Policy Tensor

A Note on Global Imbalances

In Markets on January 28, 2015 at 12:57 am

You can download a pdf version of this note from my Academia page here.

Abstract: This note argues that global imbalances came about as a result of the geoeconomic strategies pursued by major economic powers. Large current account surpluses of major exporting states are necessarily matched by current account deficits of large importers. The balance of payment identity ensures that we every current account entry is accompanied by a capital account entry of the opposite sign. Therefore, we may equivalently refer to countries with large current account surpluses as high-savings countries. The reemergence of a liberal international financial order converted the large savings of the major exporting powers into globally mobile capital. The resulting ‘global savings glut’ has led to unsustainable financial booms in states that liberalized their asset markets.

An equally valid story can be told that emphasizes the intensifying competition for market share between the major poles, resulting in persistent oversupply in the world’s increasingly integrated markets for tradable goods and services; and the consequent ‘secular stagnation’ in the center of the international economy. However, such a ‘current account’ narrative decouples the dynamics of global production from the ‘Minskian’ dynamic of financial booms and busts that has plagued the international economy since the reemergence of a liberal financial order. We show how sticking to the ‘capital account’ and focussing on the large savings of major economic powers brings both these dynamics closer to the center of the frame of reference. We argue that the prospects for global rebalancing are dim in light of the high-savings strategies of major economic powers.


Global imbalances in the early post-war period were characterized first and foremost by the interaction of the geoeconomic policies of three states: Germany, Japan, and the United States. The export-led, high-savings, advanced-industrial strategy followed by the two US protectorates, especially Japan, undermined the profitability of US manufacturing. The consequent stagflation crisis in the core of the world economy undermined the Keynesian consensus and led to the neoliberal counter-revolution, the centerpiece of which was the reconsitution of a liberal financial order.

Three essential steps were needed to reestablish a liberal financial order. All three were accomplished under tremendous pressure from unregulated capital flows emanating from the eurodollar market to which US capital had migrated in the fifties and sixties. First, center countries were forced to relinquish policy control over key exchange rates—the UK in 1967, Germany in 1969, and the US in 1971—thus undermining the fixed-exchange rate regime. The second step was the repeal of Regulation Q and the end of financial repression in the US; effected by a panicked Carter administration as the dollar continued to slide in 1979; later consolidated under Reagan. In the same year, Carter also appointed Volcker to the Fed with a mandate to tackle double digit inflation. Volcker sharply raised interest rates, prompting the flow of global savings to the US which sent the dollar sky-high.

Japan and Germany continued to follow an export-led, high-savings strategy. During 1945-1979, Japan had largely forced its high-savings towards increasing the productivity of domestic advanced manufacturers. With Volcker’s sky-high interest rate, strong-dollar policy after 1979, Japanese savings strained the leash of Japanese financial repression. By 1982, US Treasury officials persuaded the Japanese as well to liberalize their asset markets and pursue domestic credit expansion. Japanese savings promptly began chasing both domestic and US assets. After the American financial panic of 1987, Japan doubled down on a credit expansion at home. This yielded a super-massive asset price bubble in Japan which burst spectacularly in 1989, followed by secular economic stagnation from which Japan has yet to recover. In its aftermath, Japan switched decisively from domestic credit expansion to a strategy of exporting its high savings.

The collapse of container and jet freights in the late-sixties, and the later telecommunications revolution, set the stage for the advent of ‘globalized production.’ Japanese firms pioneered the model of unbundling supply chains, mostly to Japan’s junior partners in what became ‘factory Asia.’ These junior partners followed Japan’s export-led, high-savings strategy. During the eighties and even early nineties, countries of the Pacific rim forced their high savings and those of Japan into productivity enhancing investments at home. The nineties witnessed moves towards ending financial repression all over the Pacific rim, leading to a great asset price bubble that burst in 1997. After the Asian financial crisis, Japan’s junior partners also started exporting their savings and accumulating dollar reserves for national economic insurance.

