Streetwise Professor

Angela Merkel tried to walk a thin line on VE Day. She traveled to Russia, but did not attend the atavistic, militaristic, and jingoistic parade on the 9th. Instead, along with Putin, she laid a wreath at the Tomb of the Unknown Soldier on the 10th. She also met with Putin, and criticized him for Crimea and Donbas.

Merkel said this to explain her visit:

“We cannot close the book on our history,” Ms. Merkel said in her weekly video message May 2. Despite deep differences with Russia over Ukraine, she said, “it is important for me to lay a wreath on May 10 together with the Russian president in remembrance of the millions of dead for which Germany is responsible from World War II.”

Those are laudable sentiments, but she could have done things differently, and better. Indeed, her Russian-centric approach is deeply flawed, and has implications for current events.

Ukraine and Belarus suffered far more, proportionally, than did Russia during WWII. Not that Russia got off lightly. Clearly not. But in terms of loss of life, and in terms of German war crimes, Ukraine and Belarus were ground zero.

Merkel could have and should have gone to Kiev to participate in Ukraine’s far more restrained and somber commemoration. She should have laid a wreath there, in remembrance of the millions of dead in Ukraine for which Germany is responsible. Then she could have gone to Moscow on the 10th.

By going to Moscow only, and not Kiev, she implicitly accepted Russia’s assertion that it is the heir to the Soviet Union; that to Russia is due the honor and the glory for defeating the Nazis; and that Germany owes apologies to Russia, or that at least Russia accepts apologies on behalf of all other ex-Soviet peoples. This implicitly subordinates Ukraine, Belarus and other former-SSRs to Russia. By going to Russia only, she implicitly stated that Russia is the first among nations spawned from the collapse of the USSR, and that the others are inferiors.

This is a particularly dangerous message to be sending now, when Russia is quite explicitly attempting to subordinate these other nations by force, economic pressure, and subversion. Merkel is effectively validating Putin’s belief that Ukraine is not a “real country,” and that Ukraine’s independence is illegitimate and a historical injustice.

By visiting Kiev, Merkel could have sent a very different message. She could have paid homage to those that Germany victimized from 1941-1945, while also saying that the lesson and legacy of the Second World War should be that large aggressive nations should not dominate small and weak ones.  Should could have implicitly upbraided Putin, given support to those he wants to dominate, and made amends for wrongs that Germany inflicted on non-Russians.

Merkel walked a thin line, but she could have walked a much better one.

It has been a hellish few months for Gazprom. It’s profits were down 86 percent on lower prices and volumes and the weak ruble. Although the ruble has rebounded, the bad price news will persist for several months at least, given the lagged relationship between the price oil and the price of gas in the company’s oil-linked contracts. The company has been a die-hard defender of the link: another example of be careful what you ask for.

Moreover, the EU finally moved against the firm, filing antitrust charges. Although many of the European Commission’s antitrust actions, especially against US tech firms, are a travesty, the Gazprom brief is actually well-grounded. At the core of the case is Gazprom’s pervasive price discrimination, which is made possible by its vertical integration into transportation and contractual terms preventing resale of gas. Absent these measures, a buyer in a low-price country could resell to a higher price country, thereby undercutting Gazprom’s price discrimination strategy.

It is interesting to note that the main rationale for Gazprom’s vertical integration is one which was identified long ago, based on basic price theory, rather than more elaborate transactions cost economics or property rights economics theories of integration. Back in the 1930s  economists identified price discrimination as a rationale for Alcoa’s vertical integration. There was some formal work on this in the 70s.

Gazprom is attempting to argue that as an arm of the Russian state, it is not subject to European competition rules. Good luck with that. There is therefore a decent chance that by negotiation or adverse decision that Gazprom will essentially become a common carrier/have to unbundle gas sales and transportation, and forego destination clauses that limit resale. This will reduce its ability to engage in price discrimination, either for economic or political reasons.

