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The New Reality

With shifting world powers, can we find a new global balance?

The international balance of power has shifted, giving emerging market states much more political and economic influence at the world's most important bargaining tables. This rebalancing and the uncertainty it generates will create new risks and opportunities for policymakers, investors and business decision-makers.

The financial crisis speeded the inevitable shift from an international order in which the G-7 free market democracies dominated international institutions toward one in which major emerging states have amassed unprecedented geopolitical and economic leverage. The United States remains the only global military power. Given the cost of state-of-the-art military technology -- and of building a blue-water navy -- Washington will retain this advantage for years to come. Yet, the market turmoil of the past two years has helped ensure that economic resilience, not military might, is now the ultimate guarantor of geopolitical clout.

Fueling uncertainty during this transitional phase in global leadership is the problem that none of the world's leading powers accepts its current trajectory or the burdens that come with it. In fact, for the first time since the end of World War II, no state or bloc of states has the power to drive an international agenda. Americans, accustomed to their country's superpower status, will not welcome a diminished status. Europeans, proud of their union's capacity for collective action to build peace and prosperity, will see their prestige decline as a multiyear bid to save the eurozone undermines confidence in the region's longer-term prospects. Japan remains mired in a period of extended political dysfunction. Major emerging states, particularly China, remain deeply reluctant to assume onerous international burdens at a potentially delicate moment in their countries' development. The result is a vacuum of leadership that will complicate efforts to restore confidence in global economic growth following the most significant market meltdown of the past seven decades.

The speed of this transition should not be exaggerated. It was underway for many years before the onset of financial crisis, and it will take many more years to fully develop. But its impact is already shaping the international business climate, relations among nations, and domestic policy choices in both the developed and developing worlds. The most important near-term implication of this power vacuum is that as states recover from the global slowdown with different tools and at different speeds, the divergence in their interests leads each government to safeguard its domestic political capital with policies that protect local jobs and industries at the expense of outsiders. Both China's unwillingness to allow substantial appreciation of its currency and a policy of quantitative easing in the United States aroused international anger in 2010. Some governments have already turned to various forms of capital controls; others will likely follow. New barriers to the free flow of ideas, information, people, money, goods and services will provoke threats of retaliation. Differences of opinion over the proper role of government in an economy will pit developed and developing states against one another as they compete for capital and resources. Multinational corporations face formidable commercial challenges from state-owned companies and privately owned national champions.

In addition, this rebalancing of international power and a growing vacuum of international leadership allows medium-sized powers such as Brazil, Turkey, and South Africa to play a larger role in international diplomacy and conflict resolution. Over time, the experience these governments gain in arbitrating political disputes will enhance global stability. But during this transitional phase and before officials in these countries gain that experience, their initiatives will sometimes undermine rather than enhance international cooperation -- particularly as traditional powers resist their efforts.

Challenges

Global rebalancing, a lack of international leadership and aftershocks of the financial crisis create a number of important challenges. Assumptions about security cooperation, economic stability and crisis resolution must be revisited. The decades-long development of multilateral institutions in Europe makes conflict among EU members unthinkable, but other regions do not have this advantage. This is especially worrisome for Asia, given the region's relative importance for the global economy and the number of potential flashpoints there. The long-term erosion of Washington's ability to provide a regional security umbrella in Asia and the Middle East will force historic antagonists to build new standard operating procedures to manage conflict. In Africa, the absence of established conflict resolution mechanisms could allow unresolved border disputes to spark conflict.

Over the longer-term, the willingness of regional powers to mediate disputes will enhance global stability, but it will take time for other governments to accept new countries in these roles and for the powerbrokers themselves to gain experience in conflict resolution. The lack of international consensus will also make it easier for rogue states to sow division among leading powers. Those who believe that military power -- and nuclear capabilities in particular -- can enhance national prestige and provide the ultimate safeguard for national security will face less coordinated resistance. There will also be bigger holes in international sanctions regimes.