German productivity growth had more or less kept pace with that of the US and Japan. But during the mid-nineties, Germany had directed its high savings to reabsorbing East Germany. But by the late nineties, Germany emerged as an exporter of savings; joining Japan, the newly-industrializing countries of the Pacific rim (by now including China), and the oil exporters, in exporting their savings to the US. The avalanche of savings directed at US assets bid up their prices and pushed the US tech boom into a frothy bubble, which burst spectacularly in 2000.

In the 2000s, China’s emergence as a global economic power changed the polarity of the core of the world economy from a tripolar to a quadripolar structure. China’s rise was closely tied to the ‘second unbundling’ of ‘globalized production’ whereby firms’ supply chains became extended over vast regional networks. Indeed, topological analyses of “global supply chains” reveal vastly closer ties within these three regions than without. Global production remained tripolar with one pole centered on the US but that now included Canada and Mexico; a second centered on Germany that included most of northern and western Europe; a third one, itself bipolar, in Asia centered on China-Japan that included the entire Pacific rim. Global production has continued to reblance towards the third pole at the expense of the first two. This process will likely continue well into the twenty-first century. Note that hitherto the strongest economic powers had been the most advanced manufacturing states. China has emerged as a pole of global production, and joined the top ranks in a ‘Minskian’ sense, without making deep inroads into advanced manufacturing. This is novel and remarkable. China’s sheer size has enabled it to break the mould.

The source of the bulk of the ‘global savings glut’ identified by Ben Bernanke in 2005, then, can be located in the geoeconomic strategies pursued by Japan, Germany, and China. These strategies can be seen as a strong form of ‘soft balancing’ against the United States. The glut was exacerbated by (1) the reserve accumulation strategies followed by ‘emerging markets’ and the oil exporters; (2) the relentless rise in inequality everywhere, especially the US; and (3) by the fact that US non-financial firms themselves became net suppliers of savings. How could the United States deal with the strategies pursued by the other three?

US policymakers had only three alternatives strategies available. None of them were particularly appetizing: (i) the US could give up on the liberal global financial order it had helped forge, and reintroduce financial repression; (ii) it could accept the recession effectively being exported by the other economic powers; or (iii) it could pursue credit expansion at home. Given the strong commitment to a liberal financial order among American elites, (i) was simply not on the table. The Fed’s mandate and the domestic political concerns of elected officials ruled (ii) out. The resort to (iii) was therefore inevitable. US policymakers bet on the ability of America’s deep asset markets to absorb the savings emanating from the others. The United States became the importer of capital par excellence. The asset price boom of the mid-2000s in the US and other importers of these savings was the consequence.

Global Imbalances

The implosion at the heart of global financial system in 2007-2008 did not lead to a fundamental change in the strategies pursued by major powers. China, Japan, and Germany continued their high-savings strategy. Japan and Germany have doubled down on exporting their savings. Nor did the United States change course. The Fed has resorted to extraordinary measures to shore up asset prices; looking to the attendant ‘wealth effect’ to cure the ‘balance sheet recession.’ China has redirected more of its savings towards home. It now seems to be pursing the strategy of domestic credit expansion that Japan followed in the eighties. The level of private credit in China is now approaching that of the United States. No wonder than both the US and China are now witnessing unsustainable financial booms. This has created the spectre of a third round of global financial crises that began in 2007; this time centered on China.

The root cause of the global imbalances are the high-savings strategies pursued by China, Japan, and Germany. Unless these states pursue alternate strategies to secure their economic interests there is no hope for resolving global imbalances. Note that, for the first time since 1945, we have a pole in the core of the global economy that is not a US protectorate. Alongside the emergence of other, lesser players whose combined heft is nevertheless significant, China’s rise cannot fail to make global accords more difficult to achieve. Specifically, it is hard to see how a version of the Plaza Accord of 1985 and the ‘reverse Plaza Accord’ of 1995 that served to somewhat mitigate global imbalances in the tripolar era, can be achieved now. The G20 is a significantly less effective forum for global geoeconomic bargaining that the now defunct G7. The United States could somewhat arm-twist Germany and Japan in the late twentieth century. Arm-twisting China, Japan, and Germany is going to prove considerably more difficult in the early twenty-first century.

