Peak "Surge Success"

NOTE: Early post this week as I'll be traveling for the next few days. Next post will be Monday, April 7th.

The much hailed success of the “Surge” of American forces in Iraq, led by Gen. David Petraeus, is beginning to fall apart. It’s important to understand why it worked (temporarily), why it’s falling apart now, why this will be a gradual disintegration, and why this was inevitable all along.

The surge provided impressive initial results. Why? While many cite the shiny new & improved counterinsurgency approach implemented by Gen. Petraeus, which did manage to seize upon a period where Shi’a groups were temporarily electing cease fire over insurrection for reasons discussed below, there is a potentially more significant trend behind the (until recently) reduction in violence. What has often been termed the “Sunni Awakening,” where Sunni insurgents miraculously decided that violence is counter-productive and that they should join with the Americans and fight al-Qa’ida, is probably more accurately understood as the “short-sighted Sunni pay-off.” The Americans, acting both independently and through the Iraqi government, leveraged Sunni tribal leaders, provincial officials, and existing militia leaders by offering them a deal they couldn’t refuse: stop fighting us, put up at least a convincing guise of “fighting al-Qa’ida,” and we’ll pay you huge sums of money, arm you, and give you legitimacy. This worked great, especially considering that the Shi’a militas that had been conducting what was essentially ethnic cleansing against Sunni neighborhoods had either 1) finished successfully, or 2) declared self-imposed cease fires to improve their political position within the Shi’a political block. Absent the ongoing catalyst for tit-for-tat sectarian attacks, the Sunni seized upon a huge opportunity. Seizing upon America’s inability to sacrifice without payoff for more than two to four years (as driven by domestic political cycles), the Sunnis knew that they could use America’s desire for some kind of positive news about Iraq now to arm and prepare themselves for the inevitable conflict with the Shi’a down the road. As long as the sectarian violence remains in the background, the Sunnis will continue to take all the arms and funding they can get, and are happy to temporarily refrain from violence against Americans in the mean time. This is, of course, a generalization, as many Sunni groups, to include al-Qa’ida in Iraq, haven’t bought into this program, but to the extend that the Surge has produced results, this has been the main drive.

The success of the surge is falling apart now, in part, because Moqtada al-Sadr is seizing a political opportunity presented by the weakened Prime Minister Maliki. Maliki is either greedy or simply short-sighted in his quest to please his imperial overlords, hoping to show that his government was capable of taking charge of its own security just in time for the Petraeus report to the US Congress. Sadr’s Mahdi Army recently extended its self-imposed cease fire, but thanks to Maliki’s misstep can now claim more legitimate self-defense. So Sadr is using this opportunity to “justly” demonstrate his capability to drag Iraq into chaos and quite possibly remove Maliki from power by resisting the government from Baghdad south to Basra.

What is Sadr’s plan? I haven’t spoken to the man recently, but my guess is that he plans to demonstrate his ability to destroy the semblance of order recently prevailing in Iraq, and then just as quickly to demonstrate his ability to restore that order. This serves twin purposes. First, it allows Petraeus to testify to Congress that the surge continues to work without getting laughed out of the room. This ensures the ongoing reduction in American forces, which continues to increase Sadr’s relative strength and freedom of operation. Second, and most important, it creates a very powerful negotiating platform for Sadr. The Maliki government is holding on by a string as it is, and will not be completely dependent on Sadr not exercising his demonstrated capability to bring it down. This fits with Sadr’s past behavior—he is a politician, not a warrior, at heart, and uses his military force to expressly political ends. He has learned from his mistakes in the past where he pressed for pitched battles with superior forces that he could not win. This time he is walking away from a prolonged fight he quite possibly could win in Basra and the South because he realizes that the viable threat of re-starting that battle at any time has more political weight than actual victory in that battle.

