Ahmadinejad's Sugar Daddy

How Brazilian ethanol could help Iran outwit American sanctions.

Brazilian President Luiz Inácio Lula da Silva has been spending a lot of time with his Iranian counterpart Mahmoud Ahmadinejad lately, to the consternation of the former's supporters at home and friends elsewhere in the West. Brazil, currently a member of the U.N. Security Council, has been unapologetic about its newfound relationship with Iran, which produced a dubious nuclear fuel-swap deal last month; it defends Iran's right to enrich uranium and rejects any idea of tough economic sanctions. The budding friendship has baffled Washington: Why would this Latin American country, otherwise a U.S. ally, insist on cozying up to Iran to the detriment of its relations closer to home?

There are several possible explanations. Brazil has long harbored its own nuclear aspirations, and increasingly seeks to define its own foreign policy and emerge as an independent global power. But Lula's motives may be less complicated than all that: There are also $10 billion in Brazilian-Iranian trade deals to be had. Perhaps the most intriguing, and strategic, aspect of those trade relations has to do with sugar.

Brazil is the world's largest sugar grower. This year it experienced a bumper crop, with output growing 16 percent from a year earlier. But due to a global glut, sugar prices have plunged 57 percent since February. Because sugar cane is a perishable crop that cannot be stored, the best way for Brazil to generate value from its undervalued surplus is by converting it into ethanol, of which Brazil is already the second-largest producer (after the United States) and a major consumer (for years Brazilians have driven mostly flex-fuel cars, which can run on any combination of gasoline and ethanol). The country's ethanol production is expected to rise 19 percent to 8 billion gallons this year.

For Tehran, Brazil's surplus ethanol could be a strategic savior. Iran is a major exporter of crude oil, but lacks the refinery capacity to process most of it; as a result, the second-largest oil producer in OPEC depends on other countries' exports of refined gasoline. A conference committee in the U.S. Congress is hammering out legislation that aims to exploit this weakness by imposing sanctions on foreign companies that supply refined petroleum products to Iran. Tehran has been bracing for these sanctions for a while, taking measures to address its Achilles' heel: building seven new refineries, expanding existing ones, converting cars to run on natural gas (of which Iran has the world's second-largest reserves), and securing alternative gasoline supplies from China and Venezuela.

But none of these efforts would give Iran the immediate injection of motor fuel it needs as swiftly as Brazil's ethanol. Brazil could replace most of the 5.8 million gallons of gasoline that Iran imports daily (a conventional internal-combustion car engine can handle up to 20 percent ethanol in its fuel blend without damage to the engine; in the United States most cars already run on 10 percent). Doing so would pull the teeth out of the gasoline sanctions legislation, rendering it useless before it even reaches President Barack Obama's desk.

If this were to happen, however, Congress and the Obama administration would have only themselves to blame. For years, Brazil has been clamoring to export its surplus ethanol to the United States, only to be blocked by lawmakers beholden to powerful American agricultural lobbies. If not for a prohibitive 54-cent-per-gallon import tariff on Brazilian ethanol -- not to mention a sugar quota and tariff system that restricts imports and keeps sugar prices in the United States much higher than the world price -- the fuel could have ended up in American gas tanks rather than reducing the country's leverage with Tehran.

But American lawmakers seem less afraid of a nuclear Iran than they are of angry American corn farmers and ethanol producers -- or, at least, want to have it both ways. Many champions of the Iran Refined Petroleum Sanctions Act, as the proposed legislation is called, are also defenders of the tariff. In the Senate, all but two of the nine co-sponsors of recently introduced legislation to extend the tariff -- which is due to expire next year -- by an additional five years are also co-sponsors of the Iran sanctions bill. Thirty-six supporters of the same sanctions act in the House of Representatives are also co-sponsors of the tariff-protecting Renewable Fuels Reinvestment Act.

The tariff on Brazilian ethanol has been a lingering source of tension between Brazil and the United States for years. Both Presidents George W. Bush and Obama, in their meetings with Lula, rejected his request to eliminate the tariff. Now Lula is taking his revenge, and it's surely a sweet one.



Is Afghanistan 'Medieval'?

Afghans shouldn't be insulted when Westerners say the country reminds them of the Middle Ages. The religious and political struggles of that era can offer some useful lessons.

In July 1973, Afghanistan's King Mohammed Zahir Shah was overthrown by his cousin Daud, who then abolished the monarchy and declared himself the president of a republic. The New York Times sarcastically editorialized that Afghanistan had just "leaped into the sixteenth century." Radio reports soon brought news of this slight even to provincial northern Afghanistan, where I was working at the time. Daud's government in Kabul expressed its displeasure, but an Afghan friend familiar with the region's complex history saw it differently. "We may have acted hastily," he joked. "The 15th century was pretty good around here!" Indeed, the Timurid dynasty that had its capital in Herat during that period was internationally renowned for its fine arts, monumental architecture, classical poetry -- and effective governance.

I was reminded of this story last month when the Afghan government accused Britain's new defense minister, Liam Fox, of insulting Afghanistan by describing it as a "broken 13th-century country." One Afghan official told the London Times that Fox's comments "show a lack of trust" and prove that Britain is a "colonial, orientalist, and racist country."

