Red Line: Obama’s Middle East program, Andrei Sakharov and Christine Lagarde

Participants: Ekaterina Kudashkina, Sergei Strokan, Mira Salganik, Alon Ben Meir, Gershon Baskin, Grigory Joffe, Johannes Linn

Ekaterina Kudashkina: This week we will start with the string of events surrounding U.S. President Barack Obama’s latest Middle East program. We will then look at the late Soviet scientist and dissident Andrei Sakharov, and discuss his role in bringing down the Iron Curtain. And finally we will take a closer look at French Finance Minister Christine Lagarde, who has emerged as the top candidate to succeed Dominique Strauss-Kahn as the managing director of the International Monetary Fund.

Now, Beyond the Headlines, in which we will examine whether President Obama’s fresh diplomatic offensive could boost the Mideast peace process. In less than a week, President Obama made two keynote speeches on Middle East policies. Let’s start with President Obama’s first speech at the State Department. In his address, Obama made several important statements. We spoke with Dr. Alon Ben Meir of New York University.

Dr. Alon Ben Meir: He didn’t say anything new, as far as the Israeli-Palestinian conflict is concerned. The only thing that he said more publicly is that the negotiations are to commence on the basis of 1967 lines, which we knew, but he never said it so clearly in the past. As to the reconciliation agreement between Hamas and Fatah, he was clear in saying that if they want to negotiate as a unit, then Hamas must renounce terrorism on a permanent basis and accept Israel’s right to exist in principle. I think, on that point, he basically puts himself in line with Israeli thinking. Another point where he puts himself in line with Israeli thinking is the need for the Palestinians to recognize Israel as a Jewish state, a home for the Jewish people. This is a very important point for the Netanyahu government.

But what he laid down is basically a general frame. We can’t expect him to provide a formula for peace. Now we are waiting to see, of course, whether Netanyahu is going to move closer. He already made his position clear before he came to the U.S. The Israel Parliament has basically stated three conditions under which Israel will be ready to negotiate, which the Palestinians rejected out of hand. So, we will have to see now whether this speech is going to nudge either side to come closer to each other and begin to negotiate.

Real independence will come if there is a negotiated settlement, when the two states can live in peace side by side, next to each other, and cooperate on every single level. That’s what is going to give the Palestinians the kind of independence they want.

Ekaterina Kudashkina: However, strangely enough, one point stirred a lot of controversy. Let me quote it directly from President Obama’s speech:

“The borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states.”

Sergei Strokan: I would say that there was a lot of misinterpretation. Once you say 1967, the Palestinian side believes that we have to base it on the 1967 borders. For the Israelis, what is more important is not 1967, but other issues of demographic changes. It is a very ambivalent message, and every side can take whatever it wants from it.

Ekaterina Kudashkina: No one seems to have noticed a very small part—“with mutually agreed swaps.”  What kind of swaps are they?

Sergei Strokan: This is the subject for negotiations. He doesn’t specify it deliberately. He leaves it for the parties to decide for themselves.

Ekaterina Kudashkina: The wording that was so cautious actually stirred a lot of discussions, and the general understanding was that he had proposed going back to the 1967 pre-war borders. This was widely seen in Israel as a surprise and unfortunate turn against the U.S.’s closest and most trusted ally.

Sergei Strokan: For its part, the powerful pro-Israeli lobby in U.S. started dropping hints that by pressuring Israel, Obama might eventually lose the confidence of Jewish donors for the 2012 presidential race

Mira Salganik: All in all, President Obama had to make another, conciliatory speech at the rostrum of the American Israel Public Affairs Committee.

Sergei Strokan: Well, I read this speech, you know, and in his speech Obama didn’t actually backtrack on the issue, but warned against misinterpreting his words. According to Obama, his critics missed the point when they ignored his call for mutually agreed adjustments to the border issue. Obama said that his proposal “allows the parties themselves to account for the changes that have taken place over the last 44 years, including the new demographic realities on the ground and the needs of both sides."

