Short Note - Afghanistan
The US assault [Operation Khanjar] against the Taliban in Helmand Province has begun. 4,000 US marines supported by 650 Afghans are involved in the largest US-led operation since Falluja in Iraq. The aim is to clear up pockets where NATO’s writ fails to run.
The insurgents appear to have adopted their standard technique of melting into the background as troops advance up the southern Helmand valley. The US plans to hold ground and then ‘drink lots of tea … eat lots of goat’ to win over the community.
The importance of Helmand, which the British have failed to subdue and which saw the death on July 2nd of the highest-ranking officer, alongside a trooper, yet to be lost in a roadside bombing, is that it presents a supply route between the Afghan Taliban and the increasingly bitter bush wars in Pakistan.
A subsidiary aim is to put the Afghan Army under fire and to test its mettle, engaging it in direct conflict with the Taliban and so try to bring to an end certain ambiguities about local attitudes to NATO.
The Afghans and the US are often at loggerheads. The US has had to back down over airpower-based policies that have led to many civilian deaths. The Afghans have, meanwhile, been defending their ‘field eradication’ and ‘bribery’ strategies for dealing with the narcotics trade.
The US is not pleased that these policies seem to be having no effect on the revenue streams available to the Taliban. We presume that such policies reduce the amount of the crop but that they also raise the price from scarcity and that monetary incentives drift, in part, back to the insurgents.
Meanwhile, the Police Chief of Kandahar and eight other officers were killed in clashes with US-trained Afghan Special Forces, suggesting that the local police were somewhat ambiguous in their loyalties.
Countering local ambiguity over its mission has become central to NATO strategy. It needs its own sea of support in which to swim. Very many Afghans are still standing back, assuming that one day the West will be defeated and that they will have to live with the consequences.
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Tim Pendry
in Afghanistan, British Army, Helmand, Kandahar, Muslim Lands, Narcotics, Pakistan, Taliban, US Foreign Policy
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Britain's Slump
Latest official figures indicate that the UK has had its worst slump in output since the 1950s – a GDP fall of 2.4% in Q1 2009 – with no clear sign that things have improved since then. Economists warn that full recovery will not take place for another two years.
Construction has been hardest hit (-13.2%), then manufacturing (-12.5%) while services fell by -3.1%. The contraction is now worse than that of the late 1980s and early-1990s - even than the worse still contractions of the 1970s and early 1980s.
Investment has plummeted – from 5.3% in Q3 2007 to -13.2% in Q1 2009 – although there is some belief that low inventories mean that industry must bounce back soon. This is a theoretical assessment that may take little account of the anxiety over risk that is now emerging in the country at large.
We are now seeing the investment strategies of Government beginning to collapse like a pack of cards as a result of adverse market conditions. The most politically contentious u-turn is the suspension of the Royal Mail part-privatisation with major questions left standing over the funding of the pension fund.
There is also the leaked memo showing that, once two ‘white elephant’ aircraft carriers have been completed in 2014, there is expected to be virtually no work for the shipyards involved. More disturbing to economic liberals is the re-nationalisation of the East Coast (London-Edinburgh) rail franchise.
National Express’s need to settle with the Government over the terms of its service on the East Coast rail line was a weekend story but July 1st saw the withdrawal of the franchise and threats to National Express’ other two franchises, bringing to an end its hopes of becoming a major rail operator.
The Left likes the re-nationalisation but it is perhaps not understanding what is happening here. Government claims that there will be no cost to the taxpayer as a going concern, but the real story here is that market conditions are undermining the whole public-private partnership model of New Labour.
Market conditions are making it harder to privatise assets on best terms. This suggests an ongoing drain on funds just to keep existing infrastructure (and jobs) going with little left for new investment. Already there are suggestions of many major flagship initiatives being shelved.
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Faltering Confidence In The Global Economy?
Analysts have been exploring various scenarios for the next stage of the global economic crisis – hoping for one that allows Governments to unwind their emergency measures. This very much depends on how the US and eurozone economies develop in the coming months.
Uncertainty is high so we expect no precipitate moves from the Federal Reserve or the ECB but central bankers clearly want to unwind their easing measures safely without reversing the tentative signs of a return to growth.
A Financial Times analysis on June 29th suggested four scenarios: a) a steady low inflation/low interest rate recovery; b) a faster recovery than expected; c) a fall back to deflation and continued recession; and d) stagflation because of soaring commodity prices (primarily, oil).
The consensus forecasts are for a return to 2007 levels of growth for the US (and rising) by mid-2010 and a return to some, if very low, growth for the eurozone around the same time. Consensus forecasts on inflation are 2% or below in 2010 but with the Eurozone lower than the US.
But this air of uncertainty in itself tells you to be wary of talk of premature recovery. Sure enough, July 2nd saw a bigger-than-expected fall in US employment that had a major knock-on effect on shares and commodity prices.
The US unemployment rate rose from 9.4% to 9.5%, the highest level since the early 1980s. Since the US is the motor for global recovery, this is serious news for the rest of the world. It will be particularly worrying for the British whose entire fiscal strategy is built on the deus ex machina of Obamanomics.
There has also been growing interest in the real effects of high public spending in the US. The Administration is letting it be known that it calculates that the US economy will see the boost from emergency spending within the next few months.
It is clearly nervous that political pressures might result in a tightening of monetary and fiscal policy before recovery is well established. It is tentatively suggesting that the economy is close to ‘stabilisation’ but this is rapidly becoming a matter of faith rather than certain knowledge.
Uncertainty is the enemy of business but we are living in a very uncertain period with conflicting signals coming from various parts of the global economy. We should expect volatility and further aftershocks from the initial crisis, with the situation becoming clarified by the early Autumn.
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