Global imbalances will continue as long as the high-savings strategies of China, Japan, and Germany remain in place. As long as these states pursue these strategies, the ‘global savings glut’ will ensure that financial booms continue to plague the liberal financial order. Only the location of asset price bubbles will be determined by which states choose to—or are forced to—import these high savings beyond their capacity to absorb them. Given that there is little chance that these states will change their strategies, global policymakers are likely to play whack-a-mole with financial panics for some time to come.


The Problem With Islam Reconsidered

In Arab Uprisings, Middle East, Thinking on January 14, 2015 at 6:53 am

Last Fall I argued that Islam appears relatively more vicious than Christianity because the latter has been defanged as a result of a series of confrontations with secular forces in Christendom over the past few centuries, while the former has not; that Islam’s DNA is characterized by an unparalleled fusion of political and spiritual authority; that it is only Muslim societies’ non-adherence to Islamic principles that makes them somewhat consistent with modernity and societal achievement. It has, of course, not escaped my attention that my argument can be used by Islamophobes for their own agenda. But I will not lie: Islam is as bad as mass delusions get. It could certainly be argued that my essay was ahistorical. The Koran has remained virtually unchanged for centuries, while radical Islamism is new. Constants cannot explain variables. Very true. But I was not trying to explain Islamic radicalism at all; I was simply trying to defend Bill Maher on the grounds that, as a matter of fact, he did not say anything particularly controversial: none of the liberals who denounced him would concede that the beliefs he was attacking were defendable — they were simply denouncing him for locating these ideas squarely in Islam.

In the aftermath of the Charlie Hebdo massacre, there are two strong arguments going around. Progressives point to the context of Islamic radicalism: the long-standing domination of the Muslim world by the West, rampant Islamophobia, and the alienation of Muslim communities in Europe. A great example is this piece by Fredrik deBoer. “We’re debating,” he says, “dead moral questions, and for the same reason we always do: because that debate allows us to ignore the ones that might lead us to a different place than the celebration of our own liberal righteousness.” What place? This one:

The question of the price that Muslims will pay for these attacks– that is a live question, the security and rights of the Muslim people is very much uncertain, indeed. If there is anything that this country [the US] has stood for in the last 15 years, it is its willingness to sacrifice anything to fight Muslim extremism, and in the process, innocent Muslims. We have invaded multiple Muslim countries, sent secret raids into far more, killed Muslims with drones and bombs, wiretapped Muslims at home and abroad, sent agents to infiltrate their mosques, thrown dozens of them into a prison camp without trial or judicial review, assassinated them without due process, tortured them, and spent billions of dollars and thousands of lives in doing so. Of all the things that you should fear your government will lose the resolve to do, fighting Muslim terrorists should be at the absolute bottom of your list. There is no function that our government has performed more enthusiastically for years. Can any credible person doubt our commitment to fighting Muslim terrorists, in 2015? 

Quite true: it is hard to think of the end of “GWOT” in 2015. But deBoer’s eye-point is located in the US and he is presumably not paying much attention to the other side of the pond. Others more familiar with the specific history think along the similar lines. “Long before the identity of the murder suspects was revealed by the French police — even before I heard the names of Cherif and Said Kouachi — I muttered the word ‘Algeria’ to myself” writes Robert Fisk, perhaps the most respected MidEast correspondent in the Western Press. He is right of course: France’s brutal pacification campaign in Algeria not-so-long-ago is almost certainly part of the context. As is the fact that a quarter of French graduates of North African descent are unemployed. Let’s bracket all this for now and label it “context.”

