The Issues Still Separating

The Issues Still Separating Baghdad and Washington

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Some four months before expiration of the U.S. military's legal mandate in Iraq, less than 75 days ahead of the U.S. election, and with plans for key Iraqi local elections now up in the air, negotiators from both countries seem to have finally drafted a framework for American forces to keep operating in the country. But the technical details they resolved will now be subject to intense and potentially conflicting political pressures on both sides.

Hours after news of the draft broke, U.S. Secretary of State Condoleezza Rice arrived in Baghdad on a previously unannounced trip, and told reporters that while negotiators had "taken this very, very far … there is no reason to believe that there is an agreement yet." The outstanding issues, she said, concern "exactly how our forces operate," adding that any "agreement rests on aspirational timelines." Those are references to the two toughest points of dispute: the role of U.S. troops in a nominally sovereign country they have dominated for more than five years, and just how quickly some of them will leave.

Iraqi Deputy Foreign Minister Mohammed al-Haj Humood and other people familiar with the matter tell The Wall Street Journal that the draft agreement sets a goal -- this may be the key word allowing Baghdad and Washington to fix some kind of timeline -- of 2011 for the departure of combat troops from Iraq. By the summer of 2009, American forces would mostly disappear from metropolitan areas and other population centers, the Journal says, citing senior officials in Washington who say the talks are over and the agreement is ready to present to political leaders. CNN cites a U.S. source saying any dates are "not a deadline" and are subject to the conditions at the time. And the Associated Press notes U.S. officials have still been resisting any commitment to a firm, specific date for a pullout.

The presence of American forces in Iraq and among Iraqis has been double-edged -- a major factor in reducing the violence so drastically over the past year, but a daily reminder to Iraqis that they remain in many ways an occupied country with little say over their protectors. Which partly explains why the role and legal limits for U.S. forces in the new agreement is so important. (These so-called status-of-forces issues can be touchy even with longtime allies like Japan and South Korea.) The Journal reports that the Bush administration relinquished its insistence that American contractors like those of Blackwater stay immune from Iraqi law, but notes a lingering dispute involves such immunity for U.S. military personal. Mr. Humood, who led Iraq's side in the negotiations, tells the paper joint U.S.-Iraqi committees will be set up to resolve such issues case by case. But history suggests the Pentagon, under any presidential administration, would be extremely reluctant to subject soldiers, sailors and airmen to Iraqi law.

Ms. Rice, without providing details, said more work is needed to deal with these issues, and suggested this will be the main subject of her meetings on this trip with Prime Minister Nouri al-Maliki. "Ultimately the prime minister has to make the call on moving forward," Ms. Rice said, adding that the visit gives her a chance to "see what we can do from Washington to get to closure." But Mr. Maliki may not be in a position to provide closure even if he wants to, since he must deal with a fractious Iraqi parliament still unable to agree on other important political decisions and touchy about most things American.

In the meantime, the importance of even "aspirational" timelines is likely to be played down by security officials and experts in both countries, including Gen. David Petraeus, the departing commander of American forces in Iraq and soon-to-be military chief for the entire region. Gen. Petraeus, in one of a series of interviews he has given this week, tells the New York Times that despite the U.S. and Iraqi success in reducing the violence, "It's not durable yet. It's not self-sustaining." "You know," he added, "touch wood, there is still a lot of work to be done." And as for his recommendations for the next U.S. president, who'll have to make the actual choice on when to withdraw troops: "The only statement I think somebody in a position like this can responsibly make is that it obviously depends on the conditions and how much risk one is willing to take."

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One Rumor the Fed Couldn't Ignore
In a year when uncertainty has been one of global finance's biggest plagues and rumor a major source of infection, the Federal Reserve made a rare decision to quietly inquire if one alarming bit of information making the rounds was true. A July rumor suggested Credit Suisse Group might be cutting off its line of credit to Lehman Brothers Holdings. And people familiar with the matter tell The Wall Street Journal that Fed officials called the Swiss bank to see if it was true. No, they were told, it wasn't. "The Fed's unusual move underscores the tough position that federal officials are in as the Wall Street investment bank tries to overcome mortgage-related losses," the paper says. "As financial institutions suffer through write-downs and loan woes, the Fed has a strong incentive and the moral authority to dispel groundless speculation that could threaten the viability of an important cog in the U.S. financial system."

