What are they fighting about in Basra?

war stories
Warlord vs. Warlord
What are they fighting about in Basra?
By Fred Kaplan
March 27, 2008
Slate.com

The wars in Iraq (the plural is no typo) are about to expand and possibly explode, so it might be useful to have some notion of what we're in for.

Here is President George W. Bush, speaking this morning in Dayton, Ohio, and revealing once again that he has no notion:

[A]s we speak, Iraqi security forces are waging a tough battle against militia fighters and criminals in Basra—many of whom have received arms and training and funding from Iran. … This offensive builds on the security gains of the surge and demonstrates to the Iraqi people that their government is committed to protecting them. … [T]he enemy will try to fill the TV screens with violence. But the ultimate result will be this: Terrorists and extremists in Iraq will know they have no place in a free and democratic society.

The reality, alas, is less stark. The fighting in Basra, which has spread to parts of Baghdad, is not a clash between good and evil or between a legitimate government and an outlaw insurgency. Rather, as Anthony Cordesman, military analyst for the Washington-based Center for Strategic and International Studies, writes, it is "a power struggle" between rival "Shiite party mafias" for control of the oil-rich south and other Shiite sections of the country.

Both sides in this struggle are essentially militias. Both sides have ties to Iran. And as for protecting "the Iraqi people," the side backed by Prime Minister Nouri al-Maliki (and by U.S. air power) has, ironically, less support—at least in many Shiite areas, including Basra—than the side that he (and we) are attacking.

In other words, as with most things about Iraq, it's a more complex case than Bush makes it out to be.

The two Shiite parties—the Islamic Supreme Council of Iraq and Muqtada Sadr's Mahdi army—have been bitter rivals since the early days of post-Saddam Iraq. And Maliki, from the beginning of his rule, has had delicate relations with both.

Sadr, who may be Iraq's most popular Shiite militant and who controls several seats in parliament, gave Maliki the crucial backing he needed to become prime minister. However, largely under U.S. pressure, Maliki has since backed away from Sadr, who has always fiercely opposed the occupation and whose militiamen have killed many American soldiers (until last year, when he declared a cease-fire).

Maliki has since struck a close alliance with ISCI, which has its own militia, the Badr Organization, and whose members also hold much sway within Iraq's official security forces (though more with the police than with the national army). This alliance has the blessing of U.S. officials, even though ISCI—which was originally called the Supreme Council for the Islamic Revolution in Iraq—has much deeper ties with Iran than Sadr does. (ISCI's leaders went into exile in Iran during the decades of Saddam's reign, while Sadr and his family stayed in Iraq—one reason for his popular support. As Ray Takeyh of the Council on Foreign Relations has noted, SICRI was created by Iran, and the Badr brigades were trained and supplied by Iran's Revolutionary Guard.)

Sadr's Mahdi army and ISCI's Badr Organization came to blows last August in the holy city of Karbala. This fighting—and his growing inability to control criminal elements within the Mahdi army—spurred Sadr to order a six-month moratorium on violence, which he renewed last month, against the wishes of some of his followers. (This moratorium is a major reason for the decline in casualties in Iraq, perhaps as significant as the U.S. troop surge and the Sunni Awakening.)

The fighting this week in Basra may be a prelude to the moratorium's collapse and, with it, the resumption of wide-scale sectarian violence—Shiite vs. Sunni and Shiite vs. Shiite.

Many Shiites believe—not unreasonably—that Maliki ordered the offensive in Basra now in order to destroy Sadr's base of support and thus keep his party from beating ISCI in the upcoming provincial elections.

Late last month, Iraq's three-man presidential council vetoed a bill calling for provincial elections, in large part because ISCI's leaders feared that Sadr's party would win in Basra. The Bush administration, which has (correctly) regarded provincial elections as key to Iraqi reconciliation, pressured Maliki to reverse his stance and let the bill go through. He did—at which point (was this just a coincidence?) planning began for the offensive that's raging now.

Maliki's official reason for the offensive, simply to bring order, has some plausibility, because Basra—Iraq's second-largest city, a major port, and a huge supplier of oil—is teetering on the edge of anarchy. At the start of the occupation, British forces were put in charge of Basra, but they viewed their operation as passive peacekeeping, not counterinsurgency, so militias moved in and gradually took the place over. By the time the British withdrew to the outskirts, the city was already taken over by fractious warlords.

The current fighting in Basra is a struggle for power and resources between those warlords. It's hard to say which faction is more alluring or less likely to fall under Iranian sway. Neither seems the sort of ally in freedom and democracy that our president conjures in his daydreams. (The lively blogger who calls himself Abu Muqawama speculates that Bush officials have embraced ISCI because, unlike Sadr, its leaders speak English.)

It's not a case of good vs. evil. It's just another crevice in the widening earthquake called Iraq.

Fred Kaplan is Slate's "War Stories" columnist and the author of Daydream Believers: How a Few Grand Ideas Wrecked American Power. He can be reached at war_stories@hotmail.com.

Article URL: http://www.slate.com/id/2187564/

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Citigroup 2007 Fees Led Banks

Citigroup '07 Fees Led Banks Heading for Worst Year Since '01
By Lisa Kassenaar
March 3rd, 2008 (Bloomberg)

Five days after UBS AG reported the biggest quarterly loss in banking history on Jan. 30, Rick Leaman packed his black wheeled garment bag, headed to New York's LaGuardia Airport from his Connecticut home and flew off to meet with clients.

``Even if you aren't doing deals, you have to be on the road,'' says Leaman, the Swiss bank's joint global head of investment banking. ``You still have to be in front of clients, generating ideas.''

Leaman and the bankers who work for him led UBS to a company-record $5.54 billion in fees from advising on mergers and acquisitions and underwriting securities in 2007, according to data compiled by Bloomberg. The firm leaped to No. 1 in the world in arranging equity sales.

Yet UBS's investment banking team had little chance to congratulate itself. The unit's contribution was dwarfed by the $18.4 billion UBS wrote down after a disastrous foray into the U.S. subprime mortgage lending market. UBS stock has plunged 34 percent this year to a 52-week low as of Feb. 29.

In trading rooms throughout the U.S. and Europe, the spectacle has been similar: soaring fees amid punishing losses. For the fourth year in a row, securities firms set a record for fees, according to Bloomberg's annual ranking of the 20 best- paid investment banks.

Led again by Citigroup Inc., the banks collected $86.9 billion from advising on M&A and underwriting stocks and bonds. That was a 22 percent increase over 2006's $71 billion and 64 percent more than in 2005.

`Cheap Credit'

``It was an extremely active year,'' says Franck Petitgas, Morgan Stanley's co-head of investment banking. ``Plentiful and cheap credit allowed quick and large transactions.''

The bill for all of that speed and daring started coming due in June, and financial institutions that dipped deepest into mortgage-related debt are still paying. Since the beginning of 2007, banks around the world have written down a total of $181 billion in assets with exposure to subprime mortgages and leveraged loans.

From August to December, the value of announced leveraged buyouts, which pay millions in advisory fees to the biggest financial firms and provide fuel for the debt and equity markets, had plunged 68 percent compared with the same period a year earlier.

``A year ago, everyone thought trees were going to grow to the moon,'' Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said in an interview on Jan. 27 at the World Economic Forum in Davos, Switzerland. ``Obviously, 2007 was a much tougher year than expected, and 2008 is probably going to be the same.''

Out-of-Control Risk

On today's chastened Wall Street, the watchword is risk management. Four of Dimon's colleagues at top investment banks lost their jobs because they let risk get out of hand. UBS CEO Peter Wuffli was the first to go, in July. Then Merrill Lynch & Co.'s Stan O'Neal retired and was replaced by New York Stock Exchange CEO John Thain. Shortly after joining Merrill in December, the former Goldman Sachs Group Inc. president put himself in charge of risk management.

In November, Citigroup CEO Charles Prince was replaced by Vikram Pandit, a former Morgan Stanley president. Pandit says he's considering selling off pieces of the bank, which has $2.18 trillion in assets.

At Bear Stearns Cos., CEO James ``Jimmy'' Cayne ousted Co- President Warren Spector and then, in January, was forced out himself, giving up his CEO job while remaining chairman. Bear Stearns, which ranked No. 19 in the Bloomberg 20 in 2006, fell off the 2007 list after a series of setbacks that in the third quarter saw the company post its steepest profit decline in more than a decade.

`Pockets of Strength'

Pandit and Thain, as well as competitors Lloyd Blankfein at Goldman Sachs, John Mack at Morgan Stanley and JPMorgan Chase's Dimon, will try to bolster fees in 2008 by focusing on traditional pockets of strength in battered markets, says Eric Weber, a managing director at New York-based Freeman & Co., a financial services consulting firm. Among them: restructuring faltering companies and investing in distressed debt, Weber says.

The banks' craving for ever higher fees helped lead them to disaster. They underwrote and invested in billions of dollars of collateralized debt obligations, or CDOs, packages of debt that bundle subprime mortgages, bonds and other loans. The securities, because they carried top ratings and higher yields, earned the banks bigger fees. When rising foreclosures gutted the value of the CDOs, the banks were forced to curtail other lending to hang on to capital.

Recession

Now the banks must struggle to drum up new business in the face of a U.S. economic downturn. The sinking housing market is sending the U.S. economy into recession, according to economists at Goldman Sachs. The Standard & Poor's 500 Index has tumbled 15 percent from its recent peak on Oct. 9.

And the Federal Reserve cut the overnight lending rate five times from September through mid-February, including a surprise 75-basis-point reduction on Jan. 20, in an effort to stimulate economic activity.

``We're all in 'stop, look and listen' mode to sort out 2008,'' UBS's Leaman, 45, says. He says he won't make projections for how his investment banking division will fare this year until the end of the first quarter. Then, he says, he'll have a clearer picture of whether a recession is under way and whether the $168 billion economic stimulus package passed by the U.S. Congress and signed by President George W. Bush in February will bolster the markets.

Pessimism for 2008

If recent history is any guide, Leaman and his peers could be in for a rough ride.

