for the outstanding contribution it must make to the fund. The government has petitioned private businesses for donations, but the current economic crisis has evidently undermined such prospects. Back in 2003, Libya reached an agreement to pay $2.7b to Pan Am victims, but failed to fulfill the compensation deal after legal disputes arose. The most recent agreement stipulates that no payments will be made to victims' families until the entire $1.8b is in the humanitarian fund. Given the bleak financial climate, any final resolution looks a long way off.

In recent days, Libya has made other headlines of the more conventional sort. The country's top energy official, Shokri Ghanem, called for OPEC to cut production ahead of the cartel's meeting on November 18. When member-countries meet in Vienna next month, they will likely address the significant decline in oil prices, which have slumped some 45% since their peak in July. 

On Friday, the Paris-based International Energy Agency (IEA) lowered its projected oil demand in 2009 by 440,000 barrels per day (bpd), on account of the worsening liquidity crisis. OPEC, which has a production quota of 28.8m bpd (about 1/3 of the world's demand), would like to keep the price window between $80 and $100 per barrel.

Libya's first payment into the humanitarian fund comes just days after an American trade office was established in Tripoli. While Congress has yet to lift funding restrictions for an ambassador position or an embassy building, there are signs that the US sees an economic benefit from its relationship with Mr Gaddafi. Libya has the world's 9th largest oil reserves and has been a major player in the European energy equation. 

On Thursday, Libya announced it would pull $7b out of Switzerland and halt oil shipments to its refineries. Back in July, Mr Gaddafi's son, Hannibal Gaddafi, was arrested along with his wife for mistreatment of their servants in a Geneva hotel. The charges were dropped, but the diplomatic spat continues. Cash and oil are precious commodities at this time, and there is no doubt the US would like to step in and replace the Swiss as trading partners.

The Americans will have to tread carefully, however. Mr Gaddafi is still a mercurial leader with an abysmal human rights record. Libya has much to offer, but perhaps it should fill its humanitarian obligations first. 

For Karzai, Trouble Is Family Affair

An Afghan informant for the US Drug Enforcement Administration is causing quite a stir from his prison cell in Kabul. Counternarcotics and intelligence officials recently confirmed that Hajji Aman Kheri had been supplying information about drug trafficking in the capital city. Mr Kheri was arrested last year on charges that he was involved in a 2002 plot to assassinate the Afghan vice president. The lack of evidence recently triggered the Afghan Supreme Court to order his release, but Mr Kheri remains behind bars. Last month, his supporters rallied in protest of the continued incarceration, claiming that Mr Kheri was being held for political reasons. 

Back in 2006, Mr Kheri tipped off American and Afghan officials who seized a truck carrying 110 lbs of heroin. The shipment was linked to a bodyguard for Ahmed Wali Karzai, the younger brother of the Afghan president. In 2004, Mr Karzai's younger brother was implicated in another narcotrafficking arrest. After a cache of heroin was confiscated in Kandahar, the commander who had impounded the truck received a call from Ahmed Wali Karzai and a presidential aide asking him to release the vehicle.

Both President Karzai and his younger brother claim that these allegations are cooked up by political enemies, hoping to discredit the government. Nevertheless, officials within the Bush administration and the intelligence community are afraid of the real possibility that Ahmed Wali Karzai is not only connected to the drug trade, but actively protected by the Afghan president. American policy in Afghanistan has taken a hard line approach to the opium trade, and such complicity in the Karzai government would compromise domestic credibility. 

Most analysts suggest that the rich profits of the drug trade are effectively the only source of revenue in Afghanistan. The state (which, at this point, exists only as an intellectual construct) is under siege from local Taliban officials and heavily armed traffickers. In recent days, alarming excerpts of a draft National Intelligence Estimate (NIE) on Afghanistan have leaked to the press. In the report, which represents a consensus view of America's 16 intelligence agencies, it is clear that American officials have grave doubts about the current Afghan government. 

In Afghanistan, political hot water is truly a family affair. In addition to Ahmen Wali Karzai, the Afghan president must also deal with the revelation that his older brother, Qayum Karzai, recently met with Taliban officials. According to senior diplomatic sources, Qayum Karzai had a secret dinner with several leaders of the Taliban insurgency and Pakistani PM Nawaz Sharif. The event, which has been described as a religious and social gathering, was hosted by King Abdullah in Saudi Arabia.

