Subject: Stephen Hadley Op-Eds
From: Catherine Eng <[email-masked]>
Cc: Stephen Hadley <[email-masked]>
Date: Thu, 13 Aug 2015 17:17:48 -0400

Dear All,

Please find below the links and the text of three recent opinion pieces
co-authored by Steve Hadley.  We thought they might be of interest to you.
Thank you.

Four Steps to Afghan Reconciliation
<https://www.washingtonpost.com/opinions/four-steps-to-afghan-reconciliation/2015/08/12/55c6930c-3eb0-11e5-9443-3ef23099398b_story.html>
-
Washington Post
Crucial Weapons in the Defense of Ukraine
<http://www.wsj.com/articles/crucial-weapons-in-the-defense-of-ukraine-1437436039>
-
Wall Street Journal
The Oil-Export Ban Harms National Security
<http://www.wsj.com/articles/the-oil-export-ban-harms-national-security-1432076440>
-
Wall Street Journal

*Four Steps to Afghan Reconciliation*

By Stephen J. Hadley and Andrew Wilder

August 12, 2015

The horrific bombings in Kabul this past week that killed and wounded
hundreds of civilians are a grim reminder that there are enormous
challenges ahead in Afghanistan. But a recent 10-day visit to the region
convinced us that there is also still a real possibility of a path to
peace.

Perhaps the most troubling thing we learned from senior Afghan and
Pakistani officials during our visit was that Afghanistan is once again
becoming a haven for transnational terrorist groups, including the brutal
Islamic State. With much of the region in chaos, few U.S. allies have the
political will, public support and ground forces to fight the terrorists.
Afghanistan is a notable exception.

Last year’s political and security transitions produced a reformist unity
government led by President Ashraf Ghani and Chief Executive Abdullah
Abdullah and the successful assumption of security responsibility by Afghan
security forces. But the simultaneous withdrawal of more than 120,000
coalition troops and dramatic reduction in international military and
civilian assistance produced a severe economic crisis. Pakistan’s military
operation in North Waziristan, coming right after the security transition
in Afghanistan, pushed thousands of hardened militants across the border at
a moment when Afghan forces were least able to handle them. Many fighters
moved into northern Afghanistan, long a relatively quiet area.

The Afghans, still struggling with a long-standing Taliban-led insurgency,
are now fighting militants drawn from throughout Central Asia, Pakistan,
the Caucasus and the Middle East — something not envisioned in the planning
for the security transition. Afghan forces are fighting bravely, mostly
holding their own, but are taking heavy casualties.

Ghani’s courageous outreach to Pakistan dramatically improved relations
between the two countries, at least until the attacks of this weekend. This
initiative came while Pakistan was still reeling from the devastating
December attack by the Pakistani Taliban (the TTP) on the Army Public
School in Peshawar that killed more than 130 children. This attack plus
Ghani’s outreach seem to have convinced Pakistan to support Afghan
reconciliation and to sponsor direct discussions between Taliban and Afghan
government representatives. The most recent meeting, on July 7 in Murree,
Pakistan, with China and the United States observing, could become a
full-fledged reconciliation process. We believe the internal Taliban power
struggle and last weekend’s attacks will delay things, perhaps for months,
but have not killed the chance for talks.

Pakistan now seems to accept that it needs a stable Afghanistan that is not
a terrorist safe haven. As one senior Afghan official told us: “The TTP
changes things for Pakistan. The more the Pakistanis support the Haqqani
Network and the Taliban to weaken the Afghan state, the more safe havens
there will be in Afghanistan for the TTP to attack Pakistan.”

But Pakistan clearly wants to control the reconciliation process and retain
its influence over the Taliban. Afghans believe, with some justification,
that Pakistan has doubled down on its material support to the Taliban
during the current fighting season — both to hedge its bet on
reconciliation and to strengthen its negotiating position. So, perversely,
the prospects for peace and the pace of conflict have increased in tandem.