The second argument going around is that the massacre had nothing to do with the teachings of Islam; that most Muslims are moderates who were as horrified as non-Muslims to learn of the slaughter; that terrorists “have no religion”; and so on and so forth. As opposed to progressives committed to raising awareness about “what we are doing to them,” this crowd, which includes almost all the heads of states, wants to depoliticize the atrocity. Seemingly more inclusive, this line of reasoning is actually insidious. It says: Pay no attention to Muslim grievances, pay no attention to the surveillance state or other abuses of the national security apparatus, join us in condemning terror as barbarism and go shopping, while we pursue the policies we see fit without public discussion.

In other words, the purpose of this sham is to shut down discussion of deeply-relevant questions: What is radicalizing Muslims? What role has the West’s, in particular, the United States’ policies played in fanning the flames of Islamic radicalism? What role have US client states in the Muslim world — especially those in the Arabian peninsula — played? Are drone strike creating more terrorists than they eliminate? Should the West continue to intervene in the Middle East? What policies should the West pursue to deal with the threat of Islamic radicalism?


What both the progressives and the “terrorists have no religion” crowd ignore are the pronouncements and motivations of the extremists themselves. It is important to understand what these guys are saying about their own agenda and to situate it in its historical context. For these radical Islamists are not simply motivated by irrational hate. They are working on a specific theory that seemingly explains the predicament of the Muslim world and gives them reason to believe that their actions will further the Muslim cause. What is this theory? How did it gain ascendancy? What are they trying to do? Without answering these questions, we cannot hope to defeat radical Islamism.


The core of the Islamic world in fact escaped the most brutal phase of European domination of the rest of the world. After the expulsion of the Moors from Spain, Europeans turned their attention to Africa, Asia, and the Americas. Most of the inhabitants of the New World were exterminated; millions of Africans were enslaved; and all three were colonized. What held the predatory Europeans off the Middle East was the power of the Ottoman empire, which was also growing in strength during the most violent, initial phase of European expansion (sixteenth and seventeenth centuries).

The rising threat from Europe was hardly noticed in Metropolitan Islam until it was bitterly learnt on the battlefield. The Treaty of Carlowitz (1699) was the first of many humiliations of the Ottoman caliphate that had hitherto shielded the Middle East from the European predations. Western military innovations were immediately copied. But that proved insufficient to stem the tide. Something other than superficial reforms and Western arms was needed. The ‘crisis of Islam’ led to a fanatical search for an explanation of the superiority of the Western barbarians who had hitherto been seen as inferior even to the barbarians of the East. As European wealth and power became increasingly evident, the question became more and more urgent: What was the talisman of Western success? How can we restore our competitiveness? [See under Lewis.]

Two particular answers emerged in the Ottoman caliphate. Given that we are very much still in the historical movement that started in 1492, these answers have unsurprisingly sustained their salience. The first explanation was that the ultimate roots of Western power lay in Western institutions; that the West had discovered political and economic principles that made it strong. As David Deutsch would put it, this was a ‘good explanation’: the West had indeed discovered what Karl Popper would call ‘the principles of open society’ that lie at the root of long-term success. Proponents of this view argued for ‘Westernization,’ or somewhat euphemistically, for ‘modernization.’

Deathly opposed to the first answer were traditionalists who argued that Western superiority was only apparent. What had occurred, in their view, was a decline of the Islamic world. And, crucially, this decline could be traced to the erosion of Islamic principles in society and government. The solution, therefore, was not Westernization but purification: a return to original Islamic principles. This, second answer, was a ‘bad explanation.’ Yet, it survived. You can see it in Qutb’s writing — Qutb is the intellectual father of the Muslim Brotherhood and an inspiration for all Islamist movements including Salafist-Jihadists such as ISIS and Al Qaeda. After its dismemberment at the hands of the European powers, the successor state of the Ottoman caliphate, Turkey, went decisively with the first answer. How then did the second, flawed explanation come to gain ascendancy towards the end of the twentieth century? Ideally, we would like an explanation that accounts for ideational content, timing, and dispersion of radical Islamism. In what follows, I will attempt to sketch a straightforward explanation that does just that. 


