Last night, as part of the launch of its new master’s degree program in global policy studies, the LBJ School of Public Affairs hosted former Secretary of State Madeline Albright for a discussion of foreign policy issues facing the United States (you can see a webcast here). The discussion covered a range of issues, and Secretary Albright highlighted a number of points that she raises in various of her recent books, notably including her new one, styled as a memo to the new president. Not surprisingly, her answers to questions tended to fall back on now-well-known Democratic foreign policy positions, and although she made a show of trying to stay above the political fray, her positions in the election are so well-rehearsed that electoral politics of course slipped into the discussion. The crowd didn’t seem to mind, even if a few of us weren’t so sure we agreed with everything she was saying and, more important, were a bit uncomfortable with a borderline-partisan launch event for a non-partisan educational program.

Public affairs programs tend to lean liberal. Many students are attracted to the field because they want a leg up in careers that try to transform the world for the better. Their whole reason to get into this business is anti-conservative, because they don’t like what they see and they are optimistic about their ability to make the world a better place. There’s definitely a place for their idealism, but public affairs education should temper it with realism. And at UT, many of us on the faculty — even liberal-leaning faculty members, I think — try to do that.

A diversity of political viewpoints is really useful in the classroom, too. We wouldn’t want only liberals (or only conservatives) in the incoming class. Fortunately, we have enough diversity, even though its safe to say that more students and faculty at the LBJ School are Democrats than Republicans, and more are liberals than conservatives. That’s probably the case in Washington policy debates, both inside government (among permanent staffers — there’s certainly little diversity among political appointees, for obvious, good reasons) and in the “policy community.” That pluralism helps us make better policy choices, when we have civilized discussions about ends and means.

Moving beyond the Democrat v. Republican mix, many public policy students hope to become self-styled, non-ideological “technocrats,” which in a way worries me even more than their liberal-idealistic tendencies. Many of the important decisions in global affairs are inherently political ones, based on our values that help us to define our goals in the world rather than on technical decisions about implementation strategies. And the old public administration idea that we can separate implementation from political decisions and simply adopt “best practices” to do whatever the politicians tell us is, well, bankrupt. Debates about implementation are often a smokescreen covering up debates about what we are trying to achieve, and many of the implementation questions cannot be decided independently from politics, because the implementation strategy determines who will make the real choices about what gets done, what constituencies will really benefit from the policy, etc. Yes, we need technical, expert input into public policy-making, but we cannot abdicate our political responsibilities by yielding all decision-making power to experts.

The role of foreign service officers came up repeatedly in the discussion with Secretary Albright: a group of generally highly motivated, smart, well-trained individuals who play a really important role in implementing (and, usually less overtly, choosing) American foreign policy. Everyone naturally wants the U.S. to have a high-quality foreign service, and many global policy studies students aspire to join. I hope they succeed. In countries around the world, regardless of the outcomes of big policy debates in Washington, foreign service officers sometimes have to use their judgment and expertise to make the right choices to represent the U.S. (and to collect information useful to the decision-makers back in Washington). This job requires both aptitude and training, and it is rarely a political job.

Several questioners and Secretary Albright both stressed that they would like to see the foreign service expand. I would guess that almost everyone at the event last night agreed that would be a good idea. Overextended foreign service officers cannot do their job well: the routine parts of their job swallow the opportunities to use judgment and to collect and reflect on information about the world, the workers’ morale drops and they represent America less well, etc.

At this point, LBJ School Dean Jim Steinberg brought up Secretary Albright’s famously positive personal relationship with Senator Jesse Helms. He made the point that bipartisanship can help increase funding to hire more high-quality foreign service officers. Neither Republicans nor Democrats favor diplomats so overworked that they cannot do a good job or such light staffing levels that important business slips through the cracks because we don’t have personnel assigned to the task.

But of course that bipartisan personal relationship in the late-1990s did not really succeed in expanding the foreign service. The State Department budget remained a tiny fraction of the budget given to other international activities. The military’s Combatant Commanders have huge staffs and budget allocations compared to all of the embassies in their areas of responsibility — partly for military operations and equipment that make the CoComs’ positions hard to compare to diplomats’, but partly for other reasons.

Some people have honest questions about the diplomats’ potential effectiveness, if we were to hire more of them or to give them more money. Some people worry that diplomats would make choices when they are struggling to represent America in foreign countries that undermine certain policy goals or expand others beyond the point that political decision-makers prefer to countenance.

Of course, we have the same problem right now with military decision-makers overseas. For some reason, we fear giving discretion to State Department officials far more than we fear delegating to military leaders like Gen. Petraeus and Gen. Odierno.

But the important point is that we can’t get out of delegating some part of policy-making to foreign service officers, military officers, and other “do-ers.” We should be able to have a bipartisan consensus to increase the State Department budget and to hire more people into the foreign service. We need better balance between State and the military, and frankly between the military and every other part of the U.S. government involved in affairs both foreign and domestic.

