The U.S. Isn't as Free as It Used to Be

By TERRY MILLER

The United States is losing ground to its major competitors in the global marketplace, according to the 2010 Index of Economic Freedom released today by the Heritage Foundation and The Wall Street Journal. This year, of the world's 20 largest economies, the U.S. suffered the largest drop in overall economic freedom. Its score declined to 78 from 80.7 on the 0 to 100 Index scale.

The U.S. lost ground on many fronts. Scores declined in seven of the 10 categories of economic freedom. Losses were particularly significant in the areas of financial and monetary freedom and property rights. Driving it all were the federal government's interventionist responses to the financial and economic crises of the last two years, which have included politically influenced regulatory changes, protectionist trade restrictions, massive stimulus spending and bailouts of financial and automotive firms deemed "too big to fail." These policies have resulted in job losses, discouraged entrepreneurship, and saddled America with unprecedented government deficits.
In the world-wide rankings of economic freedom, the U.S. fell to eighth from sixth place. Canada now ranks higher and boasts North America's freest economy. More worrisome, for the first time in the Index's 16-year history, the U.S. has fallen out of the elite group of countries identified as "economically free" by the objective measures of the Index. Four Asia-Pacific economies now sit atop the global rankings. Hong Kong stands in first place for the 16th consecutive year, followed by Singapore, Australia and New Zealand. Every region of the world maintains at least one country among those deemed "free" or "mostly free" by the Index.

Columnist Mary O'Grady discusses the Heritage Foundation's Index of Economic Freedom for 2010.

Some countries, notably Britain and China, have followed America's poor example and curtailed economic freedom. But many others—such as Poland, South Korea, Mexico, Japan, Germany and even France—have maintained or expanded economic freedom despite the global crisis. Ignoring the pressures of recession, these enlightened nations have continued to liberalize their economies, granting their entrepreneurs and consumers greater freedom. As a result, the average Index score dropped only 0.1 point in 2010. Eighty-one countries out of the 179 ranked recorded higher scores than in 2009.
These trends are important because study after study shows a strong correlation between economic freedom and prosperity. Citizens of economically freer countries enjoy much higher per-capita incomes on average than those who live in less free economies. Economic freedom also has positive impacts on overall quality of life, political and social conditions, and even on protection of the environment. Perhaps of most significance in these hard times, Index data indicate that freer economies do a much better job of reducing poverty than more highly regulated economies.

Associated Press

The public sector can't match the vitality of the private sector in promoting growth. Governments, even those that promise change, are primarily agents of the status quo. They tend to reflect the views and needs of those already holding political or economic power. Even democratic nations have their vested interests. Real change, however, can happen when those outside the mainstream have the freedom to try new things: new production processes, new technologies and new methods of organizing workers and capital.
It is common these days to dismiss as simpletons or ideologues those who speak in favor of the free market or capitalism. An honest assessment shows otherwise. Economic freedom, as represented in the Index of Economic Freedom, is a philosophy that rejects economic dogma, championing instead the diversity that follows when entrepreneurs are free to choose their own paths to prosperity.
The abiding lesson of the last few years is that the battle for liberty requires perpetual vigilance. President Obama professes desire to foster prosperity, environmental protection, poverty reduction and better health care. How ironic, then, that his economic proposals so consistently ignore or even undermine the one system—free enterprise capitalism—that has proven best able to achieve those goals.
Now America's once high-flying economy is barely crawling forward. Americans deserve better, and they can do better—as soon as they reverse course and start regaining the economic freedom that made America the most prosperous country in the world.
Mr. Miller is director of the Center for International Trade and Economics at the Heritage Foundation. He is co-editor, with Kim R. Holmes, of the "2010 Index of Economic Freedom" (471 pages, $24.95), available at heritage.org/index.

Why America and China will clash

By Gideon Rachman

Published: January 18 2010 19:54 | Last updated: January 18 2010 19:54

Pinn

Google’s clash with China is about much more than the fate of a single, powerful firm. The company’s decision to pull out of China, unless the government there changes its policies on censorship, is a harbinger of increasingly stormy relations between the US and China.

