Report

Forgotten Missions

Out of the headlines but not out of action, the U.S. military is still engaged in long-forgotten interventions.

Remember the nearly 300 schoolgirls kidnapped in April by Boko Haram? They're mostly still missing. The world's attention has moved on, but the U.S. military is still flying reconnaissance missions looking for them. It's also still searching for Joseph Kony, the murderous leader of the Lord's Resistance Army (LRA), a guerrilla group that first operated in Uganda but has since moved into a handful of other central African countries. Like the missing schoolgirls, Kony once inspired a viral social media campaign but lately has garnered little attention. Authorities think he's hiding in Kafia Kingi, a contested area along the Sudan-South Sudan border where U.S. and African Union troops have little access.

In this crisis-heavy summer, once high-priority missions are quickly falling off the public's -- and sometimes the national security establishment's -- radar. Even the biggest of U.S. military missions --Afghanistan, where roughly 29,000 U.S. troops are deployed -- seems to be on Washington's back burner compared with Ukraine and the threat of the Islamic State. But the commanders running these operations, as well as the personnel carrying them out, certainly haven't forgotten.

The Pentagon's top five "forgotten missions" follow.

The missing Nigerian schoolgirls:

In April, Boko Haram, an Islamist terrorist group, kidnapped nearly 300 teenage schoolgirls in Nigeria. Spurred to action by a global social media campaign with the hashtag "#BringBackOurGirls," Barack Obama's administration deployed manned and unmanned aircraft to help find the girls. It also dispatched advisors from the State and Defense departments as well as the FBI. In late May, 80 troops deployed to Chad to support and maintain unarmed Predator drones providing the mission with surveillance.

Approximately 60 girls have escaped, but the rest remain missing. Meanwhile, the United States flies manned and unmanned surveillance and reconnaissance flights 32 to 42 hours a week, according to the Pentagon. And the personnel sent to Chad are still there. U.S. Africa Command also has approximately five people on the State Department-led interagency coordination and assessment team at the U.S. Embassy in Abuja to assist the Nigerian government.

"While this effort is not an open-ended mission, there is also no specified end date," a spokesman for Africom told Foreign Policy.

The hunt for Joseph Kony:

In October 2011, President Obama sent a military team of 100 to help African forces track down Kony, who officials thought was hiding in the jungles of central Africa. This March, the president authorized more troops and the use of V-22 Osprey aircraft to aid the mission.

Today, the Obama administration is evaluating the mission, which is authorized through Oct. 25, and, as the administration routinely does, is considering whether to extend it. In the meantime, a new team of advisors is scheduled to replace the current team in September.

"The momentum for the mission within the administration is still high, at least for the moment," said Sasha Lezhnev, associate director for Congo, the Great Lakes, and the LRA at the Enough Project, an advocacy group focused on ending genocide and crimes against humanity.

Congress is also still on board. Before the U.S.-Africa Leaders Summit this month, 76 House members sent Obama a letter supporting the ongoing operation.

Kasper Agger, who also works for the Enough Project and is based in Kampala, Uganda, said that though Kony remains at large, the mission is still largely viewed as successful.

"If you just look at the number of attacks, abductions, and killings done by the LRA, they're down by 80 to 90 percent over the last three years," he said.

Destroying Syria's chemical weapons:

Almost a year after a sarin gas attack unleashed by the Syrian government killed more than 1,400 civilians outside Damascus, the Defense Department quietly announced last week that Syria's most dangerous chemicals had been neutralized. U.S. civilian and military specialists began destroying the stockpile in early July aboard the MV Cape Ray, a U.S. container ship specially outfitted for the mission. Now that the mission is complete, the ship and its crew will soon return to the United States. Meanwhile, several reports claim that the Syrian government may still be using chlorine gas against rebels in opposition areas.

NATO air policing:

Following Russia's invasion and annexation of Crimea in March, the United States contributed more F-15 fighter jets to NATO's Baltic air-policing mission, which began several years ago as a way to guard the airspace of NATO countries that don't have their own air-policing assets. In April, NATO tripled the number of aircraft involved from four to 12.