Most of the Islamic world had long ago discarded any notions along the lines of a ‘return to purity.’ Indeed, the most prominent Islamic movement for centuries was sufism, a mystical version of Islam which emphasized communion with God over ritual and dogma. In other words, it involved an outright rejection of any commitment to the actual content of the Koran and the hadith. This of course meant that it everywhere and forever remained a counter-narrative, hunted by the state, despite its immense popularity. On the other hand, scribes have always played a prominent role in public affairs. In both Shi’i and Sunni traditions, a small number of schools of jurisprudence have played a decisive role in the direction of Islamic thought.

When American politicians or opinion makers are called ‘moderate,’ they can be located within the spectrum whose boundaries are marked by two bookends:the New York Times and the Wall Street Journal; thus far and no further. For instance, a constitutional purist would insist that there be no legislation at all, and that independent courts be left alone to interpret the constitution; an interpretation that is beyond the pale. When Muslims say they are ‘moderate,’ they mean that their interpretation of Islam lies between the major scribes (say, someone at Al-Azhar University in Egypt) and the sufis at the benign extreme.

Who are the fundamentalists? There is no daylight between the dominant interpretation in the gulf on the one hand, and radical Islamist groups (ISIS, Al Qaeda et al.)’s interpretation on the other. Both are salafist. The Financial Times explains the ‘800 pound gorilla in the room’ much better. The Saudis like to blame the Muslim Brotherhood for the rise in Islamist extremism. But the torch of Sunni Islamist radicalism long ago passed to the Salafists. Global Jihadism is synonymous with Salafist-Jihadism. 

For all practical purposes, the only difference between official salafism and militant salafism is this: Salafist-Jihadists think that it is the duty of all Muslims to fight for the Umma against the infidel forces, and they reject the House of Saud as a legitimate protector of the two holy mosques (inter alia because of its relationship to the United States); whereas official salafism disagrees on both counts. All salafists consider the Shi’i to be heretics. Salafist-Jihadists find the license to kill in being a ‘vanguard of the faithful,’ who must impose the true faith on all heretics and infidels, by lethal force if necessary. In terms of what precisely constitutes the ‘true faith’ in nonpolitical matters, there is no disagreement. The only disagreement is political: whether or not one should take up arms to challenge the politico-military order. This is an uncomfortably short ideational hop. Progressives who want democracy in the Arabian peninsula must consider the fact that there is no doubt that salafists would prevail handsomely if free and fair elections were held in the oil monarchies today. Are you sure you want that?  

But what explains the rise of Salafist-Jihadism late in the twentieth century? Here is my straightforward theory of what happened: The salafist interpretation — which went with the second answer — happened to flourish in the region with most of the world’s oil. That is precisely why the oil price revolution of the seventies led to the emergence of Salafist-Jihadism, which made its first appearance in the Afghan war of the eighties. The CIA and the Saudis funnelled weapons and money though the hands of the ISI to the Mujahideen. Many went to fight from the gulf. The coffers of superrich gulf Arabs have expanded enormously since the eighties. Today, the gulf contributes the lion’s share of ISIS’ external funds. I am sure this has not escaped the notice of Western intelligence agencies, so I have no doubt that they are already trying their utmost to monitor the flow of funds from the gulf. 

Whereas the gulf connection explains the timing of the take-off of global jihad, what accounts for its dispersion? In particular, why has the Islamic world become a more fertile ground for jihadist recruitment? The answer to that must be sought in the deepening societal crisis of the Arab states. 