One gauge for how far fees may fall in 2008 is their drop in 2001 from '00, during the investment banking contraction triggered by the Internet bubble's pop. Nine of the top 10 banks in this year's Bloomberg 20 saw M&A fees decline at least 22 percent back in 2001, with Citigroup's fees falling 49 percent, according to Bloomberg data. Equity underwriting fees also declined in 2001 for eight of the top 10 firms, dropping 36 percent at Morgan Stanley and Credit Suisse Group.

This time around, bankers at Bank of America Corp., Lehman Brothers Holdings Inc. and JPMorgan Chase have all predicted that the overall value of M&A in 2008 is likely to fall by at least 20 percent from 2007. That means fees may take a similar tumble, says Roy Smith, a former Goldman Sachs partner who teaches finance at New York University. ``The market is lumbering through a long, painful liquidity situation,'' Smith says. ``Things are going to be moving very slowly for a while.''

Things were moving at warp speed at the start of 2007. In the first half, M&A volume trounced previous records. Companies were raising billions of dollars for ever larger deals.

KKR's Big Deals

In February, Kohlberg Kravis Roberts & Co. and TPG Inc. announced the biggest LBO in history, agreeing to pay $43 billion for Texas power producer TXU Corp. Then a group led by Edinburgh-based Royal Bank of Scotland Group Plc won a bidding war against London-based Barclays Plc and agreed to pay more than $100 billion for ABN Amro Holding NV, the biggest Dutch bank.

The first half of 2007 was Wall Street's busiest six months ever, with $2.4 trillion of announced M&A transactions.

H. Rodgin Cohen, chairman of Sullivan & Cromwell LLP, the No. 1 M&A legal adviser in 2007, according to Bloomberg data, describes the first seven months of 2007 as frantically busy.

``It was extraordinary,'' says Cohen, 63, who says he spent early 2007 pressing Sullivan & Cromwell's partner in charge of hiring for more staff to keep up. ``I had never seen anything with the breadth and depth of that time,'' he says. ``It's hard to imagine much of that coming back without a substantial easing of credit conditions.''

Citi No. 1 Again

Even in a year as eventful as 2007, the pecking order for Wall Street's best-paid investment banks didn't change. For the fourth year in a row, the top five were Citigroup, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Merrill Lynch, all based in New York.

Citigroup brought in $6.88 billion in fees from M&A and securities underwriting, according to Bloomberg data, 19 percent more than the $5.79 billion in 2006. Goldman Sachs was second in total investment banking fees with $6.66 billion, up 18 percent from 2006.

Morgan Stanley, which placed third, recorded an estimated $6.36 billion, up 22 percent from $5.22 billion, Bloomberg numbers show. Rounding out the top five, JPMorgan Chase garnered $6.23 billion, up 33 percent from a year earlier, and Merrill Lynch brought in $5.55 billion, up 23 percent from 2006.

Citigroup held on to No. 1 by reaping more from fixed income than rivals did. Total fees from bond underwriting rose 30 percent to $18.8 billion in the year. Of that, Citigroup captured $1.69 billion, 13 percent more than in 2006.

Fixed Income Gains

JPMorgan Chase was also lifted by fixed income, collecting 49 percent more from underwriting debt than a year earlier, or $1.18 billion. Merrill Lynch placed third in fixed income with $1.16 billion, a 41 percent boost from 2006. Merrill's gains came in part from arranging the most sales of preferred stock, a blend of equity and debt. The company underwrote $13.5 billion of those transactions, generating about $293 million in fees.

Fixed income's stellar season was driven by M&A, especially the surge in private equity buyouts. Leveraged buyouts are typically based on a small amount of cash paid upfront and a host of agreements to raise money from investors. The purchase of Dallas-based TXU, for instance, included debt issues totaling $11.3 billion.

Total M&A fees came in at $42.4 billion, up 21 percent from 2006. Goldman Sachs earned the most for M&A advice for a third consecutive year, Bloomberg data show. The firm brought in $3.93 billion in fees for the year, up 34 percent from 2006. Morgan Stanley was second, with $3.23 billion, a 24 percent jump from 2006, and Citigroup moved to third from fourth, with a 16 percent gain, to $2.9 billion.

Goldman M&A Champ

Goldman Sachs raked in billions by working on the eight biggest M&A deals of the year. The firm, together with Lehman Brothers and Rothschild Bank, represented ABN Amro as a bidding war raged for the Amsterdam-based bank for six months. Goldman Sachs also worked for Rome-based Enel SpA in its $53.3 billion takeover of Spanish power company Endesa SA, which was completed in partnership with Madrid-based Acciona SA. It helped KKR and TPG buy TXU and helped private equity giant Blackstone Group LP scoop up Hilton Hotels Corp.

Goldman Sachs completed a total of 354 deals worth $1.2 trillion, more than any other firm last year. The firm advised on more than 50 M&A agreements of more than $5 billion -- about 40 percent of all mergers and acquisitions announced of that size.

