Why the Long Face?

How Secretary of State John Kerry could turn the ashes of Middle East peace into diplomacy that actually gets results.

Secretary of State John Kerry's push for Middle East peace has come to this sorry impasse: the Israelis demanding the United States release a traitor before they are willing to proceed with previously agreed releases of Palestinians, and the Palestinians playing for international recognition over U.S. objections. Put another way, the Israelis want to impose a penalty on their main international backer for moving forward on a plan that is clearly not of their making, while the Palestinians think they can circumvent Washington's main leverage over them, which is recognition of Palestine as a state. Suffice to say that it's pretty difficult to see how the negotiations proceed from here to a stable two-state solution, despite Kerry's frenetic efforts and best intentions.

Kerry's effort to start his tenure as secretary with a major peace initiative was a reasonable gambit: it is one of the few things countries in the region want that also aligns with U.S. interests. And it's certainly one of the only things ostensibly achievable by "smart power" alone. Many countries in the region argue that if only the United States would put a little effort and attention to the problem, if it would lean just a little on the Israelis over whom we have such enormous leverage, there could be justice for Palestinians, thus removing a major obstacle to public support for the United States throughout the region. Ambitious strategists in Washington take that even further -- envisioning a Middle East wherein the Arab states not only extend diplomatic recognition to Israel, but cooperate openly with Israel to counter Iran. It's an appealing vision, but runs aground on how very little each of the parties (including those pressing hardest for U.S. involvement) are willing to give to achieve those outcomes.

So here we are again, with Kerry left pleading that "the leaders have to lead and they have to be able to see a moment when it's there." The political heads of Israel and Palestine see a moment, but it's not the moment Kerry sees. More worryingly, the Obama administration cannot seem to grasp the fundamental contradiction in its approach to diplomacy. The problem with leading from behind is that it necessitates others leading from the front ... and if others were willing and able to lead, they wouldn't need United States involvement.

Perhaps Kerry will yet channel Palestinian President Mahmoud Abbas's inner Anwar Sadat and find Benjamin Netanyahu's inner Menachem Begin. But right now that has about the same odds as Warren Buffet's March Madness bracket bet. The smart money says that yet another push for Middle East peace will sink into the sands and Kerry will be left with the recriminations of all parties believing if only Washington had pushed others more, their preferred outcome could have been achieved. It will be a stinging defeat for the secretary, who alone in the Obama administration has argued for the peace process as a priority.

It should (but probably won't) occasion a reconsideration by the Obama White House of what diplomacy can achieve on its own. It should (but surely won't) occasion a reconsideration by the Obama White House of how their choices have diminished American standing in the world -- we are not more respected because they eschew a forceful role. Instead, as the Middle East peace negotiations illustrate, hesitance and unreliability causes other states to reposition themselves in ways that reduce our ability to affect them. Call it insulation from our indifference.

If the Middle East peace negotiations crumble -- much like negotiations to produce a unified opposition or alignment of U.S. and Russian interests in Syria, or negotiations to persuade Moscow to end its occupation of Crimea and quit its revanchist threats to any state that happens to have Russians among their population -- Kerry should pause and reconsider how he is approaching diplomacy, what he might do differently to produce better results. Here are five suggestions:

1.) Motion does not equal progress. Both Kerry and Secretary Hillary Clinton before him have operated on the "mileage plus" model of diplomacy, traveling constantly. Clinton even trumpeted it as a major achievement. There is advantage to showing up, but it is not the central element of a secretary's job nor the appropriate metric for determining effectiveness. Kerry should travel less, sending deputies and bringing leaders to Washington, tying his presence abroad to the concrete achievement of a diplomatic objective. The arrival of an American secretary of state should be a form of leverage to achieve diplomatic outcomes, not a routine part of the diplomatic process.

2.) Strengthen the institution. Most secretaries of state run the department from the seventh floor (the secretary's suite in Foggy Bottom), caring little about the foreign and civil service or the institutional weaknesses of the State Department. That absolutely should not be the case for an administration whose approach to the world is fundamentally diplomatic. The Obama administration is committed to reducing the role that military force plays in American strategy, but that cannot happen without a dramatic strengthening of the non-military means of national power. The Treasury Department has succeeded brilliantly in the past 10 years at developing new tools that can target sanctions on individuals, track terrorist money flows, and identify banks laundering money. The State Department is long overdue for just such a muscular effort to identify and develop new means of diplomatic leverage.

The State Department is also overdue for another Quadrennial Diplomacy and Development Review -- one that doesn't celebrate the process as its main achievement or recommend more senior positions for its organizational chart. Our diplomats deserve a secretary of state who will develop a vision for the organization that will inspire, orient, and involve them. They deserve investment in their professional education and development. They deserve a government that funds their activity as fulsomely as it does the military -- and one that then holds them as accountable for producing results. Kerry has involved himself in none of those things.

3.) Play team sports. Kerry and Secretary of Defense Chuck Hagel made a joint appearance at the Munich Security Conference in an attempt to persuade the world that America was not withdrawing from the world. They made a joint appearance before Congress in an attempt to persuade wary legislators that the administration had a policy on Syria. Kerry and Hagel should make this a habit. President Obama's foreign policy is suffering from the widespread perception that military force is not an option. Closer and more visible cooperation across the Potomac River would go some way to deflecting that perception. Having the secretary of state lead the development of truly integrated strategies -- policies that have diplomatic, economic, and military components working in tandem to support clear political objectives and identifiable end states -- would go even further.

4.) Prioritize. Kerry has done this pretty well: One can see his priorities from the allocation of his time. The question is whether those are the right priorities. It does seem odd that Afghanistan figures so little, especially with the election looming and Obama's exit strategy so dependent on that election producing a cooperative political order -- instead of the country going up in flames, as Iraq has. Given the behavior of both Israel and the Palestinians, a shift in effort is in order: What about shoring up states like Jordan that have been a force for good for a future without a peace agreement and that have borne the brunt of a bad Syria policy? Or come up with a policy for dealing with Gen. Sisi's Egypt? Closer to home, energy issues and political change in Mexico are creating new opportunities for North American integration -- an enormous strategic opportunity Washington has failed to take advantage of.

5.) Stop compartmentalizing. The Obama administration persists in believing that its choices on Iraq, Afghanistan, and Syria do not affect how allies and enemies alike see the United States. It is a parallel to their belief that the wars are ending, when in fact all that is ending is our participation in them. The war in Iraq is not over for Iraqis; the war in Afghanistan will not be over for Afghans or Pakistanis. The administration develops exclusive policies without considering how they are fundamentally interrelated. For example, the administration continues to believe that even after the stand-off in Crimea, Russia will continue to advance the president's pet project of cooperative nuclear non-proliferation, including U.S. involvement in securing nuclear materials in Russia and upholding the Iran sanctions effort. That is transparently wishful thinking and it clouds the ability to fireproof the most important U.S. policies. What is needed is a perspective of how our actions in one arena will ricochet into others.

Israel and Palestine once again foregoing the opportunity for a peace treaty is a great disappointment, but Kerry could profitably reflect on the opportunities it provides to focus his attention and strengthen America's hand for future rounds. It is a silver lining worth grasping, not least by the secretary of state who invested so much in trying to foster a new era of defenseless diplomacy.

Ed Johnson for FP


Moneyball and McCutcheon

Actually Mr. Lewis, it's not just Wall Street that's rigged. It's the American system.

This past Sunday on 60 Minutes, Michael Lewis, the Damon Runyon of modern Wall Street, looked into the camera and uttered the potent thesis of his latest book, Flash Boys. "The stock market," he said, "is rigged."

The tale he told was so appalling and compelling that it's no wonder the book is already in the upper ozone of Amazon's best-seller list. In short, he described how fat-cat Wall Street high-frequency traders had gamed the markets to give themselves a decisive split-second edge in making trades -- thus making the rest of us into chumps. They essentially found out what you wanted to buy and -- in the split second between your broker initiating the trade and the deal going through -- they'd step in front of you in line, buy what you wanted, jack up the price, and sell it straight back to you. It's called front-running and it's not legal ... unless you do it by exploiting inefficiencies in high-tech fiber optics and black box algorithms that regulators haven't caught up with yet.

What makes the story even more horrifying is that, at least to anyone who happens to read the financial pages every now and then, it shouldn't be the least bit surprising. We live in a new golden age of financial abuse in which old-fashioned scam artists have found new ways to get rich using technology and protect these ill-gotten assets with a nearly untouchable status amid America's political-financial oligarchy. Greed is good, say the new (very old) rules, but Wall Street has learned a few things since the days of Milken and Boesky: spread a few crumbs in front of the right members of your co-dependents in the political establishment, and you'll receive (in the same mail as your American Express Centurion card) your Washington, D.C.-approved get-out-of-jail-free card.

Just ponder the recent glorious past of our financial history. The financial community persuades Washington to get off its back by posting its top executives in top positions for decades. (It's actually more likely than not that if you ran Goldman Sachs you also had a top job in the U.S. government over the past couple decades.) Then, when the same execs who said they would self-regulate blew up their banks with mortgage-backed security scams, they called up Washington and said, "Please bail us out or the system will collapse, crushing the little guy." Then they got bailed out, propping their banks back up but somehow forgetting to help the little guy who was left holding the bag for mortgages Wall Street actively sold to him, no matter his credit. Then when the cry came to regulate, Wall Street pushed back so hard that today, thanks to inadequate reforms, there are more too-big-to-fail banks than there were back before the crisis that the too-big-to-fail banks caused.

But wait ... don't stop there. We also now have simultaneously occurring major scandals involving corruption in global FOREX markets, corruption in setting LIBOR rates, and this front-runner scandal. Oh, and the fines (or as Wall Street likes to call them, the cost of doing business) associated with the last round of scandals were so meager that they barely bit into the hyper-profitability of these firms. In fact, the big Wall Street CEOs who oversaw the crisis have actually not only been kept on but have gotten giant raises after the fines were imposed.

