Turkey Increasingly Shuns U.S. Weapons

By UMIT ENGINSOY, WASHINGTON And BURAK EGE BEKDIL, ANKARA

Recent Turkish procurement practices that favor non-U.S. suppliers in key defense programs may indicate a larger tendency to avoid the purchase of American weapons where the Turks easily can find alternatives, analysts and industry sources said.

“At some point in a not-so-distant future, we may see that Turkey practically buys only fighter aircraft and related services from the United States, and almost nothing else,” one Ankara-based analyst said.

Turkey’s ongoing complaints over what it sees as the United States’ strict restrictions on technology transfer and other sale difficulties have prompted the NATO ally to seek closer industry ties with other suppliers, the analyst said.

This year, Turkish procurement authorities have shunned U.S. products in three programs collectively worth billions of dollars, selecting an Italian-British group for attack helicopters, and South Korean companies for trainer aircraft and main battle tanks.

The United States has been Turkey’s closest Western ally and largest weapon supplier since World War II. The defense-industrial relationship has two aspects: government-to-government purchases from the United States, Washington’s Foreign Military Sales based on(FMS) mechanism; and commercial sales, in which U.S. companies usually have to compete with rivals from other countries. It is the second category in which the Americans are struggling.

The government-to-government sales will continue to flourish, with Turkey set to buy new fighter aircraft and related services worth nearly $15 billion over the next 10 to 15 years. These include a Turkish plan to buy 100 next-generation F-35 Joint Strike Fighter jets worth $10.7 billion; a recent contract for the sale to the Turkish Air Force of 30 F-16 Block 50 fighters worth $1.85 billion; and an ongoing modernization of older Turkish F-16s for $1.1 billion. In all these cases, Lockheed Martin is the prime contractor.

In addition, Turkey buys various types of Air Force and naval missiles and other services under FMS deals.

But commercial sales are faltering. The only recent commercial contract won by the United States is last year’s $580 million purchase of 17 S-70B Seahawk naval warfare helicopters. And Sikorsky was the sole source in that deal.

U.S. Government Complains

The U.S. government and companies blame the deterioration on the Turkish procurement agency’s strict rules of acquisition that took effect in 2005.

In unusually candid language, a senior Pentagon official recently accused the Undersecretariat for Defense Industries (SSM), Turkey’s procurement agency, of “hindering Turkey’s military modernization, interoperability with NATO allies and U.S.-Turkey defense industry cooperation.”

“Onerous terms and conditions — liability, work share, technology transfer and upfront U.S. government approval requirements in Turkey’s standard contracts — have kept U.S. firms from bidding,” Daniel Fata, deputy assistant secretary of defense for Europe and NATO, told a House of Representatives panel March 15.

Since then Turkey has selected the Italian-British AgustaWestland, maker of the A-129 Mangusta International, for its $2.7 billion attack helicopter program. Ankara also has opted for the KT-1 Woongbi, developed by South Korea’s Korea Aerospace Industries, for the $450 million trainer aircraft contract. As the model for Turkey’s national tank program, South Korea’s XK-2 platform, made by the Agency for Defense Development, has been chosen. With follow-on contracts, the South Korean share in this deal may exceed $1 billion.

U.S. companies were nonplayers in all three programs, with leading manufacturers, including Boeing, Bell Helicopter Textron and Raytheon, even failing to bid. The U.S. firms said the Turkish terms and conditions were not compatible with U.S. export laws and regulations.

Earlier, U.S. company General Atomics lost a nearly $200 million UAV deal to Israel’s Israel Aerospace Industries.

“Winning Turkish contracts is becoming increasingly difficult for U.S. firms, and we’re not happy about that at all,” one U.S. industry official said.

Turkish procurement officials deny charges of discrimination, with SSM chief Murad Bayar saying that his agency had softened terms and conditions to enable U.S. participation. But Bayar and other officials also say that companies from other countries do not share U.S. complaints.

“The Turks, to borrow their language, are kind of fed up with U.S. restrictions on technology transfer and other sale problems, and are effectively telling the Americans that as long as they can find equivalent systems from less problematic suppliers, they will prefer non-U.S. solutions,” the Ankara-based analyst said. “And I see no reason for the Turks to change this approach in the foreseeable future.”

One exception in Turkey’s recent preference for non-U.S. systems for commercial deals is helicopters.

Sikorsky Aircraft, maker of the S-70 Black Hawk International, is expected to win an ongoing tender for 32 military utility helicopters for $500 million over European rivals. Boeing’s CH-47 Chinook is seen as an early favorite in an upcoming program for heavy-lift helicopters.

Although not directly related, the faltering U.S. commercial sales to Turkey come at a time of deteriorating political relations, mainly because of the Iraq war and increased terrorist attacks inside Turkey by separatist Kurdish rebels based in northern Iraq. Ankara’s calls on Washington and Baghdad to put an end to the presence of the outlawed Kurdistan Workers Party in Iraq so far have produced no visible result.

Turkey has emerged as the world’s “most anti-U.S. country,” according to this year’s annual global poll by the Pew Research Center, released June 27. The poll’s results indicate only 9 percent of Turks have favorable views of the United States, Pew said. •

E-mail: umenginsoy@defensenews.com, bbekdil@defensenews.com

FT REPORT - GREECE: Rising prosperity brings feel-good facto

By Kerin Hope, Financial Times

Published: Jul 13, 2007

Greece's reputation for presenting unreliable statistics that flatter its public accounts has long undermined its credibility with European partners.

Those days may be over, however.

In May, the Athens government received a green light to exit the European Commission's excessive budget deficit procedure, ending almost three years of close scrutiny by Eurostat, the organisation's audit arm.

The 2006 budget deficit fell to 2.6 per cent of gross domestic product - the first time it had fallen within the 3 per cent of GDP limit set for members of the eurozone since Greece joined the currency in 2001. This year, the deficit is projected to shrink only marginally to 2.5 per cent of GDP.