In the meantime, this shift in the balance of global power and lingering effects of recession will fuel the growth of reactionary forms of nationalism in both developed and developing countries. In developed states, particularly in Europe, nationalism flows from deepening anxiety over economic security and expectations of falling standards of living. We believe that threats to the eurozone itself have been exaggerated. But austerity measures, now in place in several European countries, will take time to restore governments to financial health. Over time, as restive publics in vulnerable peripheral countries realize that austerity is a long-term project, frustrations will be expressed in ever-more-volatile anti-government protests and, in some cases, in an intensification of anti-EU and anti-immigrant sentiment. Management of these frustrations will sap the EU's institutional energy and diminish the European appetite for deeper involvement in the politics of other regions. In the United States, where the so-called real unemployment rate remains well above 16 percent, three consecutive elections have revealed a surge in anti-incumbent anger -- providing lawmakers with new incentives to appeal to national pride with punitive legislation aimed at trading partners, particularly China. In developing states, nationalism flows from pride in national accomplishments and suspicions that developed states are conspiring to stunt their growth. The resentments that these perceptions sometimes arouse can, for example, increase Chinese public demand, often expressed via the Internet, for new limits on access of foreign companies to the Chinese marketplace.

In addition, rebalancing itself can provoke tensions. Beijing is well aware that the next stage of China's development will depend on a shift away from current levels of reliance for growth on exports -- particularly to consumers in Europe, the United States and Japan -- toward much higher levels of domestic consumption. This enormous transfer of wealth from the state and companies toward households is the work of a generation, not of a single five-year plan. But as it erodes confidence in Washington that mutually assured economic destruction aligns U.S. and Chinese economic interests, it will feed mistrust between the two governments.

Chinese policies will provoke sharper criticism from other governments, as well. The Chinese leadership picked high-profile fights of various kinds with Japan, India, South Korea, ASEAN and Australia in 2010. These tensions create an uneasy balance within many governments between hopes for increasingly profitable trade relations with China and fears of Chinese regional dominance. To hedge their bets, many of these governments will work to enhance security ties with Washington in 2011, adding to regional tensions. The Chinese leadership may also find itself increasingly in conflict with emerging powers in other regions over its approach to trade and currency policy. In particular, there is a risk that high-profile gatherings, particularly the G20 summit meeting in Cannes later this year, could provide opportunities for India, Brazil and others to join US and European calls for a more flexible renminbi.

There is also the problem of state capture of energy. China, in particular, has used state-owned oil and gas companies to pay above-market prices to ensure long-term supplies of the energy and other commodities needed to fuel the next stage of the country's development. This practice creates frictions with commercial competitors and other governments by adding upward pressure on the price that all must pay for access to these resources.

More broadly, we are likely to see greater political and trade conflict between the United States and China, and Beijing may continue to be more aggressive in pursuing various commercial and security disputes with its neighbors. But the real threat that the Chinese leadership poses for democratic values and free market capitalism comes from the perceived success of its state capitalist model. As the United States, Europe, and Japan struggle to their feet following the Great Recession, China powers ahead with state-backed spending and development, encouraging governments, particularly in the developing world, to believe that states can dominate local market activity to ensure strong and steady long-term growth. This is an appealing prospect for some governments in Africa and Latin America, but China's investment strategy extends even into the heart of Europe. In recent weeks, China has invested in key economic sectors in Greece and Italy; signed lucrative commercial agreements in Germany, France, and Britain; and pledged to buy sovereign debt in Spain and Portugal.

In response to China's apparent success, we are likely to see an increase in both the developed and developing worlds in (often subtle forms of) state intervention in market activity. One form particularly worthy of note in 2011 will be an increase in various forms of capital controls. Risk-tolerant investors will continue to look to emerging markets and developing economies for higher long-term growth rates. The continued inflow of enormous volumes of capital will add upward pressure on currencies in these countries, undermining local firms by making their exports more expensive and intensifying import competition. Policymakers in some of them will likely turn to direct market interventions to manage currency values and to protect local jobs and industries. If these market interventions do not stem the threat of currency appreciation, some of these governments will turn to more formal capital controls as a way to counter appreciation. The lack of international leadership will also make it much more difficult to establish a new global financial architecture, to formulate a coherent international response to climate change, or to better coordinate international responses to public health crises.

In addition, the importance of authoritarian states for the global economy will make it more difficult to build international support for protection of human rights, media freedoms, and other democratic values -- though demand for these rights within authoritarian states may increase as rising standards of living fuel expectations for other forms of freedom.

