Political Risk

Here is a different approach to assessing the situation in Iraq. It is a small part of a larger assessment of political risk around the world by Ian Bremmer entitled A Political-risk Outlook for 2008. He is a political scientist who makes his living advising Wall
Street clients specifically on the political risk aspect of investment. He might be said to have invented the field. According to his Wikipedia page:

Bremmer is most widely known for advances in the field of political risk and,
more directly, bringing political science as a discipline to Wall
Street. In 2001, Bremmer authored Wall Street’s first global political
risk index, now the GPRI (Global Political Risk Index)—a joint venture
with investment bank Citigroup.

Here is Bremmer’s reading of the political risk in Iraq in 2008. The “dynamic” he is
referring to at the beginning is the initial military success of the war in 2003 followed by failure to get the politics right. In his view that dynamic is in danger of repeating in the current situation. He accepts that the surge is succeeding militarily but true to his specialty lays out the political risks as he sees them.

That much is history.But in 2008, this dynamic is unfolding again. Following a strongly criticized Bush decision to ignore the bipartisan (and exhaustively
vetted) Baker-Hamilton plan and press ahead with a troop surge, it’s
turned out that the American generals indeed knew what they were doing.
More than 150,000 well-trained American troops, tens of thousands of
well-paid mercenaries, the support of many tribal leaders (particularly
in the north), billions of dollars of reconstruction aid, and a
revamped counterinsurgency strategy on the ground have markedly
improved security in much of the country. The troop surge has led
radical Shiite cleric and militia leader Moqtadr al Sadr to stay on the
sidelines – not risking confrontation with U.S. military power – and
seriously degraded al-Qaida in Iraq’s capacity for attacks. All of this
has meant fewer casualties – U.S. military, Iraqi military and Iraqi
civilian.

But politically, the United States has actually lost ground. This is clearest in Baghdad, where Washington has all but lost its influence on Prime Minister Nouri al-Maliki’s administration – a stunning political fact given the extraordinary amount of cash and military support still funneled by the U.S. government into the country. This change became clear following Baghdad’s refusal to attend
the Annapolis conference on the Middle East, despite direct lobbying by
President Bush and Secretary of State Condoleezza Rice, or to sign up
for the American pact with Iraq’s Sunni tribal leaders to fight al-Qaida. The greatest political influence on Baghdad is presently Iran – a factor that will likely grow over time as Iraqi political actors await the withdrawal of American military forces and Washington loses the political will to provide economic support.

Which means that the military gains – though real and important – are temporary and cannot continue with a significant reduction in the American troop presence. U.S. domestic opposition to the war remains at its highest levels, and as the U.S. scales down its presence, the likelihood that the insurgency will grow precipitously is great. Sadr will stay on the sidelines until it’s safe to come out – but no longer. Ultimately, all this will likely produce a fragmentation of the country and a proxy war between Saudi-supported Sunni and Iranian-supported Shia, with the
Kurds eventually going their own way. This makes Iraq increasingly less of a mess domestically but more a factor for regional instability throughout the Middle East. This will become increasingly evident in 2008.

It is a fine line between assessing risk and making predictions. Although his language is sometimes that of prediction remember who Bremmer is accustomed to advising – people who are thinking of putting money into a particular country. What we have here, first of all, is one line of expert thought grounded in conventional wisdom such as the Baker report. This is exactly as it should be when it comes to investment – ignoring conventional wisdom is not the safe course. In a time of fundamental political change and uncertainty a leader may choose to ignore conventional wisdom precisely because it is based on the past and may no longer offer much chance of success. Bush chose the surge over Baker’s advice and he has succeeded so far, but there is a long way to go politically. Consequently, the most telling part of Bremmer’s analysis is his reading of the Milaki government’s current attitude to the US. I know that Milaki and Petraeus got into shouting matches over the empowerment of Sunni militias against al Qaeda early in the surge and that Milaki even demanded that President Bush fire Petraeus. My reading is that Petraeuus’ efforts are not just military but also politcal and that the goal behind the military strategy is to make reconciliation more likely by implementing bottom up political change through empowering local people to establish security in their own areas. I agree with Bremmer that the risk remains political disintegration and I would not invest my money in Iraq for exactly that reason. But I am glad that the President did not accept the conventional wisdom of his bipartisan advisors I wish the Iraqi people well and hope that they can find their way forward to the point where they can control their own security and destiny without US help.


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