The ugly truth behind Obama's Syria plan

Targeted strikes to punish Assad will only perpetuate the conflict – and that's exactly what the American government wants.

America's aims in Syria are not what the government wants you to think.

You can see the evidence in what action is being suggested. Jay Carney, the White House chief spokesman, yesterday categorically ruled out regime change as an objective. “The options that we are considering are not about regime change,” he said to the assembled White House press corps. “They are about responding to a clear violation of an international standard that prohibits the use of chemical weapons.” But the targeted strikes being proposed will only perpetuate the butchery – and that is what they are designed to do.

A true solution to the conflict in Syria would have been difficult and incredibly complex even two years ago. It would take a long time, and more money than would probably be palatable to either Britain or America. Solving this problem would mean attempting rapprochement between two factions whose hatred for each other is drenched in the blood of thousands and steeped in years of murder. It is probably impossible.

But nobody is even talking about a solution, and there's a reason for that.

America is not interested in regime change. Obama does not want to be a war-time president. Nor is he interested in the humanitarian argument for intervention for any more than rhetorical purposes. A cursory glance shows his 'red line' of the use of chemical weapons to be ridiculous. The death toll in Syria stands at more than a hundred thousand people. The rhetoric has been that Assad must be “punished” for the use of chemical weapons, but why? The tools used to reach this number are immaterial in the face of that horror. Who cares whether people were killed with shells, mortar or gas?

The truth is that evening the odds in Syria – which the West has already been doing, by drip-feeding supplies and weaponry to rebel forces – has turned a brief if bloody resolution into an interminable meat-grinder, in which no side has the decisive edge, and flattening out some more of Assad's tactical advantages will only maintain this grisly status quo.

Here is why that is attractive to the American government. At the moment, the conflict in Syria is acting as a sort of sump; collecting the resources of America's enemies in a confined space. It's a black hole for extremists. When Assad's army re-took the town of Qusayr in June, they were supported by Lebanese Hezbollah. Iran, too, is supporting him: the Independent on Sunday reported in June that a contingent of 4,000 Iranian Revolutionary Guard troops would be sent to fight alongside Syrian government forces. Tehran has even threatened to strike at Israel should America attack Syria, a move which could start a disastrous chain of events.

On the other side, Jabhat Al-Nusra, widely regarded the most effective and disciplined rebel group fighting the Assad regime, is openly linked with Al-Qaeda; another jihadist affiliate, the Islamic State in Iraq and Syria (ISIS), is a hugely powerful faction of the rebel Free Syrian Army.

As far as the White House is concerned, this is a zero-sum game. While these groups are spending money and resources fighting in Syria, the threat they pose to the West is greatly diminished. If Al-Qaeda is focussing on overturning Assad, it is not plotting the next 9/11; and it is even possible that it might be grateful to the US for even miserly airborne assistance. My enemy's enemy, so the saying goes, is my friend.

Obama and his advisers will also be calculating that victory for the rebels in Syria could allow anti-Western sentiment to resurface under an extreme Islamist regime. Another lesson from recent history: in Iraq, it was after Saddam was toppled that things went to hell in a handcart.

So that leads to the awkward conclusion: that a half-hearted airborne intervention in Syria is designed not to rock this deadly boat, but to steady it.

The situation for Putin is much the same. Perpetual civil war in Syria works almost as well for Russia as for the United States. Russia has enormous business ties with Assad's Syria – some 20 billion dollars worth, according to the Congressional Research Service, and they stand to lose this if Assad is toppled – as well as Russia's only military naval base outside of its borders, . But Syria is also a large-scale buyer of Russian arms; spending nearly five billion dollars in the four years to 2010, and that number has increased significantly since the conflict began, with Assad signing deals to buy advanced S-300 anti-aircraft missiles and MiG-29 fighter jets in just the last few months.

More importantly, the Syrian conflict allows Putin to tighten political support at home in an era of increasing unrest and protest by increasing anti-American, and anti-Western sentiment. With Russia and the US implacable on the UN security council, no resolution is likely, however much Russian foreign ministers may bluster about “catastrophic consequences” if the US and its allies were to intervene.

Russia doesn't want the rebels to win, because it will lose its business and its naval base. America doesn't want the rebels to win because the state they will most likely form will be an extremist Al-Qaeda backed breeding-ground for terrorism, led by the Al-Nusra Front.

So Syria has become effectively a straw man, by tacit agreement of both Russia and America. And as long as the straw man continues to burn, neither side cares how many civilians are lost in the inferno.

Barack Obama walking to the West Wing of the White House. Photo: Getty

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.

Ralph Orlowski / Getty
Show Hide image

Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

0800 7318496