The Taliban appear to be under pressure. Pakistan seems to be pushing them
toward reconciliation and the Afghan security forces have not collapsed, as
some expected, following the coalition drawdown. The announcement of
Taliban leader Mohammad Omar’s death — two years after the fact — not only
exacerbates growing internal divisions but also undermines the movement’s
legitimacy by raising questions about whether the group is simply an agent
of Pakistan. And the arrival of the Islamic State introduces a potentially
dangerous rival.

The Afghan government needs to take advantage of these developments by
renewing its call for the Taliban to leave the insurgency and reconcile.
The Pakistanis and Afghans to whom we talked all believe that the
reconciliation process should be pursued despite considerable skepticism
that it can succeed.

Success will depend largely on whether the Afghan unity government can
dramatically improve its performance, communicate effectively to its people
and provide some level of economic growth and better security and military
effectiveness. But the United States and other friends of Afghanistan can
take four steps to buy time for the Afghan government and to put pressure
on the Taliban.

●First, increase U.S. and international diplomatic pressure on Pakistan to
bring all Taliban elements to the table and make peace with Afghanistan.

●Second, provide short-term economic stimulus focused on job creation
combined with governmental reforms. Even then, the improved public
confidence the economy needs will depend as much if not more on
improvements in governance and security.

●Continue the current level of financial support for the Afghan security
forces, combined with an expanded U.S. mission to train, advise and assist
those forces. These steps are needed to maintain both the morale of the
Afghan forces and the military pressure that has helped bring the Taliban
to the table.

●Develop an Afghan counterterrorism platform in the country — supported by
adequate U.S. intelligence, surveillance and reconnaissance and close air
support — to deny safe haven to terrorist groups in Afghanistan and the
region and to encourage reconciliation.

We are not advocating a return to U.S. combat operations or a U.S. military
buildup. But our suggestions will undoubtedly require a U.S. military
presence closer to current levels than the 1,000-person Kabul-based force
previously planned for post-2016. The exact size of the force should be
mission-driven, with the theater commander having the flexibility to
determine its composition, deployment and use.

We believe that, despite all the challenges, peace can come to Afghanistan.
But both Afghanistan and the United States must do their part.

*Crucial Weapons in the Defense of Ukraine*

Without debt reduction and more aid, a young democracy could vanish

By Stephen J. Hadley and Robert B. Zoellick

July 20, 2015

Russia’s aggression against Ukraine is an assault on the vision that
emerged from the end of the Cold War of a Europe whole, free and at peace.
For that vision to be realized, the war against Ukraine must end, and its
government must be able to offer its people a secure, prosperous and
democratic future. If Ukraine—a country of more than 40 million
people—becomes a failed state, the turmoil will spill into the European
Union and likely fuel future conflict between Russia and the trans-Atlantic
community.

Since Russia invaded and “annexed” Crimea in March 2014, the war has
destroyed an estimated 20% of Ukraine’s economic potential and displaced
about one million people. If Ukraine’s economy collapses—and if its
democracy descends into recriminations and clashing factions—there can be
no successful defense of its territory and independence.

The International Monetary Fund forecasts that Ukraine’s economy will
shrink by 9% this year after a drop of about 7% in 2014, and that inflation
will reach almost 50%. But the IMF has also been impressed by the Ukrainian
government’s efforts to reform an opaque system that for too long fueled
corruption not growth. This required great courage at a time when ordinary
Ukrainians are suffering from rising prices and plummeting living standards.

Earlier this year, the Ukrainian parliament adopted a comprehensive reform
program. Pensions were cut and taxes increased. Energy prices almost
quadrupled. The number of public officials was cut by 28,000. The budget
process was transformed so spending discipline can be enforced. The IMF
recognized these efforts with a $17.5 billion loan package this year. But
the fund estimates that Ukraine will need about $40 billion over four
years. Russia doesn’t have to conquer Ukraine; it can bleed its economy
until the society and government collapse.

