Long List of Suckers

Last week, I toured the great Mogul compound of Fatehpur Sikri, near the Taj Mahal. My Indian guide mentioned in passing that in the late 1500s, when Afghanistan was part of India and the Mogul Empire, the Iranian Persians invaded Afghanistan in an effort to “seize the towns of Herat and Kandahar” and a great battle ensued. I had to laugh to myself: “Well, add them to that long list of suckers — countries certain that controlling Afghanistan’s destiny was vital to their national security.”

There were already plenty on that list before, and there have been even more since. As America now debates how to extract itself from Iraq and Afghanistan, it is worth re-reading a little Central Asian history and recalling for how many centuries great powers — from India to Persia, from Britain to Russia, and now from America to Iran, Turkey and Pakistan — have wrestled for supremacy in this region, in different versions of what came to be called “The Great Game.” One can only weep at the thought of how much blood and treasure have been expended in this pursuit and how utterly ungreat this game has been in retrospect. No one ever wins for long, and all they win is a bill.

It is with this bias that I think about the debate following President Obama’s decision to withdraw all U.S. forces from Iraq, on schedule, at the end of this year — a decision that has been greeted with much huffing and puffing from hawkish Republicans about how Obama will be remembered for losing Iraq to Iran. Iraq will now fall under Iran’s “influence,” they proclaim, and none of us will ever be able to sleep well again.

Please put me down in the camp that thinks Obama did the right thing and that Iran’s mullahs will not be the winners.

Why? Well, for starters, centuries of history teach us that Arabs and Persians do not play well together. Yes, Iraq has a Shiite Muslim majority and so does Iran. But Iraqi Arab Shiites willingly fought for eight years against Persian Iranian Shiites in the Iran-Iraq war.

Moreover, I am certain that in recent years America’s lingering troop presence in Iraq actually gave Iran greater influence in Baghdad. The U.S., however well intentioned, became a lightening rod that absorbed a lot of Iraqis’ frustrations with their government’s underperformance, and the U.S. “occupation” drew all attention away from Iran’s shenanigans inside Iraq. Iraqis are a proud people. Once our troops are gone, Iraqi Arabs will surely focus entirely on their own government’s performance and on any Iranian or other attempts to try to be the puppeteer of Iraqi politics. Any Iraqi leader seen as Tehran’s lackey will have problems.

Indeed, once we’re gone, I actually think the dominant flow of influence will be from Iraq toward Iran — if (and it is still a big if) — Iraq’s democracy holds. If it does, Iranians will have to look across the border every day at Iraqis, with their dozens of free newspapers and freedom to form any party and vote for any leader, and wonder why these “inferior” Iraqi Arab Shiites enjoy such freedoms and “superior” Iranian Persian Shiites do not.

“Iran’s interests were served by the Arab status quo ante — ideologically bankrupt regimes brutalizing disenfranchised populations,” argues Karim Sadjadpour, an Iran expert at the Carnegie Endowment. “The more representative governments there are in the Middle East, the more it highlights the fact that the Islamic Republic of Iran is a salmon swimming upstream against the current of history.”

Some say Iran was the geopolitical winner of the U.S. intervention in Iraq. I’d hold off on that judgment, too. “The Iranian regime is at its lowest moment of influence in the region — 14 percent popularity in the latest Zogby poll,” remarked Abbas Milani, who teaches Iranian politics at Stanford. What you see today if you look underneath the Islamic revolutionary facade in Iran, added Milani, “is a flourishing of painting, films and music, driven by technology. It is a society seeking its own bottom-up blend of Islam and modernity. The regime has no role in this.”

Just as I don’t buy the notion that we need to keep playing The Great Game in Iraq, I also don’t buy it for Afghanistan.

“If the U.S. steps back, it will see that it has a lot more options,” argues C. Raja Mohan, a senior fellow at the Center for Policy Research, in New Delhi. “You let the contending regional forces play out against each other and then you can then tilt the balance.” He is referring to the India, Pakistan, Russia, Iran, China and Northern Alliance tribes in Afghanistan. “At this point, you have the opposite problem. You are sitting in the middle and are everyone’s hate-object, and everyone sees some great conspiracy in whatever you do. Once you pull out, and create the capacity to alter the balance, you will have a lot more options and influence to affect outcomes — rather than being pushed around and attacked by everyone.”

America today needs much more cost-efficient ways to influence geopolitics in Asia than keeping troops there indefinitely. We need to better leverage the natural competitions in this region to our ends. There is more than one way to play The Great Game, and we need to learn it.