Morgan Stanley was the leading adviser on transactions involving European targets or acquirers. The firm advised on 162 such agreements, generating about $1.5 billion in M&A revenue. Among its deals was Toronto-based Thomson Corp.'s $18.2 billion acquisition of London-based Reuters Group Plc. (Bloomberg LP, the parent of Bloomberg News, competes with Reuters and Thomson in providing financial news and data.)

Private Equity Boom

Citigroup's M&A bankers advised on the four biggest private equity deals, totaling $140 billion. Along with Goldman Sachs, it represented KKR and TPG in their purchase of TXU, now called Energy Future Holdings Corp. The bank was there when a group led by the Ontario Teachers' Pension Plan paid $42.4 billion for Canadian telephone company BCE Inc.

The bank also worked for KKR when it acquired First Data Corp. for $27.5 billion and advised TPG and Goldman Sachs on their $27.1 billion purchase of Alltel Corp. Citigroup's fees for those four deals alone were an estimated $175 million, according to Bloomberg data.

In equity underwriting, UBS leapt to the top of the fee list from fifth place a year earlier. The Swiss bank earned $2.45 billion in fees from stock sales, up 50 percent. UBS worked on the $5.4 billion initial public offering in October of Criteria CaixaCorp, the investment company of Spain's biggest savings bank, and the $5.4 billion stock offering of Electricite de France SA.

Stock Sale Surge

JPMorgan Chase jumped to second in equities from seventh on the strength of equity-linked issues. Those are deals selling securities whose return is determined by the performance of a basket of stocks or a stock index. The firm brought in $2.2 billion in fees from equity underwriting, up 69 percent from $1.3 billion in 2006.

Third place in fees from equity deals went to Citigroup, with $2.16 billion, up 20 percent from $1.8 billion a year earlier. Goldman slipped from first to sixth in fees for arranging stock deals. The firm's take in that area fell 7.3 percent to $1.91 billion from $2.06 billion, according to Bloomberg data.

Fees Less Important

Even when setting records, traditional investment banking fees typically represent less than 20 percent of revenue for the biggest financial firms. At Citigroup, with its huge consumer bank and credit card operation, M&A advice and underwriting accounted for about 8 percent of the bank's $81.7 billion in revenue in 2007.

At Goldman Sachs, whose $11.6 billion in 2007 net income made it the most profitable firm in Wall Street history, investment banking accounted for about 14.5 percent of its $46 billion in revenue.

Those figures understate investment banking's significance to these firms, NYU's Smith says. ``Investment banking has been a bridge to other business,'' he says. It burnishes long-term client relationships, he says, and has provided a steady, growing source of income to the firms since 2003.

For 2008, banks see lucrative opportunities in cleaning up their own tattered industry. As of mid-March, financial companies were among the most active customers in the capital markets. Merrill Lynch generated $205 million in fees, or 18 percent of its total bond fees, from its own deals. About 18 percent of Citigroup's bond deals were to raise capital for itself. ``The financial sector is in capital repair mode,'' Morgan Stanley's Petitgas says.

Microsoft-Yahoo

There's still money to be made in the M&A market -- as Microsoft Corp. made clear with its $44 billion hostile bid to buy Internet pioneer Yahoo! Inc. in February. That same month, Melbourne-based BHP Billiton Ltd., the world's largest mining company, upped its unfriendly bid for London-based Rio Tinto Group Plc, a producer of iron ore, copper, aluminum and energy, to $147 billion from $100 billion.

In January, Chicago-based CME Group Inc., which operates the world's largest futures market, announced it had had discussions about a merger with New York-based Nymex Holdings Inc., owner of the biggest energy market, that would value Nymex at about $11 billion.

Petitgas, whose bank is advising Microsoft on its bid for Yahoo, expects M&A activity to remain robust in 2008. Acquirers, though, may have a harder time financing their takeovers. ``Despite tighter credit conditions, big-event financing is still available,'' Petitgas says.

Looking Overseas

The big banks are also courting more non-U.S. clients and offering advice on crossborder mergers, Freeman's Weber says. Investment banking was more international than ever in 2007. About $31 billion, or 36 percent, of total investment banking fees were from Europe, Bloomberg data show, roughly equal to the $32.8 billion, or 39 percent, in U.S. deals.

M&A transactions in China and Hong Kong increased 38 percent in the year, contributing to $12.6 billion of fees from Asia.

Investment bankers might also find gold in the sovereign wealth funds that the banks have called on to shore up their balance sheets. The funds are government pools of capital accumulated from the sale of oil, gas and, in the case of Asia, consumer goods, to the U.S.

Citigroup collected $7.7 billion early in 2008 from a group led by the Kuwait Investment Authority, $6.8 billion from Government of Singapore Investment Corp. and $7.5 billion from the Abu Dhabi Investment Authority. Merrill Lynch took in more than $10 billion from Korean Investment Corp., Singapore's Temasek Holdings Pte. and Kuwait.

Blinkered Wall Street

The hard times that hit the banking industry could have been forecast as early as February 2007, when late payments on U.S. bank mortgages jumped to their highest level in four years, says Steve Bernard, head of merger analysis at Robert W. Baird & Co. in Chicago. He says Wall Street was blinded by its own euphoria over the flow of deals.