The U.S., EU and World Bank have each committed about $2 billion. Other
donors are assisting. But this is a pittance compared with Greece. All
should stretch to do more. If the Ukrainian patriots fail for lack of
support, Europeans and Americans will pay the price for years through costs
of insecurity, criminal networks and social breakdown.

The IMF also expects Ukraine to restructure its debt to achieve about $15
billion of savings. This is critical: Of the $3 billion of IMF support that
the Ukrainian government has received this year, $2.4 billion has been used
to service debt. It will be hard to increase support if the emergency money
flows out the door to creditors.

No creditor wants to yield to a debt restructuring. Yet the bondholders’
commercial interest argues for a serious adjustment that enables Ukraine’s
reforms to succeed so that the creditors can eventually get paid. Put
simply, the IMF numbers—and the reformers’ budgets—do not add up without
debt reduction. About $3 billion of Ukraine’s euro bonds are held by
Russia, and we are not aware of any principle that a debtor must repay a
country that invades it.

The IMF has stated it will continue to support Ukraine, in accordance with
the fund’s lending-into-arrears policy, even if Kiev halts payments to
creditors. The Ukrainian government has suggested that it is willing to
offer creditors increased returns in the future if the recovery succeeds
beyond the expectations of the IMF program—analogous to GDP warrants. Yet
the Ukrainian Parliament has also authorized the government’s negotiators
to default if the creditors fail to agree to a package that gives Ukrainian
democracy a chance to survive.

Ukraine is not Argentina. Nor is it Greece. The country has been invaded. A
young democracy threatened by war is taking reform steps reminiscent of the
courageous Poles 25 years ago. The Poles changed European history;
Ukrainians can, too. The Ukrainian government has announced plans for
police and judicial reforms, international audits, tax simplification, laws
to protect investors, privatizations and land reforms. The odds may be
long, but the prize is great, and the trans-Atlantic community will never
have a better chance to invest in Ukraine’s success.

If Western governments do not stretch to assist—and creditors persist with
short-term calculations—the likelihood is high that Ukraine will fall back
to the post-Soviet world of authoritarian government and gangster
capitalism. An open and prosperous Ukraine will allow opportunity and
commerce to flourish, not just within its own borders, but also within the
wider region. The vital interests of Ukrainians, other Europeans, Americans
and global investors are one and the same. Now is the moment for the U.S.
to lead in pressing all the parties to recognize that truth.

*The Oil-Export Ban Harms National Security*

The U.S. is willfully denying itself a tool that could prove vital in
dealing with threats from Russia, Iran and others.

By Stephen J. Hadley and Leon E. Panetta

May 19, 2015

The United States faces a startling array of global security threats,
demanding national resolve and the resolve of our closest allies in Europe
and Asia. Iran’s moves to become a regional hegemon, Russia’s aggression in
Ukraine, and conflicts driven by Islamic terrorism throughout the Middle
East and North Africa are a few of the challenges calling for steadfast
commitment to American democratic principles and military readiness. The
pathway to achieving U.S. goals also can be economic—as simple as ensuring
that allies and friends have access to secure supplies of energy.

Blocking access to these supplies is the ban on exporting U.S. crude oil
that was enacted, along with domestic price controls, after the 1973 Arab
oil embargo. The price controls ended in 1981 but the export ban lives on,
though America is awash in oil.

The U.S. has broken free of its dependence on energy from unstable sources.
Only 27% of the petroleum consumed here last year was imported, the lowest
level in 30 years. Nearly half of those imports came from Canada and
Mexico. But our friends and allies, particularly in Europe, do not enjoy
the same degree of independence. The moment has come for the U.S. to deploy
its oil and gas in support of its security interests around the world.

Consider Iran. Multilateral sanctions, including a cap on its oil exports,
brought Tehran to the negotiating table. Those sanctions would have proved
hollow without the surge in domestic U.S. crude oil production that
displaced imports. Much of that foreign oil in turn found a home in
European countries, which then reduced their imports of Iranian oil to zero.