The argument goes beyond the simple observation that we could double the foreign service budget for a tiny fraction of the defense budget. It is about diversity in the policy discussion. American foreign policy needs people with different kinds of expertise, people doing a variety of jobs overseas, people with all sorts of partisan and ideological backgrounds. We need politics. Good, old-fashioned, pluralist discussions — in public affairs schools, in Washington, in Iraq.

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The Wall Street Journal reports that oil prices are up again today, apparently because of the fear of a disruption in the Strait of Hormuz. The price bump follows a series of events in what is becoming a familiar pattern. First, an Israeli politician said today that Iran is making “unacceptable” progress with its nuclear program and that an Iranian nuclear weapon would be an “existential” threat to Israel. Presumably investors fear that this statement indicates an increase in the probability that Israel will unilaterally attack Iran. In the past, Iran has promised to respond to an attack by disrupting oil flows, which would increase the price of oil. Traders, wanting to buy low and sell high, rush into the market to buy oil at its current “cheap” price, so the price goes up today.

Today’s Wall Street Journal report was better than most, because it suggested that an Israel-Iran conflict would threaten oil supplies in two ways:

The comments brought to surface long-held market fear over a potential attack on Iran, OPEC’s second-largest oil producer. Apart from a potential loss of Iran’s output of near 4 million barrels a day, conflict in the region could endanger the vast amounts of oil that move through the Middle East. Iran sits at the mouth of the Strait of Hormuz, through which about 20% of the world’s oil flows — a volume that couldn’t be made up fully through the release of emergency stockpiles in consumer countries.

Most articles just point to Iran’s threat to “close” the Strait of Hormuz. Regardless, these regular references — and their effects on oil prices, which affect consumers around the world — deserve deeper consideration. At the bottom of this post, I’ll point you to a tool that I hope will help you to think through the problems in the Strait.

Of course, Iranian leaders directly control their own production level and exports, so they may have some real leverage there. But Iran consumes a good fraction of its own production, so its exports only amount to a few million barrels a day. And the type of crude that Iran exports (relatively heavy and sour) is relatively substitutable with spare capacity from elsewhere in the world, notably Saudi Arabia. As a result, analysts take the next logical step: to really pose a threat to hurt the world (and, Iran presumably hopes, thereby to deter the Israeli attack), Iran would have to cut off not only its own exports but also other oil flowing out of the Arabian Gulf — including that Saudi spare capacity that might counterbalance any Iranian export embargo.

The next leap that analysts and reporters make, though, is the one that is much more questionable: they assume that if Iran wanted to do so, it could readily reduce the flow of oil through the Strait of Hormuz from its current level of 17 million barrels a day down to zero.

If the world didn’t lose its nerve and kept trying to send oil tankers through the Strait — a tremendously profitable activity at the current price of oil — it would require a complex military operation to interdict all of those oil tankers. Could Iran pull it off? How much could they succeed?

Oil markets need to do a better job of analyzing this threat — and so do politicians of all political stripes analyzing the threats to American interests around the world and making decisions about American foreign policy. In the spirit of improving the bipartisan debate on important policy questions, I worked with a group of graduate students over the past year to develop a web site that organizes a great deal of background information on the threats to oil flows through the Strait of Hormuz. The project was sponsored by the Robert S. Strauss Center on International Security and Law, and the Hormuz web site is now up. The site includes information on the strategic geography of the region, on how the oil market works, on how tankers and insurance firms have responded to military attacks in the past, on how the various weapons that might be used against tankers work and on how effective they might be in stopping a tanker’s transit, and on other relevant topics.

Ideally, this site would have been “live” at the beginning of July, in the last round of Hormuz excitement when Iran test-fired some medium-range ballistic missiles near Hormuz — weapons that are far too inaccurate to pose any threat to shipping but nevertheless sparked fears of increased Iranian capability to make trouble in the Strait. Or the site might productively have been up in June, when the previous round of Israeli comments sparked a surge in oil prices. Or last January, when an incident between Iranian boats and U.S. Navy ships sparked the release of some doctored videos (one by each side) and much hand-wringing.

Oh, well. The site is up now, and its material should still be useful. As the Journal reported, there was another incident today, and there are sure to be many more in the weeks to come. I hope that everyone will find the site useful in developing their views on the realistic level of threat. For what it’s worth, my views are summarized on one page of the site (here), although even people who disagree with me can surely make use of the data and organization of the rest of the site.

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But we need to remember, especially at Across the Aisle, that bipartisanship should rarely, if ever, be a goal for its own sake. The United States in recent years has made all sorts of “bipartisan” foreign policy errors.

And we’re on our way to another one, if the House-led effort to crack down on oil market speculators makes it into law.

In recent years as a New York Times columnist, Paul Krugman has often opined based on his values, and his columns can sometimes seem partisan and shrill. But when he writes as an economist, he is almost always sharp and clear and insightful (who am I to offer broad criticism of one of the leading international economists of our time? I once tried to get him to join my committee of advisors on my Ph.D. dissertation, but since I studied graduate international economics at MIT when he was on leave, meaning that I took the class with another great contemporary international economist, Avinash Dixit, Krugman demurred.  Bottom line: I have my personal views about Krugman’s economics writings, but a dispassionate observer would be perfectly justified in taking his views much more seriously than mine.).

Krugman’s column in today’s Times about speculation in the oil market seems solidly on point, based on well-argued economics. And he offers much more detailed analysis on his blog (here is the most recent post in a series, which started here). Blaming “speculators” for the run-up in oil prices and passing bipartisan legislation to crack down on speculators in hopes of driving down the price of gas in the U.S. is misguided.

I don’t have much to add to the specifics of the oil discussion. Krugman posts lots of detail and some useful graphs. The bottom line is that “paper barrels” traded by financial speculators rarely affect the price that consumers of oil pay for the ability to burn petroleum (whether in their cars or somewhere else). Financial speculators who never physically possess the oil both buy and sell in the market. They increase the number of trades, but they don’t change overall supply and demand. Every “paper” speculator who buys a futures contract then sells that same contract before the delivery date. So the added demand for purchases is exactly compensated by the added supply offered for sale within the lifetime of the contract.

Of course, if the speculator does actually take delivery of the oil and decides to hold it in inventory, then his purchase in fact reduces the supply available to people who want to take the oil and burn it. So if inventories rise along with “speculative” trades, then speculation can drive up the consumer price of oil, at least until the speculators decide to sell from their inventories (e.g., when tanks get so full that the rental cost of storage capacity is high enough that it’s no longer profitable to hold the oil hoping for a higher consumer price in the future).

The thing is that oil inventories have not been rising in this fashion, and the relationship between the futures price and spot price of oil does not appear to support the hypothesis that this hoarding dynamic is going on.

Of course, producers of oil may be speculating by leaving oil in the ground, and the fact that producers are organized into a cartel (OPEC) makes it more plausible that they might be do this. Whatever the level of demand (which surely has been rising in recent years), a working cartel will withhold some measure of supply, selling less than the amount at which price equals marginal cost. And it’s hard to tell today whether OPEC is pumping at full capacity and investing as fast as it can to increase its future ability to pump oil (that is, trying to “catch up” to rising demand), or whether OPEC is acting like a working cartel. We just don’t know enough about what’s going on inside OPEC’s fields, because they hold their technical data very close to the vest.

But if OPEC “speculation” is the problem, then the issue for U.S. policy is with OPEC not with financial speculators regulated by the CFTC. Directing the CFTC to limit the ability to trade oil futures will just reduce trading volume and create market rigidities that in principle may create losses in the American market.

For me, though, the real thing to consider is what makes someone a “speculator” (hence the quotes throughout this blog entry). No one ever seems to define carefully who the “bad guys” are in this plot. Definitions of speculation are hard to come by, and they are even harder to operationalize.

In my courses, I try something relatively simple, and although it is imperfect, I think it helps make some points: a speculator is someone who hopes to make a profit by buying an asset (e.g., a futures contract) and selling it to someone else at a higher price even though he has not taken any action to increase the value of the asset. A speculator’s goal is to profit by taking money from some other buyer rather than by creating additional value. If the speculator correctly buys “low” and sells “high” at the “right” price in each transaction, the speculative purchase has not created any new value; it has simply transferred the profit from the previous owner (who sold to the speculator) to a new owner (the speculator himself).

This definition is not too far from the one offered in Benjamin Graham’s classic business book, The Intelligent Investor, which seeks to differentiate between “investors” and “speculators” and to convince readers to be the former rather than the latter. Graham doesn’t include as clear a statement of the definition as I would like, but Jason Zweig’s commentary in the 2003 revised edition comes close: “An investor calculates what a stock is worth, based on the value of its businesses. A speculator gambles that a stock will go up in price because somebody else will pay even more for it.” The definition of an investor presumes what seems to me an unreasonable ability to calculate the true value of a business (and that the current owners won’t be able to calculate that same value), but again, Zweig is getting at something meaningful.

So what’s the implication of this investment? Speculators may or may not make money on particular trades, but it seems that their success depends more on luck than on reasoning — or perhaps on understanding human nature and animal spirits of other speculators more than on understanding the underlying business.  But the worst that speculators can do is lose their own money rather than change the underlying value of the asset. Their demand for the asset — and their money flowing into the market for the asset — is only a temporary aberration. The recent run-up in oil prices has extended over several years, which is a pretty long time to blame on purely financial speculation.

If OPEC suppliers are holding oil in the ground rather than pumping as fast as they can, are they speculating? Probably not. For one thing, they are taking direct action to increase the price of the asset (that is, they are constraining supply).  Is that good behavior, from the perspective of the United States and American consumers? Probably not (unless you really believe the climate change story that says we’re better off with much higher energy prices). But it’s a different problem from the one that the bipartisan consensus in the House of Representatives diagnosed this week.

Begging our friends in the Persian Gulf to pump more oil doesn’t seem very productive (as in the Bush administration’s recent effort), because Saudi Arabia and the other producers will decide what’s in their interest and what they are capable of doing in terms of investment and exploitation of existing fields. Our ability to tell them what to do is, well, limited. But the begging policy is based on a logic that is closer to the right way to think about the causes of current high oil prices than Congress’ anti-speculation jag.