The company is also having problems closer to home, where it is engaged in a battle with an old enemy (Sechin/Rosneft) and some new ones (Timchenko/Novatek), and it is not faring well.

Gazprom and Putin have always held out China as the answer to all its problems. There were new gas “deals” between Russia and China signed during Xi’s visit to the 70th Victory Day celebration. (Somehow I missed the role China, let alone the Chinese Communists, played in defeating the Nazis.) But the word “deal” always has to be in quotes, because they never seem to be finalized. Remember the “deal” closed with such fanfare last May? I expressed skepticism about its firmness, with good reason. There is a dispute over the interest rate on the $25 billion loan that was part of the plan. Minor detail, surely.

Further, Gazprom doesn’t like the eastern route agreed to last year. It involves massive new greenfield investments in gas fields as well as transportation. It has therefore been pushing for a western route (the Altai route) that would take gas from where Gazprom already has it (in western Siberia) to where China doesn’t want it (its western provinces, rather than the more vibrant and populous east). The “deal” agreed to in Moscow relates to this western route, but as is almost always the case, price is still to be determined.

If you don’t have a price, you don’t have a deal. And the Chinese realize they have the whip hand. Further, they are less than enamored with Russia as a negotiating partner. Who could have ever predicted this? I’m shocked! Shocked!:

Chinese and Russian executives and advisers said that in addition to the challenge of negotiating prices acceptable to both sides, energy deals between the countries have also been hampered by mutual distrust and Chinese concerns about antagonising the US.

“The Russians are unreliable. They are always flipping things around for their own interest,” said one Chinese oil executive.

Who knew?

Putin is evidently losing patience with the company, and its boss Alexei Miller, is far less powerful than Sechin and Timchenko. When it was a strategic asset in Europe, and offered real possibilities in Asia, it could defend itself. Now that leverage is diminishing, its future is much cloudier.

The impending new supplies of LNG coming online in the US and Australia dim its future prospects further.

In sum, Gazprom is beset by many agonies. Couldn’t happen to a better company.

A few words about Garland.

First, the traffic cop who blew away two Islamist would-be mass murders is a total badass. He took out two guys who surprised him and were spraying him with assault weapon fire: pictures from the scene show dozens of evidence markers on the ground, most of which are likely indicating ejected brass from their assault weapons. His assailants were wearing body armor, which means he took them out with freaking head shots while taking rifle fire. With a service pistol. If that isn’t coolness and courage under fire, I don’t know what is.

I wonder if the guy has a military background, because most cops are not noted for their marksmanship. That was some serious shooting under the most disadvantageous and stressful conditions possible. He must spend a lot of time at the range, and must be thanking God that the freaks who attacked him apparently didn’t, going with the tried-and-true Muslim spray and pray thing. There are a lot of Salafists pushing up rocks in Iraq and Afghanistan because of that. I hope they keep it up.

Second, the American-born leader of this suicide mission had been convicted of a terrorism-related offense, and was on a watch list. So how the hell was he able to get his hands on weaponry that was fortunately too powerful for him and his Pakistani buddy to handle? The FBI watched this guy about as well as he watched Tamerlan Tsarnaev. (So yeah, Al Sharpton. Let’s federalize all law enforcement. Here’s a case-excuse me, another case-where the feds fucked up, and the local yokel saved the day.)

Third, this event has provoked the left into paroxysms of rage . . . at Pamela Geller and Geert Wilders, for having the audacity to engage in politically incorrect speech. As in the aftermath of Charlie Hebdo, I’ve lost count at the number of talking heads and pixel stained wretches who condemn the violence but . . . The “but” involves some variant on the theme that Geller engaged in hate speech, and had it coming, or at least the government should constrain such offensive speech to prevent such unfortunate events from recurring.  Indeed, the “buts” are more frequent and insistent here, because the Hebdo staff were hard core leftists, and Geller and Wilder are most definitely not.

As my father would say when I would try to talk my way out of something: No buts. Period.