The Saudis have historically been the financial backers for the Taliban (though their role is now diminished) and insurgents launch their attacks against American and Afghan forces from safe havens in Pakistan's border region. Thus, it would appear that a meeting of these parties could begin to sketch out a negotiated settlement that would quell violence in the region.

Additional reports suggest that extensive talks have been taking place between representatives of President Karzai and the militant leader Gulbuddin Hekmatyar. After receiving extensive support from the CIA in the 1980s, Mr Hekmatyar is now considered a "global terrorist" by the US. In May 2002, American forces tried to kill the former Mujaheddin leader with a Predator drone carrying antitank missiles, near Kabul.

Afghan leaders appear to be paving the way for negotiations with Mr Hekmatyar, who leads the Hezb-i-Islami fighters. Three months ago, Mr Hekmatyar's son-in-law, Dr Ghairat Baheer was released after six years in prison, a move that has brought both men closer to the negotiating table. Such events illustrate that the Afghan government is searching desperately for a non-military solution to its spiraling crisis. 

Diplomatic overtures to even the most unsavory militants may well be necessary in Afghanistan. Nevertheless, there are good reasons to doubt these specific back channel negotiations. Mr Hekmatyar is an unlikely peace broker as he has poor relations with Taliban religious leader Mullah Omar. The Saudis have phased out their direct contacts with Taliban officials, and the residual connections may prove difficult to reign in. What is more, the Saudi intelligence community still deeply resents the fact that Mr Omar reneged on his 1998 pledge to turn over Osama bin Laden. 

In a manner befitting Washington, the final draft of the NIE will not be released until after the election. That is unfortunate. Policy makers in the US and NATO need every possible resource to craft a comprehensive new strategy in Afghanistan. Militarily, the war is one will be extremely difficult, if not impossible, to win. The situation is far different from Iraq, a wealthier country with superior infrastructure and organization. The indigenous factors that allowed for recent security gains in Baghdad simply to not exist in Afghanistan.

Oil revenues have certainly bolstered Iraq's long-term prospects for rehabilitation, and there are some analysts who hope the poppy crop could do the same in Afghanistan. The vast shortfall of painkilling medications in the developing world represents a market opportunity for Afghan producers. In the 1960s, Turkey was a major source of illegal heroin, but by 1974, the country was a licensed exporter of the raw materials that are turned into medical morphine and codeine. Turkey now enjoys earnings of some $60m per year on its opium crop.

Country reports suggest that more than 2 million Afghans are dependent on poppy production, despite its black market status. Transitioning opium to a legal crop seems like a promising idea. Indeed, the British based Senlis Council has suggested that the UK and US should buy up all the poppy crop to be harvest legally. If such a plan were to succeed, however, the Afghan government would first have to address the security threat posed by existing narcotraffickers, which include the Taliban. Drug lords would either pay higher prices than the government (knowing they could still turn a profit on black markets in the West) or violently seize large swathes of opium-producing land.

Clearly, the country's problems are nightmarish. For too long, the Bush administration pretended it had succeeded in Afghanistan while it tried to deal with ongoing failures in Iraq. The reality of two woefully conducted wars is now unavoidable. Recent stories about the Karzai government (and its relations) are unsettling, though the problems are certainly not all self-made. Still the US needs to have a willing and able partner in Kabul, and credibility among the Afghan population is at a premium.

The next presidential elections in Afghanistan will take place in the second-half of 2009. The next US president will still be new to the job, but he had better have some idea about what to tell the winner. 

Russia Moving Out of Buffer Zones, Sort Of

The most recent reports from the Caucasus confirm that Russian troops have dismantledmost of the checkpoints that had formed unilateral buffer zones around Abkhazia and South Ossetia. EU monitors will now regulate the ceasefire between Georgia and Russia, a week after some its teams were unable to reach the disputed territories. This move comes ahead of the Friday deadline for withdrawal, as established in the French-brokered deal. 

The standoff is far from resolved, however. The Caucasus remains a combustible region, and tensions over the August war are still simmering. On Friday, a car bomb exploded in South Ossetia killing seven Russian soldiers. According to Russian officials, the vehicle was one of two cars that had been stopped at a checkpoint in the village of Ditsa, about 3 miles from the South Ossetian capital, Tskhinavli. The four Georgians in the convoy were arrested for possession of light firearms and grenades, while the vehicles were taken to the Russian military base in Tskhinvali. During a further search of the vehicles, an explosive device ripped through the checkpoint.