So this post mostly has been about what is not causing high oil prices. I recently was interviewed at length about oil by the Romanian magazine Revista 22 (of all places — I have no special ties to Romania), and if anyone has the stamina to read on, here is the English version of a couple of my thoughts about what is causing oil prices to rise:

1.     What has triggered the current oil crisis-the post 9/11 price spikes? Which were the structural forces that shaped these trends? Which are the key factors that affect oil supply and prices? Which was their role in shaping these trends?

Many things affect oil prices. The market is incredibly complex, especially at the detailed level of trying to explain individual trades, as particular deliveries of crude oil depend on variations in the quality of the oil, the exact timing of deliveries, the number of oil tankers available to compete for the business, etc. But for broad understanding of the environment rather than an effort to make money on particular futures contracts, we can explain the run-up in oil prices in the past few years based on a couple of key factors.

The first big factor is that demand is rising around the world.  Economic growth in China and India have received a lot of attention in the press, and those countries are big factors to be sure, but demand has also soared in other countries, notably including the United States. Comparing to the immediate aftermath of 9/11 is a bit unfair, because the economic troubles at that point artificially depressed demand (so of course demand looks like it is “up” since then), but even comparing to the late-1990s, demand has increased worldwide. And that demand increase has helped raise oil prices, partly because it takes a few years for investment in production and distribution capacity to catch up and partly because the higher level of production to meet the demand involves exploitation of more expensive marginal resources. But I should stress that increases in the cost of producing oil cannot explain the run-up to a $130 per barrel price: there’s a lot of oil available that’s economically viable to produce at a price of $50 per barrel – for example, in Canada – that just takes a few years to get on line. 

Along with the increase in demand (relative to the rate of investment in supply), the second big factor in the rising nominal price of oil to the vicinity of $130 per barrel is the drop in the value of the dollar. If we monitor the price of oil in dollars, and each dollar is worth less, then the reported number for the price needs to increase just to maintain the same level of true cost for the oil. The drop in the value of the dollar relative to other currencies is not caused by anything in the oil market: the United States runs a trade deficit, and over time, economists expect that long-term exchange rates should adjust to bring that deficit back into balance. Indeed, at some point, the U.S. will run a trade surplus again. But because oil prices reflect a combination of the real cost of production and, probably more importantly, the real value of oil to consumers, when the numerical representation of that value changes because the value of what we use to measure prices – the value of the dollar – changes, then the nominal price of oil must change, too. This would be true even if the real value of oil stayed the same. One effect of this is that the real increase in the cost of oil for consumers in the United States has increased more than the real increase in costs for consumers in countries whose currencies have appreciated relative to the dollar (e.g., for European consumers).

2.     We live today in a global oil market that has become very tight on supply. The real issue seems to be a supply issue. So, in this context (of a very tight supply) has the market the capacity to respond to some major oil supply shocks caused by political disruptions (wars, terrorism)? In the past it seems to have a market pattern capable of dealing with major disruptions in the oil supply by compensating increases elsewhere. Has the today’s market enough slack production capacity in order to increase the output for dealing with a price spike triggered by political disruptions?

It is hard to divide the causes of the rising price into the “supply side” and the “demand side” of the oil market. The price is determined simultaneously by the amount of oil on the market at a particular moment (supply) and how much people want to use that oil (demand). You can only talk about “tight supply” in comparison to demand conditions. What we see today is that demand has broadly increased, and the amount of oil pumped into the market has increased, too, by a few million barrels a day – say, from 80 million barrels a day to 86 million barrels a day worldwide. Right now, people are willing to pay more than $130 for the marginal barrel of oil, given that 86 million barrels or so are on offer, but suppliers are not willing to reduce inventories or pump faster right now for a marginal price of only $130. There’s a lot of oil inventory around the world – in private and public stocks, owned by oil producers and by middlemen and by consumers – and all that oil could be additional “supply” tomorrow, if people thought that it was worth it to sell at the current price. 

Trying to trace a particular price or a particular restraint on selling to “supply-side” political disruptions like wars or terrorist attacks or fires or natural disasters is a mistake. Most supply disruptions are very small compared to the overall size of the market, and many market participants have opportunities to compensate for the disasters.  Iraq’s contribution to oil on world markets dropped after 2003 for several years, but the net drop of a few hundred thousand barrels of Iraqi oil did not cause the market price to double.  Supply disruptions have been one factor, but a relatively small one. The market generally over-reacts to news of an attack on oil supplies: most of the time, when pipelines are damaged or a tanker is attacked, the damage is minor and the asset gets back on line promptly.  It is hard for terrorists or even militaries to cause a lot of damage to such a large and diverse infrastructure of oil supplies. If one tanker does not make its scheduled delivery, some oil comes out of the market that day, but there is plenty of oil available in inventories to compensate – and the tanker will eventually make its delivery, a bit behind schedule, so the inventories can later be refilled. The only supply disruptions that really should affect oil prices are sustained disruptions that affect a lot of oil (millions of barrels per day) for a long time (weeks). 

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Predictions about the likely course of politics and violence in Iraq are difficult; there are too many variables.

Too many proposals for what the U.S. should do in Iraq rely on detailed understanding of the status of the political (and military) strength of various factions. We should be skeptical; even Posen’s astute analysis relies on major simplifications — for example, we know that the frequent division of Iraqi Shiite interests into two groups (the Supreme Council and the Sadrists) is a big simplification, because both of those groups are fractured within on some issues, and other groups also contest power (the most frequently mentioned is the Fadila party, called a splinter from the Sadrists). Perhaps the best way to judge predictions about the future of Iraq — and American policy options — is to think about how much they rely on getting the subtleties of Iraqi politics and the intra-Iraq military balance exactly right.

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Critics have complained that vast sums of money are wasted due to the military operating four air forces, two land armies and overlapping intelligence and space programs.

Sounds like a reasonable point. And most of the (limited) commentary that I have seen about the study worries that the rapid timetable or entrenched political interests will prevent the study from doing its job and saving money “left on the table” in the defense budget (for example, here). The presumption is that a more centralized military organization — more “jointness” in military parlance — is a good idea. The danger, in this view, is that the military services each want to preserve “parochial stovepipes;” the implied solution is that Defense Department civilians rather than the service staffs should drive the study project.

Sometimes it’s a good thing that few studies or even “blue-ribbon panels” have any effect on the real policy environment. I would be upset if this study were likely to narrow America’s strategic options and capabilities. Or maybe I should take solace in the Congressional direction to eliminate “unnecessary” duplication, perhaps implying that Congress understands that not all duplication is bad. But I’m afraid that “jointness” is so ingrained in the modern military (and among civilian DoD leaders) that the baseline assumptions are that all competition and interservice rivalry should be stamped out.

Triggering a “roles and missions” debate every once in a while is a good idea: the services should have to justify their activities and think creatively about how they can contribute to U.S. national security. The last official discussion along these lines was a 1994 Roles and Missions Commission that released a report called Directions for Defense. Unfortunately, that report ended up ducking important debates, simply endorsing the trend towards jointness begun with the 1986 Goldwater-Nichols Act — like endorsing motherhood and apple pie in contemporary American defense politics. The real threat in a roles and missions debate is that it will lead to collusion, a quiet agreement not to make waves, or an open endorsement of a more planned approach to defense management that assumes that ”collaboration” must be good. A roles and missions study might help create set-asides, allocating certain capabilities and skills to certain services.

In truth, it is the competitive process that stimulates creative thinking and innovation. Americans understand that set-asides lead to “good-enough” solutions rather than striving for the best performance. Duplication of capabilities gives the services a chance to propose different operational concepts, allows defense policy-makers (and the services themselves) to learn from a variety of experience what works and what doesn’t, and offers a cushion of capability if for some reason a particular weapon system or unit misses its performance goals. Facing uncertainty about threats, opportunities, mission parameters, best practices, and almost everything else about the changing strategic environment, equipment duplication seems like one of the least of our worries.  What we want is to encourage experimentation based on a couple of different organizational cultures and strategic philosophies that offer options to policy-makers.

Of course, what I’m describing is the general American preference for competition.  We don’t want a clear plan in the United States that would allocate cereal-making to General Mills (eliminating the “duplicative” efforts of Kellog’s and Post). We don’t want a single candidate on the ballot in elections. We like debate.

The goal of defense management should not be to “streamline” so much as to spur serious thinking about how to achieve American goals. We should not have roles and missions debates that allocate particular roles to particular services. Instead, we should have debates among the services in which each offers a proposal for how to solve the same problem.

Of course we don’t want the services to truly hate each other, and we have made some important progress over the past few years in improving operational cooperation.  No one favors communications foul-ups or fratricide among our forces deployed in the field. The services all understand that they are on the same side (our side, the American side). Some interservice joint training is a good idea. Other steps to improve joint operations make sense. But that doesn’t mean we need a new emphasis on joint planning and defense management.

I know it’s heresy to remember the benefits of interservice rivalry. Goldwater-Nichols and jointness are so popular now that in addition to the roles and missions study, Washington is atwitter with proposals to expand jointness beyond the military to include other parts of the U.S. foreign affairs effort (e.g., to the State Department or even to Agriculture and Energy and Commerce and the other components of Provincial Reconstruction Teams).

Harvey Sapolsky wrote a short, clear column about the benefits of interservice competition a few years back for Joint Forces Quarterly.  Now would be a good time to resurface those ideas. He, Caitlin Talmadge, and I explore these ideas in much greater length in our forthcoming book, U.S. Defense Politics: The Origin of National Security Policies.  The book won’t be out until fall, but I hope that someone will read it then…

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Perhaps the articles are right: oil traders noticed that attack, and maybe any attack that has anything to do with oil will always phase timid businessmen.  But in reality, they should not be so scared.

In my experience, few people in the oil industry are really timid. They do business in all sorts of exciting places around the world. But maybe the financiers who trade oil futures have less fortitude or time for analysis.