So, while I have already ordered Michael's book (he once briefly worked with me back in the days that dinosaurs -- read the BSDs of Salomon Brothers -- roamed the Earth so I feel OK using his first name), and with all respect to him and full admiration for his amazing ability to tell hugely important and complicated stories, I think he has it wrong. It's not just that the market is rigged. It's our entire system that's rigged.

If that was not clear to you before today, the Supreme Court may have actually done one useful thing with its otherwise atrocious decision to declare campaign finance limits unconstitutional. They may have made the craven, corrosive role of money in politics even clearer. One of the main working parts -- let's say, the crankshaft -- of this rigged system is the utterly corrupt relationship between the check-writers of Wall Street (and Las Vegas, Silicon Valley, and everywhere in between) and the check-takers of Washington, D.C. The operating assumption that has driven the court since the perverse and profoundly destructive Citizens United v. Federal Election Commission decision of early 2010 -- that somehow "money is speech" and is thus protected by the First Amendment -- is at work again in this latest decision, in the case of McCutcheon v. Federal Election Commission. As many have correctly noted, the problem with this idea is that, in practice, it means that people with more money have louder voices (more free speech to exercise) than people with less money. It is contra the intent and spirit not only of our constitution but of the entire rationale behind any democracy, much less the one that used to hold itself up as an example to the world.

But offering ourselves up as an example to the world has not been our strong suit for a while -- not since Iraq, not since Abu Ghraib, not since Guantánamo, not since serial violations of sovereignty of other nations by our drones and cyberwarriors, not since the NSA surveillance revelations of vast systemic violations of privacy at home and abroad (see, most recently, this week's revelations by Director of National Intelligence James Clapper). And the list goes on, from the failure to learn from or prosecute the perpetrators of the financial crisis of 2009, to a growing inequality which has now reached levels not seen since the last Gilded Age; from a failure to take care of minorities in inner cities, the majority of whom are not getting high school degrees, to our continuing inability to create good jobs for the people who need and want them. Add to that the indignity of Citizens United and, now, McCutcheon, and you have to have some pretty big balls to walk around the world lecturing allies and enemies on the virtues of our current version of the American system.

And if you hear the sound of buzzing emanating from within the Beltway today, that's because it's going to get worse before it gets better. The buzzing is not so much that of disapproval or of our otherwise inert Congress doing as it should and getting up off its haunches and actually passing meaningful campaign finance reform. No, it's the buzzing of consultants and bundlers, of the permanent money machines of the political parties, and of the secret, not-yet-actually-legal-but-active-as-hell bankrollers of the likely 2016 presidential candidates responding to the giant judicial KA-CHING that emanated from within the marble walls of our highest court today.

The next presidential election will inevitably become the most high-spending free-for-all in American electoral history. Forget Iowa. The only primary that matters now is who can court the most billionaires and centimillionaires that will choose which candidates can raise the $1.5 billion it will probably take to win the White House. (Sorry, ordinary millionaires not invited. Look at the inequality tables, by the way: Most benefits in recent years have not gone to the top 1 percent, they've gone to the top .01 percent. Coincidence? If you think so, I've got a long-shot candidate I'd like you to fund for president.)

In a practical sense, what Justice John Roberts and his right-wing gang did was make it far more likely that the winning candidates for each party will be the ones who play the best moneyball. That means the ones with the biggest cash crankshafts. And that means Hillary Clinton and Jeb Bush. That, in turn, means that it is more likely today than ever that, in addition to being America's first African-American president, Barack Obama is very likely to become the only American president between 1989 and 2021 (at least) who is not named Bush or Clinton.

So take that democracy fans. Here in this nation of 314 million people, it is more likely today than ever that our message to future generations is that there are only two families we think capable of producing our leaders. (And immediate families at that, not even extended families.) Now, let me be perfectly honest here. As it happens, of all the possible GOP candidates, I prefer Jeb Bush -- who I have met a couple times, watched in action, and found exceptionally impressive. He'd be a terrific president. And of all the candidates out there for president that have been mentioned, at this moment in time, I think Hillary is the one who would get my vote. (And that's for many reasons: not least of which is because in this rigged system, among those who have been shut out the longest are women and it's long overdue that we set that right.)

But it's all a bit ridiculous, right? Two families? It's not a reflection on the Bushes or the Clintons to say that the system is so skewed toward money and brand names, proven commodities, and fund-raising networks, that we've actually brewed up our own aristocracy in this country. Take that Vladimir. Between our money class and our political class, you and your oligarchs have nothing on us.

Clarification: The McCutcheon v. FEC ruling leaves in place limits in donations for individual candidates. Thus much of its benefit goes to political parties. However, joint fundraising PACs -- like 2012's Obama Victory Fund or Romney Victory fund -- that primarily benefit top of the ticket candidates but also help other candidates and party groups that support them, are likely to provide a way around this so that there are new flows to candidates and their leadership PACs. Further McCutcheon, in conjunction with Citizens United, sets a dangerous precedent about where future campaign finance rulings may go. Thus the biggest and best fundraisers have and are likely to gain further advantage and the biggest check-writers gain further influence.

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