The prospect of a nuclear agreement with Iran does not permit the U.S. to
stand still. Once world economic growth increases the demand for oil, Iran
is poised to ramp up its exports rapidly to nations whose reduced Iranian
imports were critical to the sanctions’ success, including Japan, South
Korea, Taiwan, Turkey, India and China. U.S. exports would help those
countries diversify their sources and avoid returning to their former level
of dependence on Iran.

More critically, if negotiations fail, or if Tehran fails to comply with
its commitments, the sanctions should snap back into place, with an even
tighter embargo on Iranian oil exports. It will be much harder to insist
that other countries limit Iranian imports if the U.S. refuses to sell them
its oil.

There are other threats arising from global oil suppliers that the U.S.
cannot afford to ignore. Libya is racked by civil war and attacks by the
Islamic State. Venezuela’s mismanaged economy is near collapse.

Most ominous is Russia’s energy stranglehold on Europe. Fourteen NATO
countries buy 15% or more of their oil from Russia, with several countries
in Eastern and Central Europe exceeding 50%. Russia is the sole or
predominant source of natural gas for several European countries including
Finland, Slovakia, Bulgaria and the Baltic states. Europe as a whole relies
on Russia for more than a quarter of its natural gas.

This situation leaves Europe vulnerable to Kremlin coercion. In January
2009, Russia cut off natural gas to Ukraine, and several European countries
completely lost their gas supply. A recent EU “stress test” showed that a
prolonged Russian supply disruption would result in several countries
losing 60% of their gas supplies.

Further, revenue from sales to Europe provides Russia with considerable
financial resources to fund its aggression in Ukraine. That conflict could
conceivably spread through Central Europe toward the Baltic states. So far,
the trans-Atlantic alliance has held firm, but the trajectory of this
conflict is unpredictable. The U.S. can provide friends and allies with a
stable alternative to threats of supply disruption. This is a strategic
imperative as well as a matter of economic self-interest.

The domestic shale energy boom has supported an estimated 2.1 million U.S.
jobs, according to a 2013 IHS study, but the recent downturn in oil prices
has led to massive cuts in capital spending for exploration and production.
Layoffs in the oil patch have spread outward, notably to the steel
industry. Lifting the export ban would put some of these workers back on
the job and boost the U.S. economy.

Why, then, does the ban endure? Habit and myth have something to do with
it. U.S. energy policy remains rooted in the scarcity mentality that took
hold in the 1970s. Even now, public perception has yet to catch up to the
reality that America has surpassed both Russia and Saudi Arabia as the
world’s largest producer of liquid petroleum (exceeding 11 million barrels
a day). The U.S. became the largest natural gas producer in 2010, and the
federal government will now license exports of liquefied natural gas.

The fear that exporting U.S. oil would cause domestic gasoline prices to
rise is misplaced. The U.S. already exports refined petroleum, including
875,000 barrels a day of gasoline in December 2014. The result is that U.S.
gasoline prices approximate the world price. Several recent studies,
including by the Brookings Institution, Resources for the Futureand Rice
University’s Center for Energy Studies, demonstrate that crude oil exports
would actually put downward pressure on U.S. gasoline prices, as more oil
supply hits the global market and lowers global prices.

Too often foreign-policy debates in America focus on issues such as how
much military power should be deployed to the Middle East, whether the U.S.
should provide arms to the Ukrainians, or what tougher economic sanctions
should be imposed on Iran. Ignored is a powerful, nonlethal tool: America’s
abundance of oil and natural gas. The U.S. remains the great arsenal of
democracy. It should also be the great arsenal of energy.

Catherine Eng | Chief of Staff to Stephen J. Hadley | RiceHadleyGates LLC
E-mail:  [email-masked]
Tel.:  202-220-5061
Web: http://www.ricehadleygates.com

This message contains information that may be confidential and/or
privileged.  If you are not the intended recipient, you may not read, copy,
distribute, or use this information.  If you have received this
transmission in error, please notify the sender immediately and then delete
this message.