The reason that the Google case is so significant is because it suggests that the assumptions on which US policy to China have been based since the Tiananmen massacre of 1989 could be plain wrong. The US has accepted – even welcomed – China’s emergence as a giant economic power because American policymakers convinced themselves that economic opening would lead to political liberalisation in China.

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If that assumption changes, American policy towards China could change with it. Welcoming the rise of a giant Asian economy that is also turning into a liberal democracy is one thing. Sponsoring the rise of a Leninist one-party state, that is America’s only plausible geopolitical rival, is a different proposition. Combine this political disillusionment with double-digit unemployment in the US that is widely blamed on Chinese currency manipulation, and you have the formula for an anti-China backlash.

Both Bill Clinton and George W. Bush firmly believed that free trade and, in particular, the information age would make political change in China irresistible. On a visit to China in 1998, Mr Clinton proclaimed: “In this global information age, when economic success is built on ideas, personal freedom is essential to the greatness of any nation.” A year later, Mr Bush made a similar point: “Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy ... Trade freely with the Chinese and time is on our side.”

The two presidents were reflecting the conventional wisdom among America’s most influential pundits. Tom Friedman, New York Times columnist and author of best-selling books on globalisation, once proclaimed bluntly: “China’s going to have a free press. Globalisation will drive it.” Robert Wright, one of Mr Clinton’s favourite thinkers, argued that if China chose to block free access to the internet, “the price would be dismal economic failure”.

So far, the facts are refusing to conform to the theory. China has continued to censor new and old media, but this has hardly condemned it to “dismal economic failure”. On the contrary, China is now the world’s second largest economy and its largest exporter, with foreign reserves above $2,000bn. But all this economic growth shows little sign of provoking the political changes anticipated by Bush and Clinton. If anything, the Chinese government seems to be getting more repressive. Liu Xiaobo, a leading Chinese dissident, was recently sentenced to 11 years in prison for his involvement in the Charter 08 movement that advocates democratic reforms.

Google’s decision to confront the Chinese government is an early sign that the Americans are getting fed up with dealing with Chinese authoritarianism. But the biggest pressures are likely to come from politicians rather than businessmen. Google is an unusual company in an unusually politicised industry. If the Googlers do indeed head for the exits in China, they are unlikely to be crushed by a stampede of other multinationals rushing to follow them. To most big companies the country’s market is too large and tempting to ignore. Despite Google, US business is likely to remain the lobby that argues hardest for continuing engagement with China.

The pressures for disengagement will come from labour activists, security hawks and politicians – particularly in Congress. To date, the Obama administration has based its policy firmly on the assumptions that have governed America’s approach to China for a generation. The president’s recent set-piece speech on Asia was a classic statement of the case for US engagement with China – complete with the ritualistic assertion that America welcomes China’s rise. But, after being censored by Chinese television in Shanghai and harangued by a junior Chinese official at the Copenhagen climate talks, Barack Obama may be feeling less warm towards Beijing. An early sign that the White House is hardening its policy could come in the next few months, with an official decision to label China a “currency manipulator”.

Even if the administration itself does not move, the voices calling for tougher policies against China are likely to get louder in Congress. Google’s decision to highlight the dangers of cyberattack from China will play to growing American security fears about China. The development of Chinese missile systems that threaten US naval dominance in the Pacific are also causing concern in Washington. Impending US arms sales to Taiwan are already provoking a dispute.

Meanwhile, protectionism seems to be becoming intellectually respectable in the US in ways that should worry China.

A trade war between America and China is hardly to be welcomed. It could tip the world back into recession and inject dangerous new tensions into international politics. If it happens, both sides will share the blame. The US has been almost wilfully naive about the connections between free trade and democracy. The Chinese have been provocative over currency and human rights. If they want to head off a damaging clash with America, changes in policy would be well advised.

gideon.rachman@ft.com
More columns at www.ft.com/rachman
Post and read comments at Gideon Rachman’s blog

Have You Seen this Man? An "Aged" Osama Bin Laden With Gray Hair, No Beard

FBI Forensic Artists Produce Enhanced Mug Shot Photos of Top Terrorists.

Using sophisticated digital enhancement techniques, the FBI today published "aged progressed" mug shots of Osama bin Laden and 17 other top terrorists wanted by the U.S.