Opportunities

The dramatic global power shift now underway will introduce a period of uncertainty and instability before a new equilibrium can take hold. This transition will require a more complex, more management-intensive global order, and established powers will have to downscale expectations - sometimes painfully - of the scope and reach of their influence. But this period of uncertainty and heightened competition also presents opportunities for a range of countries. The governments of medium-sized rising powers like Brazil, Indonesia and Turkey can redefine their roles on the regional and international stages. Iran, Myanmar, North Korea and other "rogue" states will face less coordinated pressure from an international community that cannot agree on how to interact with them. Resource-rich African countries have new choices of political and commercial partners as energy-thirsty states compete for contracts. Finally, we see opportunities as well as challenges for Washington in what is likely to be a period of relative decline.

First, Brazil, Turkey and Indonesia will increasingly offer leadership on the resolution of international conflicts through a combination of four key factors: their growing economic strength; an increased willingness among other states to cede leadership roles to governments that do not have the clout to dominate a region's political dynamics; an ability to avoid labels of east or west, one model of capitalism or the other; and diplomatic dynamism driven by the integration of national economic and political interests.

The second group of states for whom the fragmentation of power, capital and ideas presents an opportunity is that of the "rogues," those states identified with policies that undermine regional or international stability such as Iran, North Korea and Myanmar. A shift in the global balance of power provides these governments with opportunities to form political and commercial partnerships with more influential states, easing international pressure on them for changes that might undermine their domestic authority. These partnerships also offer them access to capital and technology that boosts their development. In the case of Myanmar, the shift will only accelerate a trend by which many of its Asian neighbors and others have prioritized strategic and economic ties over concerns with the regime's human rights record or suspected proliferation activity. In all three cases, a shift in the balance of power away from the United States and European Union toward developing states generally, some of which are not democracies, helps them avoid international isolation.

For resource-rich African countries looking to achieve a trio of strategic aims - to generate growth and prosperity, to retain political control, and to break the cycle of dependency often associated with traditional Western aid programs -- the new era is marked by the pursuit of new economic relationships with the outside world. In particular, Chinese investments across the resource and infrastructure spaces are allowing these African countries to explore a broader range of political and economic models of governance financed by commodities enjoying super-cycle prices.

In addition, we believe that the new global balance represents a long-term opportunity for the United States to find a sustainable international leadership role that allows for the eventual sharing of more of the burdens that come with the provision of global public goods. Long burdened by the costs associated with its Cold War and global hegemon roles, the United States is now overstretched, under-resourced and deeply in debt. Americans may eventually look back on this period as the moment when its burdens - political, economic and military - were aligned with its reduced capabilities, allowing it to begin to re-engage the world from a position of renewed vigor. If so, the emerging vacuum of leadership may prove less problematic.

Finally, multinational companies and investors have opportunities, as well. Those who recognize the increased importance of governments in market activity in many countries, particularly in emerging markets where governments practice some form of state capitalism, will have first-mover advantage in many cases. Those who diversify their risk exposure are better placed to survive an inevitable period of volatility in global markets. And those who recognize that not all emerging markets are created equal -- that they pose unique risks and opportunities -- are best placed to profit.

Wildcards

We must also take into account a number of wildcard scenarios -- the unlikely, though not implausible, events that generate shocks with a significant impact on global security and the stability of the global economy. Terrorism, including attacks that involve chemical, biological and even nuclear weapons, remains a constant threat. In addition, the risk of cyberattacks will grow in 2011. The centralization of data networks makes states much more vulnerable to potentially debilitating attacks, and new technologies help governments to project power in a world where direct military strikes are much more costly and dangerous. The almost-certainly state-sponsored Stuxnet attacks on Iran's industrial infrastructure offers a preview of what tomorrow's carefully targeted state-sponsored attack might look like. We can also expect an increase in these forms of attacks directed by state-owned companies against privately owned rivals, including Western multinationals. Finally, the international fight over Wikileaks in 2010 underscores the risk posed by individual hackers and info-anarchists. Following moves in several countries to prevent Wikileaks from further disclosure, hackers sympathetic to Julian Assange targeted governments and the corporations that support them.