However, backsliding is not an option, says George Alogoskoufis, the finance minister. "We're preparing for larger cuts next year. As a eurozone member, we're committed to balancing the budget by 2010," he says.

Eurostat is expected to approve later this year a revision of the national accounts - the first in more than 20 years - that shows an increase in GDP by as much as 25.7 per cent annually since 1994.

Improved information-gathering has enabled the state statistical service to capture more activity in the fast-growing services sector, along with a larger percentage of the thriving grey economy.

Based on the revisions, the budget deficit would shrink by up to half a percentage point. But the impact on Greece's public debt, the highest in the eurozone as a percentage of GDP, would be much larger. The debt would fall at a stroke from 104 to 85 per cent of GDP.

Greek per capita income would receive a significant boost too. In terms of purchasing power parity, the Greeks would outpace their Mediterranean neighbours Spain and Italy to become almost as well off as the French.

The revisions reflect the impact of a decade of growth at about 4 per cent a year - a rate that should be sustained over the medium-term, Mr Alogoskoufis says. He notes that the economy expanded in the first quarter by as much as 4.6 per cent on an annualised basis.

Growth is driven by strong consumption and high investment, underpinned by transfers worth €22bn over eight years from the latest EU structural package. The jump in Greece's per capita income resulting from the statistical revision is not expected to affect current levels of EU funding.

"There's a feel-good effect and a neighbourhood effect," explains Paul Mylonas, chief economist at National Bank of Greece. "People in the private sector are investing quite a lot, and economies in the neighbouring countries, increasingly important export markets for Greece, are growing fast."

Larger Greek companies are deepening their presence in Bulgaria and Romania following their EU accession. Smaller companies are finding opportunities in the less-developed markets of the western Balkans.

Shipping and tourism,the main growth drivers together with cross-border expansion, are benefiting from a buoyant global economy.

Investment in new tonnage is at record levels. Tourism bookings are at a 10-year high, thanks to a recovery in Germany, the biggest market for Greece, and rising numbers of American, Chinese and Russian visitors.

Mr Alogoskoufis says the benign climate provides an opportunity to crack down on widespread tax evasion among small businesses and Greece's high percentage of self-employed workers, from plumbers to doctors and lawyers.

A previous campaign aimed at corporate tax evaders has borne fruit, thanks to improved electronic cross-checking of invoices and payments, and tighter enforcement by the finance ministry's special police unit.

But as a percentage of GDP, tax receipts are among the lowest in the EU, at a little below 20 per cent according to the revisedstatistics.

"We need to engage both the public and the social partners.

"There'll be incentives for households to ask for receipts, for example, for repair jobs, and measures to encourage the reporting of extortionary practices during tax audits," Mr Alogo-skoufis says.

Yearly reductions have cut corporate tax rates from 27 to 22 per cent. Rates for personal income tax are also being reduced. But the tax code remains complex, with overlapping legislation that is open to different interpretations by middle-ranking revenue officials.

Yannis Stournaras, an Athens University economics professor, says that the tax system needs a thorough overhaul.

He says: "There are some tough choices to be made in order to maintain revenue growth. There are few alternatives to raising VAT, but it also needs to be better administered. And the government has to consider introducing a capital gains tax."

As Greece enters the run-up to a general election, Mr Alogoskoufis faces pressure to loosen fiscal policy. He insists that next year's budget will not contain hand-outs for special interest groups.

But as the election campaign gets under way, it will become clear that the optimistic climate in Athens and other major cities does not extend to smaller towns and places off the tourist track. There are fewer new jobs in the provinces and income disparities are growing.

Although the jobless rate has fallen in the past three years from almost 11 per cent to about 9 per cent, it remains among the highest in the eurozone.

Unemployment is low among heads of households, but among young workers the rate exceeds 24 per cent, the highest in the EU.

"Measures to free the labour market are crucial," Mr Mylonas says.

"The minimum wage is far too high for inexperienced workers: it discourages employers from hiring.

"Such high rates of youth unemployment don't bode well for growth in the future."

NYT - Bush to Declare Gains in Iraq on Some Fronts

July 12, 2007

By DAVID S. CLOUD and JOHN F. BURNS

WASHINGTON, July 11 — The Bush administration will assert in the next few days that progress in carrying out the new American strategy in Iraq has been satisfactory on nearly half of the 18 benchmarks set by Congress, according to several administration officials.

But it will qualify some verdicts by saying that even when the political performance of the Iraqi government has been unsatisfactory, it is too early to make final judgments, the officials said.

The administration’s decision to qualify many of the political benchmarks will enable it to present a more optimistic assessment than if it had provided the pass-fail judgment sought by Congress when it approved funding for the war this spring.

The administration officials who provided details of the draft report to The New York Times, insisting on anonymity, did so partly to rebut claims by members of Congress in recent days that almost no progress had been made in Iraq since President Bush altered course by ordering the deployment of about 30,000 additional troops earlier this year.

The report will land in the middle of a two-week Senate debate that has pitted advocates of an early American troop withdrawal against Mr. Bush, who wants to defer major policy decisions on Iraq until September, when a more comprehensive report is due from the top two Americans in Iraq, Ambassador Ryan C. Crocker and Gen. David H. Petraeus.

The White House report says the most progress has been achieved in the military realm. The American command’s latest unpublished monthly figures, prepared for the White House report, show a substantial decline in two major categories of violence, the number of Iraqi civilians killed in sectarian violence and casualties from car and truck bomb explosions.

But the report also acknowledges that some military benchmarks have not been met, including improvements in the ability and political neutrality of the Iraqi security forces and the Iraqi government. Even in some areas where the report will cite progress, the officials in Washington said the document would acknowledge that the overall goal of political reconciliation remained elusive and would chide the Iraqis for failing to take advantage of the presence of more American troops to take more far-reaching steps.

Administration officials said the report could be made public as early as Thursday, though the White House said the timing of the release had not been determined. At the same time, officials said, the White House would like to avoid giving Congress ammunition to use in seeking to enact restrictions on the United States military presence in Iraq.

