Two Weeks in January: America’s secret engagement with Khomeini -BBC

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The BBC has published an article detailing direct secret talks between the US, under the Carter administration, and representatives of Ayatollah Khomeini as the Shah’s regime was crumbling. Neither the US or the Iranian government wanted the meetings public, and the Iranian government is dismissing the article as a fabrication.

The talks were initiated by the US in order to establish contacts between the Shah’s military and Khomeini’s representatives so that some sort of transition could be arranged and a full blown civil war avoided.

  • “Secretary Vance informed the French government that Washington urgently needed to be in direct contact with Khomeini’s group. The reason: to obtain Khomeini’s support for secret talks in Tehran between Beheshti, and the Shah’s military and intelligence chiefs.”

The meetings are interesting in and of themselves. However, perhaps more interesting is the perspective the article gives us on how revolutions unfold and the circumstances under which strategic choices are made by key actors. The US was operating with little information and had to make a choice between allies who no longer appeared politically viable, and an opposition they did not understand or trust. This is not just a history lesson. The Shah fell in 1979, but the same type of scenarios played themselves out during the Arab Spring and the same type of calculations had to be made.

For more details see:  http://www.bbc.com/news/world-us-canada-36431160

Neoliberalism: Oversold? -IMF and Salon

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A recent article published by the IMF, “Neoliberalism: Oversold?” suggests a long overdue ideological reappraisal is taking place. The article challenges standard neo-liberal beliefs about austerity, capital controls, economic inequality and the one-size-fits-all approach to economic planning. Below are links and a few highlights from the article and a discussion published at Salon.com, “Wrong all along: Neoliberal IMF admits neoliberalism fuels inequality and hurts growth”.

From Salon:

  • “The world’s largest evangelist of neoliberalism, the International Monetary Fund, has admitted that it’s not all it’s cracked up to be.
  •  Neoliberalism refers to capitalism in its purest form. It is an economic philosophy espoused by libertarians — and repeated endlessly by many mainstream economists — one that insists that privatization, deregulation, the opening up of domestic markets to foreign competition, the cutting of government spending, the shrinking of the state and the “freeing of the market” are the keys to a healthy and flourishing economy.
  • Yet now top researchers at the International Monetary Fund, or IMF, the economic institution that has proselytized — and often forcefully imposed — neoliberal policies for decades, have conceded that the “benefits of some policies that are an important part of the neoliberal agenda appear to have been somewhat overplayed….”
  • “In analyzing two of neoliberalism’s most fundamental policies, austerity and the removing of restrictions on the movement of capital, the IMF researchers say they reached “three disquieting conclusions.”
  • One, neoliberal policies result in “little benefit in growth.”
  • Two, neoliberal policies increase inequality, which produces further economic harms in a “trade-off” between growth and inequality.
  • And three, this “increased inequality in turn hurts the level and sustainability of growth.”
  • The top researchers conclude noting that the “evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are…”

For more from the Salon article, see: http://www.salon.com/2016/05/31/wrong_all_along_neoliberal_imf_admits_neoliberalism_fuels_inequality_and_hurts_growth/

From the IMF:

  • “Moreover, since both openness and austerity are associated with increasing income inequality, this distributional effect sets up an adverse feedback loop. The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth..”

It will be interesting to see if this critique has an impact on IMF policy. It is after all a research paper. There will doubtless be bureaucratic and political push-back from within the IMF and from some of the donar countries.

For the IMF article, see: http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm