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By Doug Bandow

Doug Bandow

How to explain the Trump administration’s fixation with Iran?
The Islamic Republic is an economic wreck and in political
disarray, and lacks an effective conventional military. It
obviously cannot seriously threaten America.

Moreover, Tehran’s capabilities are dramatically overshadowed by
Israel’s nuclear arsenal, Saudi Arabia’s lavishly appointed
military, and the United Arab Emirates’ brutal war-making. The
obvious response to Iran’s threats, which have been far exceeded by
Riyadh’s reckless aggressiveness, is regional cooperation—and
for Tehran’s neighbors to better treat their own oppressed
populations, so the latter do not find Iran’s Islamist message
appealing.

Yet President Donald Trump, who doesn’t like the North Atlantic
Treaty Organization, through which the Europeans have become
embarrassingly dependent on America, wants to create an Arab NATO,
provisionally named the Middle East Strategic Alliance. The
organization’s leading member would be Saudi Arabia, another nation
which candidate Trump criticized for taking advantage of the United
States.

Secretary of State Mike Pompeo used the latest UN General
Assembly meeting to host prospective members while Deputy Assistant
Secretary of State for Arabian Gulf Affairs Tim Lenderking
criss-crossed the Gulf promoting the idea. If all goes well, it
will be introduced at a summit hosted by the United States in
January.

Donald Trump doesn’t like
the original NATO, so why does he want a second one?

At least the original NATO served a useful purpose. Western
European countries had been wrecked by World War II and the Soviet
Union turned Central and Eastern European states into dismal
satellites. Soviet domination of Eurasia, though not sufficient to
threaten American independence, would have presented the U.S. with
a dangerous security environment for years if not decades.

The alliance’s chief shortcoming was allowing Europeans to treat
America’s military commitment as welfare. NATO’s European members
are capable of confronting Russia or any other presumed adversary.
Yet after recovering economically, they continued to rely on Uncle
Sam, dismissing ever more embarrassing pleas from Washington that
they do more. They knew American officials would defend the
continent, no matter what.

Today even countries claiming to be vitally threatened by
Russia—Poland and the Baltic States—spend only about
two percent of gross domestic product on their militaries. They
expect the United States to swoop in at the last minute and save
them if the worst happens. NATO is an alliance primarily in name
rather than action. President Trump has repeatedly made this point,
but his own officials have done their best to undermine his
efforts.

Alas, an Arab NATO, whether called MESA or something else, would
multiply the original NATO’s many infirmities. First, by its
own terms the proposed organization would be bound to target its
own members. A spokesman for the National Security Council …read more

Source: OP-EDS

By Alberto Mingardi

Alberto Mingardi

MILAN — The Italian government’s decision to

bust the deficit limits it had agreed with the European Union
is depressing. But it’s not surprising.

It’s not just that Rome is now governed by a
grand coalition of extremists: Interior Minister
Matteo Salvini’s far-right League and Economic
Development Minister Luigi Di Maio’s anti-establishment 5tar
Movement.

For years, Italian politicians have portrayed the
country’s fiscal constraints as the result of foreign
machinations — unfair limitations imposed by Brussels or
Berlin.

People tend to
overestimate the immediate benefits of government spending and
underestimate what it may cost them in the long run.

Right-wingers have portrayed the financial storm that ousted
then Prime Minister Silvio Berlusconi in 2011 as a conspiracy.
Italy’s rising cost of borrowing, they claim, was somehow
weaponized to drive out one of the few politicians who stood up to
Germany.

More recently, former Prime Minister
Matteo Renzi demanded, and obtained, “flexibility”
over Brussels-mandated budget constraints, thereby undermining the
legitimacy of fiscal rules.

Indeed, his center-left Democratic Party’s electoral program
promised a budget deficit of 2.9 percent — quite a bit higher
than the 2.4 percent deficit the government unveiled Thursday
night.

Renzi’s rhetoric portrayed the negotiation over budget limits as
a diplomatic skirmish with the
European Commission — a framing that plays into the hands
of the populists in charge of the country today.

Seen in this light, a bigger deficit is proof that Italy is
staring down the European technocracy — never mind the
consequences for the country’s finances over the long
term.

Italy’s government is made up of strange bedfellows. The
League is primarily concerned with restricting immigration. The
5Stars lean left; their key campaign promise was a
“citizen’s income” for the poorest of Italians,
one they partially delivered on by busting through the EU’s
spending constraints.

For now, the two parties have squared their differences by
agreeing to spend more freely.

At least in Renzi’s times, laxer public finances were seen as a
necessary counterpart to supply-side reforms. Now bigger deficits
are good in themselves.

Salvini and Di Maio both champion a vulgar form of Keynesianism:
a blind preference for government spending, regardless of the
macroeconomic outlook.

This has dire consequences for the long-term health of the
economy.

Italy’s cost of borrowing has roughly doubled since the
government took power last spring. This is a serious matter in a
country where the public debt is over €2.2 trillion or 132 percent
of GDP. It also translates into a higher cost of credit for
households and businesses.

This is particularly troublesome for the enterprising,
productive part of Italy: In short, the League’s stronghold in the
north.

Perhaps because they lack a credible alternative …read more

Source: OP-EDS