The report will “not conclude, as it has been characterized, that this is a colossal failure,” one of the officials said. “It is a mixed bag, with some areas that are too early to pass judgment on.”

Several administration officials said that in the drafting of the report, which was done primarily at the National Security Council, officials tried to walk a fine line between giving a credible assessment of Iraq’s progress and giving the Iraqis an incentive, in the words of one official, “to improve their grades.”

Administration officials said the Pentagon had been much more willing than the State Department and the White House to make hard and fast calls about whether Iraqi progress was satisfactory.

An assessment of political progress provided to the House Armed Services Committee by Thomas Fingar, the deputy director for analysis at the National Intelligence Council, painted a much bleaker picture than the White House report, saying there were “few appreciable gains.”

The new military figures come from a sheaf of colored charts and graphs prepared by the American military command for submission to the White House. The documents say that sectarian killings in Baghdad declined to 300 in June, when the American force reached full strength, from 1,650 in January. Nationally, sectarian killings declined to 650 in June from 2,100 in January, according to the documents. The number of “high profile” bombings, including suicide attacks, fell below 90 in June from more than 180 in March.

In separate interviews in recent days, Ambassador Crocker and General Petraeus, the top American commander in Iraq, have offered a subdued view of the military statistics, saying that while some measures of violence showed a downward trend, it was too early to suggest that there had been a lasting turnaround in the war.

Ambassador Crocker, in an interview on Saturday, was blunt in his assessment of the war. While “by Iraqi standards, June was a pretty good month,” he said, the figure of 650 sectarian killings showed that the situation remained grim. “If 20 people killed a day is good news, that tells you how bad things were previously,” he said. “The challenges here at every level remain just huge.”

But he said he believed that the United States could avoid disaster in Iraq, given enough time. “Do I think it can still be done?” he said. “Yes, I do. I’m just not sure if it can be done on the kind of time lines and with the kind of time pressures that the situation back home has generated.”

Other figures relayed in the report to Washington showed that Iraqi casualties from car and truck bombs, which have been the war’s biggest cause of injury and death, fell below 500 in June, including more than 200 casualties from one attack on a Shiite mosque in the Rusafa area of east Baghdad, compared with 1,100 in February. According to a detailed breakdown, vehicle bombings across Iraq fell to 40 in June, compared with 115 in March; suicide bombings fell to 30 from 48; and attacks by suicide vest bombers stayed nearly equal, with 18 in June, 2 fewer than in March.

Another measure of the Baghdad violence, the number of insurgent and militia attacks, went from 200 in a two-week period just before the troop increase began in mid-February to 390 in the first two weeks of June, before falling back to 240 in the second half of the month, according to the American figures.

A senior officer who helped compile the charts said the spike reflected the heightened tempo of American-led military operations in insurgent and militia strongholds across the city. “The attacks are up because we’re going into the neighborhoods picking fights,” he said.

General Petraeus was cautious in assessing the fall-off in what the military calls “high-profile attacks,” meaning bombings with parked vehicles that cause high casualties, and suicide attacks with bomb-laden vehicles or by militants wearing suicide vests. He noted that in early July there were a number of devastating attacks, including a suicide bombing in a village southwest of Kirkuk last week that killed more than 130 people.

“That had gone down for three months in a row, April, May and June, fairly substantially,” the general said. But he added, “We will have to see if that is sustained this month or not, because there have been a number, as you know, at the beginning of this month.”

The most striking success shown by the military figures was in the western desert province of Anbar, an area declared all but lost politically to insurgents by a Marine intelligence report in 2006. The number of attacks in Anbar declined to 225 in June from 1,300 in October, according to the military data.

American officers have attributed the success in Anbar to deals with Sunni tribal leaders exhausted with the brutalities of Al Qaeda in Mesopotamia, a largely Iraqi organization that American officers assert has foreign leadership. But the military says that the extremists, under pressure in Anbar, have moved the focus of their attacks elsewhere, including the troubled province of Diyala north of Baghdad, and the oil-rich city of Mosul in the north.

On the political front, none of the benchmarks that have been achieved include the high-profile legislation on which Congress asked to see progress. Debate has not yet begun in the Iraqi Parliament on the oil law or the revenue-sharing law, both of which are crucial to keeping Iraq united over the long term.

The most direct criticism of the government of Prime Minister Nuri Kamal al-Maliki in the report, officials said, is for its failure to make headway on a law that would make it easier for former members of Saddam Hussein’s Baath Party to obtain government jobs. American officials consider the measure vital to any political reconciliation with Sunnis. Laws to disarm militias and to grant amnesty are still in their formative stages, and as a practical matter, disarming militias seems an all but impossible goal as more groups control swaths of territory.

In the report, Mr. Maliki’s government will be credited with taking steps toward forming a committee to review and overhaul the Iraqi Constitution and with making progress on “allocating and spending” its $10 billion budget for reconstruction projects, though officials privately say little of the money has been spent so far on projects.

In contrast to the White House report, Mr. Fingar’s assessment to the House committee was overtly critical. “The multiparty government of Nuri al-Maliki continues halting efforts to bridge the divisions and restore commitment to a unified country,” it concluded, “and it has made limited progress on key legislation.” But it added that “communal violence and scant common ground between Shias, Sunnis and Kurds continues to polarize politics,” and Mr. Maliki’s effort at reconciliation are “only at its initial stages.”

Mr. Crocker said in an interview that he did not expect the legislative benchmarks to be achieved in the coming weeks and that in his view those measures were less significant than whether the leaders of the different factions found a way to keep talking to one another. He said he had been encouraged by signs in recent weeks that a small group of leaders representing each of the major sectarian and ethnic blocs — including Mr. Maliki, a Shiite; President Jalal Talabani, a Kurd; and Tariq al-Hashemi, a Sunni — had met at times of crisis and spoken with a common voice.

