By Ryan Walsh
As the tension between Iran, the United States, and Israel exponentially increases, one can only wonder, how long before war erupts? Presumably, Iran has been developing a means to create nuclear weapons, a feat that has not been accomplished by any radical Islamic nations to date. Needless to say, the power to destroy an entire city (and more) with one missile is a power that no single nation should possess. However, super power nations such as the U.S, Russia, and the United Kingdom have all developed nuclear weapons as a means to keep peace in the world. The threat of those missiles looms over every one of our enemies, and potentially holds catastrophic terror attacks at bay. Iran, despite that, challenges the authority of those nations by potentially developing said nuclear weapons. Would they use that power to keep peace? Doubtful. Iran has an overwhelming hatred for any Western, non-Muslim nation, fueled by their president, Mahmoud Ahmadinejad, and supreme leader, Ayatollah Ali Khamenei. But, would an attack on Iran’s nuclear facilities halt the development of weapons?
No, says The Washington Post. “Iran’s defense minister warned that an Israeli attack on Iran will lead to the collapse of the Jewish state, state-run television reported Saturday, in one of the strongest statements from Iran indicating it would punish Israel should it attack Iran’s nuclear facilities.” However, “Israeli officials say Israel must act by the summer if it wants to effectively halt Iran’s program because Tehran is moving more of its nuclear installations deep underground.”
As a close ally to Israel, the U.S would be asked to intervene in such a scenario. The question arises: is it worth it? In an already failing economy, do we have the resources, or the manpower, to launch another war against terror and tyranny? The answer, unfortunately, is no. We do not have the ability to safely spend billions of dollars on a war with an entire country.
Nonetheless, the recent bombings of Israeli Embassies in Tbilisi, Georgia (the country), and Delhi, India, prove that we must take action; says Mitchell D. Silber in the Wall Street Journal. “Iran’s next target could be on American soil. The bombing attempts of Embassy personnel in India and Georgia this week may well be the beginning of an Iranian campaign to retaliate for the West’s attempts to stop its nuclear program.”
It is vital that the U.S and Israel act with great haste. Iran has just mastered the entire cycle of Nuclear Fuel, which is but a step away from developing a bomb. Israel, especially, is in danger. “The Iranian government, through a website proxy, has laid out the legal and religious justification for the destruction of Israel and the slaughter of its people,” says Reza Kahili, an ex-CIA agent. Iran’s hatred for Israel, and its small size, make it the most likely target for invasion, or a nuclear strike, if Iran is allowed to develop nuclear weapons. Attempted terror attacks by Iran have already been discovered and destroyed by the CIA; one that could have killed hundreds of people in Washington D.C. It is evident that the U.S and Israeli military need to act with haste in order to stop the development of nuclear weapons by the Iranians, as the results could be utterly catastrophic.
By Ryan Walsh
In 2008, Iraq was only the 13th largest oil producer even though it holds the third largest proven petroleum reserves. Iraq’s energy sector faces a period of development ahead and the industry has not yet reached its pinnacle. This from a country where oil export revenues account for more than 75% of GDP, proving that energy infrastructure will be critical to Iraq’s future economic success.
Nonetheless, challenges abound concerning oil development. Though Iraq is rich in resources, its oil is concentrated in the Shiite-dominated and Kurdish-controlled areas. For instance, Southeastern Iraq, which holds 70 to 80 % of Iraq’s proven oil resources, is controlled mostly by Kurds. The near-constant risk of sectarian conflict is a difficulty that the government will need to overcome. This is particularly noteworthy because the government is has considerable clout over the industry; the Ministry of Oil maintains control over nearly all the oil and gas production infrastructure through three entities: the North Oil Company, the South Oil Company, and the Missan Oil Company.
Although the Ministry of Oil maintains control over oil fields, it has moved towards a system of awarding contracts, as an answer to international pressures. It has also formed bonds with its neighbors, with sharing agreements on oil fields with Kuwait and Iran. Iraq has also signed agreements with Russian, South Korean, and Malaysian companies to develop oil fields in the Bedra region, where production is expected to be 170,000 barrels per day for the next 20 years.
