Tag Archive: Leon Panetta


Olivier Douliery / Getty Images

Olivier Douliery / Getty Images
President Barack Obama (C) speaks during a cabinet meeting as U.S. Secretary of State Hillary Clinton (L) and Secretary of Defense Leon Panetta listen in the Cabinet Room at the White House January 31, 2012 in Washington, DC.

Nobody likely envies the challenge President Barack Obama faces getting his “messaging” right on Iran. He must meet the demands of election-year politics and continue to press Tehran’s back to the wall over its nuclear program, all the while avoiding the eruption of a major new Middle East war.

In an NBC interview that aired Sunday, Obama sought to apply a cold compress to the fever of war hysteria that broke out in the media last week over a report that his own Defense Secretary, Leon Panetta, believes Israel will start a war with Iran by launching air strikes on its nuclear facilities before June. The Washington Post’s David Ignatius reported the views attributed to Panetta, and the media frenzy intensified when Panetta pointedly declined to confirm or deny the report.

Obama, by contrast, told NBC’s Matt Lauer he didn’t believe that “Israel has made a decision over what they need to do” on the Iran issue, and vowed that “we are going to make sure that we work in lockstep as we proceed to try and solve this, hopefully diplomatically” – although he added that “all options” remain on the proverbial table.

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But the picture remains ambiguous since Israel has long insisted that it retains the right to make its own decisions over whether to take military action – as Obama acknowledged – and it is not directly involved in any diplomatic negotiations with Iran. Israel’s primary contribution to such diplomacy, as currently exists, has been to play the “bad cop” role of threatening military strikes. Its hope is that this would either intimidate Iran into backing down (it hasn’t, despite Israel continuously reiterating the threat of military action over the past five years) or at least press the Europeans into adopting harsher sanctions against Iran in order to restrain Israel from launching a war they’re desperate to avoid. (On that front, Israel has been remarkably successful.)

Given the alarm signals issuing from Israel in recent weeks, U.S. and other Western officials have reportedly been seeking to persuade the Israelis to desist from launching a military attack. While speculating that Israel might attack by the summer, Panetta also said publicly that “we have indicated our concerns” over that prospect. And in a CBS interview last month, he stated that the Pentagon’s priority, in the event of an Israeli strike, would be to protect U.S. troops from any Iranian backlash. One report even alleged that Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, had told the Israelis on a recent visit that they should not expect the U.S. to fall in behind them if they choose to initiate a war with Iran without coordinating such a step with U.S.

“The administration appears to favor staying out of the conflict unless Iran hits U.S. assets, which would trigger a strong U.S. response,” Ignatius wrote, although he notes that if Israeli cities came under attack, the U.S. commitment to Israel’s security would oblige it to come to Israel’s defense.

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While Israeli leaders publicly insist that the country must make its own decisions on a matter deemed so vital to its security, Israel’s limited tactical ability to mount the sort of sustained air assault required to inflict serious damage on Iran’s nuclear infrastructure means that it needs a plausible end-game scenario that won’t make things worse. A surprise air strike that did some damage but brought a backlash in which the U.S. stayed largely on the sidelines could be a strategic disaster for Israel. It could leave Israel more isolated, cause international efforts to squeeze Iran to come to an end, and very likely – as Defense Secretary Robert Gates warned last December – prompt Iran to go ahead and build nuclear weapons, which it has not yet decided to do.

Israeli Prime Minister Benjamin Netanyahu has often argued that the only way to get Iran to back down is to present it with a credible threat of military action for failing to do so. But a threat is only credible if both sides believe it will be acted upon, and the danger is that if Iran chooses to ignore the threat, options are considerably narrow for those making it.

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The din created by Israeli saber-rattling, and its echo in the U.S. domestic political arena, has helped shape the Administration’s narrative on Iran – that under President Obama, the U.S. has managed to impose the most punishing sanctions ever imposed on Iran, and garnered the widest support yet for punitive action against the Islamic Republic. Those sanctions are beginning to hurt, and right now the focus should be on strengthening the measures in the hope they force Iran to relent on its nuclear work. In other words, Administration officials argue, sanctions could well succeed and render military action unnecessary. As if to underscore his commitment to tightening the squeeze on Iran economically, President Obama on Monday signed a new executive order impounding all assets of Iran’s central bank traded or held in the U.S.

Toughening sanctions may placate Israel for a time and allow President Obama to demonstrate concrete action to pressure Iran as distinct from the campaign-trail saber-rattling of his Republican challengers. But the prospects are, at best, uncertain that tougher sanctions combined with the threat of military action will force Iran to back down from developing a nuclear program that would put strategic weapons within reach, even if it stopped short of building and testing a bomb. Many Iran analysts doubt that the leadership in Tehran would allow itself to be seen as buckling under pressure, and some Israeli analysts fear that if Iran’s leaders believe an attack is inevitable and imminent, they may choose to strike first and start a war on terrain of their choosing.

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The least-developed aspect of the Obama Administration’s strategy may be the diplomacy. Currently, the primary public channel for communicating with Iran is via the European Union-led “Permanent Five + 1″ talks, involving the U.S., Britain, France, Russia, China and Germany. Until now, that forum has been used largely to test Iran’s readiness to accept previous demands that have been backed by ever-escalating sanctions.