State Department, FBI Release Digitally Enhanced Photos Of Most Wanted Terrorist Suspects, Osama bin Laden

(State Department/FBI)

One version of bin Laden shows him with a full head of wavy gray and black hair, and a trim beard. No previous photo had shown him without a headdress covering his hair.
The second "aged processed" mug shot of bin Laden shows him with the long flowing beard that has been his trademark, although much grayer than previously seen.

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The FBI and the State Department, which administers the international rewards program called Rewards for Justice, said the enhanced photos were created by forensic artists at the FBI's crime laboratory in Quantico, Virginia.
The FBI said its artists modified facial features and altered "grooming and cloth choices" in hopes the public might recognize bin Laden or any of the others.

"These new images are powerful examples of how advances in technology and science can be used to help find and bring to justice wanted persons," said Louis E. Grever, the head of the FBI's Science and Technology Branch.
Despite a $25 million reward for information on his whereabouts, U.S. officials say they have not had a confirmed sighting of bin Laden in more than eight years.
The full list of the aged photos can be seen at the State Department Web site www.rewardsforjustice.net.
 

 

Blaming Israel First

Business as usual at the U.N.

 

BY Peter Berkowitz

January 18, 2010, Vol. 15, No. 17

Tel Aviv
With the possible exception of the U.S. armed forces, no military in the history of warfare has made greater efforts in the face of grave national security threats to avoid the use of force or has tried harder, when obliged to fight, to protect noncombatants than the Israel Defense Forces. With the possible exception of the U.S. armed forces, no military has investigated itself as rigorously as the IDF. With the possible exception of the U.S. judiciary, no courts have done more to hold their military accountable than Israel’s. And with the possible exception of America, no democracy has gone further in wartime to legitimize dissent than Israel.
It is therefore a bitter irony, fraught with consequences for the legitimacy of international law, that—with the same possible exception—no country’s military, judiciary, and democracy have been the target of greater vilification for alleged human rights violations, war crimes, and crimes against humanity than Israel’s.
The continuing controversy over the Goldstone Report is a case in point.
In April 2009, the Geneva-based U.N. Human Rights Council appointed Richard Goldstone, judge of the Constitutional Court of South Africa and former prosecutor of the International Criminal Tribunals for the former Yugoslavia and Rwanda, to head a mission

to investigate all violations of international human rights law and international humanitarian law that might have been committed at any time in the context of the military operations that were conducted in Gaza during the period from 27 December 2008 and 18 January 2009, whether before, during or after.

 On September 15, the mission released its 575-page report. The bulk was devoted to alleged Israeli misconduct in Operation Cast Lead, which aimed to stop the more than 12,000 rockets and mortars fired over eight years by Hamas and other armed Palestinian groups at civilian targets in southern Israel. The report firmly and in vivid detail accused the Jewish state of human rights violations, war crimes, and “actions” that “might justify a competent court finding that crimes against humanity have been committed.” Tentatively and briefly, the report also found that “it may be that the Palestinian combatants did not at all times adequately distinguish themselves from the civilian population” and that Palestinian rocket and mortar attacks on Israeli civilians “would constitute war crimes, and may amount to crimes against humanity.”