I will not spend a millisecond discussing Pamela Geller’s words or beliefs, because they are utterly irrelevant. Utterly, completely irrelevant. The government’s powers to limit speech are extremely limited, and rightly so. Geller’s speech and actions are clearly within the protected zone, and for good reason, particularly for speech with political or religious content.

What is “hateful” or “offensive” is inherently subjective. Giving the government the power to censor or silence or punish speech because someone might be offended, or because he or she might deem words to be hateful, is to give it virtually unlimited power to oppress its political opponents. It is an instrument of social and political coercion and control.

As surely as day follows night, when being offended is grounds to call on the government to silence those who oppress those giving offense, the ranks of the offended and aggrieved will metastasize like the most virulent cancer. The ins will use “hate speech” as a club to bludgeon the outs. It will stifle all public discourse, as the circle of offensiveness will grow ever wider, like a drop of oil on still water. The most insistent and fanatical and politically driven-who are the most easily offended, and the most willing to opportunistically claim to be offended-will have a veto over what can be said, and will use it ruthlessly to enhance their power.

Cliff Asness asked on Twitter where the leftists who were die-hard advocates of free speech back in the ’60s and ’70s went. The answer to that question is almost trivial. When the left was seeking power, free speech served its interests as a way of undermining the establishment that it hated and wanted to displace. As its power grew, its interest in free speech contracted accordingly. What was a weapon that it could employ against the establishment became a threat as it became the establishment. Put differently: the left’s interest in free speech varies inversely with its power.

This can be seen in the time series, but particularly in the cross section. The institutions that the left dominates are the most hostile to free speech. Just look at any university if you doubt this. Conversely, they are most insistent about contrarian voice and speech in those institutions that they do not control, such as churches.

Insofar as those whom the left is rallying to defend in the Geller/Garland affair-that is, Muslims-are concerned, they outdo themselves. In defending Muslims, they infantilize and patronize them: apparently they believe Muslims are so incapable of self-control that they must be shielded from any hateful words, because they are liable to go on a murderous rampage if they hear them. And since when was the left so solicitous of the sensitivities of the religious? Well never, actually, including now. Muslims, and the phantom phenomenon of “Islamaphobia”, are merely battering rams that the left can use to attack its real enemies, i.e., anyone to their right, religious Christians (n.b., one of whom I am most definitely not) and Jews, Jacksonian Americans, traditionalists, libertarians, etc. (The left’s “other” is quite diverse.)

The fact that a local traffic cop was the only thing that saved hundreds from the homicidal plans of two Islamist fanatics (one of them a native born American citizen) is deeply concerning. But what is far more disturbing is that this isn’t what disturbs what I would wager is a clear majority of the chattering class. What disturbs them (or what they opportunistically claim disturbs them) is speech that they disagree with, and which they are hell-bent on limiting the rights to engage in such speech. They are not targeting hate speech: they are targeting speech and speakers that they hate.

Fine. As we say in Texas: Come and take it.

The frenzy over the Sarao spoofing indictment has led to the CME Group receiving considerable criticism about the adequacy of its oversight of its markets and trading system. One argument that has been advanced is that the CME’s for-profit status (and the for-profit status of other exchanges) is incompatible with its role as a self-regulatory organization. A piece by Brooke Masters titled “Exchanges Need to Balance Policing and Profitability” in the FT a few days ago puts it this way:

The Sarao case highlights the potential problems with the current US system of relying on “self-regulatory organisations”, including the exchanges, to do much of the frontline policing of markets. They are supposed to make sure traders abide by the rules and refer serious misbehaviour on to government regulators.

This system may have worked when exchanges were owned by their members, but now that they have to generate profits for shareholders, conflicts have emerged. A market that cracks down too hard or too quickly could drive away paying customers. The CME controls the futures market allegedly used by Mr Sarao, but the temptation to go soft could be far greater in areas where trading venues compete.