If Iran were to cry uncle, it would easily find channels through which to concede defeat in the nuclear standoff. And if Tehran shows no interest in engagement, then the question of diplomatic channels is moot. But if Iran doesn’t cave, yet indicates a willingness to engage in a search for a compromise designed to strengthen guarantees against the militarization of its nuclear program, that would present new political and diplomatic challenges for the Administration. Those range from potentially differing bottom lines between the U.S. and its “lockstep” partner Israel on acceptable outcomes (particularly on the question of whether Iran retains the capacity to enrich uranium under international monitoring), fear of Iranian time-wasting balanced against the reality that diplomacy requires patience and sustained engagement and, inevitably, election-year political considerations that necessitate not appearing “soft” on Iran.

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Christine Lagarde Christine Lagarde said austerity was only one of the measures needed to overcome the debt crisis

Inappropriate spending cuts could “strangle” growth prospects, the head of the IMF has warned.

Austerity programmes must be tailored to each economy, Christine Lagarde said, and not be “across the board”.

The International Monetary Fund has been one of those stressing the need for countries to cut their debts, but some fear this could hit growth.

The correct response to the eurozone debt crisis has been a major debate at World Economic Forum in Davos.

“We are not suggesting there should be fiscal consolidation across the board,” Ms Lagarde stressed.

“Some countries have to go full-speed ahead to do this fiscal consolidation, but other countries have space and room. They should explore what to do… in order to help themselves.

“It has to be tailor-made.”

One of those expressing concerns about the possible implications of fiscal consolidation at the gathering at the Swiss ski resort was US Treasury Secretary Tim Geithner.

He told the annual meeting of political and business leaders on Friday that there was a risk of a recessionary “cycle” from austerity measures.

“There is a risk that every disappointment in growth will be met with an austerity that will feed the decline, and that is a cycle you have to arrest to solve financial crises,” Mr Geithner said.

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George Soros has warned that Europe is likely to face a “lost decade”

‘Progress’

Crisis-hit countries such as Greece and Spain are implementing deep government spending cuts and raising taxes in order to try to bring down their deficits.

“For parts of Europe for a long time, there will be no alternative to very substantial adjustment in budget deficits,” Mr Geithner said.

He is one of a number of leaders who have said this week that the deficit-cutting measures have been an important step in addressing the eurozone debt crisis.

Ms Lagarde echoed those on Saturday: “There is work under way. There is progress, as we see it,”

But some see these policies as potentially very damaging. Financier George Soros told the BBC that the fiscal cuts, which Germany supports, could even lead to a “lost decade” of economic stagnation in Europe.

“This German insistence on austerity could destroy the European Union,” he said. “This is reality, this is the harsh reality that we need to face.

“It is not written in stone, the future is not predetermined. We determine the future, so it would be well within the possibilities of the authorities to change it.”

A document, reportedly leaked to the Financial Times, has suggested that Germany could be asking for Greece to do more, including giving up the financial control of its tax and spending decisions to an administrator appointed by Brussels.

Firewall

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For the first time in a while leaders meeting here don’t seem to be stalked by the fear that the eurozone might blow up”

image of Stephanie Flanders Stephanie Flanders Economics editor, BBC News, Davos

Austerity is only one part of the solution, Christine Lagarde said.

She, and others on the panel, stressed the importance of reinforcing what is being referred to as the “firewall”, a much-expanded rescue fund made up of funds pledged by eurozone members.

“It is critical that the eurozone members actually develop a clear, simple, firewall that can operate both to limit the contagion and to provide this sort of act of trust in the eurozone so that the financing needs of that zone can actually be met,” she said.

The IMF managing director also spoke of the hundreds of billions of dollars of extra funds she wants to raise to support any crisis-hit countries, especially if a economic downturn takes hold.

Holding up her designer handbag she said: “I am here with my little bag to collect a bit of money.”

“There will be needs in the eurozone, no doubt about it, but in central and eastern Europe there will be needs as well. And in other countries including in low income countries, including in middle income countries, there will be needs. Short term for some, long term for others.”

The UK has been one of those resistant to pledging extra funds for the IMF to help eurozone countries, but there have been indications in recent days that its stance is softening.

“I think there is a case for increasing IMF resources and I think that will also be a way of demonstrating that the world wants to help… solve the world’s problems,” UK Chancellor George Osborne told the Davos audience.

But, like his US counterpart Tim Geither, he said any additional help would be conditional upon Eurozone countries demonstrating they were doing all they could do help fellow members.

“There aren’t going to be further contributions to the IMF from other G20 countries, including Britain, unless we see the colour of their money, and I think that’s a reasonable request.”

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Insider’s guide: Why business leaders go to Davos

Debt deal

For the first time in a while, leaders meeting in Davos don’t seem to be stalked by the fear that the eurozone might blow up, the BBC’s economics editor Stephanie Flanders reports.

But many of the sessions have been discussing what still needs to be done.

“The fact that we’re still, at the beginning of 2012, talking about Greece – again – is a sign that this problem has not been dealt with,” George Osborne said.

“The danger here is that the tail wags the dog throughout this crisis. In other words, the inability to deal with specific problems with the periphery causes shock waves across the whole European economy and the world economy,” he added.

Talks reconvened on Saturday between the Greek government and representatives of its private creditors, including banks and hedge funds.

It is hoped that a deal to renegotiate the country’s debt can be concluded before a meeting of the European Council on Monday. An agreement is a precondition for receiving further bailout funds from European authorities and the IMF.

“Concluding the deal that will lead to a more sustainable situation in Greece, I think actually is fundamental to stability in the Eurozone,” Mr Osborne said.

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Davos 2012

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