Iraq’s tumultuous past has certainly complicated its path going forward. For instance, contracts signed during Saddam Hussein’s government have to be reviewed or renewed, while a new legal framework for oil development is being established. Moreover, the Kurdistan Regional Government has created its own hydrocarbon laws for the oil fields in Northern Iraq. It is unclear how these laws will be resolved with national Iraqi laws once they are in place. Additionally, Iraq has land and maritime disputes with both Kuwait and Iran, which could hinder future cooperation on oil field development. There are also disputes over the rights to develop oil fields between these nations, which could escalate as new pipelines are discussed.
Looking forward, Iraq is looking to invest in its refineries, with a goal of increasing its refining capacity up to 1.5 million barrels per day from 600,000 barrels in 2017 compared to 2008. This ten-year strategic plan includes five new refineries as well as investment into its existing refineries, and $5 billion for investment in natural gas fields. Hence, from the economic and business side, Iraq’s oil industry has been well planned and organized. This will form the foundation of long-term growth in the energy sector and establish market stability through investment power.
In terms of the general Iraqi economy, improvement is expected in the future as key infrastructure continues to be built after the war. Though unemployment remains a serious problem – it was 17.6% at the end of 2007 – inflation has dropped and oil exports have risen. Rising oil prices have similarly buttressed this growth. This has been fueled by the rise in world oil demand, especially in developing countries. Continued support of high oil prices by OPEC will ensure a healthy economic future for Iraq. With more stability there, private sector investment has also increased. Nevertheless, violence still affects the oil and agriculture industries, and the ever-present threat of sectarian violence weighs down on the economic future. In a future of political and societal stability, though, economic growth is expected to be robust.
Indeed, the oil industry is becoming the foundation, powering economic growth. Oil-field contracts have been awarded to BP, ExxonMobil, China National Petroleum, and other foreign investors, bringing in billions of dollars of foreign cash. This brings along other foreign suppliers who vie for contracts to build infrastructure. The International Monetary Fund estimated 2010 economic growth at 7.3%. Foreign direct investment is expected to grow as the need for infrastructure increases. The central bank has been helpful, relying on the IMF to help stabilize the dinar, reducing inflation from 80% in 2006 to single digits. This has provided a predictable, stable environment for investment.
Cooperation with the United States government will provide a safety mechanism for Iraqi markets as well. Not counting limited security arrangements, the Strategic Framework Agreement provides economic engagement in various sectors, including health, education, science, and technology. American mediation has also helped repair business and political relations with Egypt and Saudi Arabia, paving the way for greater economic investment. The U.S. State Department has also hosted business forums in Iraq to provide opportunities for American corporations in Iraq. Thus, American involvement can provide a baseline level of stability while additionally offering higher levels of economic engagement.
Unfortunately, the Gulf Cooperation Council has offered little substantive engagement with Iraq. Qatar and Kuwait both have bilateral disputes while Oman possesses little capital to invest. Saudi Arabia, on the other hand, views Iraq only in terms of balancing against Iran, and as such rarely pushes for more direct economic relationships. Through this all, Iraq still needs foreign investment. Luckily, Iran and Iraq still have a strong trade relation – they have signed several Memoranda of Understanding to build their economic ties, which have resulted in nearly $10 billion in bilateral trade in 2010. Nevertheless, black market oil and agriculture have stifled greater growth and could pose bigger problems in the future. Similarly, Turkey, as Iraq’s largest trading partner, and the United Arab Emirates have helped drive reconstruction and investment initiatives.
The global recession and credit crisis has undoubtedly weakened Iraq’s economic positioning for the future. Over-reliance on oil exports means that as soon as oil prices tank, the national budget will collapse and the private sector will lose out on the investment that oil production brings. Moreover, the perception is that the Iraqi government has little vision and economic planning to overcome such an obstacle. The government is much larger than it was during Saddam, meaning it would be less flexible to change during a chaotic investment environment. This is especially true for the investment occurring in Iraq, which is also concentrated in housing and real estate. Investors worried by the global credit crunch will have little reason to continue investing in infrastructure projects if the global recession becomes direr.
