Friday, November 9, 2012

Iran and the Debt Negotiations

I am now in DC. Two stories are absorbing my interest at the moment.

1) Iran's attack on a US reconnaissance drone that was flying in international air space. 
 This incident doesn't surprise me. In fact, after the Beirut bombing a couple of weeks ago, I argued that in pursuit of weakening the international alliance opposing them, Iran, Hizballah and Syria were attempting to export violence and instability into regional political dynamics. Faced with crippling international sanctions in response to their nuclear program, Iran's economy is now in free fall. Inflation is exceptionally high, and Iran's oil export industry (the lifeblood of the economy) is struggling with unprecedented sanctions. Again, from my perspective Iran's latest action is unsurprising. I have consistently argued (see my guardian piece) that Iran responds to increasing sanction pressure with increasing aggression. The Iranians believe that Western fear of a war will lead to a collapse of the anti-Iranian alliance. Accepting this Iranian strategic understanding, the United States must respond carefully but robustly. While there should be no military response to this latest incident, the President should order USAF/USN fighter escorts for further drone flights over the next few weeks. If Iran attempts another attack, the President should order the US Military to take responsive defensive action.  
From a legal perspective, this attack was an act of war. However, it was one of many such acts that Iran has engaged against the US in recent years.

2) The looming debt negotiations. House Speaker, John Boehner, has signaled a willingness to re-engage serious debt negotiations with the President. This is a positive step. However, it will be important to see whether the president is serious about offering major reforms to Medicare (the core debt driver). The President must be honest and open in his dealings with Republicans. Sadly, this was not the case the last time debt negotiations took place.

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