This is a straw man dining on red herring. The for-profit status of exchanges has little, if anything, to do with the incentives of an exchange to self-regulate. Indeed, for some types of conduct, investor ownership and for-profit status likely improves exchange policing efforts substantially.

I addressed these issues 21 years ago, and then again 15 years ago, in articles published in the Journal of Law and Economics, and 22 years ago in a piece in the Journal of Legal Studies. In the older JLE article, titled “The Self-Regulation of Commodity Exchanges: The Case of Market Manipulation,” I demonstrated incentives are crucial, and for some types of conduct the incentives to police were weak even for non-profit exchanges.

Exchanges (which were organized as non-profits) historically made little effort to combat corners, despite their manifest distorting effects, because the biggest costs of manipulation fell on inframarginal demanders of exchange services (namely, hedgers) or third parties (people who do not trade rely on exchange prices when making decisions), but exchange volume and member profitability depended on the marginal demanders (e.g., speculators) who were little affected. Therefore, exchanges didn’t internalize the cost of corners, so didn’t try very hard to stop them. For-profit exchanges would have faced the same problem.

In other cases, exchanges-be they for profit or non-profit-face strong incentives to police harmful conduct. For instance, securities exchanges have an incentive to reduce insider trading that reduces liquidity and hence raises trading costs leading to lower trading volume. Again, this incentive is largely independent of whether the exchange is for-profit or not-for-profit.

Exchange incentives to police a particular type of deleterious conduct depend crucially on how the costs of that conduct are distributed, and how it affects trading volume and trading costs. The effect on volume and trading costs determines whether and by how much the exchange’s owners (be they shareholders or members) internalize the cost of this conduct. This internalization depends primarily on the type of conduct, not on how the exchange is organized or who owns it or whether the exchange can pay its owners dividends.

In fact, for-profit exchanges have stronger incentives to adopt efficient rules relating to certain kinds of conduct than member-owned, not-for-profit ones. In particular, the members of mutual exchanges were intermediaries; brokers and market makers mainly. The intermediaries’  interests often conflicted with those of exchange users. In particular, self-regulation on member-owned exchanges often took the form of adopting rules and polices that were explicitly intended to benefit their members by restricting competition between them, thereby hurting exchange customers. For instance, member owned exchanges operated commissions cartels for decades: Only forty years ago last Friday (“May Day”) was the NYSE commission cartel that dated from its earliest days dismantled by the SEC. Even after the commission cartels were eliminated, member-owned exchanges adopted other anti-competitive rules that benefited members. Self-regulation was in large part an exercise in cartel management.

Further, powerful members, be they big individual traders or important firms, could often intimidate exchange managers and enforcement personnel. In addition, daily interaction between members contributed to a culture in which screwing a buddy was beyond the pale, but in which many a blind eye was turned when a customer got screwed. Not all the time, but enough, as the FBI sting in ’88-’89 and its aftermath made clear.

So no, there was no Eden of mutual, non-profit exchanges that rigorously enforced rules against abusive trading that was despoiled by the intrusion of the profit-seeking snake. The profit motive was there all along: exchange members were obviously highly profit-driven. It just was manifested in different ways, and not necessarily better ways, than in the current for-profit world.

This also raise the question: just who would own, control, and manage a neo-mutual, non-profit exchange? Big banks, either directly or through their brokerage units? Does anyone think that would solve more problems than it would create? Does anyone honestly believe that there would be fewer conflicts of interest and less potential for abuse in such a setup?

This all gets back to the issue of why exchanges demutualized in the first place. It had zero, zip, nada to do with self-regulation and rule enforcement. It was driven by a seismic technological change. I showed in my 2000 JLE article that non-profit form and mutual ownership economized on transactions costs on floor based exchanges, but were unnecessary in an electronic marketplace. I therefore predicted that exchanges would demutualize and become investor-owned as they shifted from open outcry to electronic trading. That’s exactly what happened over the next several years.