The termination of inter-state Arab-Israeli confrontation in 1973 privatized the confrontation with Israel. Egypt realigned from the Soviets to the Americans. Egypt’s exit from the ranks of the confrontation states meant the collapse of the entire project because no other regional power was in a geo-strategic position to threaten Israel. The collapse of the Soviet Union and the attendant disappearance of the socialist project in the Middle East further decentered the system. With Turkey standing at Europe’s door and ignoring the Middle East, Iran busy standing up to goliath, and Egypt in disarray, the Saudis have managed to play an extraordinary role on the stage of the Middle East; under US protection of course. The Saudis have been hunting Al Qaeda since the nineties but the Iraq war and the Arab uprisings have destabilized the Middle East by orders of magnitude. After declining to dire straits in 2010, Salafist-Jihadist groups have reemerged as a formidable force.

What is going on is hard to miss. Large parts of the Islamic world have been outright conquered by Salafist-Jihadist forces. There is a multi-player, large-scale military contest going on within the Islamic world. One can roughly array the players into a spectrum between the strong secularists who form the backbone of Turkey on the one hand, and ISIS on the other. This may indeed be the beginning of the Middle East’s Thirty Years’ War. Richard Haass, the President of the Council on Foreign Relations, found this description of Europe’s 1618-1648 version:

It is a region wracked by religious struggle between competing traditions of the faith. But the conflict is also between militants and moderates, fueled by neighboring rulers seeking to defend their interests and increase their influence. Conflicts take place within and between states; civil wars and proxy wars become impossible to distinguish. Governments often forfeit control to smaller groups – militias and the like – operating within and across borders. The loss of life is devastating, and millions are rendered homeless.

The Thirty Years’ War killed a third of the German populace. This is no ordinary war in the Islamic world either. What is at stake is the relationship between religion and politics. Indeed, the very nature of legitimate authority is up for grabs. If this is indeed Islam’s Thirty Years’ War, the West needs to talk about long-term strategy. Were it to leave the system ‘isolated’ so to speak, I would not bet on the long-term stability of the oil monarchies. In that scenario, ISIS would spread its influence, perhaps conquer Jordan and Lebanon, and threaten the Arabian Peninsula. Boko Haram’s gains sans Western intervention are anybody’s guess. In the gulf, Iran would establish its regional hegemony in short order. But no US President can ignore America’s strategic interest in protecting both the gulf and the lungs of world economy, to paraphrase the old British manner of referring to Red Sea route as the ‘lungs of the empire.’ The very idea of leaving the system isolated is preposterous in light of US grand strategy.

There are some things that the West can do to nudge the affair in the right direction. But for that, the West needs a clear-eyed view of what said right direction is. Everywhere in the Islamic realm, we find moderates pitted against fundamentalists. That is one vector that needs to borne in mind. Turkey’s model — which has followed the first answer even after the rise of moderate Islamism (which will survive the AKP) — “offers the only convincing Muslim model of dynamic and effective governance,” argues Graham Fuller, who used to be a top global analyst at the CIA. The policy tensor agrees with this assessment. 

Pan-Islamism and pan-Arabism are both centrifugal. They are essentially claims to leadership in the Middle East that cannot fail to threaten regional powers that value their autonomy. Their very success is thus self-undermining. When Nasser was riding the high tide of pan-Arabism, it prompted countermeasures by Iran, Iraq, and Saudi Arabia. Similarly, the revolutionary Islamism emanating from Iran during the eighties threatened all its neighbours, leading in this case to a brutal war wherein the Saudis and the Americans backed Saddam’s reckless bid to crush the nascent Islamic republic.

The incoherence of Arab politics and the Arab street’s penchant for conspiracy theories are signs of a societal crisis. The crisis in Arab states, Egypt above all, is itself a symptom of the failure of their models of governance. And this includes not just Ba’athism and the strongmen modes of the Maghreb and the Levant, but also the revolutionary Islamism of Iran. Identity is not enough; the Islamic Republic is on the verge of collapse. The reason is the same. Any model that generates relentless confrontation, with the unipole no less in this case, is automatically self-limiting.