The document recommended that the Security Council require Israel and Palestinian authorities to report, within six months, on the investigations and prosecutions international law obliged them to carry out. Should Israel fail to make good progress, the report recommended that the Security Council refer the mission’s allegations to the prosecutor for the International Criminal Court. The report’s recommendations concerning the Palestinian authorities were decidedly more tepid.
On November 3, the U.S. House of Representatives, by a vote of 344-36, passed a nonbinding resolution rejecting the report as “irredeemably biased.” Two days later, the U.N. General Assembly, by a vote of 114-18, adopted the report and sent it to the Security Council.
The Security Council has declined to take action. But damage has been done. By pervasively insinuating that Israel is no better than, and in some respects worse than, the terrorists it battles, the Goldstone Report hands Islamic extremists another propaganda victory. Credulous European and American intellectual and political elites have already casually imbibed the opinion that Israel deliberately attacked civilian targets to terrorize Palestinians and destroy the foundations of civilian life in Gaza.
Goldstone’s mission was suspect in Israel’s eyes from the outset. The Human Rights Council that commissioned it is disreputable. It includes among its 48 members China, Cuba, Egypt, Pakistan, and Saudi Arabia; notwithstanding the gross violations of human rights of which many of its members are guilty, it has made a priority of condemning Israel. In addition, statements about Operation Cast Lead and the Israeli-Palestinian conflict made before their appointments by two of Goldstone’s three mission colleagues—Christine Chinkin, professor of international law at the London School of Economics, and Hina Jilani, advocate of the Supreme Court of Pakistan—could reasonably be seen as prejudging Israel’s guilt. And from the General Assembly’s 1975 resolution declaring Zionism a form of racism to the International Court of Justice’s 2004 ruling that Israel’s security barrier violated international law and must be dismantled, Israel has learned to expect from international bodies hypocrisy, slander, and scorn for its security.
Consequently, the Israeli government’s decision not to cooperate with Goldstone, while still controversial in Israel, was understandable. The mission’s mammoth report, written in unseemly haste, confirmed Israel’s doubts.
A careful reading thoroughly discredits the Goldstone Report. So demonstrated Hebrew University philosophy professor and New York University law professor Moshe Halbertal, a distinguished man of the Israeli left who helped draft the IDF’s ethics code, in a devastating New Republic critique. Here, three examples of the report’s biased and unscrupulous analysis must suffice.
- First, it presents as settled that, despite completely withdrawing from Gaza in 2005, Israel remains under international law an occupying power with attendant obligations because it controls Gaza’s borders. In reality, the legal question is very much in dispute. Israel’s famously progressive and activist Supreme Court has ruled that the country no longer occupies Gaza. And as Col. (Ret.) Daniel Reisner, former head of the IDF’s International Law Department, pointed out to me, even the International Committee of the Red Cross considers the question to be difficult and unresolved.
- Second, the report blames Israel for causing humanitarian suffering by imposing a blockade on Gaza. In the process it dismisses the heroic efforts the IDF made in the midst of last winter’s military operation that increased food, medicine, and fuel entering Gaza. Nor does it examine Hamas’s theft of these humanitarian supplies or exploitation of Israel’s daily humanitarian pauses to launch rockets at civilians in Israel and attack the IDF in Gaza. And the report fails to note that Egypt controls Gaza’s western border, imposing restrictions more severe than Israel’s—this although the mission itself entered Gaza through the Egyptian-administered Rafah crossing.

- Third, the report accuses Israel of violating the laws of war by killing more than 200 civilian Palestinian police officers. In so accusing, the report relied heavily on Palestinian testimony and ignored or dismissed openly available information showing that Hamas also assigned the police a military role and ordered them, in the event of a ground operation, to fight the IDF.
More generally, the Goldstone Report suffers from fatal methodological flaws. While subjecting Israeli accounts of wartime operations to hyper-exacting scrutiny and relentless skepticism, it routinely accepts Palestinian testimony of alleged Israel crimes at face value, rarely if ever wondering whether Gazans regarded representations to the mission as acts of resistance. This is of a piece with the report’s systematic failure to give due attention, as the laws of armed conflict direct, to military necessity, which in this case means the precautions feasible for reasonable IDF commanders to make in the harsh conditions of urban warfare against an enemy relentlessly striving to blur the distinction between civilians and combatants.
Finally, while the Goldstone Report goes to extravagant and irrelevant lengths to put Israel’s Gaza operation in context by discussing the larger sweep of the Israeli-Palestinian conflict, it barely mentions Hamas and glosses over the terrorism to which it is devoted. To understand Israel’s operation, however, it is crucial to grasp Hamas’s frequently reiterated determination to wage jihad to destroy Israel. It is also vital to appreciate that Hamas blatantly violates the laws of armed conflict by deliberately transforming Gaza City and other densely populated areas into military bases. From these locations, using its own people as human shields, Hamas launches its rockets and mortars at Israel’s civilian population—ensuring that Israeli operations aimed at ending those attacks will make Israel a killer of Palestinian civilians.

