Tuesday, November 10, 2009

From Berlin to Baghdad

Tuesday, 10 November 2009

For all its menace and fanfare, Eastern European communism, one of its countless chroniclers observed, left the theater of history on tiptoe. The simple, surprising end came 20 years ago, Nov. 9, 1989, when an apparatchik of the German Democratic Republic read out a note announcing that the border that had cut through Germany would be opened for "private trips abroad." The Berlin Wall had fallen.

A mere two years earlier, in November 1987, there was a celebration of the 70th anniversary of the Bolshevik Revolution, and even Mikhail Gorbachev—the fourth Soviet leader in three years—gave the appearance of normalcy. But it was too late for such pretense. The subjugation of that "other Europe" had come to an end.

"Gorbachev's role, though honorable, has been exaggerated," British historian Norman Davies writes in his monumental book, "Europe: A History." "He was not the architect of East Europe's freedom: he was the lock-keeper who, seeing the dam about to burst, decided to open the floodgates and to let the water flow. The dam burst in any case; but it did so without the threat of a violent catastrophe."

There were the Hungarians, in October of 1989, on the 33rd anniversary of the crushing of their national rebellion, abolishing the entire ruling Communist apparatus. There were the people in Prague again, a mere two decades after the snuffing out of their freedom, launching their Velvet Revolution. Poland wrote its own distinctive history. Its national church never faltered—a gifted primate of that church, Cardinal Karol Wojtyla, rose to the papacy and helped steer his nation's history freedom's way. Its shipyard workers led a movement that made a seamless transition from workers' rights to the cause of national freedom.

It wasn't always pretty, the emancipation of these captive nations. Communism always carried within its doctrine the stern warning that national chauvinisms would spring to the fore were its "internationalism" to give way. Yugoslavia bore out that message. What rose from its graveyard were pitiless nationalisms whose crimes are indelibly etched in our memories. Tito had indeed held together an impossible country. Nor were matters pretty in Romania, no velvet revolution in the twisted, dark tyranny of the Ceaucescus. The march to ballots and free markets was not always an attractive, or a straightforward, tale.

An angry, uncompromising Russian sage, Alexander Solzhenitsyn, the oft-told story tells us, came to Washington in the summer of 1975 but was denied the opportunity to meet with President Gerald Ford. The story's significance shouldn't be overdone. Two generations of Americans had done their work "containing" the spread and the appeal of Communism.

But Soviet power seemed at its zenith in the 1970s. The cause of freedom was embattled—Jean-Fran├žois Revel said a "totalitarian temptation" was in the air. Soviet troops and their proxies were deployed in Vietnam, Cuba, Yemen, Angola, Mozambique, etc. A nativist revolution had plunged Iran, America's "pillar" in the Persian Gulf, into a new darkness, and in affluent Western Europe a willful Euro-Communism had resonance all its own.

It was against this dismal background that Ronald Reagan had risen. He may not have known much about the foreign world, he may not have always been a master of his brief—the details and the execution and the discipline were supplied by his gifted collaborator, Secretary of State George Shultz—but he trusted his own instincts. He had his feel for history's march, his faith in human freedom. He had recoiled from all the talk about America's decline. He had boundless belief in the American mission in the world.

"I do have a strategy," Reagan said after one detailed briefing on the challenge of the Soviet Union: "We win, they lose!"

He was to be vindicated. Where political regimes had taken on an authoritarian cast in the 1970s, the number of countries that chose what broadly could be called political freedom increased by 50% between 1980 and 1990. The American strategic build-up in the Reagan years was of a scale that the Soviet Union could not match.

In Afghanistan, the last battle of the Cold War, the Soviet imperial thrust was broken. American weapons and American will, Saudi money, a Pakistani sanctuary, and a ragtag army of volunteers from the wider world of Islam broke the Soviet will. (We thought well of these volunteers then, they were freedom fighters, the mujahideen, and we nicknamed them "the mooj" in affection.)

It would stand to reason that 45 years of vigilance would spawn a desire for repose. The disputations of history had ended, we came to believe. Such was the zeitgeist of the '90s, the Nasdaq era, a decade of infatuation with globalization. The call of blood and soil had receded, we were certain then. Bill Clinton defined that era, in the way Ronald Reagan had defined his time. This wasn't quite a time of peace. Terrorists were targeting our military installations and housing compounds and embassies. A skiff in Aden rode against one of our battleships. But we would not give this struggle the label—and the attention—it deserved.

A Harvard academic had foreseen the shape of things to come. In 1993, amid this time of historical and political abdication, the late Samuel P. Huntington came forth with his celebrated "Clash of Civilizations" thesis. With remarkable prescience, he wrote that the end of the Cold War would give rise to civilizational wars.

He stated, in unadorned terms, the threat that would erupt from the lands of Islam: "The relations between Islam and Christianity, both Orthodox and Western, have often been stormy. Each has been the other's Other. The 20th century conflict between liberal democracy and Marxist-Leninism is only a fleeting and superficial historical phenomenon compared to the continuing and deeply conflictual relation between Islam and Christianity."