I think that Obama’s suggestion that the “parties themselves” should account for the changes sounds good. But the question is how long will it take the parties? A year, a decade, 50 years, a century? Time in the Middle East moves dead slow, when it comes to resolving conflicts like this.

Due to these two speeches, we have an ambivalent message to be interpreted by each party in its own way. This is a problem.

Mira Salganik: Let me put a word in for the rational behind Obama’s message. It is clear that there will be skeptics or extremists on both sides. Still, I believe that Obama found a strong argument against those who believe that the existing status quo could really be left untouched. I would say that, for the first time as far as I know, a clear-cut promise for a Palestinian state has been spelled out. Secondly, it was clearly said that Israel cannot go on for decades and decades with a sort of postponing of lasting peace with Palestinians.

Sergei Strokan:  I think an important point in Obama’s message is that you cannot keep the status quo forever.

Ekaterina Kudashkina: Especially with the Arab revolutions, when Israel is being surrounded by instability. 

Sergei Strokan: What Obama wanted to say is that, by trying to beef up its security while being in a state of conflict with the Arab world, Israel would inevitably face the situation where a stalemate in Mideast peace process undermines its security.

Ekaterina Kudashkina: As for the Palestinians, who have just reached a peace agreement between Fatah and Hamas, they will also have to accept that it usually takes two for a peace process.

Mira Salganik: But who can convince Palestinian hotheads to give up the anti-Israeli stance?

Ekaterina Kudashkina: That is the key point. The European Union – the largest Palestinian donor – has already supported President Obama’s call. So did Russia, through the statement of Sergei Naryshkin, the head of the presidential administration. Naryshkin said that Moscow fully backs the idea of creating an independent Palestinian state within pre-1967 borders with the capital in East Jerusalem. 

Sergei Strokan: Incidentally, President Obama’s Mideast initiatives coincided with a visit by representatives of the leading Palestinian factions to Moscow this week.

Ekaterina Kudashkina: This was the first such visit after the recent peace deal between Fatah and Hamas. To counter possible criticism, I would like to mention that Moscow is not playing any behind-the-scene games aimed at torpedoing the U.S. initiative. As a part of the Mideast Quartet, it fully understands that it is only through collective international and concerted efforts that the Middle East can reach long-lasting peace.

{***}

Ekaterina Kudashkina: Now it’s the right moment to listen to someone who’s been directly involved in the Israeli-Palestinian peace talks quite for some time. We are joined by Gershon Baskin, founder and CEO of the Israel and Palestine Center for Research and Information in Jerusalem.

Gershon Baskin: There will be no negotiation process taking place right now, the basic conditions to enable negotiations have not been met, as evidence by Netanyahu’s speech, and the Palestinian leadership decided that they are moving forward with their plan to achieve recognition of the Palestinian state at the international level and bringing the issue to the United Nations General Assembly in September. The Quartet, which Russia is a part of, will have nothing to do, because Russia, the United Nations and most of the countries in the European Union support the Palestinian position.

Ekaterina Kudashkina: Now we move to Red Line’s second heading, Between the Lines, to discuss the most interesting publication of the week. This time we were looking for a publication on the late Andrei Sakharov, the world famous physicist and human rights activist whose 90^th birthday was celebrated last week. The international media seems to have forgotten someone it hailed some 20 years ago, and the only story we could find in the mainstream press was a story by Jonathan Steele in The Guardian. The story is entitled “Andrei Sakharov's birthday celebrations are also a Soviet history lesson.”

Mira Salganik: It is so typical of Western coverage of the Sakharov anniversary. The man was a dissident, persecuted for his human rights activism – end item.

Ekaterina Kudashkina: Well, just to be fair, The Guardian wrote about him as someone who created a bomb, too, let me quote: “A member of the team which developed Moscow’s hydrogen bomb in the firm belief that world peace depended on the Soviet Union achieving military balance with the United States, he later had second thoughts about the risks of confrontation that both sides were running. He also opposed the idea of anti-ballistic missile defense.” So they mentioned this at least.