In the meantime, the United States has stepped up its activities elsewhere in the region. Also in March, the Pentagon announced that 12 F-16 fighter jets and about 300 U.S. troops were heading to Poland in response to the conflict between Russian-backed separatists and the Ukrainian government. In October, approximately 600 new soldiers will rotate through to take part in training exercises aimed at reassuring European allies.

Afghanistan:

After 13 years of war and a force that once numbered 101,000, approximately 29,000 U.S. troops are still in Afghanistan. Combat operations are set to end in December. Then the Obama administration plans to leave behind 9,800 troops through the end of 2015. But first Washington needs a signed bilateral security agreement from Afghanistan outlining the terms and conditions for maintaining a U.S. troop presence.

Outgoing President Hamid Karzai has refused to sign the negotiated agreement, but both presidential candidates -- Abdullah Abdullah and Ashraf Ghani -- have promised to. The problem is that an international audit of June's runoff election is ongoing, and until it's complete, no winner can be declared. The pressure to name a victor is growing. The United States wanted someone named president in time for next week's NATO summit. Meanwhile, Karzai says he's stepping down on Sept. 2 no matter what.

Sometimes being forgotten is not a bad thing:

These stories have fallen off the front page, but the military doesn't forget a mission just because it stops attracting headlines, said Richard Fontaine, the president of the Center for a New American Security. "These missions require real manpower and resources and often subject our fighting men and women to real risk."

And sometimes the lack of media attention signals a level of success, said retired Adm. James Stavridis, who's now dean at The Fletcher School at Tufts University. They could fall off the charts "because the media loses interest as the story line becomes routine -- or at least not disastrous in the day-to-day sense," he said, citing the NATO air-policing mission in Eastern Europe and the effort to destroy Syria's chemical weapons.

"The other reason is the simple press of the news cycle and the lack of new information to feed the 24-hour demand," Stavridis said. "I would put Joseph Kony and the Nigerian schoolgirls in this category." Still, there is an issue of limited capacity within the national security establishment, he said. "We have lots and lots of staff people working all the issues all the time, but a very limited number of high-level decision-makers."

The decline in the Defense Department's budget makes it even more important for officials in Washington to routinely review the department's ongoing missions, said Barry Pavel, director of the Brent Scowcroft Center on International Security at the Atlantic Council.

"These shouldn't be forgotten. When a higher priority pops up, it should not be off the table that we pull out of something and we hand it off to a regional ally or another partner," he said.

Following the disastrous Battle of Mogadishu, also known as "Black Hawk Down," in 1993, the Pentagon rethought how to manage smaller missions, deciding to name them small-scale contingencies.

Mogadishu taught the United States that its military and political leadership must ensure that all the relevant tracks of an operation -- humanitarian, diplomatic, and military -- are integrated and in sync, Pavel said.

In Somalia "those got out of whack because no one was watching them on a day-to-day basis," he added.


Pavel said the sheer number of these missions today reveals a United States that is reacting to events rather than getting out ahead of them.

"I think the lack of strategy is contributing to this phenomenon," Pavel said. "The world's a little less certain right now, and without a strategy to help policymakers make sense of what's going on in the world, we're going to be reactive."

Photo by MICHELE SIBILONI/AFP/Getty Images

Report

Argentine Default Bad Test Case for Sovereign Debt Negotiations

Messy bondholder fight could complicate future defaults.

Argentina's default three weeks ago, and the ongoing legal battle that led up to it, raises practical, theoretical, and moral questions about the ad hoc process that ensues when a country doesn't repay its creditors.

"We're at a moment where a lot of people have been stopped short and are asking: Is this really the way we want restructurings to go forward?" asked Mark Weidemaier, a sovereign-bond expert at the University of North Carolina at Chapel Hill.

The fight between President Cristina Fernández de Kirchner's government and hedge fund NML Capital, a subsidiary of U.S. billionaire Paul Singer's Elliott Management, climaxed in late July when negotiators couldn't reach a last-minute deal preventing the country from defaulting for the second time in 13 years. But what seemed like a coda was only a crescendo in the saga. Kirchner is now desperately trying to get The Hague to invalidate a 2012 New York court decision requiring the country to pay its holdout creditors.