General Petraeus appeared eager to send a message to lawmakers on Capitol Hill who have grown impatient with the war. “I can understand why the folks at one end of Pennsylvania Avenue could be frustrated, angry, disappointed and upset over the situation in Iraq,” he said, adding: “I share the same emotions, and I’m the one going to the memorial services. I went to a ceremony last night for five soldiers, and the night before for four.”

David S. Cloud reported from Washington, and John F. Burns from Baghdad. Michael R. Gordon and Alissa J. Rubin contributed reporting from Baghdad, and David E. Sanger from Washington.

The Times - Is the puny dollar a sign of America’s decline? by Anatole Kaletsky July 12, 2007

Yesterday, the pound and the euro hit their highest levels in a generation against the US dollar. The dollar, meanwhile, collapsed to a record low against an average of all the world’s major currencies. It is tempting to interpret the flight from the dollar in financial markets as the clearest, most objective, indicator of America’s relative decline.

Europe has long been derided as an ageing, sclerotic continent, doomed to irrelevance in a world dominated by America and Asia. But could it actually be America, not Europe, that is failing to compete in the globalised world economy and is now threatened with long-term decline?

Much that is happening in the world today certainly seems to belie the hubristic assumptions about American hegemony that were so prevalent a few years ago. It is not just the military debacle in Iraq and the geopolitical setbacks suffered by American diplomacy from the Middle East to Venezuela to North Korea. Less prominent in the media headlines, but in some ways more troubling, are the indicators of economic underperformance: the reliance on foreign borrowing (now equivalent to $2,000 annually for every American man, woman and child); the loss of Wall Street’s global dominance in financial services to the City of London; and now to cap it all, the dollar collapsing to record lows. Surely this is the ultimate vote of no confidence in the US economy by people who are best placed to know?

Sadly, for those of us who live in Britain and Europe and would like to believe that the strength of our currencies reflects our superlative economic prospects, the answer is an emphatic “no”. There was a time in the 19th century when the strength of sterling reflected Britain’s unparalleled prosperity and imperial power. But, since the deregulation of currencies and financial markets in the 1980s and 1990s, currency strength has conveyed almost no information about the health of a national economy – and none at all about a country’s competitive position in global trade. For example, anyone who believes that the falling dollar reflects America’s huge trade deficit and foreign borrowing should consider that the one leading currency even weaker in the past three years than the dollar has been the yen; yet Japan has the world’s biggest trade surplus and is the greatest creditor nation the world has ever seen.

To the extent that any relationship has existed between currencies and economic performance, it has usually been the “wrong” way round – rising currencies usually preceded periods of economic decline, while weakening currencies have presaged economic strength. Think, for example, of the collapse of sterling in 1992, which ushered in the strongest and longest period of economic expansion in British history.

Or consider the strength of the US economy in the late 1990s, just after the dollar fell to its previous nadir in 1995. Even more spectacular has been the decade of growth in China since its currency collapsed to a record low in the Asian crisis of 1997. On the other side of the ledger, there has been Japan’s stagnation after 1995, when the yen hit a record high, and Germany’s lost decade after the surge in the mark that followed German reunification and the eurozone’s dismal economic performance from 2003 to 2005, as the newly created euro appreciated by 60 per cent against the dollar.

There are many explanations for the apparently perverse relationship between currencies and economic performance, though none of them is watertight. For example, currencies tend to strengthen in response to rising interest rates and fears of inflation – which are obviously bad for economic performance – but also in response to strong economic growth.

On the other hand, a currency may weaken because inflation prospects are improving, as they are in the US at present, or because investors fear a financial collapse, which some believe to be a looming in the US mortgage market. But if the causes of currency strength are ambiguous and contradictory, the consequences are clear. A currency that keeps rising, as the euro and sterling are at present, will eventually do serious damage to almost any economy, hurting export competitiveness and stunting growth.

This is what happened to Britain and America after the pound and the dollar appreciated excessively in the early 1980s and again in the early 1990s. It happened to Germany and Japan in the mid1990s and again in the middle of this decade to the eurozone. Europe and Britain enjoyed some relief in 2005, when the euro and the pound temporarily weakened.

But now they will have to bear the full brunt of excessive currency strength. In Britain’s case, the strength of the pound may not do too much harm, since it will forestall or at least delay any further rate rises from the Bank of England. On the Continent, however, the European Central Bank seems determined to keep raising interest rates, thereby exacerbating the damage done by the euro’s excessive strength.

Americans, meanwhile, will enjoy the benefits of a super-cheap currency, which will more than offset falling property prices and problems with a small minority of mortgage loans. American politicians, for all their faults, instinctively understand this, which is why they have generally welcomed a falling dollar and have been pressuring China and Japan to let the dollar weaken against the yen and the renmimbi – not just, as at present, against the euro and the pound.

European policymakers, by contrast, seem to have no idea of how currency markets operate. In contrast with Americans and Asians, German politicians in particular still see a “hard currency” as a virility symbol – not as a threat to economic performance or an indicator that interest rates are probably too high.

There is only one leading European politician who seems to understand the dangers of an overstrong euro. This is Nicolas Sarkozy, who travelled to Brussels this week to plead for a more expansionary economic policy in Europe. But his pleas were met with ridicule from the other governments and the ECB. Within two months of promising to spark an economic revival, the new French President has already been paralysed by the rules of the eurozone.

That is the reality of life in today’s Europe – and one of the main reasons why America, despite all its problems, will continue to dominate the world economy in the decades ahead.

IHT - Global governance, on average, little improved over last decade, says World Bank

By Celia W. Dugger

Wednesday, July 11, 2007

NEW YORK: Africa, often characterized as a place of epic corruption and misrule, emerged in a World Bank report as a continent of great variety, with some countries making extraordinary progress over the past decade, while others have moved backwards.

The most comprehensive database on governance for more than 200 countries undermines the notion of "Afro-pessimism," the World Bank said in the report released Tuesday, and also established that industrialized, wealthy nations also struggle with corruption and bad governance.