What does Sadr hope to achieve with this political maneuvering? There are many possibilities, but I think that he wants to keep the central government weak, teetering on the brink of collapse, dependent on him for support, until he can get his plan for Southern Iraq through the assembly: create one “super federation” of southern Shi’a provinces rather than the alternate plan of creating several individual Shi’a federations, each comprising only one or two provinces. This is critical for two reasons: 1) while Sadr relies on Iran for support, he needs a single Shi’a federation of sufficient size to effectively stand up to Iran, as well as to effectively stand up to the remnant central government in Baghdad. It’s easy to play divide and conquer against many smaller southern federations, and it also enhances the relative position of the central government. 2) Sadr needs to unify Iraq’s southern oil infrastructure inside a single federated region to bring it truly under the control of that region, otherwise the central government will retain effective control of export revenues by virtue of being the intermediary in balancing the separable interests of the various southern federations through which the oil must run. It’s worth noting here that Sadr will gain significant support for this approach to a de-facto oil law from the Kurds, who have already formed just such a super-federation of provinces for the purpose of unifying control of the northern oil resources, and will support any plan that validates their hold rather than supports the central government’s claims. With Sadr in a position of power in the current central government (where he will likely accept a “Sunni awakening” style “fund and legitimize my militias in exchange for peace” deal of his own design), and in a future position of power in the southern super federation, Sadr’s Mahdi Militia will gain the same funding and legitimization of the Kurdish Peshmerga, and with it the ability to forcibly control the southern super-federation and its oil revenue.

If this strategy is what Sadr has in mind, then it makes sense to me to demonstrate (at least to internal audiences) that he can cause great chaos in the South, but then to quickly call a cease fire and cash in his political capital. It makes sense to me to push this cease fire a few days past Maliki’s Saturday (March 29, 2008) deadline to clarify who is in charge, but probably not to wait far into April before ending the uprising.

All of which brings me to why the surge was doomed to failure in the first place. While Petraeus’s updated counterinsurgency strategy was elegant and interesting, it never stood a chance because it does not address (or comprehend) the foundational problem of mutually exclusive overlap. I’ve been writing about this since immediately after I returned home from the Persian Gulf in 2004 as it creates the post-colonial terrain upon which everything else in Iraq must be surveyed. Mutually exclusive overlap is the result of the ebb and flow of empire over time, and must be seen as a four-dimensional problem. Since the Sykes-Picot Accord of 1918 arbitrarily drew lines in the Middle-Eastern sand and created notional “Nation-States” where none had been before, colonial powers (as well as those later powers practicing economic colonialism) have pitted one ethnic group against another to most effectively control their far-flung empires. This is what I call the “exploitation model,” and typically involves empowering a minority group to rule a territory with the implicit understanding that the minority group must act according to the will of the colonial power or be abandoned to the mercy (or lack thereof) of the majority. In Iraq, this took the form of long-standing British and then American support for a Sunni minority government in a Shi’a majority territory. The problem of mutually exclusive overlap arises with the development of Iraq’s vast oil potential. The Sunni majority enjoyed several decades of wealth and prosperity, subsidized entirely by their disproportionate share of oil export revenue. Now that the Shi’a are in power, they expect at a minimum a proportionate share of Iraq’s oil revenue (60%), which is virtually all of Iraq’s southern oil production as the Kurds have geographic and de-facto control over Iraq’s northern oil reserves which make up about a third of Iraq’s pre-war oil production potential. So this creates a situation where the Sunni society, economy, and psyche in Iraq is predicated on the subsidy of more than half of Iraq’s oil production, because they have enjoyed exactly this for decades. Likewise, the newly empowered Shi’a have an expectation of more than half of oil production. For both groups this is a non-negotiable minimum, and they will fight for what they consider their birthright. Unfortunately, this represents mutually exclusive overlap—with both groups expecting, at a minimum, essentially all the oil production available outside the Kurdish zone, they cannot both be satisfied. This cannot be solved by increasing Iraq’s oil production because the expectations are proportional, not empirical, and will only suffice to provide a relative advantage, not actual wealth, even if Iraq’s production were to reach 8 million barrels per day (a wildly optimistic figure four time current production) due to their growing population and dire economic problems. There is no nice way to put it: this problem will not be solved, and will result in conflict—the only question is when.

The Petraeus surge worked, either through happenstance or devious planning, by scheduling simultaneously the period when the Sunni factions realized they should pause and take advantage of an American-provided opportunity to re-arm for this coming conflict, and the time when the Shi’a factions realized they should pause to consolidate for the same. The surge is now disintegrating because the value to both sides of further “strategic pause” is winding down. Moqtada al-Sadr’s maneuvering in the South, combined with a gradual increase in Sunni violence around Baghdad, signal the transition to the next phase. This next phase may be remarkably contained, or it may bring Saudi Arabia and Iran into much more direct involvement. What is relatively certain is that neither 45,000 nor 145,000 American troops on the ground will be able to keep the peace. We entered this conflict with an almost awe-inspiring naïveté, and I have little confidence that we’ll figure out how to exit any more gracefully.