While oil wealth has made the societies on the Arabian peninsula prosperous, their prosperity hides a blatant societal failure evident in their extraordinary dependence on the competence of outsiders. In any event, their counter revolutionary rentier state model is neither attractive nor reproducible elsewhere in the Islamic world. Nowhere in the greater Middle East outside Turkey is a viable model of governance to be found. This is precisely why I agree with Fuller’s assessment. In Turkey itself, the AKP’s days are numbered. But the astonishing rise of the Gulen movement, with its strong commitment to a de-facto secular polity, gives us good reason to believe that the model will survive the AKP’s demise.

But even if Iran joins Turkey and adopts a viable model of governance, that is not going to be enough to tip the scales. Unfortunately for the Middle East, neither Iran nor Turkey are Arab; Iran is not even Sunni. Although Turkey is easily the strongest regional actor, minus a serious decline in Arab nationalism, it’s days of regional hegemony appear to be over. There are other, Arab, contenders that are not that inferior. The domestic politics of the Middle East countries are strongly coupled, which makes ‘pivot states’ more influential than their geopolitical weight would otherwise allow. As the center of gravity of the Arab and Muslim worlds, Egypt is the true pivot. Much will depend on the outcome in Egypt.

In the gulf, the only long-term viable strategy is to bring Iran back into the fold. The really long-term allies of the West are after all Iranian businessmen. Iran is also the natural regional hegemon whose reemergence is likely to stabilize the gulf. A moderation of the sectarian temperature would also help. The anti-Shi’ism emanating from the gulf can be radically reduced with US pressure. Therefore, the US needs the space to arm twist the Saudi royals. For this reason, the policy tensor has advocated bringing both Damascus and Tehran in from the cold and a ‘tilt’ away from the Saudis. In any event, the ‘principle of least action’ suggests that a strategy of equipoise is optimal for a bipolar regional system.

As for the ‘arc of weakness’ stretching from the Mediterranean Sea to the Persian Gulf, the strategy is in some sense overdetermined by the prominence of Salafist-Jihadist forces. The United States has little choice but to try to prevent the worst case scenarios from obtaining. First and foremost, it must try to ‘do no harm.’ Another misguided adventure like the Iraq war is surely a terrible idea. The US could’ve easily tolerated nationalist militants espousing limited aims conquering territory, even if they were ‘terrorists’ (not ‘all terrorists are the same’). This is not the case. The Salafist-Jihadists have unlimited aims and will not go away unless they are militarily defeated. Since air power is insufficient to defeat ISIS, I have advocated a limited intervention with US ground forces. Kimberly Kagan’s plan calls for 25,000 combat troops. That should do it. In fact, the most attractive strategy available now is a joint US action with regional players, especially Iran, to return Iraq and Syria to the territorial status quo ante circa 2011. 


The ‘context’ that we bracketed long ago, is certainly relevant to the fertility of the soil in which Islamic radicalism can grow, but this cancer will not erase itself even with credible promises of the West’s excellent behaviour in perpetuity. Even after ISIS is eliminated as a serious contender in the coming years, Salafist-Jihadism is not going to disappear. A long-term strategy is thus necessary. Any viable long-term strategy to defeat Salafist-Jihadism must both militarily defeat the extant groups and make the ground less fertile for its growth.

There is plenty more the West can do at home to reduce the alienation of Muslim communities and thereby make them infertile grounds for radicalism to grow. On this front, North America vastly outperforms Europe. Unfortunately, the tidings on the tired continent point in the opposite direction. As for the United States, prosecuting the torture of Muslims by US agencies would go a long way in restoring US prestige in the Islamic world. Reining in its recalcitrant national security agencies would help restore its reputation as a constitutional republic.

Apart from being on the ‘right side of history,’ there actually isn’t all that much that the United States or the West can do to nudge Islam’s Thirty Years’ War in the right direction. Indeed, while we make a big fuss about Islamic terrorism in the West, the real military, political, ideational, and social struggle is taking place in the very heart of Islam — that is where it will be settled. This war will ultimately be decided by Muslims themselves. In the “Problem With Islam,” I pointed out that Islam never had its Reformation. Perhaps this is it. Let’s hope it doesn’t last as long as the fight in Christendom.