In sum, exchange ownership and organizational form are not the primary or even major determinants of the adequacy of exchange self-policing efforts. The incentives to self-regulate are driven more by economic factors common to both for-profit and not-for-profit exchanges, and the choice of organizational form is driven by transactions cost economizing (including the mitigation of rent seeking) rather than by self-regulatory considerations.  The tension between policing and profit existed even in non-profit exchanges. So those who fret about the adequacy of self-regulation need to get over the idea that going back to the future by re-mutualizing would make a damn bit of difference. If only it were that easy.

The US military’s credibility is at serious risk due to its don’t-worry-be-happy disclosures about the war against ISIS. Much independent reporting today strongly suggests that ISIS is in control of a substantial portion of the Baiji refinery, and that the small Iraqi garrison is in danger of being overrun: and you know what ISIS does when that happens. But the military’s Kevin Bacon-esque take couldn’t be more different:

 While Beiji and Ramadi in Iraq remain contested between Iraqi security forces and extremist Islamic State of Iraq and the Levant militants, ISIL is experiencing setbacks, a U.S. Central Command spokesman said Friday.

If things are going so swimmingly  in Baiji, why the relatively intense air activity there today?:

Near Bayji, eight airstrikes struck one large and five small ISIL tactical units, destroying five ISIL fighting positions, three ISIL buildings, an ISIL command and control facility, an ISIL mortar system, and an ISIL VBIED.

Remember Chairman of the Joint Chiefs Dempsey (who can’t leave soon enough to suit  me) declared that Baiji (in contrast to Ramadi) is strategically important. Then why are there only 200 Iraqi police and special forces there, hanging on for dear life?

Further, the military has been extremely slow in responding to accusations by the very dodgy Syrian Observatory for Human Rights (which appears to be one guy in a flat in London who is a conduit for Islamist agitprop) that US airstrikes had killed 64 civilians in a town near Kobani. All coverage of this event takes Syrian Observatory’s account as gospel. This is a very damaging charge, and the US should have responded quickly and authoritatively immediately, rather than letting this portrayal go around the world unchallenged. The military should also investigate the Syrian Observatory very closely and report what it learns about its sources, methods, and connections. If, as it appears, it is an information war outlet, it is unconscionable that we are letting it go unchallenged as the authoritative source on events in Syria that independent reporters cannot observe.

It’s not just me that is appalled by the Pentagon’s performance. The authoritative and respected analyst Anthony Cordesman rips the Pentagon’s recently released report on the progress of the “counter-ISIS” operation. This sentence suffices, but read the whole thing:

To put it bluntly, it seems to be far more of a public relations exercise than a serious attempt at reporting on nature and success of Operation Inherent Resolve.

We need to be honest and be real, and not repeat the self-defeating performance of the “Five-O’Clock Follies” of Vietnam infamy. Credibility is vital, and methinks it is being squandered to protect an administration that is only half-heartedly  (if that) committed to destroying ISIS. Reality will rear its ugly head sooner or later, and better to confront it now when something can be done about it.

Former CIA Deputy Director Michael Morell made a rather stunning admission that the US intelligence community believed that the Arab Spring would be the death knell of Al Qaeda:

“We thought and told policy-makers that this outburst of popular revolt would damage al-Qaeda by undermining the group’s narrative,” Morell wrote in the book, a copy of which was obtained by The Washington Post ahead of its release later this month.

Instead, “the Arab Spring was a boon to Islamic extremists across both the Middle East and North Africa,” he said. “From a counterterrorism perspective, the Arab Spring had turned to winter.”

Do they also believe in unicorns and faeries at the CIA? Revolutionaries exploit political turmoil: the vast majority of political upheavals in the developing world have empowered radicals, rather than neutered them. And since when did a revolutionary situation in the Middle East in particular result in the emergence of a stable, peaceful state? The region’s nations have see-sawed between anarchic strife and repressive regimes. The region’s history is fodder for cynicism and world weariness, not flights of political fancy.