Further Reading: See John Robb's post on Moqtada al-Sadr's strategy in Iraq HERE. Also see my suggestion for solving Iraq's problem with mutually exclusive overlap (yes, gardening *is* the solution...)

Sign up: www.JeffVail.net is published Mondays, with occasional updates in between. Consider signing up for the RSS feed by clicking here.

2008: Pause

Time, once again, to engage in my annual predictions and prognostication. This year The Economist has unofficially endorsed my brand of futurology--relatively short term and thematically focused. But first, as usual, a review of how my 2007 predictions panned out:

I didn't get Iraq right--I predicted that the draw-down would begin, whereas in reality there was a "surge." I guess I'm still able to underestimate the incompetence of the Democratic Party. Mental note not to make that mistake again. I won't discuss my thoughts on the surge (e.g. the arming of the Sunni tribes for the future clash with the Shi'a establishment over oil revenues after the inevitable US withdrawal) now, but suffice to say I didn't get it right in '07. For what it's worth, I did get the "no war" call on Iran right.

I'll give myself kudos, however, for nailing the oil prediction. I said that oil would break 90 and flirt with 100, and that "peak oil" would officially break into the mainstream media. Right on all counts, not that I claim any kind of secret formula--it was just an "educated" guess based on what I see as obvious trends. The only area you could quibble was with my prediction that Russian oil production would fall--that isn't entirely clear.

I generally missed the credit crunch and was mildly wrong on housing woes and the Euro. And I overstated the problems facing Mexico--while there were some worrying pipeline attacks, the economy didn't "collapse" as I had predicted. So my 2007 predictions were poor with the notable exception of oil prices. Will this result in an overly cautious outlook for 2008? Yes and no. Yes in the sense that, considering that I fundamentally agree with the long term predictions of the "end is nigh" crowd, I think 2008 will fail to meet their expectations by far (hopes?). No in the sense that, given my fundamental agreement with "them" on the long term direction of our planet, I'm firmly bucking the trend of expecting immediate economic collapse followed by mass starvation by calling for the appearance of normalcy. Emphasis on appearance.

So what will 2008 hold? Let me consult my crystal ball...

Oil Prices: we'll break $100 firmly at some point, but won't hit any sky-high territory in '08 (that looks to be in '09, but now I'm breaking The Economists' rule of only predicting one year out). I think that we'll essentially plateau in production--maybe a small fall or small gain globally--and that increased demand in India and China will be met with efficiency efforts that clear off the low hanging fruit. Basically, I think we'll set ourselves up for a fall by doing the easy efficiency measures (but none of the tough and ultimately necessary ones) and pat ourselves roundly on the backs as production doesn't drop off a cliff and prices don't spike. This, of course, leaves only the hard and slow-to-pay-off efficiency measures remaining just in time for significant global production spikes and "export land" effects to really bring trouble in '09.

Iran & Iraq: slow news year. No troop draw-down of any significance (though possibly something symbolic in August-September time frame to give the appearance of "victory"). No war with Iran. No uptick in violence--in fact, the surge will continue "working" (as long as you define working as laying the groundwork for future bloody civil war).

The most significant story of the year: the economy won't crash. What the hell, I'll go out on a limb--we won't even have a "recession" as officially defined. On an earnest note, there is a lot more resiliency in the American and Global economies than is often accounted for, and there are many "low hanging fruit" measures to stave off the energy and credit wolves for another year. And if those real measures are too politically difficult, there is plenty of appetite for the fiction that the economy is resilient and recovering, as well as people in power who will benefit from the appearance of normalcy through the '08 elections. I'm not talking about Bilderberger/Bavarian Illuminati fairy dust, but rather simple and obvious things that can be done by the current Bush administration to ensure that it doesn't appear that a Republican administration is bad for the economy. So this time next year we'll still be listening with rapt attention to news reports tallying the Christmas shopping season and the resiliency of the American consumer. Unlike oil prices, I don't see this economic stability as a temporary reprieve before we go off the cliff. I think that media and public perception of our economy, as well as our actual economy itself, is already a matter of fiction and wizardry. This wizardry can continue, unabated, for quite some time. I agree with Ran Prieur's version of the "slow crash." That is, we're already crashing. This is what collapse looks like. The middle class gradually shrinks, the value of our pensions and investments gradually declines, things get gradually less affordable--and if it is executed properly this all happens just below the rate at which it reaches the public consciousness. A really sharp cliff in oil production could change this, but I think if we do our realistic best at mitigation efforts in energy use, this, too, will keep just under the "crisis radar." Diesel prices equivalent to $300/barrel oil haven't stemmed the commuting or truck transport industry in Europe, so I don't see why $300/barrel oil by 2010 or 2012 won't be anything more than another contributor to the slow crash. We are evolutionarily adapted to recognize and respond to surprise, short-duration crises, but we aren't evolved to be very good at even recognizing the slow, gradual ones that are visible at a distance.

