Carrot and stick

President Barack Obama, followed by British Prime Minister Gordon Brown and French President Nicolas Sarkozy, arrives to make a statement on Irans nuclear facility, on September 25 at the G-20 Summit in Pittsburgh.-GERALD HERBERT/AP

IN September, the worlds crises came together on American shores. Climate change, financial turbulence and Iran nothing was left off the table. Then, to top it off, in early October, President Barack Obama won the Nobel Prize for Peace. It has been a blistering, bewildering month. The prize came the day after the eighth anniversary of the United States war in Afghanistan, whose future was being debated in the White House. It is unlikely that the President will reduce troop levels or find a way to end this conflict.

The United Nations General Assembly gathered at its magisterial home, where the issue of climate change made its way to the centre of things. All this was preparation for the U.N. Climate Change Conference to be held in Copenhagen in December. The G-8 countries wanted to put down a marker, demanding that India, China and Brazil make significant concessions as a prelude to what will be the 15th U.N. Conference of the Parties on climate change (the first was in Berlin in 1995).

Fander Falconi, Ecuadors Minister for Foreign Affairs, put the case of the developing nations quite plainly: the rich nations and over-consuming elite have done the most to destroy the climate, for that reason they must assume the costs of carbon emission reduction. He went further, into territory that neither India nor China nor Brazil ventured, that the G-8 should pay reparations that recognise the ecological debt, the historic responsibility for excess of emissions during several decades even when the warming effect was already detected.

Indias External Affairs Minister, S.M. Krishna, was more measured at a round table discussion, but he too pointed out: We cannot get away from the fundamental fact that unsustainable lifestyles and patterns of production and consumption in the developed world have caused climate change. This cannot continue. He did not use the term reparations, which is a red flag. But he did point out that developing countries must be supported financially, technologically, and with capacity-building resources so that they can cope with the immense challenges of adaption.

In the back rooms of the U.N. and in the salons of New York, the locomotives of the South (India, China, Brazil, South Africa) acknowledged that they would have to make some concessions or else the U.S. Senate would simply refuse to go along with whatever comes out of Copenhagen. Already the Indian government has agreed to quantify its efforts to mitigate climate change, a position that it was not willing to take as recently as June 2009.

From New York, a select group of states, the Group of 20, gathered in Pittsburgh to discuss the continued turmoil in the worlds economy. In the U.S., the unemployment rate is hovering around 10 per cent, with the total unemployed population in excess of 15 million.

The World Economic Outlook of the International Monetary Fund (IMF) came out with the projection that the recession is now over, with growth rates expected to rise to about 3 per cent. But any improvement relied on strong public policies across advanced and emerging economies that, together with measures deployed by the IMF at the international level, have allayed concerns about systematic financial collapse, supported demand, and all but eliminated fears of a global depression. These fears had contributed to the steepest drop in global activity and trade since World War II.

At Pittsburgh, which is a city whose population has dropped from 650,000 to 310,000 in the past five decades, the mood among the G-20 delegates was grim. They were not prepared to celebrate the end of the recession. Indeed, even the IMF had to admit to its fears, as complacency must be avoided. Despite these advances, the pace of recovery is expected to [be] slow and, for quite some time, insufficient to decrease unemployment.

The G-20, like the IMF, took credit for the overall health of the global economy. The carrot thrown to India and China was that the G-8 might support their quest for greater voting rights in the IMF. (We are committed to a shift in IMF quota share to dynamic emerging markets and developing countries of at least 5 per cent from over-represented countries to under-represented countries using the current quota formula as the basis to work from.) Much the same was to happen at the World Bank. What was asked of them was loyalty to the current international economic order. Welcome to the club, in other words.

As the G-20 meeting began to slumber along, the leaders of France, the United Kingdom and the U.S. took the stage. They announced that they had just presented the International Atomic Energy Agency (IAEA) with detailed evidence that Iran was building a covert uranium enrichment facility near the holy city of Qom. It later turned out that the U.S. intelligence community had known about this for a few years and, indeed, that Iran was already prepared to notify the IAEA about the plant. It also turned out that this site was not yet operational; it is a year away from going online. But the announcement came with all the intended effect. It mesmerised the hallways, where discussions about interest rates were compounded by fears of an imminent attack on Iran. President Barack Obama used measured language, but President Nicolas Sarkozy of France and Prime Minister Gordon Brown of the U.K. talked of more sanctions. Brown even used the ominous phrase, the international community has no choice today but to draw a line in the sand. In 1990, President George H.W. Bush used those same words, and in 2003 his son President George Bush and British Prime Minister Tony Blair used them to indicate imminent hostilities. Brown could not be unaware of the gravity of this phrase.

The announcement and the threats came at a curious time. The Obama administration had promised to de-escalate from the brinkmanship of George W. Bush and use negotiation as the method to calm things down between the U.S. and Iran. The fracas over the Iranian election provided Obama with the opportunity to call for a democratic regime change, but he refrained from using any such language. Instead, he called upon the regime to refrain from the use of violence against the very large number of protesters. Obama said that he was troubled by the violence and that he was moved by the protests. Nevertheless, it was for the Iranian authorities to deal with what he called the irregularities.

The U.S., he promised, would pursue a tough, direct dialogue between our two countries. That seemed to be the standard that would be followed by the State Department.

Even when Iran launched its Shahab-3 and Sejil-2 ballistic missiles, which are capable of reaching Israel and U.S. military targets, the Obama administrations response was measured. Everyone with an ounce of sense realised that this was posturing on the road to a significant meeting in Geneva a few days later.

Indeed, a week after Obamas announcement in Pittsburgh and three days after the missile tests, the parties concerned gathered in Geneva to go over Irans nuclear ambitions and programme. In fact, the U.S. representative, William Burns, and his Iranian counterpart, Saeed Jalili, held direct talks. The outcome was clear, that Iran would open the Qom facility to IAEA inspections and that it would ship a large part of its enriched uranium to Russia to be further enriched. The U.S. pledged to climb down from the language of sanctions.

This was a major step forward. Obama had to clarify, however, that the tough talk was not simply verbiage. Were not interested in talking for the sake of talking. If Iran does not take steps in the near future to live up to its obligations, then the United States will not continue to negotiate indefinitely, he said. Sanctions, in other words, or worse, are yet on the table. But Israel pointed out that it would, for the present, avoid a strike on Iranian soil.

Kenneth Pollack of the Brookings Institution does not believe that Irans comedown should be taken at face value. The Obama administration backed off from the Bush policy of extending the missile shield into eastern Europe, and therefore threatening Russia. In return, Russia put pressure on Iran to make what Pollack calls symbolic compromises with the U.S. At present, Pollack adds, Russia wields considerable influence in Teheran, and it may be for purposes of their own [that] the Russians want the Iranians to appear more reasonable so that the Russians can make the case to the U.S. that they are pressuring the Iranians as Washington desires.

Sanctions do not worry Iran, he points out, as much as its relationship with Russia. Indeed, Djavad Salehi-Isfahani, a scholar at the Wolfensohn Center for Development also at Brookings, points out that the Iranian economy is in distress not because of the current sanctions (which have been in place since 2007) but because of the redistributive policies pushed by President Mahmoud Ahmadinejad through the banks. These policies, Salehi-Isfahani points out, have produced a power bloc for Ahmadinejad that includes the conservatives and the economic underclass. It is unlikely that any additional sanctions will have much punitive impact on Ahmadinejads regime, but it will certainly hit the lower classes, who may rally around the government in greater numbers.

For the American liberal intelligentsia, there is no good policy for the U.S. apart from using Russia to lean on Teheran, which is exactly, it seems, what Obama has done. Talk of sanctions is simply bluster. Calamity seems averted once more.

At the U.N., Obama took the pledge for nuclear disarmament and non-proliferation. He, of course, did not mention that the U.S. not only holds the largest arsenal of nuclear weapons but its client in West Asia, Israel, is also a stealth nuclear power. He also neglected to mention that while the world economy suffered last year, the arms market thrived. For that market, the U.S. now supplies almost 70 per cent, or $37.8 billion worth, of weaponry.

One is reminded of President Eisenhowers farewell address, where he warned about the role of the military-industrial complex, where the tired general said, In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

Obama does not have the temperament of the military-industrial complex; neither does he command the will to change the bargain that holds the U.S. in its pre-eminent position. Turbulence in the economy and pollution in the atmosphere are genuine crises. As these are set aside, along comes a manufactured crisis, that of Iran.