The Korean Peninsula

But the most immediate concern is a potential crisis on the Korean peninsula. As Kim Jong-Il's health deteriorates, North Korea will face what may prove a challenging leadership transition. Two deadly North Korean attacks in 2010 -- the sinking of a South Korean naval vessel and the shelling of a South Korean island -- suggest that the DPRK leadership either means to project strength in a time of potential domestic vulnerability or to enhance the standing of Kim's successor with the country's security elite. In either case, there is a risk that North Korea's military will provoke a conflict over which no one is fully in control as hawks in South Korea demand a tough response from their president to any North Korean escalation. Unless North Korea launches a deliberate attack on peninsular South Korea or on US forces in the region, resulting conflict can probably be contained. War serves no one's interests. But there is also the low likelihood, high-impact risk that the internal transfer of power will meet unexpected resistance within the North Korean leadership, creating a dangerous, fluid situation that draws the United States, China and South Korea into a regional security and humanitarian crisis -- with long-term economic implications.

Iran's nuclear program

The risk of military conflict over Iran's nuclear program is limited for the next several months. UN, US, and European sanctions have been imposed on Iran, and Israel, the country most likely to strike Iran's nuclear sites, will likely give them time to work. But sanctions are unlikely to undermine the consensus within Iran in favor of the nuclear program, and technical progress in the uranium enrichment process will continue. Over time, tensions will increase again, and the Israeli government may face a choice between airstrikes and a nuclear Iran.

Pakistan

Pakistan's unsteady civilian government faces a perfect storm of emerging challenges. The country faces a constant risk of militant attacks. The ruling Pakistan People's Party, in seemingly constant conflict with the country's media and its supreme court, lacks the political leverage within parliament to restore Pakistan's economic vitality with much-needed fiscal reforms. Social and ethnic unrest has sparked protests and large-scale violence in Pakistan's largest cities. Pakistan's military appears to be increasingly active in the country's politics.

Europe's contagion crisis

We believe that the media, particularly the English-speaking media, underestimates the commitment of European governments to the Euro and exaggerates threats to the eurozone. Yet, there is a reasonable likelihood of substantial debt restructuring in several EU countries, and some EU governments will face risks of sovereign default. In addition, the bid to save the eurozone, and the nationalist tensions it will create between core and peripheral EU countries, will sap much of the continent's energy and limit its appetite for a larger role in international conflict resolution, adding to the vacuum of power in global governance.

The members of the Geopolitics GAC are:

Ian Bremmer (Chair), President, Eurasia Group, USA; Thomas P. M. Barnett, Senior Managing Director, Enterra Solutions, USA; Katinka Barysch, Chief Economist, Centre for European Reform (CER), United Kingdom; Jeremy Bentham, Vice-President, Global Business Environment, Royal Dutch Shell, Netherlands; Steve Clemons, Director, American Strategy Program, New America Foundation, USA; Steve Dobbs, Senior Group President, Fluor Corporation, USA; James F. Hoge, Counselor, Council on Foreign Relations, USA; Robert Kagan, Senior Fellow, The Brookings Institution, USA; Bilahari Kausikan, Permanent Secretary, Ministry of Foreign Affairs, Singapore (Mr. Kausikan's contributions to this document represent his personal views, not those of his government); Lee Chung-Min, Dean and Professor of International Relations, Graduate School of International Studies, Yonsei University, Republic of Korea; Nader Mousavizadeh, Chief Executive Officer, Oxford Analytica, United Kingdom; Gary Mueller, Chairman, Cerebellum Capital, USA; Volker Perthes, Director, Stiftung Wissenschaft und Politik (SWP), Germany; Dmitri Trenin, Director, Carnegie Moscow Center, Russian Federation; Wang Jisi, Dean, School of International Studies, Peking University, People's Republic of China.

PARTHAJIT DATTA/AFP/Getty Images

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Transcript: "The Obama/Bush Foreign Policies: Why Can't America Change?"

Text as delivered of a speech by journalist Seymour Hersh in Doha, Qatar, on Jan. 17, 2011.

I don't know how to describe Obama, as somebody who's now in office for two years. Just when we needed an angry black man, we didn't get one. He has a nice dog.

Let's just do a checklist of what... We know a lot about Bush-Cheney. I've been doing a book for the last couple years about Cheney, basically based on people I knew that were inside... I've learned the truth that if people... You know, it's inevitable in a bureaucracy: You're a one-star general and you get assigned to the vice president's office... [cross talk] ... and maybe you knew him when he was secretary of defense under George Bush I in the first Gulf War when he was rational, so it seems, didn't want to, easily abandoned... and defended George Bush's decision not to go into Baghdad, if you remember, when we had that slaughter that we had that we called Gulf War I. But he was a different person after 9/11, as I think most of you have some sense of.