The ratings of the United States and Italy on corruption have significantly worsened since 1998, and Chile, a middle-income developing country, now performs as well on this measure as the United States, according to the report. In fact, a dozen emerging economies, including Chile, Botswana, Uruguay, Costa Rica, Latvia and Lithuania, scored higher on the rule of law and controlling corruption than some industrialized countries, like Italy and Greece.

In Africa, Tanzania, Liberia, Rwanda, Ghana and Sierra Leone all made extraordinary progress on corruption over the past decade while Zimbabwe, Ivory Coast and Eritrea retreated, the report said.

Beyond Africa, the report documents other countries that are either making hopeful progress or regressing on various measures. Those with significant gains include Indonesia, Ukraine, Colombia, Turkey and Afghanistan. The backsliders include Bangladesh, Poland, Kyrgyzstan, Moldova and Pakistan.

The report did, however, find that the gains and losses balanced out such that the average quality of governance worldwide over the past decade has not improved much.

"It begins to challenge these long-held popular notions that the rich world has reached nirvana in governance," said Daniel Kaufmann, an author of the report who heads global programs at the World Bank Institute, the bank's knowledge-sharing and training arm.

After Paul Wolfowitz, then president of the World Bank, became mired in scandal this year over charges of favoritism, bank staff had to fight for the institution's own credibility in judging governance in the developing countries it serves.

Kaufmann said countries rightly asked the bank: "What right do you have of rating the world when you first have to rate yourselves? It has to start at home."

The vast database of information on governance, provided to the bank by 30 different organizations, is itself a measure of the bank's evolution on the centrality of the issue. It measured not only corruption and electoral democracy, but also respect for civil liberties, press freedom and human rights, as well as the openness of governmental operations.

Kaufmann became a leader of the World Bank's efforts to document the devastating effect of bad governance on economic development and the well-being of poor people more than a decade ago with the support of James Wolfensohn, then the bank's president, who in 1996 famously condemned what he called the "cancer of corruption," then largely a forbidden subject at the bank.

The report, authored by Kaufmann, Aart Kraay and Massimo Mastruzzi of the World Bank, follows a decade of research culled from information provided by an ideologically diverse array of groups.

"This is the best data source on governance now," said Steve Radelet, a senior fellow at the Center for Global Development, a Washington research group. "Fifteen years ago, we didn't talk about this stuff."

The information fuels many debates on development, including whether prosperity leads to good governance or vice versa. Some of the governance indicators developed by the bank have been relied on by the Millennium Challenge, a U.S. agency that dispenses U.S. aid to poor countries based on how well they are governed.

LA Times - U.S. troop buildup in Iraq falling short

THE CONFLICT IN IRAQ: GREEN ZONE DEATHS; STRATEGY DOUBTS; FAMILIAR BUSH THEME

Amid 'surge,' forces have been unable to establish security, even for themselves. Military leaders say they just need more time.

By Julian E. Barnes and Ned Parker
Times Staff Writers

July 11, 2007

BAGHDAD — In the Ubaidi neighborhood in the eastern part of this city, American soldiers hired a local Iraqi to clean the Porta-Potties at their combat outpost. Before the man could start, members of the local Shiite militia threatened to kill him.

Today, the Porta-Potties are roped off, and the U.S. soldiers, who could not promise to protect their sewage man, are forced to burn their waste.

As part of the Bush administration's troop "surge" strategy, the U.S. unit here had moved into an abandoned potato chip factory hoping to push out the militia, protect existing jobs and provide stability for economic growth. Instead, militia members stymied development projects, cut off the water supply and executed two young Iraqi women seen talking to U.S. soldiers, sending a powerful message about who really controls Ubaidi's streets.

In the next few days, the Bush administration is scheduled to release a preliminary assessment of its overall Iraq strategy. Officials may point to signs of progress scattered across the country: a reduction in death-squad killings in Baghdad, agreements with tribal leaders in Al Anbar province, offensives north and south of the capital.

President Bush defended his strategy Tuesday, demanding Congress give his administration more time and insisting that America can "win this fight in Iraq." To underscore his request, Bush sent top aides to lobby lawmakers on Capitol Hill.

But as the experience of the troops in Ubaidi indicates, U.S. forces so far have been unable to establish security, even for themselves. Iraqis continue to flee their homes, leaving mixed areas and seeking safety in religiously segregated neighborhoods. About 32,000 families fled in June alone, according to figures compiled by the United Nations and the Iraqi government that are due to be released next week.

U.S. forces have staged offensives to push insurgents out of some safe havens. But many of the insurgents have escaped to new areas of the country, launching attacks where the U.S. presence is lighter.

And there has been no sign of any of the crucial political progress the administration had hoped to see in Iraq.

U.S. commanders are painfully aware that they are running out of time to change those realities. Army Gen. David H. Petraeus, the top American commander in Iraq, has made several efforts to slow the clock in Washington. Each time, it has sped up.

The full complement of the "surge" arrived in Iraq last month, bringing the total to 28,500 additional troops. Military officers originally hoped to have until 2008 before they had to render a verdict on the strategy. Then the Washington timeframe shrank to September. Now, it is shrinking further, with Congress demanding answers even sooner.

Supporters of the troop buildup insist that small steps could grow into larger and more long-term successes if lawmakers are patient.

"Right now we are three weeks into this. It's not like flipping a light switch," said a military officer in Baghdad, expressing the frustration of many commanders. "Time has to be given for things to work."

Commanders point to Ramadi, the capital of Al Anbar province, as a showcase for the kind of results the military wants from the current strategy. Once a battlefield, the city is now largely peaceful, calm enough that in March, Iraqi Prime Minister Nouri Maliki was able to pay his first official visit.

But military officers stress that it took about nine months of sustained effort to make Ramadi a relatively pacified city. And with its volatile mix of Sunni and Shiite Muslims, Baghdad presents a far more complex challenge than all-Sunni Ramadi.