Sergei Strokan: And this hasty description serves as an introduction to a sort of book review, as the bulk of the story is dedicated to Stephen Cohen’s The Victim’s Return: Survivors of the Gulag After Stalin. Might be a good book, but the only reason it is reviewed on the Sakharov anniversary is that, as the paper explains, “birthday celebrations coincide, more or less, with its publication.”

Mira Salganik: No wonder that in the comments – I went through them – Sakharov’ name was hardly ever mentioned. Instead there was a lively debate on Russia’s recent history with special reference to Stalin’s role. It is not that I mind, but I couldn’t help thinking that it was sparked by the paper’s treatment of a really great man’s birthday just as a pretext!

Ekaterina Kudashkina:  All the more reason for us to talk about him now, just giving a Russian perspective. To me Andrei Sakharov is an extraordinary person, and a tragic person, too. Unlike his brilliant predecessors – Oppenheimer, Niels Bohr – who raced to make the A-bomb before Hitler, Sakharov worked after the war was over. He worked for Stalin. In fact, the first Soviet device was tested on Aug. 29,1949. Then Sakharov played a key role in the development of the first megaton-range Soviet hydrogen bomb first tested in 1955. And in 1961 came the 50 megaton “Tsar Bomba” – the most powerful nuclear device ever exploded.

Sergei Strokan: It was as if the bomb exploded within Sakharov’s soul – he saw what his brainchild was capable of.

Mira Salganik: Sakharov was a man of global vision and a practical approach to problems. The major turn in Sakharov’s political evolution, I would say, started in 1967, when antiballistic missile defense became a key issue in U.S.–Soviet relations. In a secret detailed letter to the Soviet leadership, Sakharov advocated the bilateral ban on the whole thing. After a while, it turned out that he never received a reply to his letter.

Ekaterina Kudashkina: It was after this that he wrote the famous essay “Reflections on Progress, Peaceful Coexistence, and Intellectual Freedom.”

Sergei Strokan: And virtually branded Sakharov as the enemy of the Soviet establishment. None of his numerous awards – he was three times a Hero of Socialist Labor, was awarded both the Stalin prize and Lenin prize – could shield him from persecutions. Yet, he went on with human rights activism.

Ekaterina Kudashkina: In 1975, Sakharov was awarded the Nobel Peace Prize, I think he was the first Russian to get it – but was not permitted to travel to Oslo to receive it.

Sakharov protested against the Soviet invasion of Czechoslovakia in 1968. He also protested against the Soviet intervention in Afghanistan, and that protest led to his arrest and exile to Nizhny Novgorod, where he spent six years in total isolation. A scientist of his scale, of his caliber, he was not afraid to speak out for human rights.

Mira Salganik: He was in Nizhny Novgorod until one day some men entered his place and installed a telephone. The first call was from Gorbachev, asking Sakharov to please return to Moscow.

Sergei Strokan: That was the beginning of Perestroika. There is an aspect of Sakharov’s personality and activities, both academic and civil that needs to be underscored, from my point of view. Whatever he did as a physicist or a human rights activist had a global dimension. Fighting for human rights in the Soviet Union, he championed the principle of human rights as a new basis for all politics. I remember how shaken I was reading Sakharov’s article “The World in 50 Years” in which he speculated on the challenges the mankind would face. Apart from nuclear warfare he knew all about, he listed starvation, contamination of the environment, racism, nationalism, militarism, dictatorships. According to Sakharov, only the equality of men and nations, openness and cooperation based on mutual trust could secure the future of mankind.

Ekaterina Kudashkina: Now we are joined by Dr. Grigory Joffe, a professor of Soviet history at Radford University in Virginia

Grigory Joffe: In hindsight, I certainly remember Sakharov as a person of enormous moral authority. At the same time, at the very end of the Soviet Union, I have a very vivid memory of him taking a stand at one of the last congresses of People’s Deputies, where he made a speech about crimes committed during the Soviet period, and it seemed that the members, the deputies that were sitting in that room were ready to perceive perhaps some kind of critique of the Soviet regime, but they were not yet ready to go that far, as far as Sakharov invited them to go.