The real message of these attacks is that it’s very hard to disrupt the flow of oil in global markets.  We don’t have all that much to fear.  Oil prices should not be on such a hair-trigger for a panicked surge, and if there’s a “security premium” in the oil price today, we should actually let it deflate — that is, if we were rational about oil pricing, which we may well be in the long run but we are not always in the short-term, even when that “short-term” can last for a pretty extended period.

Pirates are something of a problem for small ships traveling near Somalia and Yemen. They can approach yachts, tugs, and even small cargo ships. Captains and passengers on these types of vessel should take precautions, perhaps stay out of the dangerous waters and certainly stay alert during transits.

But oil tankers are vastly larger ships — in many cases over a thousand feet long. Pirate boats have trouble approaching tankers at all (dealing with the waves that the tanker pushes outward as it plows through the water), let alone pirates’ subsequent struggle to clamber up the side of a tanker while it is underway (necessary to board the ship and capture its crew and cargo). And clambering would really be necessary: the deck of an oil tanker is quite high off the waterline, well above the deck height of pirates’ boats.

The attack on the Japanese tanker this week may represent an escalation in pirate tactics — firing a rocket at the tanker (rather than just threatening ships with small arms fire), presumably in an attempt to force the tanker to stop so that the pirates could board it.  But tankers are so big that rocket fire has almost no effect.  The pirates pursued the Japanese tanker for hours and were only able to put a small hole in the ship that had no effect on its ability to continue its journey.

In fact, we know a good deal about the resiliency of tankers, even in the face of attacks with much larger weapons.  During the Tanker War phase of the Iran-Iraq War in the 1980s, hundreds of tankers were hit with Exocet anti-ship cruise missiles.  Relatively few were substantially damaged: most were not even damaged enough to interrupt their transits, and even fewer were damaged to the extent that it was not economical to quickly fix them up and return them to service in the oil trade. If tanker captains take a few precautions — and, like the Japanese captain this week, don’t stop — they have little to fear from pirates or even from larger, military attacks (if any country’s military were crazy enough to start taking shots at oil tankers; anyone listening in Iran, a country that occasionally threatens to do this?).

Tankers’ damage-resistance even extends to modern, more sophisticated weapons that some might think would be more deadly than a 1980s-era Exocet. Sure, the warheads are bigger on some other types of missiles, but they are simply not that big compared to the size of a tanker.  And tankers only have a very small number of truly vulnerable areas (e.g., the engine room), so the overwhelming probability is that, if someone shoots at a tanker, even a hit is unlikely to make much difference. The modern military weapons have been optimized for a different sort of target: technological improvements have tried to overcome warships’ active defenses (think of the design effort the Chinese might make to try to overcome American warships’ Aegis defense systems — and how little difference that effort would make in the ability of the missile to hurt a tanker that lacks such active defenses).

If the oil traders took the time to think about the rocket attack this week, they might see it as clear evidence of attackers’ inability to disrupt the oil trade.  Shouldn’t a failed attack like this drive the price of oil down, not up? Let’s hope that cooler heads prevail.

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The appearance of policy conflict is nothing new for ADM Fallon. Rumors have been flying more or less since the admiral moved from his billet as commander of Pacific Command (where his policy views were controversial, too, but perhaps more quietly controversial because they were over longer-range China policy rather than an ongoing war). When Fallon took his current position at the head of U.S. Central Command, people began to talk about his sharp disagreements with Gen. David Petraeus, the U.S. Commander in Iraq, over both substance (on the surge) and style (Gen. Petraeus’ high-profile comments that sometimes seem to defend the Bush administration in political battles). Of course, Gen. Petraeus is extremely popular with ADM Fallon’s boss and with many other politicians. And that disagreement has been compounded, in the rumors, with an ongoing disagreement over Iran policy (perhaps principally with Vice President Chenney, if the rumors are to be believed). The Iran disagreement perhaps came to a head with the publication of a story in last week’s Esquire.

On Iran, ADM Fallon’s statement says, “I don’t believe there have ever been any differences about the objectives of our policy in the Central Command area of responsibility….” It’s easy to see through this comment: even people who think “we can live with an Iranian nuclear bomb” agree that the U.S. should prefer a non-nuclear Iran to a nuclear-armed one. So we all agree on the objectives of our policy. That statement, though, can certainly cover up intense disagreement about the means of trying to achieve that objective and about whether we’re likely to succeed.

I’m not eager to lionize ADM Fallon. The Esquire article makes it clear that he’s been very busy acting as a diplomat throughout the CENTCOM Area of Responsibility — a defect in the current U.S. government organization that gives the Combatant Commanders so much power and responsibility that they squeeze out the activity and influence of American diplomats and analysts who, in an ideal world, would have better background and analytical capability (the military could presumably focus on applying its own unique, professional expertise in military affairs). The defect in U.S. organization for international affairs is not ADM Fallon’s fault, of course; it partly dates to the much-lauded-but-flawed Goldwater-Nichols Act that reformed American defense organization in the 1980s, compounded by the fact that any country at war will tend to listen disproportionately to its military commanders. But ADM Fallon clearly didn’t lean against the flawed framework.