Under 'Color of Federal Law'

The Supreme Court ruled three decades ago in Carlson v. Green that a federal prisoner could sue for money damages from prison employees who abused his constitutional rights. On Tuesday, in Minneci v. Pollard, the court heard the government and others contend that a prisoner held in a facility operated by a private contractor cannot bring this kind of action.

The court should reject this argument. If not, it will allow the government to contract away prisoners’ constitutional rights — and contract away its own responsibility to protect individuals imprisoned under the law.

While incarcerated for 20 months in a privately run facility, Richard Lee Pollard fell and broke his elbows, a serious injury. When he sought medical treatment, he was refused a splint to help repair his arms and forced to wear a handcuff-like device that caused him tremendous pain.

If he had been in a government-run prison, he clearly could have sued those who mistreated him for damages. The private facility where Mr. Pollard was imprisoned was different only in ownership. It operated under federal authority and functioned as a government facility. Those who worked there or provided services for it were operating “under the color of federal law,” a critical test.

The government and others also contend that such actions are reserved for extraordinary circumstances where the person alleging injury has no other basis for suing because, for example, state law provides no remedy and that Mr. Pollard could have brought a civil action under tort law in state court. But after the court held that is no substitute because of the vagaries of state laws, Congress twice affirmed the right to sue officials for redress in federal court.

The Pollard case matters so much because one of every six federal prisoners is now held in a privately run facility, compared with none two decades ago. Private facilities also house half the federal immigration detainees.

Bad as many government-run prisons are, some privately run prisons may well be worse. There is mounting evidence that private prisons pay guards less, have smaller staffs and give limited training, reducing the level of care and oversight and exposing prisoners to greater threats to health and safety. The prisons and the people who work there must be held accountable when they badly perform this role of government.

Corzine's Big Bet

Why did Jon S. Corzine make the risky bets that have now plunged MF Global Holdings into bankruptcy court? We don’t know, but the likely explanations are disturbing.

Over the past year, most investors have been fleeing the sovereign debt of Spain, Italy and other euro-zone basket cases. Not Mr. Corzine. The onetime chief executive of Goldman Sachs and former New Jersey senator and governor who has run MF Global since early 2010, was all in, buying up $6.3 billion worth of discounted euro-zone debt.

As Azam Ahmed reported in The Times on Tuesday, Mr. Corzine appeared to be wagering that the European Union would come to the rescue of Europe’s troubled economies, averting a default. In other words, Mr. Corzine was betting on a bailout.

A euro-zone bailout may well come, but not in time for Mr. Corzine and MF Global. Concerns about Mr. Corzine’s big bet led two ratings agencies to downgrade the firm to junk last week, draining investor confidence — and cash — from the firm, and sending it spiraling into bankruptcy proceedings. The fact that Mr. Corzine built a strategy betting on a government (in this case, European) rescue should be a chilling reminder of how far the world has not come since the darkest days of the financial crisis. Europe is trying to bail out Greece, in part, to protect its big banks.

In fact, the financial system, on both sides of the Atlantic, is still dominated by too-big-to-fail banks and regulations intended to ensure that their collapse won’t bring down the financial system are still a work in progress.

It is progress that in Europe, at least, creditors are being asked to bear some of the burden. But the need for bailouts is clearly still very much with us.

Another reason that Mr. Corzine’s bets may have gone so wrong — and another echo of the financial crisis — is that American regulators did not rein in the firm. MF Global was highly leveraged, with liabilities at the end of June of $44.4 billion and equity of only $1.4 billion.

In a research note published on Tuesday, Steve Blitz, a senior economist with ITG Investment Research, pointed out that MF Global was one of the firms designated by the Federal Reserve as a primary dealer in United States Treasuries. After the havoc of high leverage in the financial crisis, how is it possible that the Fed allowed MF Global to operate with so much leverage? Are the Fed, the Securities and Exchange Commission and other relevant regulators fully monitoring the risks at other broker dealers?

Meanwhile, self-regulation is clearly not the answer. The Wall Street Journal reported on Monday that the Financial Industry Regulatory Authority, a self-regulatory agency for brokerages, recently warned MF Global to shore up its capital to cushion against its increasingly risky positions. Whatever the firm did, if anything, clearly wasn’t enough.

In the end, the American people are lucky that MF Global was small enough to fail, its riskiness and recklessness absorbed by the bankruptcy process. But with the devastating damage from the crisis still hobbling the economy, relying on luck is not enough.

MF Global is a warning that the system is still far too vulnerable and the work of regulatory reform far from finished.