And so, I did know people in that process, and I couldn't write much about it. How to describe the Bush-Cheney years would be... I was telling a group of faculty people earlier -- and the book I'm doing isn't published, I don't want to talk too much about it -- but just to give you an idea of how differently they thought... As many dark thoughts as you may have about what America did after 9/11, whatever the justification was... I would argue that, what I'm really writing about is, about how eight or nine neoconservative whackos, if you will, overthrew the American government. Took it over. And it's not only that. It's not only that the neocons took it over, it's how easily they did it -- how Congress disappeared, how the press became part of it, how the public acquiesced. And all of us, I guess, in the sense of payback and rage and fear, tremendous amount of fear in America, and we all sort of signed on to what we call now the global GWOT, the global war on terror which, for this government, [inaudible] still exists.

I talked to somebody the other day in the... [inaudible] ... I'm ruminating here, but I talked to somebody Saturday before I came about Ben Ali -- a man in the intelligence community, a very decent... Believe me, as you can under... it makes total sense. Many people, the overwhelming percentage of people, want to do their job right, whether in the CIA, or the Joint Special Operations Command etc., etc. Around the world, that's just the natural instinct. Everybody wants to do their job right. But I'll just tell you, the thinking that goes on... I mentioned what happened in Tunisia, the implications of which I think will be felt, my guess is, we're talking about, there are a lot of countries in North Africa where there's economic distress as there was in Tunisia -- Morocco, Algeria, etc. -- where we could see a lot of trouble. But, my American friend -- this is somebody in the joint special operations business -- his first remark was, "Oh my God, he was such a good ally."

You know, he was. He was an ally in the Global War on Terror. That's the way we do look at things. Never mind that... maybe he did chase down terrorists, al Qaeda if you will, for us. But you have to wonder (which I did not say to my friend, being reasonably polite at that moment, I did not say that), but for every terrorist we capture, how many more do we make? I mean, how many more... We complain bitterly when Iran captures three American students, they released the woman but the other two men are kept there, we complain bitterly in America about the lack of their jurisprudence and the lack of a good legal system. And how many people are still in GITMO, Guantánamo, suffering away? Over 200 still. We claim we can't get rid of them, nobody wants them, but the truth that if they weren't al Qaeda when we captured them -- and most of them were not, as many of you probably understand -- they are now after 7, 8, 9 years of being incarcerated without any hearings or any rights. So we don't always look at ourselves in ways we should.

In any case, the Cheney-Bush years, I can just describe this scene that I was talking about earlier today, which is that in early April of 2003 after we won, quote-unquote, the war, before the insurgents -- the dead-enders, as Mr. Rumsfeld called it initially -- before they took, before the other war began, the war of attrition, there was looting of the artifacts. There was a big, sort of, it was a huge story in the United States and I'm sure around the world, the various gangs that were looting  -- there is a lot of looting in Tunisia right now, it's one of the byproducts of unrest -- the various gangs looted the museums, etc. There was a big hue and cry, and Rumsfeld was asked about it and his basic attitude was sort of: "Boys will be boys," you know, "This is the price of freedom."

So, but in the Cheney shop -- I can write about it in ways I could not then, because I didn't want expose anybody who was there -- in the Cheney shop the attitude was, "What's this? What? What are they all worried about, the politicians and the press, they're all worried about some looting? And wait a second, Sunnis don't like Shia? And there's no WMD? And there's no democracy? Don't they get it? We're going to change mosques into cathedrals. And when we get hold of all the oil, nobody' s going to give a damn." That's the attitude: "We're going to change mosques into cathedrals."

That's an attitude that pervades, I'm here to say, a large percentage of the Special Operations Command, the Joint Special Operations Command and Stanley McChrystal, the one who got in trouble because of the article in Rolling Stone, and his follow-on, a Navy admiral named McRaven, Bill McRaven -- all are members or at least supporters of Knights of Malta. McRaven attended, so I understand, the recent annual convention of the Knights of Malta they had in Cyprus a few months back in November. They're all believers -- many of them are members of Opus Dei. They do see what they are doing -- and this is not an atypical attitude among some military -- it's a crusade, literally. They see themselves as the protectors of the Christians. They're protecting them from the Muslims in the 13th century. And this is their function. They have little insignias, they have coins they pass among each other, which are crusader coins, and they have insignia that reflect that, the whole notion that this is a war, it's culture war.