The interim progress report that Bush promised to release this week is likely to emphasize the success the military has had in killing Sunni militants in the "Baghdad belts," the cities and towns that dot the major rivers and highways leading to the capital. In recent weeks, the newly arrived U.S. forces have been focused on fighting members of Al Qaeda in Iraq, , a militant Sunni group made up of Iraqis and foreign fighters.

Top generals say the strategy is crucial to securing Baghdad. Only by controlling the routes into the capital, and denying militants safe havens, can the U.S. and Iraqi militaries keep out the car bombs that stoke sectarian violence inside the capital.

But leading Iraqis are less sure of the strategy.

Mahmoud Othman, a Kurdish member of the Iraqi parliament, said the U.S. approach may be successful at weakening Al Qaeda in Iraq. But he said Americans would not be able to solve Iraq's sectarian conflict or stop clashes between armed groups in Baghdad neighborhoods.

"The surge has an important effect in fighting Al Qaeda," the independent politician said. "On the Sunni-Shiite conflict, it hasn't had any effect…. Extremist Shiites and Sunnis are fighting each other. The Americans can't stop this."

U.S. officials have made little, if any, progress with their persistent calls for Iraqi officials to take steps toward reconciliation between Shiites and Sunnis.

Key administration officials, most prominently Defense Secretary Robert M. Gates and Vice President Dick Cheney, have visited Iraq to push for passage of an oil-revenue sharing law, provincial elections and reform of rules barring members of the former ruling Baath Party from government jobs.

But the Iraqi government is bogged down by fighting among Shiite, Sunni and Kurdish parties. It is unclear whether the oil law, the one piece of benchmark legislation still given hopes for passage before September, will reach a vote any time soon.

The number of death-squad killings in the capital, one sign of sectarian divisions, is down from earlier this year. But the number remains roughly at the level seen after the 2006 bombing of Samarra's Golden Mosque, which served as a catalyst for the extreme sectarian violence.

In Baghdad, the number of bodies found dumped in the streets dropped to 540 last month from 830 in January. Some American officers say those numbers could rise again. And others say that the decline may simply represent the depressing reality that most Baghdad neighborhoods are now segregated, meaning there are fewer people left for death squads to kill.

Maj. Gen. Joseph Fil Jr., the commander of U.S. forces in Baghdad, said that American troops at the end of June controlled about 42% of the city's neighborhoods, up from 19% in April.

But to many Iraqis, that is little comfort.

"The Americans do not make me feel safe," said Amin Sadiq, a 30-year-old Shiite worker in the Ghadeer neighborhood of east Baghdad. "When you hear the speeches of the top U.S. military leaders, you think that everything is ideal and perfect and Iraq will be better. But when you see how the U.S. soldiers behave, I really feel I should not trust the leaders."

The American military has helped bring a tense truce in some areas, but has not re-integrated once-mixed neighborhoods.

The western Baghdad neighborhood of Ghazaliya, once a prosperous mixed middle-class area, was riven by sectarian violence in 2006. It is now divided between Shiites in the northern end and Sunnis in the south, with the U.S. military stuck in the middle, trying to keep the peace.

"Last year, things were bad. This year is worse than before," said a man in his 50s who identified himself as Qais Qaisi.

The presence of Iraqi and American security forces means that Sunnis cannot fight back against the Shiite militias, which have the tacit support of the Iraqi army unit in the area, Qaisi said. But he nevertheless voiced concern about a possible American pullout.

"If the multinational forces withdraw, there will be very bloody sectarian battles," he said.

Military officers routinely say that improving the economy is a prerequisite to improving security. And U.S. forces, by putting up barriers and controlling traffic, have been able to reopen some marketplaces that had been targeted by suicide bombers. Although that has allowed some neighborhood commerce, success with other projects has proved more elusive.

The Pentagon is working to reopen state-owned factories and has identified several dozen that can be renovated and restarted. But that work is slow, and many residents say they see few improvements in their neighborhoods.

Although U.S. forces have been able to overcome militia threats and start small neighborhood projects such as installing streetlights, they are not able to initiate larger undertakings.

"We aren't doing anything meaningful," said one mid-level noncommissioned officer. "Where are the real projects? We aren't offering these people enough safety, or money, or jobs."

Amid the political setbacks and continuing violence, however, there are signs of relative calm in some areas.

Earlier this year, the streets of Baghdad were desolate at sunset. Now, in places, there are signs of life.

In Yarmouk, a neighborhood in west Baghdad, 18-year-old Ahmed Shakir used to see bodies on the street every day. Snipers fired from hidden perches and gunmen clashed with U.S. and Iraqi soldiers. But last month, after weeks of U.S. patrols, his neighborhood started to feel safe — safe enough for Shakir to stay outside on the basketball court until 8:30 p.m.

"It is usually me and three of my friends, we always go play basketball," he said. "Now we have U.S. and Iraqi patrols roaming the streets every day. If they continued doing this, things will remain better. If not, then it will get worse for sure."

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julian.barnes@latimes.com

ned.parker@latimes.com

Times staff writers Saif Hameed, Zeena Kareem, Mohammed Rasheed and Wail Alhafith contributed to this report.

NYT - Bush Counters G.O.P. Dissent on Iraq Policy

July 11, 2007

By JEFF ZELENY and SHERYL GAY STOLBERG

WASHINGTON, July 10 — Fearful of a Republican rebellion over Iraq that his own aides believe could force him to change course, President Bush said Tuesday that the United States would be able to pull back troops “in a while,” but asked Congress to wait until September to pass judgment on a future military presence there.

Senator John McCain, Republican of Arizona, fresh from a trip to Iraq, joined in the call for patience, imploring lawmakers not to “let fatigue dictate our policies.” As the Senate began a two-week debate over a major military spending bill, the White House dispatched cabinet officials and advisers to urge other Republicans to stand by the president.