``What started out as a minor concern morphed into a major concern for the entire economy,'' he says. ``When there was speculation about a $100 billion deal, we should have said, 'Wow, things are looking a little excessive.'''

For the rest of this year, Bernard says, many CEOs won't be looking for strategic investments unless the stock market gathers strength and they're confident the economy is improving. Many corporate acquisitions are partially paid for with stock, a currency that's lost some of its heft since August.

Profit, Stock Swoon

``The outlook for sales affects CEOs' level of confidence,'' Bernard says. ``They don't want to buy something when their profits are falling, and now they have a less valuable currency, too.''

For UBS's Leaman, the company's role as the leading equity underwriter may provide a cushion in a rough year. Selling stock will be a better prospect for banks than advising on M&A, if the last economic downturn is any guide.

``It will still take a lot of time to clean up what happened,'' Leaman says. ``My guess is that I will be on a plane a fair amount this year.''

The Chicken Doves

The Chicken Doves
Elected to end the war, Democrats have surrendered to Bush on Iraq and betrayed the peace movement for their own political ends
MATT TAIBBI

issue: Feb 21, 2008
Rolling Stone

Quietly, while Hillary Clinton and Barack Obama have been inspiring Democrats everywhere with their rolling bitchfest, congressional superduo Harry Reid and Nancy Pelosi have completed one of the most awesome political collapses since Neville Chamberlain. At long last, the Democratic leaders of Congress have publicly surrendered on the Iraq War, just one year after being swept into power with a firm mandate to end it.

Solidifying his reputation as one of the biggest pussies in U.S. political history, Reid explained his decision to refocus his party's energies on topics other than ending the war by saying he just couldn't fit Iraq into his busy schedule. "We have the presidential election," Reid said recently. "Our time is really squeezed."

There was much public shedding of tears among the Democratic leadership, as Reid, Pelosi and other congressional heavyweights expressed deep sadness that their valiant charge up the hill of change had been thwarted by circumstances beyond their control — that, as much as they would love to continue trying to end the catastrophic Iraq deal, they would now have to wait until, oh, 2009 to try again. "We'll have a new president," said Pelosi. "And I do think at that time we'll take a fresh look at it."

Pelosi seemed especially broken up about having to surrender on Iraq, sounding like an NFL coach in a postgame presser, trying with a straight face to explain why he punted on first-and-goal. "We just didn't have any plays we liked down there," said the coach of the 0-15 Dems. "Sometimes you just have to play the field-position game...."

In reality, though, Pelosi and the Democrats were actually engaged in some serious point-shaving. Working behind the scenes, the Democrats have systematically taken over the anti-war movement, packing the nation's leading group with party consultants more interested in attacking the GOP than ending the war. "Our focus is on the Republicans," one Democratic apparatchik in charge of the anti-war coalition declared. "How can we juice up attacks on them?"

The story of how the Democrats finally betrayed the voters who handed them both houses of Congress a year ago is a depressing preview of what's to come if they win the White House. And if we don't pay attention to this sorry tale now, while there's still time to change our minds about whom to nominate, we might be stuck with this same bunch of spineless creeps for four more years. With no one but ourselves to blame.

The controversy over the Democratic "strategy" to end the war basically comes down to whom you believe. According to the Reid-Pelosi version of history, the Democrats tried hard to force President Bush's hand by repeatedly attempting to tie funding for the war to a scheduled withdrawal. Last spring they tried to get him to eat a timeline and failed to get the votes to override a presidential veto. Then they retreated and gave Bush his money, with the aim of trying again after the summer to convince a sufficient number of Republicans to cross the aisle in support of a timeline.

But in September, Gen. David Petraeus reported that Bush's "surge" in Iraq was working, giving Republicans who might otherwise have flipped sufficient cover to continue supporting the war. The Democrats had no choice, the legend goes, but to wait until 2009, in the hopes that things would be different under a Democratic president.

Democrats insist that the reason they can't cut off the money for the war, despite their majority in both houses, is purely political. "George Bush would be on TV every five minutes saying that the Democrats betrayed the troops," says Sen. Bernie Sanders of Vermont. Then he glumly adds another reason. "Also, it just wasn't going to happen."

Why it "just wasn't going to happen" is the controversy. In and around the halls of Congress, the notion that the Democrats made a sincere effort to end the war meets with, at best, derisive laughter. Though few congressional aides would think of saying so on the record, in private many dismiss their party's lame anti-war effort as an absurd dog-and-pony show, a calculated attempt to score political points without ever being serious about bringing the troops home.

"Yeah, the amount of expletives that flew in our office alone was unbelievable," says an aide to one staunchly anti-war House member. "It was all about the public show. Reid and Pelosi would say they were taking this tough stand against Bush, but if you actually looked at what they were sending to a vote, it was like Swiss cheese. Full of holes."

In the House, some seventy Democrats joined the Out of Iraq caucus and repeatedly butted heads with Reid and Pelosi, arguing passionately for tougher measures to end the war. The fight left some caucus members bitter about the party's failure. Rep. Barbara Lee of California was one of the first to submit an amendment to cut off funding unless it was tied to an immediate withdrawal. "I couldn't even get it through the Rules Committee in the spring," Lee says.