I also don’t know enough about how ADM Fallon got the CENTCOM job or what he has done inside the complex world of national security decision-making to be able to offer an informed evaluation. In an administration widely acknowledged to carefully vet officers’ policy views before promoting them, it would be a bit remarkable if a “maverick” somehow slipped through the cracks. The Esquire story attributes the move to CENTCOM to Defense Secretary Gates’ foresight: perhaps Gates wanted someone to counterbalance the political influence of Gen. Petraeus. Maybe so, but Gates probably did not make the decision entirely on his own. It may take some time before we figure out the inside military-military and civil-military politics here.

But ADM Fallon’s resignation is an important story — and it takes me back to a theme that I have addressed before on this blog. People who fear that the Bush administration is committed to attacking Iran before the next president takes over have been predicting that Bush would relieve Fallon of command any time now as a step in that direction (one reference among many). If the Admiral is a good military leader, relieving him of command is very costly for our military — and for our political leaders — since good commanders are scarce and take many years to develop. Those who argue that commanders who disagree with presidential policy have only one recourse — resignation — have to face the same fact: resignation is costly, and if it is, indeed, the only option in cases of disagreement, then that tradition certainly will squelch debate and reduce the quality of policy advice.

Wouldn’t we prefer that, at least behind closed doors, our top admirals and generals debate freely and interact with a variety of political leaders (the president, the secretary of defense, Congress, etc.)? I don’t think there’s any evidence that ADM Fallon would have disobeyed an order or intentionally done a bad job of leading a fight that the president ordered him to undertake in his AOR. Forcing him to prematurely end his military career for reasons other than quality of leadership seems a shame, and it seems likely to stifle debate that might improve American policy. The price of offering advice and exercising professional military judgment should not be losing your job, even when the policy that you advocated does not win the policy debate.

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Sure, they differ at the margins — setting priorities among the various places that the U.S. can meddle or debating the importance of cooperation with international organizations to build legitimacy for interventions — but the general theme is the same. And that consensus breeds complacency, whether it’s sloppy arguments in favor of intervention (note the problems in Brett Stephens‘ history in his critique of Ron Paul’s views on intervention — he misinterprets the U.S. interventions in both World War I and in the Tanker War between Iran and Iraq in the 1980s) or a stunted debate in the presidential campaign (it’s hard to find sensible discussion about Iran or terrorism, for example: do any of the candidates have a coherent view that they can explain about the level of the threat from each?).

The problem with Walt’s call for realist analysis in a leading newspaper of record — analysis that would, indeed, offer something different from the conventional wisdom — is that there are no real candidates for the job. Realists need to cut their teeth as regular contributors to the policy debate elsewhere before they can make it to the New York Times, and academics need to convince young writers to adopt their line; academics have neither the incentives nor the right skills to audition for the job themselves. The leading academics of the previous generation that Walt refers to in his column, people like Ken Waltz and Hans Morgenthau, had sensible things to say about American foreign policy, but they did not have regular gigs as columnists, either. If we can find the realists voices in the current public debate, we should all just do our best to promote their views, adding to the diversity of thought and argument. I try to do my small part through this blog and a few other outlets, but I would certainly appreciate help and recommendations from any source! And I applaud Steve Walt for doing his share, too, even if I think he’s getting a bit ahead of himself in his call forrealists with regular columns.

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Arkin is an expert on technical aspects of military affairs who currently writes an online column for the Washington Post, but he has also been a well-known guy in the security studies community for a long time. What he has to say has a certain credibility, and his explanation of the controversy over “doctoring” of the videos was very clear: both the Americans and the Iranians released video of a real incident, and the audio that accompanied both tapes was real and from the morning of Jan. 6, too, but neither the American tape’s audio nor the Iranian tape’s audio matched the video — that is, on each tape, two events were mashed together for political effect. It is unlikely that the threatening audio on the American tape was a broadcast from the Iranian speedboats (it probably came from a prankster), but the peaceful radio interchange on the Iranian tape actually came from a separate interaction between the Iranian Navy and the American warships that had taken place two hours before the speedboat incident. Note that the Iranian Navy is a different organization, with different commanders and different interests, from the highly ideological and zealous Iranian Revolutionary Guard Corps, which commanded the speedboats.

So what should we make of the incident? I was actually on a trip to the Gulf from January 4-11 precisely to do research about how to assess the potential that military conflict in the Strait of Hormuz might disrupt oil tanker traffic — a nightmare scenario often discussed in the press (including in the aftermath of the Jan. 6 incident, for example, here). Of course, I don’t have a complete picture: I didn’t see the incident, and I only met with relatively few people, but at least they were informed people interested in exactly the kind of questions bandied about in the discussion of the incident.

In my conversations, it was clear that many people in the region thought that the point of President Bush’s trip was to rally support for an attack on Iran, and Bush’s rhetoric during the trip certainly played into that narrative. I’m sure the trip really had a lot of motives and a lot of agenda items — democratization, the Arab-Israeli peace process, trade initiatives, jawboning about the price of oil — but the discussion of the incident and the president’s repeated comments about Iran in almost every public appearance certainly drowned out the rest. That doesn’t seem like a good outcome for the general policy discussion about the region, which tends to be too shrill and too conspiracy-laden in the best of times.