The young jihadists who shattered the illusions of an era practically walk out of Huntington's pages. We had armed the boys of the jihad in Afghanistan. They came to a conviction that they had brought down one infidel empire, and could undo its liberal rival.

A meandering road led from 11/9 to 9/11. The burning grounds of Islam are altogether different than the Communist challenge. There is no Moscow that serves as the seat of Jihadist power. This is a new kind of war and new kind of enemy, a twilight war without front lines.

But we shouldn't be surprised with some of history's repetitions. There are again the appeasers who see these furies of Islam as America's comeuppance, there are those who think we have overreached and that we are riding into storms of our own making. And in the foreign world there are chameleons who feign desire for our friendship while subverting our causes.

Once again, there arises the question in our midst of whether political freedom, broadly conceived, can and ought to be taken to distant lands. In the George W. Bush years, American power and diplomacy gave voice to a belief in freedom's possibilities. A different sentiment animates American practice today.

For the peoples of Islam, the question can be squarely put: Will they tear down their walls in the manner in which the people of Central and Eastern Europe tore down theirs? The people of Islam are thus sorely tested. They will have to show their own fidelity to liberty. Strangers with big guns and ample means can ride into their midst with the best of intentions and skills, but it is their own world, their own civilization, that is now in history's scales.

—Mr. Ajami, a professor at Johns Hopkins School of Advanced International Studies and a senior fellow at Stanford University's Hoover Institution, is the author of "The Foreigner's Gift" (Free Press, 2007).Printed in The Wall Street Journal, page A25

Thursday, November 5, 2009

From the Wall Street Journal: Moody's Downgrades Five Dubai Companies

DUBAI -- Moody's Investor Services, the credit ratings agency, Wednesday downgraded five major Dubai-government-controlled companies after the emirate's finance department relinquished its obligations to the firms' debts in late October.

In a statement, Moody's said it downgraded Dubai Holding Commercial Operations Group LLC, or DHCOG, to Baa1 from A3, two notches above junk level. DHCOG is effectively owned by Sheikh Mohammed Bin Rashid Al Maktoum, the ruler of Dubai and vice president and prime minister of the U.A.E.

DP World, Dubai Electricity & Water Authority and DIFC Investments saw their issuer and debt ratings downgraded to A3 from A1, while Jebel Ali Free Zone, or JAFZ, had its rating lowered to Baa1 from A3. Emaar Properties' rating was left untouched at Baa1, according to Moody's.

The rating outlook for the first four companies is negative, while DHCOG and Emaar are maintained on review for downgrade, Moody's said in the statement. "The downgrades follow recent disclosures of increased conditionality around when support could be provided to these GRIs [government-related issuers]," Moody's said.

"This includes the specific criteria that will be considered by the recently established Dubai Financial Support Fund when assessing whether financial assistance should be provided." The Dubai Financial Support Fund manages Dubai's debt obligations.

Dubai's government is under no obligation to extend support to any such government-related issuers either directly or through the support fund, Moody's added.

"Moody's is therefore making a greater distinction between its view of the creditworthiness of Dubai's GRIs and that of the Dubai central government, which is itself viewed by Moody's as benefiting from support from the U.A.E. federal government," the agency said.

Dubai's government-related entities are believed to make up the bulk of the emirate's debt pile. Last month, Dubai's government launched global roadshows to market a $6.5 billion debt program, whose prospectus stated that the government has no obligations to the debt of its "government-related entities."

According to the prospectus, "direct debt" of the Dubai government stands at $19.4 billion, much lower than the $80 billion of total debt the government and its government-related entities are believed to owe. DP World had just under $60 billion in liabilities at the end of last year, according to its balance sheet.

In February, a $20 billion bond program was launched by Dubai, to help pay back government and government-related entities' debt. The first $10 billion tranche was subscribed to by the United Arab Emirates' central bank in Abu Dhabi.

Government officials have said the second $10 billion would be issued in October or November but no details have been provided so far. Dubai's Department of Finance declined to comment on when the second $10 billion tranche would be launched.

The Department of Finance previously said the $6.5 billion program is not part of the second $10 billion bond.

"Moody's assumes that the second $10 billion tranche will be funded imminently to further prop up the gradually depleting support fund," Moody's said.

Dubai has nearly $19 billion of debt coming due this year and next, according to regional research house EFG-Hermes. Government-owned property developer Nakheel has a $3.53 billion bond due in December and a $1 billion bond issued by the Dubai Civil Aviation Authority in 2004 is due Wednesday.

The $1.93 billion sukuk, or Islamic bond, issued by Dubai's government last week is likely to help pay back such debt, investors have said. The sukuk is part of the $6.5 billion debt program.

"Dubai's recent successful government bond issuance is also likely to be supportive to Dubai's liquidity profile and alleviate some of the pressures that would arise from further bailouts, although the use of proceeds has not been specified," Moody's said.

Write to Maria Abi-Habib at Maria.Habib@dowjones.com