As the case lumbers forward, setting records for contentiousness along the way, market watchers are pondering what it portends for other nations. And people following the fight closely still fiercely debate who is at fault: the politically motivated Argentine president acting against her country's interest or the greed-crazed hedge funds that will stop at nothing to get paid?

The responsibility debate highlights a more fundamental question of fairness underlying sovereign-debt negotiations: When should a country be able to walk away from its debts? After a bit of economic bad luck, a natural disaster, a war, a corrupt ruler? How much of the bitter medicine of setting a country straight after an economic crisis should be swallowed by investors and how much should be borne by the government itself and, ultimately, its citizens?

Argentina isn't the only country hounded by investors to repay old debts. Take Grenada. Taiwan's export credit agency sued the small island nation, making a similar argument to that of the hedge funds in Argentina's case. Grenada defaulted in March 2013 but its troubles began nearly a decade earlier. Twin hurricanes Ivan and Emily walloped the Caribbean nation in 2004 and 2005. The storms inflicted damage worth twice the country's GDP, devastating its two main moneymakers, tourism and nutmeg -- a crop that takes 13 years to regrow and reach peak harvest, according to the IMF.

Grenada has yet to reach an agreement with its creditors. Its bonds were trading at 50 percent of face value before the default and are now at 30 percent, said Stuart Culverhouse, chief economist with Exotix, a brokerage firm that focuses on frontier markets. Investors might count themselves lucky if they get 50 percent at this point. The IMF said last month that the country's debts were worth 110 percent of GDP at the end of last year. The government of Grenada did not respond to requests for comment.

There's no international court to decide when a country can walk away or law governing debt-repayment negotiations. If an individual or company goes broke in the United States, they can plead their case before bankruptcy court and ask for protection from their creditors. In some circumstances, they can effectively write off that debt. The process is much more complicated for a country, even though the stakes are higher because the borrowing decisions of a few leaders affect the entire population. The temptation for politicians to over-borrow, and leave future leaders to deal with the resulting belt-tightening, is seductive. And yet there's no external check on how much a government can borrow. A country is free to sell all the bonds investors will buy.

When a government decides that it can't make good on its debts, it must face those generous investors again -- and ask them to accept less than the country is contractually obligated to pay under the bonds' terms. The government suggests a figure, bondholders reject it, and haggling ensues, in some cases for years. That process is called "restructuring." After much negotiating back and forth, most investors usually take a new bond worth less than the original because it's better than nothing. Once a majority of bondholders sign onto the deal, the new bonds are issued.

The process is messy and political and every new default presents unforeseen complications. Now, some observers worry that the Argentine case has upended what scant process exists. On July 24, as Argentina spiraled toward default, the IMF's chief economist warned about the ramifications for the global financial system.

"There is a cost to the world in the sense that we need resolution systems which work well when countries are in trouble and one of the implications of this Argentina episode is that there is much more uncertainty as to how we'll be able to restructure debt for other countries in the future," IMF head economist Olivier Blanchard said in Mexico City.

Hedge fund NML's successes against Argentina in court threaten to further complicate an already disorganized process more akin to wrangling a price in a street bazaar than a legal proceeding. People who want to get paid sooner accept less. Some investors hold out and demand more. The government usually caves eventually and the deal is done.

The New York court that ruled in favor of the holdout creditors in the Argentine case also stopped the country from paying the 93 percent of bondholders who had already accepted less, known as "a haircut" in financial speak. That may dissuade investors in other cases from taking a haircut if a court can invalidate the deal later.

"The whole idea of a settlement was that you get certainty. Now you've lost that certainty," said Anna Gelpern, a Georgetown University law professor and expert on debt contracts.

Gelpern, the IMF, and others are worried that Judge Thomas Griesa's 2012 ruling that all bondholders must be paid simultaneously may have thrown a wrench in the works. Argentina couldn't keep paying the bondholders who'd accepted earlier deals, the judge ruled, without also paying the holdout creditors, NML Capital, in full. The case ended up in Griesa's court in the Southern District of New York because Argentina's bonds were written under U.S. law, a choice Argentina made to give investors more certainty that it wouldn't do exactly what it's now doing -- flouting the contract. Argentina is now trying to change that by getting bondholders to turn in their American bonds for ones governed by Argentine law, in order to circumvent Griesa's ruling, but bondholders are unlikely to accept that deal.