However, a business-friendly regulatory framework and lessening concerns about political stability and security have combined to help Iraq draw in foreign capital. Its oil development plans going forward have provided a measure of stability, as it has averaged about 4.5% real growth over the past four years. The relatively well-educated population has also helped firms transitioning to Iraq. And though mistrust may exist towards the government, its National Development Plan includes more than $100 billion in infrastructure projects over the next four years. Assuming oil prices remain relatively constant, Iraq’s economic and energy future is expected to see stable growth and expansion.
1 Volkan Guner, “Source of Conflict and Life: Energy Future of Iraq,” Eurasia Critic (Eurasian Intelligence & Strategies), April 2010, http://www.eurasiacritic.com/articles/source-conflict-and-life-energy-future-iraq.
2 Elena McGovern, “Iraq’s New Reality: Finding its Role in the Middle East,” The Stimson Center and The Centre for International Governance Innovation, March 01, 2009, http://www.stimson.org/books-reports/iraqs-new-reality-finding-its-role-in-the-middle-east/
3 Ephraim Kam, “Iraq in Turmoil,” The Middle East Strategic Balance 2007-2008, The Institute for National Security Studies, 2008.
4 Stanley Reed and Nayla Razzouk, “Iraq’s Economy Wakes Up,” Bloomberg Businessweek, April 22, 2010, http://www.businessweek.com/magazine/content/10_18/b4176017884558.htm.
5 Elena McGovern, “Iraq’s New Reality: Finding its Role in the Middle East,” The Stimson Center and The Centre for International Governance Innovation, March 01, 2009, http://www.stimson.org/books-reports/iraqs-new-reality-finding-its-role-in-the-middle-east/
6 Matt Kennard, “American companies look to Iraq as US economy stalls,” The Comment Factory, August 10, 2011, http://www.thecommentfactory.com/american-companies-look-to-iraq-as-us-economy-stalls-5577/.
7 Aiyob Mawloodi, “The global credit crisis and the potential impact on Kurdistan’s economy,” The Kurdish Globe, August 20, 2011, http://www.kurdishglobe.net/display-article.html?id=6AD2FBC7F12F286CA27E112B4EECCD3F.
By Ryan Walsh
As any student of economics knows, a nation’s Gross Domestic Product is directly affected by the consumption and investment expenditures of its citizens. Given our present GDP of $14.6T, our national debt of $14.9T, and our federal budget deficit of $1.3T, the prospect of decreasing the US national debt is indeed daunting .
There are two means by which our government can accrue enough money to pay off our national debt: (i) it can cut its discretionary spending and use the money it saves as payment; or (ii) it can increase taxes and use the revenues towards payment. When the national debt exceeds the GDP by $0.3T as it does now, if the government absolutely must intervene in the economy, it must tread lightly to avoid causing a recession.
Because consumption and investment are directly affected not only by the amount of disposable income a business or citizen has, but also by consumer expectations of the economy, the future of the United States economy is, indeed, in trouble. The American people know that the debt must be paid off in some way or another, and unfortunately, many expect that the government will choose to increase future tax rates rather than cutting its own discretionary spending.
Given that prices of consumer goods have increased by nearly 68 percent since 1967, consumers already find it difficult to purchase food and other goods due to this drop in disposable income. Moreover, resource costs for businesses are very high due to the falling value of the dollar in currency markets, and because of union power and wage floors, the costs of employment are also very high. Because of our high inflation rate, consumers have been less inclined and less able to purchase large quantities of goods and services, and because of high production costs, producers have had to either supply less at higher prices or lay off workers in order to maintain price and supply levels.
And there’s the rub—— when our national debt exceeds our GDP and our government wishes to– or rather feels that it must— intervene, corporate and personal income tax rates will inevitably increase, consumer and investor confidence and propensities to spend will decrease, and the GDP will decrease, giving us little hope of closing the gap between the amount of money we owe and the amount of money we earn each year.