Look, Knights of Malta does great stuff. They do a lot of charity work; so does Opus Dei. It's a very extreme, extremely religious, Roman Catholic sect, if you will. But for me, it's always, when I think of them, I always think of the line we used about Werner von Braun. Werner Von Braun was the German rocket scientist who invented the V-2. And after WWII we had a secret program of bringing and sort of de-Nazifying some of the German scientists who were valuable to our own energy, our own missile program. And we brought him here -- I think it was called PAPERCLIP, the secret program -- and we brought him here to sort of recreate his life. You know, he was this nuclear... he was this scientist, he was a rocket scientist. So there was a wonderful satirist named Tom Lehrer [Mort Sahl -Ed.] -- some of you old-timers might remember him, he wrote ditties. And one of his ditties about Werner von Braun was, oh yes, "Werner von Braun, he aimed for the moon but often hit London." With his rockets. So the trouble with some of these religious groups is they may have good things, but right now there is a tremendous, tremendous amount of anti-Muslim feeling in the military community.

So, what is Obama doing? Obama has turned over, I think his first year, basically, he turned over the conduct of the war to the men who are prosecuting it: to Gates, to Mullen, who is the chairman of the Joint Chiefs. And in early March, as I recreate it -- and nothing is written in stone, but I'm just telling you what I've found in my talking and my working on this over the years -- we have a general running the war in Afghanistan named McKiernan. McKiernan, unlike McChrystal, his deputy at the time Rodriguez, unlike Petraeus, unlike Eikenberry... They were all together at West Point class of 74, 75, 76 -- what they call, we always call the sort of West Point Protective Association. McKiernan was William and Mary, not West Point. And Gates went to see him in March of ‘09, sort of the first big exploration on behalf of the new Obama administration. What do you need to win the war? Well, the correct answer was, he said, "300,000" -- of course, he knew he wouldn't get it, he was just saying to win that's what it's going to take.

There was a Russian study, the Russians did some wonderful studies after they were sort of beaten to death in Afghanistan (that we called a great victory of America versus the communists, the surrogate war there we fought in the 80s). When the Russians left they did a number of studies that have since been put back in the archives by the Politburo. But when they were out, they showed that, the Russians estimated, just to seal off Pakistan from Afghanistan, the Hindu Kush, 180,000 troops alone just to seal it off so you couldn't get the cross-border stuff that we are so worried about in terms of fighting the war in Afghanistan with the ability of the Taliban to retreat into Pakistan.

And by the way, there were studies done, two large studies done, when we first... right after 9/11, about going into Afghanistan. One was done by [inaudible] one of the war colleges, and they were both extremely critical of the prospects of victory. And there was a drive made to formalize the studies; they were ad hoc studies, and the vice president, then Cheney, sort of stopped them. Nobody wanted to talk about history.

We're sort of, anyway, we hate history in America. We're anti-history, as you know. Else why would we make the same mistake we always do? I remain convinced that if Nguyen Van Thieu -- the South Vietnamese premier in 1975 when South Vietnam fell -- that somehow if we had built a high wall around his palace we would still be airlifting food and supplies and supporting the Democratic Republic of South Vietnam. We don't like to lose, we don't know how to lose, which explains I think a lot of Afghanistan.

In any case, Obama did abdicate, very quickly, any control, I think right away, to the people that are running the war, for what reason I don't know. I can tell you, there is a scorecard I always keep and I always look at. Torture? Yep, still going on. It's more complicated now the torture, and there's not as much of it. But one of the things we did, ostensibly to improve the conditions of prisoners, we demanded that the American soldiers operating in Afghanistan could only hold a suspected Taliban for four days, 96 hours. If not... after four days they could not be sure that this person was not a Taliban, he must be freed. Instead of just holding them and making them Taliban, you have to actually do some, some work to make the determination in the field. Tactically, in the field. So what happens of course, is after three or four days, "bang, bang" -- I'm just telling you -- they turn them over to the Afghans and by the time they take three steps away the shots are fired. And that's going on. It hasn't stopped. It's not just me that's complaining about it. But the stuff that goes on in the field, is still going on in the field -- the secret prisons, absolutely, oh you bet they're still running secret prisons. Most of them are in North Africa, the guys running them are mostly out of Djibouto [sic]. We have stuff in Kenya (doesn't mean they're in Kenya, but they're in that area).