Rep. Lynn Woolsey, a fellow caucus member, says Democrats should have refused from the beginning to approve any funding that wasn't tied to a withdrawal. "If we'd been bold the minute we got control of the House — and that's why we got the majority, because the people of this country wanted us out of Iraq — if we'd been bold, even if we lost the votes, we would have gained our voice."

An honest attempt to end the war, say Democrats like Woolsey and Lee, would have involved forcing Bush to execute his veto and allowing the Republicans to filibuster all they wanted. Force a showdown, in other words, and use any means necessary to get the bloodshed ended.

"Can you imagine Tom DeLay and Denny Hastert taking no for an answer the way Reid and Pelosi did on Iraq?" asks the House aide in the expletive-filled office. "They'd find a way to get the votes. They'd get it done somehow."

But any suggestion that the Democrats had an obligation to fight this good fight infuriates the bund of hedging careerists in charge of the party. In fact, nothing sums up the current Democratic leadership better than its vitriolic criticisms of those recalcitrant party members who insist on interpreting their 2006 mandate as a command to actually end the war. Rep. David Obey, chair of the House Appropriations Committee and a key Pelosi-Reid ally, lambasted anti-war Democrats who "didn't want to get specks on those white robes of theirs." Obey even berated a soldier's mother who begged him to cut off funds for the war, accusing her and her friends of "smoking something illegal."

Rather than use the vast power they had to end the war, Democrats devoted their energy to making sure that "anti-war activism" became synonymous with "electing Democrats." Capitalizing on America's desire to end the war, they hijacked the anti-war movement itself, filling the ranks of peace groups with loyal party hacks. Anti-war organizations essentially became a political tool for the Democrats — one operated from inside the Beltway and devoted primarily to targeting Republicans.

This supposedly grass-roots "anti-war coalition" met regularly on K Street, the very capital of top-down Beltway politics. At the forefront of the groups are Thomas Matzzie and Brad Woodhouse of Americans Against the Escalation in Iraq, the leader of the anti-war lobby. Along with other K Street crusaders, the two have received iconic treatment from The Washington Post and The New York Times, both of which depicted the anti-war warriors as young idealist-progressives in shirtsleeves, riding a mirthful spirit into political combat — changing the world is fun!

But what exactly are these young idealists campaigning for? At its most recent meeting, the group eerily echoed the Reid-Pelosi "squeezed for time" mantra: Retreat from any attempt to end the war and focus on electing Democrats. "There was a lot of agreement that we can draw distinctions between anti-war Democrats and pro-war Republicans," a spokeswoman for Americans Against the Escalation in Iraq announced.

What the Post and the Times failed to note is that much of the anti-war group's leadership hails from a consulting firm called Hildebrand Tewes — whose partners, Steve Hildebrand and Paul Tewes, served as staffers for the Democratic Senatorial Campaign Committee (DSCC). In addition, these anti-war leaders continue to consult for many of the same U.S. senators whom they need to pressure in order to end the war. This is the kind of conflict of interest that would normally be an embarrassment in the activist community.

Worst of all is the case of Woodhouse, who came to Hildebrand Tewes after years of working as the chief mouthpiece for the DSCC, where he campaigned actively to re-elect Democratic senators who supported the Iraq War in the first place. Anyone bothering to look — and clearly the Post and the Times did not before penning their ardent bios of Woodhouse — would have found the youthful idealist bragging to newspapers before the Iraq invasion about the pro-war credentials of North Carolina candidate Erskine Bowles. "No one has been stronger in this race in supporting President Bush in the War on Terror and his efforts to effect a regime change in Iraq," boasted the future "anti-war" activist Woodhouse.

With guys like this in charge of the anti-war movement, much of what has passed for peace activism in the past year was little more than a thinly veiled scheme to use popular discontent over the war to unseat vulnerable Republicans up for re-election in 2008. David Sirota, a former congressional staffer whose new book, The Uprising, excoriates the Democrats for their failure to end the war, expresses disgust at the strategy of targeting only Republicans. "The whole idea is based on this insane fiction that there is no such thing as a pro-war Democrat," he says. "Their strategy allows Democrats to take credit for being against the war without doing anything to stop it. It's crazy."

Justin Raimondo, the uncompromising editorial director of Antiwar.com, regrets contributing twenty dollars to Americans Against the Escalation in Iraq. "Not only did they use it to target Republicans," he says, "they went after the ones who were on the fence about Iraq." The most notorious case involved Lincoln Chafee, a moderate from Rhode Island who lost his Senate seat in 2006. Since then, Chafee has taken shots at Democrats like Reid, Hillary Clinton and Chuck Schumer, all of whom campaigned against him despite having voted for the war themselves.

"Look, I understand partisan politics," says Chafee, who now concedes that voters were correct to punish him for his war vote. "I just find it amusing that those who helped get us into this mess now say we need to change the Senate — because we're in a mess."