We Will Not Be Intimidated

In Thinking on January 7, 2015 at 11:12 pm


The bastion of Western liberalism on this side of the pond opined that the massacre in France today was “motivated by hate.” No it wasn’t. The goal of the Islamic militants in this dastardly undertaking was not to traumatize the French people or undermine the French state. It was not meant to extract political concessions from the regime. Nor was the goal to highlight the plight of a persecuted minority; or secure vengeance for wrongs committed by French forces against Muslims. No. The goal was to intimidate the media into showing deference to sacred symbols of the Islamic faith. This is not your run-of-the-mill terrorism.

Politically motivated violence has its own logic. Terrorism is usually the weapon of the weak. More often than not, the psychological message of terror is: “You think you can keep crushing us without consequence? No, we will spill your blood until you recognize the injustice you are doing to us.” The goal is quite clearly political. In modern times, terrorists have usually been motivated by nationalism. Their terror is mostly directed against occupying powers. A Serbian terrorist famously assassinated the Archduke of Austria; Irish militants bombed British targets to secure an independent Ireland; Indian extremists carried out assassinations of British Raj officials; Tamil Tigers attacked the regime in Colombo; ETA carried out attacks against the Spanish regime; and so on and so forth. The solution is usually simple: the government must reach some sort of a political accommodation with the nationalists.

A more virulent form of politically motivated violence is one that is driven almost purely by ideology. The goal is to upend the existing order and replace it by some sort of utopia. Marxist-Leninist and Maoist groups want to not only bring down the government, they also want to dismantle the state and the property relations that go with it. Theoretically, the goal is to replace the existing social order with a much more egalitarian one. But in practice, it means the dictatorship of the party. Most Islamist militants are really nationalist agitators—think Chechens or Palestinians—whose nationalist struggle is thinly veiled by Islamic ideology. On the other hand, Salafist-Jihadists are almost purely ideologically driven—it is only to them that the term “Islamo-fascist” can be faithfully applied. These guys want to establish a caliphate; some immediately, others eventually. ISIS has already prematurely proclaimed one in the heart of the Middle East. When ISIS militants and their fans raise their index finger—which for regular Muslims just means tawhid or a commitment to strict monotheism—they are proclaiming the global supremacy of their literal interpretation of God’s law. Their goal is nothing short of the establishment of a Salafist-Jihadist world state. The solution to ideologically-driven terrorists is simple again: they must be conclusively defeated; no government can compromise with groups that espouse unlimited aims.

So where do these Parisian Islamists fit in? They may be inspired by the success of ISIS, but they are likely to be self-radicalized. Their goal is not the establishment of an Islamic state in the heart of Europe. Their goal is intimidation. This is the psychology of the bully: “How dare you insult the Prophet? We will kill with such brutality that no one will attempt such insolence again.” This is not an attack on the French. This is an attack on the Enlightenment. Unfortunately, in this case there are no simple solutions: attempts to root out home-grown Islamic terror usually end up undermining the very values we are trying to defend. Brutal crackdowns promised by the hard right are likely to backfire. There is no substitute for diligent intelligence work and the cultivation of sympathetic contacts by law enforcement inside the Muslim community.

This is a time for us—the children of the Enlightenment—to recommit ourselves to the defence of the freedom of speech. What does that mean? It means this: You do not believe in the freedom of speech unless you are willing to defend the right of the person who you disagree with to speak without fear. More pertinently it means that whether or not you think that the Charlie Hebdo cartoons were in good taste, they had a right to publish them; irrespective of what France’s 5 million Muslims feel about it. 

And Islamists: Do you want to know why the Islamic world has failed to keep up with the West since the eighteenth century? It was then that the West discovered the principles of open society. That is to say, the values of the Enlightenment. And it all started in Paris. Call us when you have caught up with France circa 1751. Meanwhile, get this once and for all: You will not be able to intimidate us. 


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