But Fox was hardly the first Westerner to reach for the medieval analogy when attempting to get a handle on Afghanistan. Something about Afghanistan conjures up the medieval period in the Western mind in an unreflective way, if only to express the idea that "they are not like us." For some it is a simple insult. Former Blackwater CEO Erik Prince declared that the Taliban were "barbarians" who "crawled out of the sewer" with "a 1200 A.D. mentality." (Given Prince's own fixation on the medieval Christian crusaders of the same era, perhaps the Taliban aren't the only ones with that mentality.) Yet medieval Europe, where religion still played central role in culture and politics and state power was highly fragmented, isn't the worst analogy for understanding contemporary Afghanistan. And Europe's experience during this period might even provide some useful lessons for the country going forward.

Secular Westerners who spend any time in rural Afghanistan are struck by the continuing power of religion there. Islam still permeates all aspects of everyday social relations in rural society; nothing is separate from it. Its influence is ever present in people's ordinary conversations, business transactions, dispute resolutions, and moral judgments. There is no relationship, whether political, economic, or social, that is not validated by Islam. In such a society it is impossible to separate religion from politics. Rural Afghans cannot even conceive of the separation of religion and government because in their minds, the two are so intrinsically linked. The declaration of Afghanistan as an "Islamic Republic" upon the fall of the Taliban provoked neither domestic discussion nor concern. Any regime in Kabul that does not seize the Islamic banner for itself is vulnerable to being branded as illegitimate by its enemies, as the Soviet-backed communist government learned during the 1980s.

Christianity once played a similar all-encompassing role in medieval European life, and it took many centuries (and the emergence of rationalist secular ideologies beginning with the Enlightenment) for church and state to disentangle themselves. By the mid-20th century, Joseph Stalin could derisively ask how many divisions the pope had, but no medieval ruler could afford to be as cavalier when his legitimacy was challenged by the pontiff, even a venal one.

The Catholic Church could call on the faithful to disobey their rulers, or to crusade against non-Christian states or against declared sectarian heretics within the faith. The fear of damnation preoccupied the lives of ordinary people. It instilled a respect for the power of religious authorities and induced them to donate lavishly to build churches or support monasteries. The church could also set rules prohibiting the lending of money with interest and demand religious tithes. Because the rise of the modern West was characterized by the long-term retreat of religion as the preeminent force in society, it now takes a different leap of faith to appreciate a society in which faith continues to dominate.

Rural Afghanistan remains such a place. The medieval analogy is not an exact one, of course. Afghanistan's Sunni Islam never had an institutionalized clerical hierarchy, monasteries, or religious figures with the power of a pope. But if we are talking about a cultural ethos, the analogy is not half bad -- particularly when the Taliban attempts to frame its opposition to the Kabul government as a jihad or holy war.

Western observers attempting to come to grips with Afghanistan's fragmented state authority also find themselves drawn to other aspects of the medieval era, a period in which leadership in Europe was personal rather than bureaucratic and the state's power to impose its will quite limited. In the wake of the collapse of the Western Roman Empire in the fifth century, a form of feudalism emerged that was highly decentralized. Monarchs devolved power by granting lands to regional leaders who were then obligated to provide military and political support to their superiors when asked.

The difficulty for a monarch was that the resources remained in the hands of his vassals, who then acted in their own interests. The rise of centralized states in Europe in the 16th through 18th centuries finished a process by which monarchs gradually centralized power and dispossessed their feudal nobilities. Then, in the beginning of the 19th century, the rise of the European nation-state took this process a step further and dispossessed the monarchs while keeping intact the centralized administrations they had built.

Afghanistan's history has followed a surprisingly similar pattern -- just delayed by a few centuries. Until the 17th century, the territories that comprise modern Afghanistan were peripheral parts of powerful regional empires centered in Central Asia, India, and Iran. Upon their decline or collapse in the mid-18th century, Afghanistan reverted to a feudal structure in which Afghan amirs gave land grants to vassals in exchange for military service. They also reached accommodations with various autonomous groups in hard-to-rule regions that rejected centralized rule outright.

The British dismantled this typically feudal structure when they invaded Afghanistan during the First Anglo-Afghan War (1839-1842). They lost that war, but successive Afghan amirs kept their reforms and their goal of centralized state power. By the end of the century, Amir Abdur Rahman (1880-1901) used modern weapons and a powerful army to establish the modern Afghan nation-state, one that ruled the country without intermediaries. For the last century, however, successive governments in Kabul that attempted to maintain Abdur Rahman's legacy of centralization experienced total state collapse at least three times, in 1929, 1992, and 2001. Power once gained devolved back to regional political leaders, particularly during the long civil war in the 1990s, a process the Taliban did little to reverse.

Foreigners encountering Afghanistan in the post-2001 era saw this devolution of power as an example of state failure. Many of the multiple competitors for legitimate authority at the local level had no desire to participate in politics in a state-centered system. Autonomous tribes and ethnic groups, local militia commanders, criminal syndicates, and even blood-feuding families sought to resist state power, but they did not seek to overturn or replace it. This arrangement is analogous to medieval Europe, where kings were frequently also unable to maintain a monopoly on the legitimate use of violence, but were still able to retain their thrones.

The weakness of President Hamid Karzai that has led many journalists to dub him the "Mayor of Kabul" is little different structurally from those medieval European kings, who also held their capitals but did not rule their people. Similarly, Karzai's adoption of a patrimonial model of the state, in which offices and resources are redistributed on a personal basis to buy the support of existing power-holders or play them off one another, has more in common with the Holy Roman Empire than the European Union. In some ways, therefore, a thorough understanding of medieval power politics and how rulers came to centralize state authority would be of greater value to the international advisors sent to the Karzai government than a background in constitutional law or regulatory reform. At least in medieval Europe, the centralized state emerged victorious.