At a major conference in London today, Afghan president Hamid Karzai rolled out his much anticipated Taliban "reintegration" or buyout plan, an initiative for which Afghanistan's allies have pledged $500 million to pay mid- or lower level fighters to stop fighting and reintegrate into Afghan society. The money could include resettling former Taliban fighters and landing them jobs, but excludes fighters with ties to al-Qaeda or other terrorist networks for inclusion in what's being called the "Taliban trust fund." And in discussing the future of the Af-Pak war, Karzai also reaffirmed that his country would need international help maintaining security in Afghanistan for anywhere from 10 to 15 more years; the training of Afghan's own forces, he added, will require another five to 10 years.
For one, the Taliban trust fund idea, backed by US envoy Richard Holbrooke, will strike even casual observers of American war as little more than a repackaging of the Sunni Awakening movement in Iraq. Indeed, Karzai's announcement comes a few months after the Los Angeles Times reported that Army Gen. Stanley McChrystal personally dragged out of retirement the key architect behind the Iraqi program, which paid Sunni Muslims to leave the insurgency and even defend against al-Qaeda and other extremist groups. Never mind the fact that Iraq and Afghanistan are wildly different countries, from their populations and political structures to the food they eat and their geographies. Sure, you could argue that the Sunni Awakening, although mired with fraud and graft, resulted in modest amounts of success, but to apply the same lessons from Iraq to Afghanistan, as the Taliban trust fund idea seems to do, doesn't make a whole lot of sense. (Plus, as Aram Roston's recent investigation in The Nation showed, so much US funding is already finding its way into Taliban hands that spending another $500 million will only amplify that epic fraud.)
Indeed, the $500 million Taliban buyout plan reminds me a lot of historian Andrew Bacevich's recent critique of Obama's Af-Pak policy—namely, that it altogether lacks any kind of imagination or rethinking of the task at hand; that US foreign policy all-too-frequently recycles the same officials toting the same tired ideas, i.e., the surge in Iraq and then in Afghanistan, and now the Awakening in Iraq and the Taliban trust fund. Obama's national security brain trust, Bacevich adriotly argued, is "unable to conceive of a basis for national security policy that does not involve the increased commitment of American military resources."
Which certainly dovetails with Karzai's belief that foreign forces will be needed in Afghanistan for another 10 to 15 years. With each day, the president's 2011 deadline for beginning withdrawal from Afghanistan resembles nothing more than smoke and mirrors; in reality, the US will be in Afghanistan training the Air Force or funding contractors or flying our drones for decades to come. In this context, Karzai's 15-year estimate looks rather modest, and today's conference in London is further confirmation (if you needed any) that the long haul of the Af-Pak war is just beginning.
Rep. Barney Frank (D-Mass.), chair of the influential House financial services committee, says Obama's lastest regulatory crackdown on Wall Street could make it into law in as soon as few months. Frank, who said the president's flurry of recent financial reforms surprised him, told the Financial Times in Davos, Switzerland, that the administration's new proposals could very well be included in an existing financial services bill already in the works within his committee. (To watch the full interview with FT's Gillian Tett and Frank, click here.)
More from the FT story:
This essentially gives a new systemic regulator the discretionary power to clamp down on banks' proprietary businesses or force banks to shrink in size—if necessary. Until recently, this aspect of the bill had not garnered much attention, since there has been a wider controversy about the future identity of a systemic regulator.
However, Mr Frank argued that Volcker's plan could be incorporated within this enhanced definition of a supervisory authority—and said he was sure that a bill would be in place well before the mid-term elections in November, if not signed off by Chris Dodd, his counterpart in the Senate, within weeks. "I think Chris will get a bill out in March."
Overall Mr Frank said the drive to de-risk banks was to be applauded. "I wish banks had fewer ways to make money than deposits," he said. He also expressed confidence that the US reforms could form part of a wider regulatory blueprint that would be incorporated elsewhere, including in Europe—dismissing scepticism that Mr Obama's initiative had upset a measured, internationally co-ordinated response to the future regulation of the world's banks.