No doubt, like all armies, the IDF made errors in Operation Cast Lead. And in the infernal smoke and fire of asymmetric urban warfare its soldiers and officers may have committed crimes. In the short term, Israel’s Military Advocate General’s Corps continues to investigate allegations and to pursue substantial ones. A military task force established to examine the Goldstone Report’s allegations headed by Brigadier General Yuval Halamish expects to publish its findings at the end of January.
The long-term stakes, according to General Halamish, are high: “The fundamental problem applies not just to Israel but to all democratic nations—if they accept the Goldstone Report’s approach and conclusions, they will not be able to fight terror.”
Peter Berkowitz is the Tad and Dianne Taube senior fellow at the Hoover Institution, Stanford University.

U.S. Economy: Trade Gap Grows as Oil Prices Jump; Exports Climb

By Courtney Schlisserman

Jan. 12 (Bloomberg) -- The trade deficit in the U.S. widened in November more than anticipated as imports climbed faster than exports, pointing to a rebound in global demand that is fueling growth.
The gap expanded 9.7 percent to $36.4 billion, the highest level since January, from a revised $33.2 billion in October, Commerce Department data showed today in Washington. Imports increased 2.6 percent, reflecting a jump in oil prices, while exports rose to the highest level in a year.
Spending by American companies and consumers will continue to push up imports, while a 12 percent drop in the dollar since early March and growing economies overseas mean U.S. sales abroad may also improve. China’s move to cool its economy by raising bank reserve requirements caused stocks to tumble worldwide.
“There’s continued strong export growth ahead,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “On the import side, it’s logical that if U.S. companies are no longer running down their inventories that they’re going to need to import more.”
Stocks dropped, depressed by lower-than-anticipated earnings at Alcoa Inc. and China’s actions. The Standard & Poor’s 500 Index was off 0.7 percent to 1,139.52 at 11:14 a.m. in New York.
Median Forecast
Economists forecast the deficit would widen to $34.6 billion from a previously estimated $32.9 billion in October, according to the median of 76 projections in a Bloomberg News survey. Estimates ranged from gaps of $31 billion to $38.2 billion.
Excluding the influence of prices, which are the figures used to calculate gross domestic product, the trade gap increased to $40.7 billion in November from $38.3 billion the prior month. The average gap for the quarter so far, at $39.5 billion, is little changed from the third-quarter average of $39.4 billion, indicating trade will not have much influence on economic growth in the last three months of the year.
A rebound in global growth along with the dollar’s decline from a five-year high on March 5 against a basket of currencies from the nation’s biggest trading partners are fueling global demand for goods from companies like United Technologies Corp. and United Parcel Service Inc.
Exports increased 0.9 percent, the seventh consecutive gain, to $138.2 billion in November, reflecting increasing demand overseas for food and American-made automobiles and semiconductors.
Soybeans to China
Demand from China for American goods climbed to a record $7.3 billion, led by surging purchases of soybeans due to a drought in Argentina, according to the Commerce Department. The increase caused the U.S. deficit with the Asian nation to fall 11 percent to $20.2 billion.
American-made automobiles and parts, semiconductors and industrial machines were also in demand globally in November, today’s report showed. The increase in vehicle sales mainly reflects cross-border trade with Canada and Mexico to satisfy North American production.
United Technologies, the Hartford, Connecticut-based maker of Pratt & Whitney jet engines and Otis elevators, last month forecast 2010 per-share profit would increase in line with analyst estimates because of cost cuts and growth in emerging markets.
Contracts in Singapore
The company, which garners more than 60 percent of sales outside the U.S., sees improvement in regions including Asia, Chief Executive Officer Louis Chenevert told investors at a meeting on Dec. 10. The Otis unit announced two contracts Dec. 8 to supply, install and maintain 1,300 elevators in Singapore public housing.
Manufacturing in the U.S. expanded in December at the fastest pace in more than three years, the Institute for Supply Management said Jan. 4. Other reports showed factories in Europe and in China also strengthened last month.
Another report today showed confidence among U.S. small businesses decreased in December as the outlook for sales dimmed. The National Federation of Independent Business optimism index fell to 88, the lowest level in five months, the Washington-based group said.
The report signals that larger companies, which are more likely to benefit from growing global demand, are leading the U.S. economic recovery, said John Ryding, chief economist at RDQ Economics in New York.
Jobs Outlook
“If this conjecture turns out to be correct, it could be another factor hampering the decline in unemployment, given the importance of small businesses to the job creation process,” Ryding said in a note to clients.
The need to prevent inventories from falling even more as sales improve, and the global economic rebound, which is pushing up commodity costs, are contributing to the increase in imports.
Imports advanced 2.6 percent to $174.6 billion. Today’s report estimated petroleum prices rose to $72.54 a barrel in November, the highest level since October 2008. The increase in costs more than offset a drop in volumes as the U.S. imported 245 million barrels in November, the fewest since February 1999.
Americans also bought more consumer goods, computers and telecommunications equipment from overseas, signaling a revival in overall demand and business investment.
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