In response to the incident, both Georgians and Russians blamed each other for the attack. In Moscow, the Russian Defense Ministry spoke of a "deliberately planned terrorist attack," in which the Georgians hoped to spoil the EU-sponsored peace. Meanwhile, Georgian Interior Ministry spokesman Shota Utiashvili said that the attack was organized by Russian forces to create a pretext for delaying their withdrawal. 

At this point, it is still unclear who orchestrated the bombing. For weeks the Russians have refused to pull back some 8,000 troops in the buffer zones around the breakaway republics. Their tepid embrace of the ceasefire, coupled with the Kremlin's hard line on foreign policy, suggest the Russians are unlikely partners in the effort to establish peace and security in the region.

On the other hand, the attack resembles an earlier episode in South Ossetia. Back in May, a car loaded with explosives blew up near police headquarters in Tskhinvali, injuring six people. At the time, South Ossetian police produced evidence that the vehicle had been purchased by unidentified suspects in Georgia. Eduard Kokoity, president of the breakaway republic, railed against the Tbilisi government for state-level terrorism aimed at escalating tensions in the region.

With the Russian withdrawal, it appears that Friday's attack is, for the moment, a bit of old news. Nevertheless, should any complications arise between Russian and Georgian forces, last week's finger-wagging could turn into a more serious dispute. As Russian troops vacated a checkpoint in Ergneti, Georgian forces raced in to raise the national flag and start a bonfire. Under normal circumstances these may be harmless gestures. With heavily armed Russians and South Ossetian militiamen watching, they are cause for concern.

The recent financial crisis will divert attention away from such developments, but instability in the Caucasus may flare up yet again. On Tuesday, Iceland's PM Geir Haarde announced that his NATO-member country would be receiving a $5.43b loan from Moscow to aid its ailing economy. With its massive currency reserves, Russia may well position itself as a vital creditor to governments in Eastern Europe (Ukraine, Romania, Hungary, Bosnia-Herzegovina, etc). These financial moves could buy the Kremlin some political leeway when it comes to dealing with restive states in the Caucasus.

On Wednesday, Georgian police officials said that two Russian soldiers almost missed their unit's withdrawal after getting drunk. According to reports, the soldiers had been drinking heavily and asked their arresting officers, "Where are we?" Given the disputed borders, some level of confusion might be forgiven. Nevertheless, alcohol is the last ingredient this conflict needs.

And Now Europe

The global selloff continued on Monday, as analysts watched the sort of market capitulation that wiped £93b off the FTSE-100 in London. Share prices across Europe, Asia, and the US continued to slide in spite of the rescue package President George Bush signed on Friday. Along with the bailout plan, the US government has recently increased currency swaps and raised the Term Auction Facility (TAF), risking more than $1t to steady the banking sector.

The markets are chewing up these liquidity injections at an alarming rate. Many analysts and dealers argue that banks are hoarding cash on expectation of pay-outs on up to $400b of credit-derivatives related to Lehman Brothers. At present, there is no central clearing house to address counterparty exposure in the trillion-dollar credit default swap (CDS) market. The opaque conditions surrounding financial balance sheets have compromised the sort of trust that drives short-term lending. 

On Monday, some $500b of derivatives contracts relating to Fannie Mae and Freddie Mac were settled, between 91.5 and 99.9 cents on the dollar. Many believe the recovery value on Lehman's bonds will not be as favorable, paying only about 10 cents on the dollar. The US Federal Reserve has scheduled a meeting for Tuesday and plans to unwind the CDS contracts by Friday. Perhaps then, banks might regain some confidence leading to a short-term financials bounce next week.

Whether or not today's losses reached an intermediate bottom, European markets continue to struggle with the ad hoc policies crafted by its members. Deposit backstops set up in Ireland and Germany have led to huge, destabilizing credit flows across the euroarea, as investors rush to security. The push to create a unified financial plan was endorsed on Monday when EU leaders issued a joint statement to "take whatever measures are necessary to maintain the stability of the financial system."