The really tragic thing about the Democratic surrender on Iraq is that it's now all but guaranteed that the war will be off the table during the presidential campaign. Once again — it happened in 2002, 2004 and 2006 — the Democrats have essentially decided to rely on the voters to give them credit for being anti-war, despite the fact that, for all the noise they've made to the contrary, in the end they've done nothing but vote for war and cough up every dime they've been asked to give, every step of the way.

Even beyond the war, the Democrats have repeatedly gone limp-dick every time the Bush administration so much as raises its voice. Most recently, twelve Democrats crossed the aisle to grant immunity to phone companies who participated in Bush's notorious wiretapping program. Before that, Democrats caved in and confirmed Mike Mukasey as attorney general after he kept his middle finger extended and refused to condemn waterboarding as torture. Democrats fattened by Wall Street also got cold feet about upsetting the country's gazillionaires, refusing to close a tax loophole that rewarded hedge-fund managers with a tax rate less than half that paid by ordinary citizens.

But the war is where they showed their real mettle. Before the 2006 elections, Democrats told us we could expect more specifics on their war plans after Election Day. Nearly two years have passed since then, and now they are once again telling us to wait until after an election to see real action to stop the war. In the meantime, of course, we're to remember that they're the good guys, the Republicans are the real enemy, and, well, go Hillary! Semper fi! Yay, team!

How much of this bullshit are we going to take? How long are we supposed to give the Reids and Pelosis and Hillarys of the world credit for wanting, deep down in their moldy hearts, to do the right thing?

Look, fuck your hearts, OK? Just get it done. Because if you don't, sooner or later this con is going to run dry. It may not be in '08, but it'll be soon. Even Americans can't be fooled forever.

Surge to Nowhere

Surge to Nowhere
Don't buy the hawks' hype. The war may be off the front pages, but Iraq is broken beyond repair, and we still own it.

By Andrew J. Bacevich
January 20, 2008
WashingtonPost.com

As the fifth anniversary of Operation Iraqi Freedom nears, the fabulists are again trying to weave their own version of the war. The latest myth is that the "surge" is working.

In President Bush's pithy formulation, the United States is now "kicking ass" in Iraq. The gallant Gen. David Petraeus, having been given the right tools, has performed miracles, redeeming a situation that once appeared hopeless. Sen. John McCain has gone so far as to declare that "we are winning in Iraq." While few others express themselves quite so categorically, McCain's remark captures the essence of the emerging story line: Events have (yet again) reached a turning point. There, at the far end of the tunnel, light flickers. Despite the hand-wringing of the defeatists and naysayers, victory beckons.

From the hallowed halls of the American Enterprise Institute waft facile assurances that all will come out well. AEI's Reuel Marc Gerecht assures us that the moment to acknowledge "democracy's success in Iraq" has arrived. To his colleague Michael Ledeen, the explanation for the turnaround couldn't be clearer: "We were the stronger horse, and the Iraqis recognized it." In an essay entitled "Mission Accomplished" that is being touted by the AEI crowd, Bartle Bull, the foreign editor of the British magazine Prospect, instructs us that "Iraq's biggest questions have been resolved." Violence there "has ceased being political." As a result, whatever mayhem still lingers is "no longer nearly as important as it was." Meanwhile, Frederick W. Kagan, an AEI resident scholar and the arch-advocate of the surge, announces that the "credibility of the prophets of doom" has reached "a low ebb."

Presumably Kagan and his comrades would have us believe that recent events vindicate the prophets who in 2002-03 were promoting preventive war as a key instrument of U.S. policy. By shifting the conversation to tactics, they seek to divert attention from flagrant failures of basic strategy. Yet what exactly has the surge wrought? In substantive terms, the answer is: not much.

As the violence in Baghdad and Anbar province abates, the political and economic dysfunction enveloping Iraq has become all the more apparent. The recent agreement to rehabilitate some former Baathists notwithstand ing, signs of lasting Sunni-Shiite reconciliation are scant. The United States has acquired a ramshackle, ungovernable and unresponsive dependency that is incapable of securing its own borders or managing its own affairs. More than three years after then-national security adviser Condoleezza Rice handed President Bush a note announcing that "Iraq is sovereign," that sovereignty remains a fiction.

A nation-building project launched in the confident expectation that the United States would repeat in Iraq the successes it had achieved in Germany and Japan after 1945 instead compares unfavorably with the U.S. response to Hurricane Katrina. Even today, Iraqi electrical generation meets barely half the daily national requirements. Baghdad households now receive power an average of 12 hours each day -- six hours fewer than when Saddam Hussein ruled. Oil production still has not returned to pre-invasion levels. Reports of widespread fraud, waste and sheer ineptitude in the administration of U.S. aid have become so commonplace that they barely last a news cycle. (Recall, for example, the 110,000 AK-47s, 80,000 pistols, 135,000 items of body armor and 115,000 helmets intended for Iraqi security forces that, according to the Government Accountability Office, the Pentagon cannot account for.) U.S. officials repeatedly complain, to little avail, about the paralyzing squabbling inside the Iraqi parliament and the rampant corruption within Iraqi ministries. If a primary function of government is to provide services, then the government of Iraq can hardly be said to exist.

