Monday, April 18, 2016

The Saudis Favor Hillary: The Erasure of Obama's Legacy and the Coming Expansion of War in the Greater Middle East

Obama has three "legacy" achievements: 1) the Affordable Care Act (ACA), a.k.a., Obamacare; 2) ending the U.S. occupation of Iraq; and 3) the deal with Iran to curtail its nuclear program.

With SecDef Ash Carter in Baghdad today promising Iraqi prime minister Abadi even more of a military commitment in the run up to the assault on ISIS-held Mosul, legacy #2 can be erased from Obama's list of accomplishments. At this point there is little doubt that the U.S. is positioning itself to take the lead on the recapture of Mosul so as to be better able to dictate terms on Iraq and Syria in a world after Sykes-Picot. In a Reuters story this morning, "U.S. Defence Chief Offers Iraq More Help, Possibly Troops-Officials," an unnamed Pentagon official pretty well sums up the Obama administration "all in" position with regards to Mosul:
"The fight of Iraq is the fight for Mosul. Mosul is the end game in Iraq," a senior U.S. defence official said, on condition of anonymity. "It’s a very large urban scenario ... We are going to need to be more aggressive, the Iraqis are asking us to be more aggressive.”
The caveat here is the fight for U.S. hegemony in the region is the fight for Mosul. A tidy U.S.-led victory, a la what Russia has achieved next door in Syria in Aleppo Province and Palmyra, will translate into a long-term military presence; a messy campaign where Iranian-backed militias do most of the fighting and the city is largely destroyed like Ramadi complicates things somewhat, not the least of which is an increase in refugees to an already post-Schengen Europe. Either way the United States will occupy Iraq for some time.

Another erasure from Obama's legacy list is the ACA. For an excellent primer on why Obamacare is headed for the dump, read "News About Obamacare Has Been Bad Lately. How Bad?," an interview with reporters Reed Abelson and Margot Sanger-Katz. UnitedHealth, an enormous insurer, decided to pull out of Obamacare markets in two states. Insurers are losing money. Blue Cross and Blue Shield Association is grumbling. Premiums are bound to increase, pricing many who don't qualify for subsidies out of the market:
Margot: . . .Every time I write a story about the health law, I get comments and emails from people just above the income cutoff for subsidies. These are the people who have been most hurt by the health law. Plans on the exchanges are just really expensive for them, and often come with big deductibles, too. And if premiums keep rising, they’ll keep getting squeezed. Analysts from the Urban Institute have done the math and found that some of them are paying more than 25 percent of their income on health care now. Still, it is awfully hard to imagine Congress approving massive new spending to make Obamacare more generous. Hillary Clinton has some proposals about affordability, but they don’t include expanding subsidies.
It turns out the free market model for health insurance doesn't really work:
Margot: Yes, I think this is one of the contradictions of the Affordable Care Act’s design. The whole idea was that competition between the insurance companies would help to hold down prices, the way it does for, say, electronics or groceries. In order for that system to work, you need people to actually switch plans if their plan starts charging more than the competition. The fact that people are actually switching seems like a sign that this market is functioning as it was designed. But as you point out, all that churn sure makes it hard for an insurer to make money by investing in its customers’ long-term health. But the individual market, pre-Obamacare, also had a lot of churn.
Reed: Yes, there’s always been churn, but the insurers got pretty good at figuring out which people they wanted to insure by turning away the people who were most likely to cost them the most money. They definitely figured out how to make money.
It’s easier to smooth all of this out if you insure more people. Do you think there’s opportunity to see the market increase in size? I know insurers in the early years suffered when some states allowed people to keep their existing plans. Those plans that were grandmothered, as it is called.
Margot: My sense from talking to folks in the industry is that the grandmothered plans really wrecked their early calculations. The Obama administration, responding to a political freakout about people whose plans were getting canceled in 2014, let states keep them for a few more years. The result was that healthy people tended to hold onto their old, cheaper plans, while sick people went to the exchanges. You can see how that might make the exchange market unprofitable for new entrants.
I do think the market size is a bit of a chicken-or-egg question. Your story last week on stability in the employer market did such a good job of laying this out. Everyone (including the Congressional Budget Office) expected that employers would start dropping coverage once the marketplaces were up and running. That didn’t happen. It means that Obamacare has been much less disruptive to the status quo than many people thought. But it also means that the exchange markets are smaller and probably more expensive than people thought, too. If prices keep going up, maybe they’ll never grow much. It certainly seems like everyone is cutting down their long-term estimates for exchange enrollment.
The last item of Obama's legacy list is the Iran deal. This is what Obama has bent over backwards -- aiding in the jihadist destruction of Syria and Iraq; actively collaborating with the Saudis in war crimes in Yemen -- to try to protect. But the Saudis are not cooperating. So over the last couple months an information war and diplomatic struggle between Obama and al-Saud has unfolded. Jeffrey Goldberg's long Atlantic Monthly piece was a major Obama salvo.

Another appeared Saturday, Mark Mazzetti's "Saudi Arabia Warns of Economic Fallout if Congress Passes 9/11 Bill." The decade-plus case brought against the Kingdom of Saudi Arabia by big insurers and family members impacted by 9/11 hit a snag last September when a federal district court judge dropped the kingdom as a defendant. The bill before Congress would address the concerns of the judge, allowing the case against the Saudis to proceed. But the Obama administration is fighting it tooth and nail.

This suit against the Saudis hardly ever gets any ink. The fact that it does now when Obama is on his way to Riyadh, where he will be on Wednesday, is not a coincidence. It is part of the info war.

Michael Shear writes in "An Old Alliance Faces New Pressures as Obama Heads to Saudi Arabia" that the Saudis have washed their hands of Obama. They're waiting for Hillary:
If the Saudis are ready to turn the page on the Obama presidency, they are also anxious about what comes next, especially if Donald J. Trump or Senator Ted Cruz of Texas becomes the next president. 
Mr. Trump has railed against Saudi Arabia, telling The New York Times last month that he might halt all purchases of oil unless the Saudis show more effort in the fight against the Islamic State. “If Saudi Arabia was without the cloak of American protection,” Mr. Trump has said, “I don’t think it would be around.” 
Mr. Cruz said during a presidential debate in February that the United States should “hold our friends to account, that friends do not fund jihadists that are seeking to murder us. And when it comes to Saudi Arabia, we need to have real scrutiny and real pressure.” 
From the Saudi perspective, Hillary Rodham Clinton might represent a return to the kind of foreign policy they remember when her husband was president. But nothing is certain in this political season, and Senator Bernie Sanders of Vermont, the other candidate for the Democratic nomination, is an unknown to the Saudis. 
“Like everybody, they have no idea what to think about Trump,” Professor Gause said. “Who knows what to make of Senator Cruz on this? The Saudis don’t know him,” he added. “I think they would be perfectly comfortable with Hillary.”
During the Bush years there was a handy shortcut one could take when it came to any of his administration's initiatives. Everything he touched turned to shit. It might look like a winner for a while but eventually you could bank it would fall apart. That appears to be the case with Obama too, which would seem to argue for a larger regional war in the Greater Middle East and the almost certain demise of the European Union.

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