The administration’s message was spelled out in remarks Mr. Bush delivered in Ohio, in which the president signaled more clearly than before that he might be open to shifting toward a smaller, more limited mission in Iraq in the future — without stating precisely when.

“I’ll be glad to discuss different options,” Mr. Bush said to a business group in Cleveland. “I believe we can be in a different position in a while, and that would be to have enough troops there to guard the territorial integrity of that country, enough troops there to make sure that Al Qaeda doesn’t gain safe haven.”

While skepticism and pessimism about Iraq policy are evident in the voices of a growing number of lawmakers, including several prominent Republicans, even more Republicans spoke forcefully about their desire to continue the fight. It remains an open question whether a series of proposals, including those calling for troop withdrawal deadlines, will gain the 60 votes needed for initial passage in the Senate when the measures are scheduled to be considered next week.

As the debate began Tuesday, Mr. Bush’s national security adviser, Stephen J. Hadley, and his new Iraq coordinator, Lt. Gen. Douglas Lute, arrived on Capitol Hill to lobby senators, while Defense Secretary Robert M. Gates fielded phone calls from lawmakers in both parties. The officials were, effectively, previewing a progress report to be delivered to Congress by week’s end.

Senator Olympia J. Snowe, a Maine Republican, said she received a call on Tuesday morning from Secretary of State Condoleezza Rice, urging her to wait until September to denounce the Bush policy. Ms. Snowe, who has previously opposed hard-and-fast deadlines for removing troops, said the time had come to change course in Iraq.

“The tide has turned,” Ms. Snowe said. “They obviously would prefer that we wait until September, but my view is that we should send a very strong message now.”

Among the proposals to be considered over the next two weeks is a plan requiring a troop withdrawal to begin within 120 days and to be completed by the end of April 2008. The sponsors of the plan, Senators Carl Levin of Michigan and Jack Reed of Rhode Island, both Democrats, said the legislation would allow troops to remain in Iraq for a limited mission of combating terrorism, training Iraqi forces and protecting American forces.

While debate over the Iraq war has dominated the first six months of the new Congress, Democrats have struggled to use their narrow majority to influence the administration’s policy. But Mr. Bush’s own words on Tuesday signaled the beginning of a White House counteroffensive aimed at emphasizing that, like Americans around the country, he, too, wants to bring troops home.

“I fully understand that when you watch the violence on TV every night, people are saying, ‘Is it worth it, can we accomplish an objective?’ ” Mr. Bush said. “Well, first I want to tell you, yes, we can accomplish this fight and win in Iraq. And secondly, I want to tell you, we must, for the sake of our children and grandchildren.” While Mr. Bush hinted in his remarks that he was open to exploring different options in the future, he did not expound on them in any significant detail, only broadly mentioning border protection and counterterrorism. He did not mention either providing security in Baghdad or training Iraqi troops, both of which remain central to the current American mission.

In a White House memorandum circulated on Capitol Hill and beyond, the administration said it was “too early to declare the surge a success or failure,” but highlighted what it called signs of progress, including “a substantial drop in sectarian murders in Baghdad since January,” “total car bombings and suicide attacks down in May and June” and “signs of normalcy in Baghdad like professional soccer leagues, amusement parks and vibrant markets.”

Even as several members of Congress said Tuesday that they were awaiting a progress report on Iraq this week before rendering their judgment, administration officials sought to play down the review of the benchmarks of progress in Iraq.

The document, required by Congressional budget legislation, is based on reports from senior commanders and diplomats in Iraq, and is being written in Washington by the National Security Council staff with participation from other departments, including State and Defense.

“This week started to take on greater importance than anyone in the administration had intended,” said one senior administration official, speaking on condition of anonymity to discuss internal deliberations. “September is our window.”

The Republican senators who believe September is too late for a new strategy began huddling privately on Tuesday to begin discussing compromise legislation to change course in Iraq. Senators Richard G. Lugar of Indiana and Senator John W. Warner of Virginia are among those who are shaping such proposals.

At the same time, a string of Republicans stepped forward and voiced support for the president, while Democratic leaders accused Republicans of using procedural maneuvering to delay votes on the Iraq legislation.

Senator Christopher S. Bond, Republican of Missouri, said the critics were being hasty. “Do we not have the patience to see a totally new strategy, which is appearing to work, given a chance?” he asked.

But Senator Lamar Alexander, a Tennessee Republican, said the two-week Congressional debate needed to produce some signs of progress. He and Senator Ken Salazar, a Colorado Democrat, are proposing a bipartisan plan to put into law the provisions of last year’s Iraq Study Group report, which called for a gradual troop withdrawal and change of direction in the mission.

“At some point we’re going to have to stop shouting at each other and see what we can agree on,” Mr. Alexander said. “We owe that to our troops and we owe that to our country.”

Jeff Zeleny reported from Washington, and Sheryl Gay Stolberg from Cleveland. David M. Herszenhorn and Thom Shanker contributed reporting from Washington.

Jerusalem Post - The Region: Getting serious about Syria

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Barry Rubin, THE JERUSALEM POST

Jul. 9, 2007

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'We must once again restore the Israeli army's deterrence, because there is no other way," explains Defense Minister Ehud Barak. Quite right. The place to start is Syria. Israel's strategic policy toward Syria should be based on two basic principles:

Israel should make the Syrians believe it wants to see the current regime there overthrown even if it has no intention of making this happen, or even really wants that outcome.

Israel should make clear that if there is a future Hizbullah attack leading to a war like last summer's, it is Syria, not Lebanon, that will be the main target of retaliation.

Let's review the issues and then discuss why this is the best policy. It is true that Israel does not seek the overthrow of President Bashar Assad's Ba'athist dictatorship, dominated by the Alawite minority. The reason is that the likely replacement would be an Islamist regime from the Sunni Arab majority. An alternative could be simply another Ba'athist regime under a different leader, but the risks of regime change are certainly real.