It was in the 1960s, I think, that he wrote his first letter to the Soviet leaders appealing to them to cut back on the arms race and cut back on the atomic weaponry, he wanted them to negotiate successfully with the United States. I thought that by the end of the 1980s, he should have already understood the language needed to talk with the Soviet leaders, but his language was the language of morals, language of philosophy, language of high ethical standards. It was not the mundane down-to-earth language that those people best understood. In some political encounters, there is always a choice of language, it is very important in politics, and at that moment I thought that Sakharov took a wrong stand – what is the point in such a lofty rhetoric if it falls on deaf ears?

{***}

Ekaterina Kudashkina: Now we are moving on to Red Line’s final chapter, Person in the News. This time it is French Finance Minister Christine Lagarde. Last weekend she emerged as Europe's likely choice to lead the International Monetary Fund after the resignation of the IMF Managing Director Dominique Strauss-Kahn. Ms. Lagarde is sometimes described as a "rock star" of the financial world. She has a good reputation and is largely regarded as an ideal candidate to fill in the job, although some are now insisting that the job should be filled by a non-European. Christine Lagarde is 55, she is often described as “serious and hard-working, but also chic.” Both at home and abroad she’s much credited for her handling of the economic crisis and also for her perfect English, which she acquired while she working for a law firm in the United States.

Sergei Strokan: Last year, the Financial Times named her the best economic minister in the eurozone and Forbes ranked her the 17th-most influential woman in the world. So it looks like Ms. Lagarde is an acceptable candidate on both sides of the Atlantic. A big plus is that after obtaining a law degree, she joined Baker McKenzie where she rose to become the firm’s president. She remained in America for 25 years, and is as comfortable on Wall Street as she is at the Élysée.

While it is widely agreed in financial circles that she would be a good choice, there are some obstacles: She is French – and the IMF may not be ready to agree to still another French candidacy – and, more seriously, she is currently under investigation.

It is reported that it has to do with damages of about 285 million euros paid to Bernard Tapie, who is a controversial tycoon and celebrity supporter of French President Nicolas Sarkozy. French prosecutors have asked for a full inquiry into her role in the award.

Mira Salganik: If the inquiry drags on, she might miss her chance, as the IMF has announced that the process to find the new managing director will be closed on June 30.

Sergei Strokan: The decision will be made by the Executive Board, chaired by Egyptian economics Shakour Shaalan.

Ekaterina Kudashkina: That is right. Just let me elaborate a little bit on the procedure. Nominations will be accepted from May 30 until June 10, after which the board will choose the top three candidates to interview. While the nominations will be secret, the board said it would release the names of the three top candidates as chosen by the board. That change could be an effort to address the complaints of critics that the process has been too secret in the past.

Sergei Strokan: It goes without saying that a decision is to be made as quickly as possible. And this comes at a crucial time – let me remind you – since Europe has to handle the debt crisis and the fragile global recovery. The current vacancy at the top of the IMF brought on much more controversy between Europe and some of emerging economies.

Ekaterina Kudashkina: And those economies argue that it is time to end the long decades of the European domination of the post.

Mira Salganik: The IMF has long been criticized for being partial to European finance interests, for secrecy of its dealings, but mostly for making its top posts practically unavailable to representatives of the emerging, fast growing economies. So, despite Lagarde’s unquestionable experience, high competence and gender, her becoming the fifth French head of the IMF might be strongly opposed.

Ekaterina Kudashkina: Although her position got stronger after former Turkish economy minister Kemal Dervis – seen as one of the leading emerging market candidates – took his name out of the race. Mexico is still planning to nominate its Central bank chief, Agustin Carstens, a former deputy managing director at the fund. Moreover, the finance ministers of Australia and South Africa, who jointly chair a G20 committee on reform of the IMF, insist the tradition of having a European at the helm of the IMF is out of date and they call for G20 nations to honor a pledge made in Pittsburgh two years ago for an open selection.

Mira Salganik: The IMF has been long aware of the mounting pressure for reforms. In 2009 when the financial crisis was ravaging the world, the IMF asked noted economist Domenico Lombardi to write a report on its reforms. And this is what he wrote: "The international financial crisis has already altered the power relationships in the world economy, so if the Europeans try to impose a candidate, there will be tensions."

Sergei Strokan: But some of the EU stalwarts argued that only a European can steer the region out of a debt crisis.  Angela Merkel, the German Chancellor, was strongly advocating this view, and she was not the only one.

Mira Salganik: Meanwhile, China, South Africa, Chile and South Korea have all added their calls that the 11th leader of the IMF should be the first to hail from outside Europe. Their failure, so far at least, has been to unite around a candidate, Kemal Dervis of Turkey, who has ruled himself out.

Ekaterina Kudashkina: But there is  Arminio Fraga, who helped turn around Brazil's economy as head of its central bank; there is Augustin Carstens, and there is also Tharman Shanmugaratnam of Singapore, not to mention Marchenko, the Head of the Kazakstan National Bank,  recently nominated for the race by Moscow.

Sergei Strokan: This looks like an attempt to make the election competitive, though few doubt that Christine Lagarde will win. Changing the old election process is an encouraging sign; this is what Russia was calling for at the time of the election of Dominique Strauss-Kahn.

Ekaterina Kudashkina: We are joined by Johannes Linn, a former World Bank Vice President for Europe and Central Asia, and the director of the Wolfensohn Center for Development. Now he is based at the Brookings Institution. Mr. Linn, could you explain to our listeners in details, first, the succession process, and, second, the needs and the essence of the planned IMF reform.

Johannes Linn: There is an informal process and there is a formal process. The formal process is that the executive directors of the IMF, who are the representatives of the member countries, formally appoint the managing director based on their votes that they have, which relates to the share of the money that they put into the institution. That is the formal process. So the majority of votes at the moment is in the hands of the Europeans and the US, so on their own they could in principle vote for a particular managing director. There is however also an informal understanding that has been in place for a long time that an European would in fact lead the IMF. This is now being questioned by some. Indeed, the G20 Summit in its last communiqué actually stated that selection of the IMF and World Bank heads will be purely on merit. So we are now in the situation where it is being put to a test whether that will happen or not.

Ekaterina Kudashkina:  And what about the reform of the IMF? Why is it needed and what is the reform?

Johannes Linn: Well, fundamentally the issue is related to who has how much voice and votes in the IMF. In terms of votes, as I mentioned, currently the Europeans and the US combined have in fact a slight majority. The reform of the IMF in terms of governance involves shifting the traditional balance of votes and voices more towards the now newly emerging economies in the world, that is China, India, Brazil, and others, who in fact have been growing much more rapidly in terms of economic power, and therefore their votes and their share in the institution should be reflected more significantly now.

In the last few years there has been a shift towards these economies in the votes and shares of the IMF, but combined with the fact that this is not reflecting its new and projected importance of these countries in terms of further growth, and that the managing director still has been in the past and may this time again be selected by the Europeans; in effect, this gives many members from emerging markets and developing countries more generally an impression that the IMF remains an institution that is basically dominated by the Transatlantic interests.

Ekaterina Kudashkina:  Perhaps this time the candidates from emerging countries have a little chance for being selected, or rather elected, to a top position?

Johannes Linn: I am a bit pessimistic, but I do not think the game is quite over yet. I think a lot depends on whether or not the BRICS actually see eye-to-eye on a single candidate. If they do, if they mobilize the support of other developing countries in particular, it could be interesting. Now the G8 meetings, I think, are an important test, and I think it would be very interesting to see what comes out of this, whether or not the U.S. will actually side now clearly with the Europeans, whether or not Mr. Medvedev can actually make his voice heard, and say that this may undermine the legitimacy of the IMF. There are still, I think, opportunities to turn us around, but it will have to happen fast, and it will require a very clear coalition of emerging market economies. They will need to come together quickly and effectively and then put pressure on the U.S. especially, but to some extent also on the Europeans to actually give a real chance to their candidate.

All rights reserved by Rossiyskaya Gazeta.