There are troubling signs that the financial crisis has spread well beyond the banking sector. Both the S&P GSCI index, which follows energy commodities, and the Bovespa Index, which follows commodity exports from Brazil, have collapsed during the recent turmoil. Until now, oil futures and emerging markets had been seen as a refuge from the credit crunch. Such losses will no doubt exacerbate the global crisis. 

The TED spread is still at record highs, and the volatility index touched a whopping 56.32 on Monday. There are reports that the Bank of England, the European Central Bank, and the Fed are all considering a coördinated rate cut. But their are certain hurdles: in the EU, there are stability and growth pacts that forbid large deficits, and in the US there are fears of inflation. Lowing interest rates might spur some sort of Pavlovian response from global investors, but there are still fears about long-term solvency of the payments system. 

As the crisis continues, the popular refrain is extended. When the US catches a cold, the world sneezes. But once the world catches a cold, the US is sure to get only more infirm.

Who Is Al Qaeda?

Last month, the BBC released the results of its world survey on the "war on terror." The report painted a rather bleak picture for the American-led campaign that has cost thousands of lives and billions of dollars. Polls of some 24,000 adults in 23 countries show that the US has failed to win the hearts and minds of people across the globe.

In 22 countries, the war on terror was deemed to have failed in its effort to weaken al Qaeda, the prime target of the Bush administration. On average, 29% of respondents believed the campaign has had no effect on al Qaeda while 30% contend that it has made the jihadist network stronger. While most countries had a negative view of al Qaeda, this trend was reversed in Egypt and Pakistan, two of America's most important allies in fighting terrorism. In these states, many more respondents had mixed or favorable opinions of al Qaeda (in Egypt only 35% had negative feelings towards the organization, and in Pakistan this figure was a remarkably low 19%).

Even in the US, where the public has been inundated with the political messages that prioritize the war on terror, only 34% of respondents thought al Qaeda had been weakened as a result. A 2007 National Intelligence Estimate concluded that the war in Iraq has rejuvenated the organization and the failure to clamp down on Pakistan's tribal areas has allowed al Qaeda to reconstitute its pre-9/11 capabilities.

Still, it is important to consider what analysts mean when they speak of "al Qaeda." For some, the jihadist movement is effectively understood as a monolithic hierarchy. From this perspective, al Qaeda appears stronger now because the organization has followers acting in various countries in the Middle East, Africa, and Europe. There are others, however, who argue that al Qaeda must be understood as a composite of three distinct entities: the core, the franchise groups, and homegrown movements.

The al Qaeda core refers to Osama bin Laden and his close, trusted associates like his strategist Ayman al-Zawahiri. These individuals are highly skilled professionals, often with connections to the organization's historical campaigns in Afghanistan (against the Soviets) and Africa (against the US). The core is responsible for issuing jihadist propaganda, operating terrorist training camps, and masterminding spectacular attacks like 9/11. 

At the franchise level stand groups like al Qaeda in Iraq, al Qaeda in the Islamic Maghreb (AQIM), and other known affiliates throughout the Middle East. These organizations have contact with the core, but have the resources and leadership to act independently. Indeed, the relationship does not always suggest allegiance to a central command structure. Back in 2005, Mr al-Zawahiri sent a detailed letter to Abu Musab al-Zarqawi, the erstwhile al Qaeda leader in Iraq. The message reprimanded Mr al-Zarqawi for the scenes of gruesome violence (often with Muslim victims) that were coming out of Iraq. Such an exchange reveals a certain amount of tension between the core and its marquee franchise.

Finally, there are homegrown terrorist cells, many of which have sprung up in European cities with disaffected Muslim populations. These groups have often been inspired by the core, but have little connection to the organization's strategic command. In recent years, government officials in the UK have been fought (with limited success) the rise of fundamentalism in Britain's Islamic community.

Since 2001, the intense manhunt for Messrs bin Laden and al-Zawahiri has weakened the ability of the al Qaeda core to command a visible presence in the jihadist movement. Misguided policies in Iraq, Afghanistan, and Pakistan may well afford these individuals a return to prominence, but for the moment their capabilities have eroded.