One more thing--Rudy will win the 2008 presidential election. Why did I pick him? He's the worst possible result that I can think of, so it seems a nice balancing point the the appearance of optimism elsewhere in this post. Besides, none of the candidates will address the fundamental causes of the slow crash, so does it really matter in the long term? IF there was a candidate who could maximize our mitigation efforts, and IF there was a candidate who could slow the slow crash as much as possible, it still only seems that the result would be to push off the matter of dealing with the slow crash on later generations. My ultimate prediction is that we will never deal with our fundamental problems en mass, but rather will let them deal with us.

Have the Kurds Abandoned All Hope of a Stable Iraq?

Energy Intelligence Note: 1 May, 2007

Salman Banaei recently published an analysis of Iraq’s draft Oil & Gas Law in the Association of International Petroleum Negotiator’s March issue of "Advisor" (also available via his Western Energy Blog). He shows how the draft law allocates control over production from “current” fields to the Iraqi National Oil Company, and that regional governments retain control over “undiscovered” fields. While regional governments can sign contracts with international oil & gas firms, the draft law ensures federal oversight by requiring approval of these contracts by Iraq’s Federal Oil & Gas Council (FOGC).

Recent events in Kurdistan, however, suggest that the Kurds may have other plans. UAE-based Dana Gas announced recently that they have agreed with the Kurdish Regional Government (KRG) to develop the Kormor gasfield (see graphic). The Kormor Field clearly falls under the draft law’s envisioned federal control, as it is a “current” field, discovered in 1928. The contract has not received FOGC approval, and it breaks the KRG’s promise to avoid signing new contracts until the end of May, to give the federal government time to pass the Oil & Gas Law.

What does this signify? It seems that the KRG is not satisfied with the division of gas fields between federal control (“current” fields) and regional control (“undiscovered” fields). This “current” vs. “undiscovered” designation seems to have little basis in geological reality, but rather is the political gloss given to the apportionment of existing fields, which is detailed in an annex to the draft law. Petroleum Intelligence Weekly reports that the KRG will reject the law if this annex remains as is. The decision to contract for development of the Kormor Field with Dana Gas prior to the official vote on the law suggests that the KRG believes the annex will not be changed, and that the law will not pass the end-of-May vote.

While none of this should come as a shock—Iraq is a sham Nation-State where mutually exclusive minimum requirements by the component national groups will prevent cooperation—it does carry significance. The prospects for a military solution in Iraq are as slim today as ever, and this failure to bridge the competing demand of Iraq’s many nations suggests that a political solution is no more likely. This reality may not seriously deter oil & gas production in the Kurdish region, where there is relative unity and security, but it will likely present a geopolitical barrier to developing the highly theoretical reserves of Iraq’s Western Desert. Furthermore, while it may be possible for the KRG to produce from their oil & gas fields, their export market is highly limited—the pipeline through Syria is non-functional, and the Turkish government is unlikely to help their rival with a viable export channel. The most viable market for Kurdish oil & gas is Iraqi domestic consumption, but reaching this market requires relying on a handful of critical pipelines that are frequent targets of insurgent attacks. It may be impracticable to market any increase share of oil & gas that the KRG may be able to exploit. Will this fact alone be enough to force them to compromise on their short-term selfish interest to form a viable Iraqi state that will benefit them in the long term by way of a valid export route? Is a willingness by the Kurds to compromise enough to bring together the rest of Iraq’s disparate factions in a similar spirit? Probably not—and the Kurds have probably considered exactly these issues in arriving at their decision to go it alone with regional production. Probably a wise choice for the Kurds, but an ominous sign for the future of the figment of Colonial Cartography that we call Iraq.