My interactions with the Navy at Fifth Fleet headquarters in Bahrain (I had several meetings there on January 7 in the hours just before the story broke in Washington) might remind us all about the difficulties of understanding intentions and risks in military affairs. It’s true that the Jan. 7 discussion was the first time that the U.S. had made a big public deal of its back-and-forth with Iranian, especially Iranian Revolutionary Guard Corps, speedboats, and the timing is, indeed, suspicious. Maybe, once again, this was a case of politicians manipulating military affairs and intelligence for their own ends. But the military actually has a real problem, and my sense from my meetings on Jan. 7 — meetings that were regularly interrupted as someone came into the room to confer in whispers about the meaning of the incident and what to say to the public about it — was that that naval officers really were concerned about what to make of the Iranians’ behavior.

And that shouldn’t come as a surprise: in the security studies community, we have been studying the threat to large ships from swarms of small boats for some time. Small boats, whether using suicide tactics or stand-off weapons ranging from small arms and RPGs to anti-ship missiles, pose unique dangers, because it is hard to determine their intentions until it is too late, because a large number of small, fast-moving attackers can overwhelm a ship’s fire control and combat-management systems, and for other operational reasons. Small boats are not perfect as asymmetric weapons, but we should be paying attention to them. (For my study of potential economic disruption, notably, small boats have limited capacity against large commercial ships; the swarming tactics are designed to overcome challenges posed by warships not by oil tankers.)

The press has made much in recent days of the fact that Iranian boats have buzzed many ships in the past — American and coalition warships and commercial traffic, too. That behavior has established a baseline pattern, normal “rules of the game.” Each time the Iranians act a little bit differently, Americans have to judge whether the Iranian action is just a minor variation on a theme or whether it is a substantial escalation; if they (or we) break the rules or try to change them, then that’s a dangerous moment. And the Americans have to make that judgment both at the tactical level (the guys on the bridge and in the combat information center of the ship in the water facing the Iranian speedboats) and also at the strategic level (even if they bent the rules, does it matter? Should we try to bend the rules back?).

When the military and diplomats get the idea that they are sending complex signals back and forth to an adversary or potential adversary through this sort of kabucki theater, we should all worry a bit, because there is tremendous potential for misunderstanding and miscalculation. Military interactions are really a very blunt instrument, and no one should lose sight of that fact. But even if we can get past the attempts to read nuance into the situation, we should remember that the baseline is that events like this are dangerous, and it’s perfectly reasonable to report on them. And I don’t need to think that there’s some sort of military or political conspiracy to foment conflict with Iran to be concerned. Even if the audio signal on Jan. 6 was from a prankster, the Iranian speedboats behaved oddly, and the boxes they were dumping overboard might have been dangerous. The video by itself is enough to make me worry.
I hope that we won’t respond to incidents like this with escalating violence, because I don’t think there’s much to gain. And I hope the Iranians aren’t themselves seriously considering a military escalation as they push the envelope to assert more influence on how the U.S. Navy acts so close to their homeland. We should remember the big picture: we’re sending warships into their neighborhood, and they have a right to be suspicious of us, just as we have a right to be suspicious of them. Let’s keep cool heads in charge on our side and hope that they will do so, too.

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Going into talks on Kosovo’s “final status,” the U.S. announced that the outcome would include independence before the beginning of the talks — leaving the Kosovars with little incentive to negotiate on any Serb concerns. Not surprisingly, no agreement was reached by the end of the talks in early December. Today, the world is stumbling along towards a unilateral declaration of Kosovar independence that is unliklely to respect any aspect of Serbian interests, which seems quite liklely to lead to foreseeable trouble.

But foresight is not a trait generally associated with American foreign policy these days. We often attribute weakness in the American foreign policy process to shrill partisan debates or intense ideological beliefs. Indeed, part of the resistance to working towards a negotiated outcome in Kosovo today does seem ideological: the U.S. wants to impose a “multiethnic democracy” as a solution on Serbia rather than recognizing that in some parts of the world, multiethnic democracy can be highly provocative. Federalism and regional autonomy might work better (that is, even if Kosovo becomes independent, the region of Kosovo where many Serbs live might be offered real autonomy as a way to placate their concerns about Albanian domination of their government and their private lives).

But where do the American ideological blinders come from in this case? It is certainly not intense public pressure or debate. Almost no one is paying attention to Kosovo. It is not partisanship or acrimony in Washington this time. Our policy on Kosovo is just quietly making mistakes. Someone should start paying attention.

The Council on Foreign Relations has posted several short articles recently on Kosovo, most of which quietly reinforce the “normal” view: Kosovo deserves independence, and Russia is somehow America’s adversary, because the Russians irrationally are holding Kosovar aspirations back. But the Council also often promotes civilized public debate, providing a real service to anyone who happens to pay attention. There’s an interesting blog exchange on the CFR site in which Alan Kuperman raises reasoned questions about America’s unbalanced, under-considered position. Check it out.

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