Whatever weakening has been experienced by the core is offset by the growing strength of al Qaeda's franchises. Recent developments in the Middle East have shown a resurgence among AQIM, the Yemeni affiliates (who last month orchestrated an attack on the US embassy in Sanaa), and al Qaeda groups in Pakistan and Afghanistan. These franchises are well organized and capable of acting with deadly precision. Still, many analysts argue that the success which such groups enjoy on the domestic front does not translate into a coördinated global jihad. Indeed, al Qaeda franchises struggle to project their attacks to the so-called "far enemy" in the US and Europe.

Homegrown jihadists may well outnumber the members in franchise groups and the al Qaeda core, and their goals are often very ambitious. Their motivation, however, is in most cases undercut by their lack of resources. While the members of this broader movement are closer to the softer, civilian targets in the US and Europe, they lack the equipment and planning to stage massive attacks. This is not to suggest their actions are without serious consequences to the communities they inhabit. Indeed, both the 2004 Madrid train bombings and the 2005 London attacks were carried out by groups that had no direct contact with the al Qaeda core.

As the relative capabilities of the organization change, it is important to recognize the bifurcation in the counterterrorism battlespace. On the one hand, there is a campaign designed to limit the al Qaeda's physical strength. This project involves the conventional instruments of military power and the strategic complexities of insurgent warfare. On the other hand, there is an ongoing conflict in the ideological battlespace. That is to say, al Qaeda invests heavily in propaganda to recruit new jihadists and globalize their agenda. In the process, the organization is able offset any losses it incurs in the physical war against American forces.

Al Qaeda has long understood the implication of a war that is fought with physical and ideological resources. Just last month, al Qaeda's religious authority Abu Yahya al-Libi was seen on a video explaining that the jihadist battle is waged "first and foremost at the level of doctrine. Mr al-Libi went on to decry the perversion of "true Islam" in countries like Saudi Arabia that have ties to the US. His comments suggested that Muslims should eschew King Abdullah's moderate religious establishment in favor of al Qaeda's teachings.

The US, by virtue of its "hearts and minds" initiatives, is also aware of the need to engage the Muslim world ideologically. But these public diplomacy projects do not take place in a vacuüm. Instead, the realities of the physical battlespace have a significant effect on developments in the ideological balance. The persistent images of American forces occupying Iraq (particularly the senseless bloodshed that the war has wrought) make it difficult for the US to gain traction with disaffected Muslims.

As one war begins to unwind (however precariously), another is poised to escalate. The US is currently working with Pakistan to fight insurgents hiding in that country's mountainous border with Afghanistan. No doubt these initiatives will demand strategic investment in the physical battlespace. Over the past seven years, however, unmanned drones, air strikes, and foot patrols have seen only limited success. The American and NATO forces must find a way to strengthen their ideological campaign in the region. Embarrassing the Pakistanis with cross-border raids is certainly a step in the wrong direction.

Three recent events in Pakistan provide some conflicting information as to who is winning this ideological struggle. First, in December 2007, opposition leader Benazir Bhutto was assassinated at a political rally, and Mustafa Abu al-Yazid, and al Qaeda commander claimed responsibility for the attack. Many analysts believe that Ms Bhutto was murdered on account of her connections to the US. Second, in July a suicide bomber blew himself up near the Red Mosque in Islamabad (which had been the stage of a bloody gun battle between government forces and students last year) in an apparent revenge attack. Finally, on September 20, a truck with 1000 kg of explosives rocked the symbolic Marriott hotel in Islamabad. The attack killed 60 people and targeted the new Pakistani President Asif Ali Zardari, who had been scheduled to dine there.

These events point to the physical power of al Qaeda affiliates in Pakistan, but they may also shift the ideological landscape. Some analysts predict that the Marriott bombing, which disrupted the holy month of Ramadan, will serve as a watershed moment in Pakistan and rally popular support against jihad.

Terrorism is a frightening and unfortunate reality in the modern world. Americans seem somewhat new to this idea, unlike Europeans who have protracted experience with separatist groups like the IRA and ETA. Officials in Washington cannot afford to think of the jihadist movement as a monolithic threat, but must consider the varying faces of al Qaeda-style terrorism. Failure to do so will certainly undermine any progress in the physical and ideological campaigns against the organization. 

The BBC survey illustrates a grave weakness in US foreign policy. For the next president, this will be one of the first polls he must address. 