STRATEGY, however, is not just stating what you ultimately want, but also what you wish the other side to think you want. In Syria and throughout the Arab world, the idea is clearly held that Israel is not willing to strike so hard as to bring down the Assad regime. In turn, this emboldens that regime to strike hard at Israel, knowing it has little or nothing to fear. That security should be taken away from the Damascus regime. Clearly, Israel does not want war with Syria. Yet the whole concept of deterrence is to make clear to the Syrians that Israel is not afraid of war, and that Syrian support for terrorism against Israel will have real and costly consequences. Without this fear, there is no deterrence. And without deterrence, war - either directly with Syria or with Syria's clients in Lebanon - is far more likely.

The weakness of Syria should also be a factor in Israeli thinking. Despite the possibility of renewed Russian aircraft sales, Syria's military is badly outdated. A lot of the regime's threats and use of terrorism is a bluff, formulated precisely to distract from that fact. The Syrian regime has no great-power ally and cannot depend on a single Arab government. Of course, the one international asset Syria enjoys is its alliance with Iran.Yet especially in the period before Iran obtains nuclear weapons, Israel can and must press Syria hard - verbally and even covertly at regular intervals; materially if events require it.

THIS LEADS us to the second point. It could not be more obvious that the current Lebanese government is not really an enemy of Israel. While it might be incapable of making peace, it would prefer a quiet border and no conflict. The main enemy of the Lebanese government is not Israel, but Iran and Syria. Whether or not officials in Beirut say this openly, this is certainly what they think. The same goes for Hizbullah, which is the main threat to take over the government.

Given the fact that the vast majority of Christians, Druse and even Sunni Muslims do not want to participate actively in the Arab-Israeli conflict, their suffering in future clashes in that quarrel should be limited. Anything that weakens the Lebanese government and society is against Israel's interests.

Obviously, of course, this does not include direct strikes against Hizbullah, but there should be no such attacks against the Lebanese infrastructure, aside perhaps from roads being used as part of Hizbullah's military effort. To hold the Lebanese government responsible for Hizbullah - when it would love to rein in that group but cannot do so - is sheer folly.

It is clear also that Hizbullah is not highly responsive to rational calculations of the strategic balance or to the infliction of material damage. Certainly, destroying its military equipment and killing its troops can be most effective. But material damage inflicted even on its supporters is welcomed by Hizbullah as a means of mobilizing them and even making them financially dependent on an organization well-funded by Damascus and Teheran.

If, therefore, Israel is going to force a state actor to pay the price in order to give it an incentive to rein in Hizbullah, the proper address is Syria.

THERE IS another important factor here which suggests holding Syria, rather than Lebanon, to account. International diplomacy and public opinion has become an important force in shaping regional issues. This situation was central to the 2006 Israel-Hizbullah war, when there were tremendous demands and heavy pressures on Israel to stop operations in and against Lebanon. In the event of a Syrian-oriented response, however, such reaction and pressures would probably be much less. Unlike Lebanon, Syria would not be seen as an innocent victim able to muster sympathy. Attacks on Syrian government, military and even strategic facilities would be less likely to involve civilian casualties. And while Israel has something political to lose by alienating the Lebanese, there are no such considerations regarding Syria. Given the fact that peace with Syria is simply not a possibility - a fact that should be clear to anyone going beyond the most superficial level of solely English-language rhetoric from Damascus - there is nothing to lose on this front, either.

To rebuild Israeli deterrence requires a proper degree of credible threat against those inciting, planning, financing and equipping attacks on Israel. This should be directed against those forces that are both implacable enemies and that have to take material losses into account.

If deterrence must turn into implementation, the guns should be pointed in the right direction. Let the Syrian rulers tremble where now they swagger.

The writer is director of the Global Research in International Affairs (GLORIA) Center, Interdisciplinary Center, and editor of the Middle East Review of International Affairs (MERIA) Journal. His latest book is The Truth About Syria.

FT Editorial - Republicans start to call time on Iraq

Published: July 9 2007 19:27 | Last updated: July 9 2007 19:27

It was only a matter of time before the growing hostility among US citizens to the war in Iraq wormed its way into Republican ranks. A matter, in fact, of election time.

Although it has long been clear that the Bush administration’s Iraq policy has been a disaster, it is not so much the realities on the ground that have percolated into Republican consciousness as the prospect of defeat at next year’s congressional as well as presidential polls.

The erosion of Republican unity falls short of bipartisan consensus in favour of US withdrawal. But it has accelerated enough for Iraq’s foreign minister to warn on Monday that a premature pull-out would lead to civil war, regional conflagration and a failed state.

Those are, of course, real risks. The problem is that Iraq is already so far down that road – and the real question is whether the continuing presence of US (and British) troops in the country is part of the problem or part of the solution.

The US invasion that promised Iraqis freedom has deprived them of their security, smashed their state and fragmented their country into a lawless archipelago ruled by militias, jihadis, ethnic cleansers, bandits and kidnappers.

The continuing US military presence shows no sign of being able to resolve this. The so-called “surge” of troop reinforcements, like everything else Washington has tried in Iraq, is far too little, much too late.

What the US occupation has done, however, is to infantilise Iraq’s public life, encouraging its leaders to believe they can infantilise Iraq’s public life,continue to play sectarian, winner-takes-all politics while American forces prevent a descent into total anarchy.

Would a US withdrawal bring Iraq’s politicians to their senses, forcing them to seek ways of living together and rebuilding their country and institutions? There is no guarantee of that. But the democratic process in the US does pretty much guarantee that the troops will be brought home. It is time to start preparing for that and to use it as leverage in Iraq and the region.

The US should make support for Iraq’s government and army conditional on real efforts to promote national reconciliation and to defeat the jihadis by building alliances, including with nationalist insurgents. The prospect of the US pulling back should also be used to concentrate the minds of Iraq’s neighbours, including Iran, in ways that emphasise the benefits of a stable Iraq in a more secure region.

Measured against this administration’s fantasies of transforming the Middle East, this is not much. But it is a lot more than Iraq is likely to get under present US policies.