U.S. Shifts Iran Focus to Support Opposition

By JAY SOLOMON

WASHINGTON -- The Obama administration is increasingly questioning the long-term stability of Tehran's government and moving to find ways to support Iran's opposition "Green Movement," said senior U.S. officials.
The White House is crafting new financial sanctions specifically designed to punish the Iranian entities and individuals most directly involved in the crackdown on Iran's dissident forces, said the U.S. officials, rather than just those involved in Iran's nuclear program.

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Sipa Press

The U.S. is seeking ways to help Iran's opposition, led by figures such as Mahdi Karroubi (pictured).

U.S. Treasury Department strategists already have been focusing on Iran's Revolutionary Guard Corps, which has emerged as the economic and military power behind Supreme Leader Ayatollah Ali Khamenei and President Mahmoud Ahmadinejad.

In recent weeks, senior Green Movement figures -- who have been speaking at major Washington think tanks -- have made up a list of IRGC-related companies they suggest targeting, which has been forwarded to the Obama administration by third parties.
Names on the list include Iran's largest telecommunications provider, Telecommunication Company of Iran, which is majority-owned by the IRGC, and the Iranian Aluminum Co. A U.S. official involved in Iran said the administration wouldn't comment on whether it was acting on the information.
American diplomats, meanwhile, have begun drawing comparisons in public between Iran's current political turmoil and the events that led up to the 1979 overthrow of Shah Reza Pahlavi.
"In my opinion there are many similarities," the State Department's chief Iran specialist, John Limbert, told Iran-based listeners this week over U.S. government-run Radio Farda. "I think it's very hard for the government to decide how to react to the legitimate and lawful demands of the people."
Since the opposition movement's demonstrations recently peaked after the death of reformist Islamic cleric Ayatollah Hossein Ali Montazeri, a number of Iran scholars in the U.S. said they have been contacted by senior administration officials eager to understand if the Iranian unrest suggested a greater threat to Tehran's government than originally understood.

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Agence France-Presse/Getty Images

President Ahmadinejad

"The tone has changed in the conversation," said one scholar who discussed Iran with senior U.S. officials. "There's realization now that this unrest really matters."