Whenever countries fall on hard times and renegotiate their debts, they essentially push aside the law and say to bondholders: "Look, we can't pay, so let's make a deal." Some legal experts say that the Argentine case sets a precedent that will make it easier for a few creditors to hold up the whole negotiating process.

"Going forward, any government that tries to restructure its debt now has to deal with the possibility that there will be this interminable fight with a creditor group," Gelpern said.

Now distressed-debt investors, so-called "vulture funds," may feel emboldened. The funds buy up cheap bonds when a country is already in financial straits; then they can go to court and use a favorable judgment to chase a country's assets around the world. NML Capital famously convinced a court in Ghana in 2012 to detain an Argentine navy ship. The frigate, called the Libertad, was eventually liberated, but Argentina got the message. President Kirchner started flying in a chartered plane out of concern that the presidential aircraft, Tango 01, would be seized by creditors.

Activists worry about far-reaching consequences if creditors were to deploy such tactics against much smaller countries with fewer resources to wage a legal fight like the Argentine government did. Eric LeCompte, head of the Jubilee USA Network, an organization promoting debt forgiveness for developing countries, says an international process to protect debtor countries is needed.

"Argentina is the first victim from the court's ruling," he said. "It looks like Grenada and the Democratic Republic of the Congo may be the next victims."

Hedge funds looking to collect on bank loans upwards of 20 years old are pursuing the Democratic Republic of the Congo, which was then called Zaire. A New York district court ruled that the DRC must pay Themis Capital and Des Moines Investments a total of $69 million -- $50 million of which is interest. Tara Lee, a lawyer with DLA Piper who is representing the DRC, said the case could be overturned on appeal.

DRC's legal fees are paid by the African Legal Support Facility, a fund created by the African Development Bank to help African countries defend themselves against "deep-pocketed international investors." A lack of local government capacity and poor legal representation when first drafting bond contracts often put African governments at a disadvantage, the bank argues.

Dennis Hranitzky, a lawyer with law firm Dechert, helped NML go after the Libertad in Ghana. Now, he represents the DRC's "vulture" investors. He says the more powerful Argentine case law was a recent Supreme Court ruling that got far less attention.

"If we ever find ourselves in a position where we have to enforce in the Congo case -- which we hope won't happen; we hope to reach a settlement -- I would expect the Supreme Court's discovery decision is likely to be quite helpful," Hranitzky said of the June decision.

Argentina's predicament prompted calls for a systematic way to settle these disputes. Economist Joseph E. Stiglitz argued in the New York Times that it is now time to consider a global system for debt restructuring. But in the past, governments have shied away from adopting a process run by an international arbiter because it would require them to yield important negotiations to a third party. On the other side of the argument, many traders and experts argue that a World Bank- or IMF-led solution would only muck things up further.

Many bond market veterans don't see the Argentine case as a game changer.

"Argentina is an anomaly," said Gabriel Sterne, head of global macro investor services at Oxford Economics Ltd. and a former IMF and Bank of England economist. "It would be wrong to think that Argentina has too much implication for sovereign debt and sovereign crises."

History seems to be on Sterne's side. Elena Duggar, a sovereign-debt expert with credit ratings firm Moody's, examined 34 instances since 1997 when nations renegotiated their debt. Her findings: The process took an average of seven months and most cases didn't end up in court.

"The case of Argentina was the only one where you had persistent litigation," Duggar said. Her analysis looked only at bond negotiations where loans were the underlying factor. Cases such as Grenada's and the DRC's were excluded.

And so far, bond buyers seem to agree. Despite all the uncertainty the IMF warned about in July, foreign investors are still piling into developing countries' bonds. The IMF estimates that foreign holdings of emerging-market debt have more than doubled in the past few years, expanding from $400 billion to $1 trillion worth of bonds since 2010. Investors are also venturing much further afield -- to countries like Ivory Coast to Pakistan -- in search of higher returns. Burma is even dusting off its financial records in hopes of issuing bonds on the international market for the first time.

"Since there have been loans to governments, political, economic -- and at times even military -- considerations have been more important than legal ones," said UNC law professor Weidemaier.

JUAN MABROMATA/AFP/Getty Images