A pillar of Obama's State of the Union address on Wednesday, we're learning, will be a three-year spending freeze in domestic areas like education, transportation, housing, national parks, and farm subsidies, among others. Reeling from Massachusetts Sen.-elect Scott Brown's victory last week and a growing disenchantment with his ambitious domestic agenda (health care, climate change, financial reform), Obama's move is no doubt intended to show he's tough on the deficit, and to allay fears among fellow Democrats staring down a potentially bleak November election season. Its political utility aside, the spending freeze, as it stands now, is a wrongheaded, ill-fated move—not only because it targets areas where more funding is needed, but it exempts the most pork-riddled, wasteful area of them all: defense spending.
The fate of health-care legislation looks more ominous by the day. Today, House speaker Nancy Pelosi (D-Calif.) told reporters there aren't enough votes in the House to even pass the weaker Senate version, let alone a House-Senate compromise on health care. She also said there's no timeline in mind for getting a bill of some kind passed, an indication that the health-care-induced logjam is far from over. This could reflect the lingering doubt stemming from the Massachusetts special election, but either way it doesn't bode well. TPM reports:
"I don't see the votes for it at this time," Pelosi said. "The members have been very clear in our caucus about the fact that they didn't like it before it had the Nebraska provision and some of the other provisions that are unpalatable to them."
"In every meeting that we have had, there would be nothing to give me any thought that that bill could pass right now the way that it is," she said. "There isn't a market right now for proceeding with the full bill unless some big changes are made."
While she didn't say the option was dead -- "Everything is on the table," she said -- she outlined two very different options for passing a bill.
"There's a recognition that there's a foundation in that bill that's important. So one way or another those areas of agreement that we have will have to be advanced, whether it's by passing the Senate bill with any changes that can be made, or just taking [pieces of it]," Pelosi said.
"We have to get a bill passed -- we know that. That's a predicate that we all subscribe to."
It took a year—of pathetic deference to the financial lobby, of siding with the Wall Street alums in his administration, of allowing special interests and their shills on the Hill to hollow out financial regulation legislation—but Obama's finally seen the light. In the latest Wall Street-Washington news, the president's aiming to hit banks where it hurts by clamping down on risky speculative trading, capping the size of major financial institutions, and stopping commercial banks from trading with their own cash. An encouraging sign, Obama's latest move is just as much Paul Volcker's, the former Fed chairman who until lately couldn't get any of his ideas heard in Washington and had criticized Obama's earlier proposals. Until recently, Volcker, the chair of Obama's Economic Recovery Advisory Board, was widely seen as less influential than more pro-Wall Street administration types like Treasury Secretary Tim Geithner and Larry Summers, the president's chief economic adviser. But now Obama and Volcker appear to have teamed up, and while Wall Street will surely scream bloody murder here, I can't help but feel excited that maybe, just maybe, Obama intends to quit bowing to big finance and work toward serious, lasting, productive financial reform.
Here's why this announcement is so important. For starters, as Kevin has pointed out in his piece "Capital City" and in many blog posts, a lot of the fallout from the financial crisis (and others like it in the past, i.e., LTCM) came down to one word: leverage. Shops like Lehman Brothers were allowed to be ridiculously, insanely leveraged, their bets so far exceeding what they actually had on hand, that when a great deal of those bets failed the entire ship sank with it. That applied to a lot of institutions, some of whom would presumably be impacted by this plan, which, as it's laid out now, would limit that risk-taking—and thus prevent future Lehmans and other catastrophes that would ripple throughout the economy.
The proposal also hits on one of Volcker's causes celebre: prohibiting what's called "proprietary trading," when commercial banks make bets with their own money from, say, deposits. Until 1999, the Glass-Steagall Act maintained a firewall between commercial and investment banking, but once the act was eliminated banks began to bet again with their own cash on things like mortgage-backed securities. This latest proposal would again tamp down on that practice, given the role it caused in the run-up to financial meltdown.
With this latest proposal coming on top of the president's support for a Consumer Financial Protection Agency and the bank tax, has the administration finally reversed course? Obama has done more to take on Wall Street in the past week than in the previous year. As Congress looks to take up financial regulation talks, are today's moves a harbinger of what's to come?