Lehman's capital levels have been a source of worries since fellow Wall Street titan Bear Stearns collapsed earlier this year. And ahead of the poor quarterly results Lehman is expected to announce next month, the company has been shopping around part of its respected money-management operations in order to shore up its balance sheet. The Journal reported earlier this summer that Lehman had reached out to a big South Korean investor for cash but hadn't reached a deal. New York-based people familiar with potential buyers now tell the Financial Times that Lehman held confidential talks with South Korean or Chinese parties at the beginning of August about the possibility of selling up to 50% of its shares, but that the buyers found the asking price too high.

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Also of Note…

Associated Press: Spain began three days of mourning today for the 153 people who died when a jetliner crashed shortly after takeoff from Madrid in the country's worst air disaster in nearly 25 years. Only 19 people survived yesterday's crash of a Spanair plane bound for the Canary Islands.

Washington Post: A Bush administration proposal to exempt India from restriction on nuclear trade has aroused skepticism from several members of the 45-nation Nuclear Suppliers Group, diplomats said, making it increasingly unlikely that a deal will be reached in two-day meetings that begin today in Vienna. Both India and the U.S. have lobbied the group for approval of a landmark civil nuclear deal, but the NSG, which governs trade in reactors and uranium, operates by consensus, allowing even small nations to block or significantly amend any agreement.

Guardian: MI-5 has concluded there is no easy way to identify those who become involved in terrorism in Britain, according to a classified internal research document on radicalization based on hundreds of case studies by the security service. The study concludes it isn't possible to draw up a typical profile of the "British terrorist" as most are "demographically unremarkable" and simply reflect the communities in which they live -- a theory that clashes with common stereotypes about those involved in British terrorism.

New York Times: While Medicare's top officials said in 2006 that they had reduced the number of fraudulent and improper claims paid by the agency, keeping billions of dollars out of the hands of people trying to game the system, a confidential draft of a federal inspector general's report says those claims of success, which earned Medicare wide praise from lawmakers, were misleading. In calculating the agency's rate of improper payments, Medicare officials told outside auditors to ignore government policies that would have accurately measured fraud, according to the report.

Reuters: Consumers should brace for the biggest increase in food prices in nearly 20 years in 2008 and even more pain next year due to surging meat and produce prices, the U.S. Agriculture Department said.

Times of London: Iceland is to join the growing rush of countries aiming to tap into the potentially vast oil and gas reserves of the Arctic. Reykjavik is hoping to attract investment from some of the world's biggest oil companies as it finalizes the terms for its first offshore licenses.

Nikkei: Japanese exports to China surged 16.8% year on year to 1.28 trillion yen in July, surpassing U.S.-bound shipments for the first time in the postwar period and making the fast-growing Asian economy the country's largest trading partner, according to figures released Thursday by the Ministry of Finance.

Bloomberg: Indonesia, the world's largest tin exporter, plans to cap production of five minerals including tin to extend mine life and try to control prices, an official said.

Wall Street Journal: Boeing faces a quandary in final contract talks with union machinists that begin today: It must avoid a strike that would cause delays on an already backed-up production line, yet be tough enough to make inroads against mounting pension and health-insurance costs. Meanwhile, the head of the International Air Transport Association said that airlines globally could lose more than $6.1 billion in 2008 because of high oil prices and geopolitical instability, with Asia, particularly China and India, now also starting to feel the effects of the international downturn.

Financial Times: Ferrovial, one of Spain's biggest construction groups, was facing the threat of a forced sale of three of its British airports next year, after a damning report by U.K. competition authorities attacked its dominance of the industry. The U.K. Competition Commission provisionally concluded that Ferrovial's subsidiary, BAA, should be forced to sell two of its three London airports -- Heathrow, Gatwick and Stansted -- and either Glasgow or Edinburgh in Scotland. The most likely candidates for sale are Gatwick, Stansted and Glasgow, analysts said.

Roll Call: House ethics Chairwoman Stephanie Tubbs Jones, an Ohio Democrat, died yesterday after suffering a massive aneurysm while driving her car the day before, according to family and hospital officials.

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Quote of the Day
"Windows, Not Walls," reads the slogan at the heart of a new $300 million advertising campaign from Microsoft that will use Jerry Seinfeld as a key pitchman, The Wall Street Journal reports, citing people close to the situation. Mr. Seinfeld will appear with Bill Gates in ads and receive about $10 million for the work, in the bid to overhaul an image battered by Apple's "Mac vs. PC" ads, the paper says.