Neocons were rightly savaged after the Iraq invasion for their naive belief that Saddam’s overthrow would lead to the creation of a stable, peaceful, and democratic Iraq, and that this in turn could provide the foundation for a democratic Middle East. We all know how that worked out, which makes the naiveté of the CIA almost a decade later astounding.

Arab societies are deeply broken, and as Iraq demonstrates, throwing off the shackles of an authoritarian regime is almost certain to result in chaos and anarchy that provides opportunities to Islamist radicals. Indeed, the failure of the CIA in 2011 is more damning than the neocon failure in 2003 because the former had the benefit of the sad example of Iraq, which should tempered greatly any temptation to indulge in flights of optimism.

And God spare us from anyone who bases policies on “narratives,” or believes that the roots of Salafism in the Middle East are so shallow that it will wither and die because a few aging dictators are overthrown. Islamism is deeply embedded in Arab societies, and to believe that the fall of a Mubarak or a Khaddafy will transform Islamists into Jeffersonians is delusional.

It must also be noted that this benign view of the effect of the Arab Spring on Al Qaeda was very politically convenient for the administration. Especially in the aftermath of the elimination Osama, it supported Obama’s campaign pitch that “Al Qaeda is on the run.” This raises the possibility that the CIA slanted its analysis to benefit its political masters.

In brief, this is an intellectual failure of the first order. What confidence can we have that the mindset that led to this failure is not still exerting a baleful influence on intelligence analysis today? The CIA’s intellectual failure is particularly troubling given the extremely fraught situation in the Middle East. We need all the penetrating analysis we can get, and the thought that those charged with providing such analysis have very recently have proved to be naive fantasists is deeply troubling.

During the Cold War, Reagan’s dissatisfaction with the analysis provided by the CIA led him to form a Team B to give an alternative viewpoint about the USSR. In light of Morell’s admission, something similar is desperately needed now. But we all know that the likelihood we will get it is somewhere between zero and nil.

I have read and re-read these remarks by Brett McGurk, “deputy special presidential envoy to the Global Coalition to Counter ISIL” (counter?-that tells you all you need to know) more times than I can count, and I still can hardly believe my eyes:

 Well, you certainly hope for such a tipping point, but our plan is for a long, steady, slow-burning campaign against Daish.

I have read more military history than I should have, and I cannot recall ever reading anything like this. I keep shaking my head. The closest thing that comes to mind is the Johnson-McNamara “gradual escalation” strategy, and if that’s the best comparison, it’s very bad news.

“Slow-burning” is the antithesis of pretty much every basic military principle. I remember one quote from Reef Points from my days at Navy, from Bull Halsey: “Hit hard, hit fast, hit often.” We are doing the reverse: hitting ineffectually, hitting slowly (by McGurk’s admission) and hitting infrequently. I further remember Napoleon: “The reason I beat the Austrians is that they did not know the value of five minutes.” Speed and initiative put the enemy on his heels. “Slow-burning” gives him the opportunity to prepare an dig in and marshal resources.

And that’s exactly what ISIS is doing, especially in Mosul. It is delusional to think that the Iraqi Army will be able to take Mosul, especially the way that ISIS has burrowed itself, literally and figuratively,  into every nook and cranny of the city. The Iraqis had a helluva time taking Tikrit, which was held by a few hundred ISIS fighters. Mosul will be orders of magnitude more difficult, no matter how many excavators we blow up.

The chance to keep ISIS out of Mosul was lost last June, when ISIS was exposed on the roads and deserts around the city. But Obama stayed his hand.

“Slow-burning” also allows ISIS to slaughter at its leisure, including hundreds of Yazidi prisoners who were massacred yesterday. By the time our slow-burning is over, will there be anyone alive left to save?