In a signal of the White House's increased attention to Iran's political upheaval, Secretary of State Hillary Clinton gathered over coffee at the State Department this week with four leading Iran scholars and mapped out the current dynamics, said U.S. officials. One issue explored was how the U.S. should respond if Tehran suddenly expressed a desire to reach a compromise on the nuclear issue. Mrs. Clinton asked whether the U.S. could reach a pact without crippling the prospects for the Green Movement.
U.S. allies are mixed in their response to the new focus. One senior Arab official said he told State Department officials this week they were deluded if they though Iran was close to experiencing a revolution reminiscent of the Shah's overthrow. "The IRGC has its hands on the Iranian people," the official said.
Israel, which faces the greatest security threat from Iran, says only widespread sanctions will effectively upend Tehran's current political leadership. "Many Israeli experts have concluded that expansive sanctions will widen the schisms between the Iranian government and its people," said Israel's ambassador to Washington, Michael Oren.
Senior U.S. officials stressed in interviews this week that President Barack Obama isn't moving toward seeking a regime change as its policy for Iran. Rather, these officials said, Washington remains committed to a dual-track approach of pursuing dialogue aimed at ending Iran's nuclear program while applying increasing financial pressure if the talks fail.
Both the Obama administration and the Iranian dissidents have been wary of any direct contacts, due to fears such meetings could provide ammunition for Tehran. The regime and its supporters continue to put harsh pressure on the Green Movement; on Friday, progovernment demonstrators shot at a car carrying a leading opposition figure, Mahdi Karroubi. He escaped without harm, his Web site reported later.
Still, the White House's re-evaluation of the Green Movement marks a significant evolution of Mr. Obama's Iran policy since demonstrators began openly challenging President Ahmadinejad's re-election in June, said diplomats and analysts.
"The Green Movement has demonstrated more staying power than perhaps some have anticipated," said a senior U.S. official. "The regime is internally losing its legitimacy, which is of its own doing."
The White House initially displayed caution in lending any vocal support to Iranian protesters, as many U.S. and European officials believed Tehran's security forces would quickly suppress any wide-scale dissent. U.S. officials repeatedly stressed over the summer that the U.S. was prioritizing efforts to negotiate with Iran on its nuclear program over any rapid push for democratic change.
The U.S. response was so timid that some Iranian protesters openly challenged Mr. Obama. "Obama, Obama -- either with us, or with them!" Tehran demonstrators were recorded chanting in November.
U.S. officials say that the White House's policy has shifted, in part, due to the surprising resilience of the Green Movement in the face of the pervasive crackdown.
The Obama administration has increasingly voiced support for human rights in Iran as the demonstrations have continued. Mr. Obama used his Nobel Prize acceptance speech last month to forcefully call for the respect of human rights and civil liberties.
U.S. officials cite the White House's public mourning of Mr. Montazeri's death as perhaps the pivotal step in trying to forge common cause with the opposition.
"Do we expect the current government to be overthrown? I wouldn't say that at the current time," said a senior State Department official. "But a crack can certainly grow over time."
Write to Jay Solomon at jay.solomon@wsj.com

The Meaning of al Qaeda's Double Agent

The jihadists are showing impressive counterintelligence ability that the CIA seems to have underestimated.

By REUEL MARC GERECHT

The recent death in Afghanistan of seven American counterterrorist officers, one Jordanian intelligence operative, and one exploding al Qaeda double agent ought to give us cause to reflect on the real capabilities of the Central Intelligence Agency and al Qaeda.
The report card isn't good. America's systemic intelligence problems were partially on display in the bombing at the CIA's Forward Operating Base Chapman in Khost province. Worse, al Qaeda showed skill that had been lacking in many of its operations. In response, President Barack Obama will likely be obliged to adopt counterterrorist methods that could make his administration as tough as his predecessor's.
Professionally, one has to admire the skill of suicide bomber Humam Khalil Abu-Mulal al-Balawi's handlers. This operation could well have been months—if not longer—in the making, and neither the Jordanian intelligence service (GID), which supplied the double agent to the CIA, nor Langley apparently had any serious suspicion that al-Balawi still had the soul and will of a jihadist.
That is an impressive feat. The Hashemite monarchy imprisons lots of Islamic militants, and the GID has the responsibility to interrogate them. The dead Jordanian official, Sharif Ali bin Zeid, reportedly a member of the royal family, may not have been a down-and-dirty case officer with considerable hands-on contact with militants, but al-Balawi surely passed through some kind of intensive screening process with the GID. Yet the GID and the CIA got played, and al Qaeda has revealed that it is capable of running sophisticated clandestine operations with sustained deception.

Martin Kozlowski

Indeed, al Qaeda did to us exactly what we intended to do to them: use a mole for a lethal strike against high-value targets. In the case of al-Balawi, it appears the target was Ayman al Zawahiri, Osama bin Ladin's top deputy. During the Cold War, the CIA completely dropped its guard in the pursuit of much-desired Cuban and East German agents. The result? Most of our assets were plants given to us by Cuban and East German intelligence. With al-Balawi supposedly providing "good" information about al Zawahiri and al Qaeda's terrorist planning, a salivating CIA and the GID proved inattentive to counterintelligence concerns.
Whereas al Qaeda is showing increasing proficiency, the same cannot be said for the CIA. Competent case officers can get duped by a good double. And the GID, whose skill has been exaggerated in fiction and film and by Hashemite-stroked American case officers, isn't a global service. Take it far from its tribal society, where it operates with admirable efficiency, and it is nothing to write home about.
The CIA uses the GID so often not because the Jordanians are brilliant but because the Americans are so often, at best, mediocre. The GID's large cadre of English-speaking officers makes liaison work easy with Langley, which has never been blessed with a large number of Arabic-speaking officers, particularly within the senior ranks.