Assassinations? Let's see, Eikenberry [McKiernan -Ed.] gave the wrong number so he was replaced by McChrystal. Stanley McChrystal had been in charge of the Joint Special Operations Command from ‘03 to ‘07 under Cheney. In the beginning under Cheney -- what I'm telling you is sort of hard to take because the vice... In the beginning they would get their orders, they would call up on satellite phones, from the field, to Cheney's office, and get authority, basically, to whack people. Sometimes names were given, sometimes generic authority was given. This was going on. There's still an enormous amount of whacking going on right now. What happened is after McChrystal ran into trouble and he was replaced, Petraeus took over the war, General Petraeus -- they call him King David, David Petraeus -- and he has done this in the last 6, 8 months; He has doubled up on the nightly , nightly assassinations. He's escalated the bombing. He's gotten much tougher. His argument is: Let's squeeze them, let's bomb ‘em, let's hit ‘em, and then of course they'll be open to negotiation.

And negotiation for us means that anybody who wants to negotiate has to fully renounce any allegiance with the Taliban. [Inaudible] in the Pashtun world, they call this thing the Knesset. And of course, it's not going to happen. Of course, I don't know any serious, truly don't know any serious officer or special operator or civilian who's been in the war that has any confidence about it. We're not going to prevail in that. There are some better things. There are some units that are doing... In some valleys, we are going from villages and we are doing a little better in terms of supplying some security, but in general, the insurgency has spread wherever we are and the Taliban have moved, they're moving north. The insurgency is much more widespread; it's much more violent. American boys are being chewed up.

As some of you know who know the Pashtun world, revenge comes, can come in two generations. Revenge, particularly if a male is killed, a senior male, revenge must take place or you are dishonored. We have a legacy there that's going to be very hard to pay off. And it's there. It's not even hard to see. You could almost, you can get it, but the conflict in the increasing areas that they make them go, the targeting is...

You know, here's the way it works: We have reconnaissance missions... We have a group in Washington known as the Joint Reconnaissance Committee. And when we want missions, let's say off the coast of China, we have Boeing 707s that fly figure-eights doing electronic monitoring off China (they used to be mostly off Russia -- they're off China, they're off North Korea now). We still do an awful lot of intelligence collection. These missions are all put into a book and they're approved by the president. So the president (or his designate, but the president basically) is given these notions that you have to approve this mission for the next three months or whatever because there's risks. And yet every time American Predators are going off, controlled by the CIA or the Air Force, going off, hitting targets (more and more in Pakistan) that are undefined, that the intelligence is not very clear on, often very bad, collateral damage is enormously high because we're going after a member of the, let's say the Pakistani Taliban, and in that society the women live right next to the men, they're in separate quarters but they're there, and boom the Predator wipes out a whole building, clearly, and kills an enormous amount of people who have nothing to do with... they're non combatants. None of these missions are approved anywhere except the military chain of command. It's a very strange system and he [Obama] has not tampered with it. I think that things are better in the sense that I don't think Obama is authorizing quite as much; there isn't that much to do with the war on terror, it seems. We still have a capability to operate. I don't know what's going to happen in North Africa because of this -- and this is going to change the game, this one in Tunisia. Tunisia's almost impossible to assess. It's too early but it's going to scare the hell out of a lot of people.

You know, it is, up to a point, about oil. When I started looking at Cheney from a different point of view, like, two years ago, I didn't think so: I thought ideology, I thought protecting Israel... a lot of it is oil. You talk to people and they will tell you, "Yeah, there's the wind and the sun but you [inaudible] it in America and where is it coming from?" And there's always been an understanding. We tolerate the Saudis, we support the Saudis, who we know supply an awful lot of salafists, and they're still, their various charities are supplying often the same people we're targeting and there is certainly, they're certainly... we see them, for instance, in the Iraqi war supporting the Sunnis, the Sunni Awakening, etc. I mean, implicit... I would argue that there's nothing subtle about what we do, morally. If you think about it -- again this is something I talked about earlier -- we and the Brits always assume some imperial right to oil in the Middle East.

Part I of II. To be continued...