ISIS is actually on the offensive in places like Baiji and Ramadi. The US military is trying to spin that this is the last gasp of a force facing defeat:

While Beiji and Ramadi in Iraq remain contested between Iraqi security forces and extremist Islamic State of Iraq and the Levant militants, ISIL is experiencing setbacks, a U.S. Central Command spokesman said today.

Speaking to reporters in the Pentagon via teleconference, Air Force Col. Patrick Ryder provided a weekly update on Centcom’s operational highlights in the fight against ISIL in Iraq and Syria.

In central Iraq, Iraqi security forces continue to conduct operations to secure the city of Karmah, and they have retaken territory around the Tigris River canal, Ryder said.

“We’ve seen these efforts help isolate ISIL fighters who are in the town, and this has helped choke off their lines of communication,” he said, adding that from an operational perspective, such gains help to secure ISIL approaches to Baghdad.

Iraqi Forces Hold Ramadi

There have been no significant changes from last week’s operations in Ramadi, a city in western Iraq, where Iraqi forces continue to hold onto key ground while ISIL forces try to keep territory they captured in the eastern part of the city. “We expect Ramadi to remain contested,” Ryder said.

ISIL also continues to contest the Iraqi forces’ hold on Beiji’s oil refinery, he said.

“ISIL has shown that Beiji and Ramadi are strategically important to them, and they are committing a significant amount of limited resources to secure these locations,” Ryder said.

ISIL wants to “score a win” after suffering numerous recent setbacks, most notably in Tikrit, he added. “Because of this, both cities are expected to remain contested for some time,” he said.

Sorry. Not buying it. Most other information strongly suggests that the Iraqis are hanging on by their fingernails in both places. The initiative is with ISIS, not Iraq. At best, US airpower is keeping ISIS at bay and saving the Iraqis from another massacre. That’s not defeat, but it sure as hell ain’t victory. It’s sad to see the the military spinning so pathetically in defense of a campaign that you know deeply offends their professional and patriotic sensibilities.

In other embarrassments, the United States is telling citizens in Yemen: “Good luck! You’re on your own!”

That’s not true, exactly. The State Department is setting up the equivalent of a ride sharing program. Not exactly civis romanus sum, is it?

And there’s more! Iran seized a cargo ship in one of the most strategically important waterways in the world, the Straits of Hormuz, during a period of heightened tensions in the region: indeed there is an ongoing proxy war between Iran and the Saudis in Yemen. The Iranians are using some flimsy legal pretext to justify the seizure, but we all know that Iran is sending a message.

We also know that Obama is pretending not to hear. Again the Pentagon carried his water, issuing several mealy-mouthed statements to the effect that we aren’t sure whether the Maersk ship was in international waters, and that the US is under no obligation to defend a Marshall Islands flagged ship, despite the fact that the US has treaty obligations to that nation:

The Government of the United States has full authority and responsibility for security and defense matters in or relating to the Republic of the Marshall Islands. (b) This authority and responsibility includes: (1) the obligation to defend the Federated States of Micronesia and its people from attack or threats thereof as the United States and its citizens are defended;… (c) The Government of the United States confirms that it shall act in accordance with the principles of international law and the Charter of the United Nations in the exercise of this authority and responsibility

And even if the US had no treaty obligation, for centuries-and especially since WWII-it has been a stalwart defender of the freedom of navigation. Twice (in 1981 and 1986) Reagan dispatched carrier groups to the Gulf of Sidra when Khadaffy claimed that these waters were off-limits to foreign ships. When the Libyans insanely challenged the carriers, F-14s splashed several of their fighters. When the Iranians began attacking tankers in the Persian Gulf in 1987, foreign tankers were put under the US flag, and escorted by US ships. Later, the US shelled and destroyed oil platforms that the Iranians were using as command and control facilities to coordinate their attacks on tankers.

By the way, the Iranian seizure of the Maersk Tigris has to be viewed against the background of this history.

But Obama is hell-bent on doing a deal with Iran, and he will sacrifice pretty much any American policy principle and alliance to get it.

All of this has me doing a slow burn.