Moreover, recent evidence suggests that the United States is tacitly abandoning its efforts to create a truly functional government in Baghdad. By offering arms and bribes to Sunni insurgents -- an initiative that has been far more important to the temporary reduction in the level of violence than the influx of additional American troops -- U.S. forces have affirmed the fundamental irrelevance of the political apparatus bunkered inside the Green Zone.

Rather than fostering political reconciliation, accommodating Sunni tribal leaders ratifies the ethnic cleansing that resulted from the civil war touched off by the February 2006 bombing of the Golden Mosque in Samarra, a Shiite shrine. That conflict has shredded the fragile connective tissue linking the various elements of Iraqi society; the deals being cut with insurgent factions serve only to ratify that dismal outcome. First Sgt. Richard Meiers of the Army's 3rd Infantry Division got it exactly right: "We're paying them not to blow us up. It looks good right now, but what happens when the money stops?"

In short, the surge has done nothing to overturn former secretary of state Colin Powell's now-famous "Pottery Barn" rule: Iraq is irretrievably broken, and we own it. To say that any amount of "kicking ass" will make Iraq whole once again is pure fantasy. The U.S. dilemma remains unchanged: continue to pour lives and money into Iraq with no end in sight, or cut our losses and deal with the consequences of failure.

In only one respect has the surge achieved undeniable success: It has ensured that U.S. troops won't be coming home anytime soon. This was one of the main points of the exercise in the first place. As AEI military analyst Thomas Donnelly has acknowledged with admirable candor, "part of the purpose of the surge was to redefine the Washington narrative," thereby deflecting calls for a complete withdrawal of U.S. combat forces. Hawks who had pooh-poohed the risks of invasion now portrayed the risks of withdrawal as too awful to contemplate. But a prerequisite to perpetuating the war -- and leaving it to the next president -- was to get Iraq off the front pages and out of the nightly news. At least in this context, the surge qualifies as a masterstroke. From his new perch as a New York Times columnist, William Kristol has worried that feckless politicians just might "snatch defeat out of the jaws of victory." Not to worry: The "victory" gained in recent months all but guarantees that the United States will remain caught in the jaws of Iraq for the foreseeable future.

Such success comes at a cost. U.S. casualties in Iraq have recently declined. Yet since Petraeus famously testified before Congress last September, Iraqi insurgents have still managed to kill more than 100 Americans. Meanwhile, to fund the war, the Pentagon is burning through somewhere between $2 billion and $3 billion per week. Given that further changes in U.S. policy are unlikely between now and the time that the next administration can take office and get its bearings, the lavish expenditure of American lives and treasure is almost certain to continue indefinitely.

But how exactly do these sacrifices serve the national interest? What has the loss of nearly 4,000 U.S. troops and the commitment of about $1 trillion -- with more to come -- actually gained the United States?

Bush had once counted on the U.S. invasion of Iraq to pay massive dividends. Iraq was central to his administration's game plan for eliminating jihadist terrorism. It would demonstrate how U.S. power and beneficence could transform the Muslim world. Just months after the fall of Baghdad, the president declared, "The establishment of a free Iraq at the heart of the Middle East will be a watershed event in the global democratic revolution." Democracy's triumph in Baghdad, he announced, "will send forth the news, from Damascus to Tehran -- that freedom can be the future of every nation." In short, the administration saw Baghdad not as a final destination but as a way station en route to even greater successes.

In reality, the war's effects are precisely the inverse of those that Bush and his lieutenants expected. Baghdad has become a strategic cul-de-sac. Only the truly blinkered will imagine at this late date that Iraq has shown the United States to be the "stronger horse." In fact, the war has revealed the very real limits of U.S. power. And for good measure, it has boosted anti-Americanism to record levels, recruited untold numbers of new jihadists, enhanced the standing of adversaries such as Iran and diverted resources and attention from Afghanistan, a theater of war far more directly relevant to the threat posed by al-Qaeda. Instead of draining the jihadist swamp, the Iraq war is continuously replenishing it.

Look beyond the spin, the wishful thinking, the intellectual bullying and the myth-making. The real legacy of the surge is that it will enable Bush to bequeath the Iraq war to his successor -- no doubt cause for celebration at AEI, although perhaps less so for the families of U.S. troops. Yet the stubborn insistence that the war must continue also ensures that Bush's successor will, upon taking office, discover that the post-9/11 United States is strategically adrift. Washington no longer has a coherent approach to dealing with Islamic radicalism. Certainly, the next president will not find in Iraq a useful template to be applied in Iran or Syria or Pakistan.

According to the war's most fervent proponents, Bush's critics have become so "invested in defeat" that they cannot see the progress being made on the ground. Yet something similar might be said of those who remain so passionately invested in a futile war's perpetuation. They are unable to see that, surge or no surge, the Iraq war remains an egregious strategic blunder that persistence will only compound.

Andrew J. Bacevich is a professor of history and international relations at Boston University. His new book, "The Limits of Power," will be published later this year.