Africa Still Uneasy About AFRICOM

As the world watches US lawmakers try to negotiate a financial bailout, yet another massive government program will be officially rolled out on Wednesday. Many miles form Washington, the new United States military command for Africa (Africom) becomes operational today. Outlined by President George Bush in February 2007, Africom formally begins its mission to engage in sustained security engagement on the continent. According to US Defense Secretary Robert Gates, American forces will help train local military outfits and work with international partners to ensure stability throughout Africa.

In creating Africom, the Pentagon effectively recognizes the continent's strategic importance. The development of a unified command structure follows the existing models in the Pacific Rim, Europe, the Middle East, Latin America, and North America. Previously, three regional US commands were responsible for security in Africa, and the continent was subsumed under larger strategic interests of the American military. Africom represents a dedicated commitment to security issues throughout the region's 53 countries.

Not surprisingly, the announcement has been met with skepticism. The Pentagon floated the idea of a unified regional command nearly 10 years ago, but global opinions of the US military have become increasingly cynical. Many observers claim the the US is hoping to establish a presence in Africa to counter the growing Sino-African trade relationship and secure American access to the continent's vast resources. Indeed, many African states felt that the regional command was set up without consultation from leaders on the continent.

The location of Africom's present headquarters illustrates this uneasy relationship. The regional command was unable to find a willing host in southern Africa (although Liberia has expressed some interest) and, as a result, is currently operating out of Stuttgart, Germany. Even on the domestic front, Africom has faced significant headwinds. Last month, the command's start-up budget wash slashed by nearly 80% ($389m to $80.6m) by the House Appropriations Subcommittee on Defense. 

Most analysts suggest that Africom has three objectives: the war on terrorism, natural resource supply chains, and Chinese balancing.  Publicly, however, it seems the latter two are folded into the familiar military refrain of the Bush administration. On Tuesday, the head of Africom, General William Ward painted a broad picture of his mission, telling reporters that the US would work with African nations "to help them build their capacity."

With respect to terrorism in Africa, American analysts fear that weak governments will allow al-Qaeda or other militant groups to find safe haven on the continent. Violent instability in Somalia has created particular concern that terrorist training camps will flourish as US forces are preoccupied in Iraq and Afghanistan. This logic is not entirely new. Indeed, the US currently has a military base at Camp Lemonier in neighboring Djibouti with about 1,800 troops. Nevertheless, Africom is designed to formalize counter-terrorism activities on the continent and augment existing capabilities.

Africa is also the world's fastest growing energy market. The US gets about 1/5 of its oil from Africa (Nigeria, Angola, Algeria, and Chad), and several public officials have been calling for this figure to increase. Political tensions in the Middle East have created a large incentive for Americans to wean themselves off of imported hydrocarbons from states like Saudi Arabia and Iraq. However, there are no assurances of stability in Africa either. Abundant reserves lie under the soil of some rather tempestuous states like Sudan, Equatorial Guinea, Angola, and Nigeria. If Africom plans to provide stability across the continent, no doubt the mission will dovetail with efforts to bring these resources into safer hands.

The US has also watched the Chinese launch unadulterated economic projects throughout Africa. China's spectacular economic growth creates a voracious appetite for the continent's natural resources, but the Sino-African relationship goes beyond oil. Last year trade deals reached $73b, although the US is still Africa's largest trading partner. In addition, China has offered many major oil-producing states (which often have deep connections to Western businesses) comprehensive aid packages to build roads, schools, hospitals, and fiber-optic networks. And all this without any sort of political caveats.

Clearly the US is concerned about this burgeoning relationship, and hopes Africom will provide deeper ties with governments across the continent. In the short term, this strategy may well succeed in helping provide some measure of stability for at-risk countries. And, to be sure, there are several states within Africa the desperately need functioning central governments to allow for infrastructure development and foreign investment. In the long term, however, African businesses are likely to trade with those nations they can trust. The lingering doubts about Africom could prevent the ties from being formed.

A dedicated regional command is necessary. The arbitrary partitions that had existed for US military strategy in Africa are both irrelevant and unhelpful. But American military leaders should work quickly to assuage the concerns of those they intend to serve. The success of Africom will, in large part, be determined by its ability to gain traction among the African masses. For the moment, Washington is understandably distracted. At least officials in Stuttgart should redouble their efforts to win a hearts and minds campaign in Africa.