The best course of action would undoubtedly be to increase aggregate demand and aggregate supply by increasing households’ disposable income and lowering businesses’ costs of production. However, little can be done unless the federal government actually decides to slash its spending on superfluous special-interest programs. If the government were to decrease its spending, it would have a budget surplus which it could employ towards the reduction of our debt. Further, consumers and businesses would be more willing and able to spend more on goods and resources given a reduced anticipation of an increase in their taxes. If the GDP were to increase and the unemployment rate were to decrease as a result of such policies, the United States might find itself better able to pay off its debt.
By Ryan Walsh
From the point of view of a Republican voter, Mitt Romney seems to have it all. He is smart, intelligent, and has a history in both business and government. But, for seemingly the perfect presidential candidate, he has a few too many controversial beliefs. He has shown very liberal, and at times, hypocritical beliefs when asked about Obamacare, and was for both gay rights and legal abortion before he was against them. For these reasons, the highly controversial “Tea Party” does not consider him a true conservative.
“Gov. Mitt Romney was all smiles in 2006 as he was about to sign a law making his state the first in the nation to effectively guarantee universal health coverage”, notes Noam Levey, in the LA Times. He would go on to call this law a “landmark”, and “an achievement that comes once in a generation.” This is extremely conflicting with the beliefs he claims to have now, and this is what is angering the Tea Party so significantly. The official view of Mitt Romney, when questioned about Obamacare, is a strict repeal and replace promise. If he is elected, “On his first day of office, he will issue an executive order paving the way for waivers from Obamacare for all 50 states.” It is highly ironic that Romney claims his official position to be that of “repeal and replace”, while he passed a law in his state allowing for the same services, generally speaking. He also is for a tax reform, which would “empower individuals to purchase their own insurance.”
Thus, questions are being raised about his loyalty to his own party, and his beliefs.
“At least Herman Cain is true to his beliefs,” says Foxnews.com. “He is a strong supporter of individual healthcare, because he believed it saved his life when he had cancer.” With this being said, does this make Herman Cain the most forthright G.O.P candidate? Quite possibly. Herman Cain has held true to his very conservative beliefs and values, despite many allegations that he is not educated enough and does not have the experience required to lead this country into a new era of economic advancement, which we so desperately need. In fact, these allegations are completely false. It has been proven that a man with limited political experience can lead our country, an example being President Obama. Before being in the Senate for one year, President Obama was a protest organizer for the City of Chicago, and organized protests for local unions. Does this make him any more qualified than a CEO of a pizza franchise?
There are also many other Republican candidates picking up momentum as the primaries slowly approach. Michelle Bachmann, a Tea Party firebrand, has a good shot at winning over the far-right, or the “extremists”, as many liberals would call them. These “extreme” beliefs include eliminating excessive taxes, and abiding by the Constitution of the United States. Rick Perry has also shown to be a powerful candidate, backed by the fact that he was governor of the nation’s strongest economy.
All in all, the question arises; where does Romney stand? He is definitely a strong contender, but does he have the credentials, or the credibility to become president? There are many strong contenders in the 2012 Republican race, and to pigeonhole Romney as “The Probable” is ill judged. As the primaries approach, one can only sit back and watch as the pandemonium unfolds, because it is truly up for grabs.
1 Levey, Noam N. “Mitt Romney: Massachusetts Healthcare Reform a Double-edged Sword – Los Angeles Times.” Featured Articles From The Los Angeles Times. Los Angeles Times, 11 May 2011. Web. 25 Oct. 2011. .
2 “Cain: I’d Be Dead Under Obamacare – Herman Cain – Fox Nation.” Fox Nation – Hot Headlines, Opinions, and Video from around the Web. Fox News, 22 Sept. 2011. Web. 08 Nov. 2011. .
3 Romney, Mitt. “Policy | Mitt Romney for President.” Mitt Romney for President | Mitt Romney for President of the United States of America in 2012. Web. 08 Nov. 2011. .
4 “Ten Core Beliefs of the Modern Day Tea Party Movement.” Tea Party Movement Platform. The Tea Party Platform, 2011. Web. 08 Nov. 2011. .