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Language issues aside, the now-deceased chief of Base Chapman should have kept most of her personnel away from al-Balawi, and should never have allowed seven officers to get that close to him at one time. Traditional operational compartmentation clearly broke down.
It is also highly likely that all of the CIA officers at Chapman—and especially the chief of base, who was a mother of three—were on short-term assignments. According to active-duty CIA officers, the vast majority of Langley's officers are on temporary-duty assignments in Afghanistan, which usually means they depart in under one year. (The same is true for the State Department.) Many CIA officers are married with children and they do not care for long tours of duty in unpleasant spots—the type of service that would give officers a chance of gaining some country expertise, if not linguistic accomplishment.
Moreover, security concerns usually trap these officers into a limited range of contacts. Truth be told, even the most elemental CIA activity—meeting recruited agents or "developmentals" outside of well-guarded compounds—often cannot be done without contractor-supplied security. Without Blackwater, now renamed Xe, which handles security for Langley in Afghanistan, CIA case officers would likely be paralyzed.
The officers at Chapman were probably young. This isn't necessarily bad. As a general rule, younger case officers do better intelligence-collection work than older colleagues, whose zeal for Third World field work declines precipitously as their knowledge and expertise in CIA bureaucratic politics increases. But experience does breed cynicism, which doesn't appear to have been in abundance at the CIA base.
All of this reinforces the common U.S. military criticism of the Agency in Afghanistan and Iraq: It does not often supply the hard tactical and intimate personal and tribal portraits that military officers need to do their work. Army officers are generally among the natives vastly more than their CIA counterparts.
What does this all mean for President Obama? He did not come into office pledging to reform the CIA, only restrain it from aggressively interrogating al Qaeda terrorists. There is near zero chance that the president will attempt to improve the Agency operationally in the field. His counterterrorist adviser, John Brennan, is as institutional a case officer as Langley has ever produced. If Attorney General Eric Holder is so unwise as to bring any charges against a CIA officer for the rough interrogation of an al Qaeda detainee during the Bush administration, the president will likely find himself deluged with damaging CIA-authored leaks. Mr. Obama would be a fool to confront the CIA on two fronts.
But the president is likely to compensate for systemic weakness in American intelligence in substantial, effective ways. Mr. Obama has been much more aggressive than President George W. Bush was in the use of drone attacks and risky paramilitary operations. One can easily envision him expanding such attacks in Pakistan, Yemen and elsewhere. Visa issuances, airport security, and perhaps even FBI surveillance of American Muslim militants are likely to become much tougher under Mr. Obama than under Mr. Bush. President Obama will, no doubt, continue to say empirically bizarre things about Guantanamo's imprisonment system creating jihadists, but his administration will now likely find another location to jail militants indefinitely. Too many of President Bush's released detainees have returned to terrorism.
National Security Adviser James Jones has already described the 21st century as the liaison century, where intelligence and security services cooperate energetically. The CIA has often compensated for its internal weaknesses through liaising with foreigners. President Bush and then Central Intelligence Director George Tenet kicked these relationships into hyper-drive after 9/11; President Obama is likely to kick them even further. Mr. Obama may have foreclosed the possibility of the CIA again aggressively questioning jihadists, but he's kept the door wide open for the rendition of terrorists to countries like Jordan, where the GID does not abide by the Marquess of Queensbury rules in its interrogations.
The deadly attack in Fort Hood, Texas, by Maj. Malik Hassan in November, the close call in the air above Detroit on Christmas Day, and now the double-agent suicide bombing in Khost have shocked America's counterterrorist system. Mr. Obama surely knows that one large-scale terrorist strike inside the U.S. could effectively end his presidency. He may at some level still believe that his let's-just-all-be-friends speech in Cairo last June made a big dent in the hatred that many faithful Muslims have for the U.S., but his practices on the ground are likely to be a lot less touchy-feely. This is all for the good. These three jihadist incidents ought to tell us that America's war with Islamic militancy is far—far—from being over.
Mr. Gerecht, a former Central Intelligence Agency officer, is a senior fellow at the Foundation for Defense of Democracies.