WASHINGTON – As he campaigned for the U.S. presidency in 1952, Republican candidate Dwight D. Eisenhower argued that he would seek to bring “security with solvency” to the American people.  Eisenhower realized that the challenges posed by the Soviet Union could too easily stress America’s finite resources and a strategy to face that threat consider the economic roots of America’s military power and influence in the world. For Eisenhower, economic power was the indispensable source of American global leadership.

In his State of the Union address Tuesday evening, U.S. President Barack Obama seemed to recognize Eisenhower’s insight.  Obama focused largely on the economic challenges still facing the United States — but framed those challenges in the context of recent national security victories and the achievements of the World War II generation.  While Obama did focus on domestic affairs, he both opened and closed his address by praising America’s men and women in uniform — one of the few points drawing bi-partisan applause – and took stock of a broad set of foreign policy and security challenges that face the United States today. He also made clear that the new U.S. defense strategy would also balance security with solvency — saving nearly half a trillion dollars but maintaining the type of first-rate military required to deal with current and emerging threats.

Obama’s address included a call to learn from the shared sacrifice, partnership, and teamwork that the U.S. military demonstrates day after day, to include that shown in the mission to kill Osama bin Laden in May of last year — clearly the most significant national security event of the past twelve months.

Obama was assertive in his description of his vision of America’s role in the world but realistic when considering the complexity of the challenges ahead. In stark contrast to much of the isolationist rhetoric of the Republican primary debates, he argued that America continues to be a strong, ascendant world leader with a “steadfast” commitment to allies around the globe.

Of course, Obama noted the end of the war in Iraq and the determination to transition to Afghan leadership.  He also acknowledged the “wave of change” brought about by the Arab Spring and issued a sharp rebuke to the Assad regime — noting that they would soon discover “that the forces of change can’t be reversed and that human dignity can’t be denied.”   He praised the power of partnerships that have enabled a unified approach to counter the Iranian quest for nuclear weapons but was realistic in his assessment of whether this in and of itself would provide the solution.  Coming a day after U.S., British, and French warships entered the Persian Gulf despite threats from Iran; Obama reiterated that while he hoped for a peaceful resolution, “no options” were off the table.

It is telling that while facing a tough re-election in a poor economy, Obama has chosen to frame domestic problems within the context of foreign policy successes.  It is a clear indication that even while Washington focuses on a Presidential election campaign, the administration will not abdicate the responsibilities the United States has as a global leader.

Mark R. Jacobson is a Senior Transatlantic Fellow at the German Marshall Fund. He has formerly served at the Department of Defense and on the staff of the Senate Armed Services Committee. The views expressed are his own.

WASHINGTON– Political realities facing the leaders of the United States and Iran mean that military confrontation between the two states is a distinct possibility. In late December, the Iranian armed forces conducted a number of war games — which included the live firing of missiles — in the Straits of Hormuz and adjacent waters of the Persian Gulf and the Gulf of Oman. When the aircraft carrier USS John Stennis sailed for a routine repositioning from the Gulf to the North Arabian Sea, Iran told the United States not to return it to the Persian Gulf region. The commander of Iran’s army, General Ataollah Salehi, later reiterated that “The Islamic Republic will not repeat its warning.”

On January 6, three armed patrol boats of the Iranian Revolutionary Guard Corps came within several hundred yards of a U.S. amphibious assault ship, the USS New Orleans. This is precisely the sort of cat-and-mouse games at sea that can lead to serious miscalculations and subsequent escalation. Many Americans will recall that in 1964 a military encounter between North Vietnamese torpedo boats and the USS Maddox resulted in a pitched sea battle, which was enough to persuade the U.S. Congress to pass the Gulf of Tonkin Resolution that gave President Lyndon Johnson authority to begin the massive escalation in Southeast Asia.

In addition to military brinksmanship, covert military action against Iran’s nuclear establishment appears to be increasing. On January 11, the Iranians announced that one of their nuclear scientists had been assassinated in Tehran. They blamed both the United States and Israel though they offered no explicit proof. Some Iranians have publicly called for retaliatory killings. Assassinations and reprisals have long been an important driver in the paths to war. Remember the attempted assassination in London of Israel’s ambassador to the United Kingdom, Shlomo Argov on June 3, 1982? This attack was attributed to the Palestinian Liberation Organization and provided the pretext for Israel’s invasion of Lebanon three days later.

Why might Iran be willing to risk confrontation with the United States at this time? It faces draconian new international sanctions, led by the United States, and if the EU agrees to ban imports of Iranian oil at the end of January, its financial situation will further deteriorate. Its currency is in freefall and the business community appears to be in a state of panic. Even Iran’s great friend China is cutting back on oil purchases. The regime in Tehran also faces the possibility that its closest Middle East ally, Syria, is edging towards civil war and there is a chance that the Bashar al-Assad regime could eventually be ousted. This would radically change the balance of power in the region and undermine other Iranian allies, especially Hezbollah. While Iran has signaled a willingness to return to Turkey for nuclear talks, it has simultaneously blamed the United States for attacks on its people and financial system.

The Obama administration, meanwhile, is being savaged by Republican opponents for appearing weak on Iran, despite warnings that any interference with international traffic through the Straits of Hormuz “will not be tolerated.” When U.S. Secretary of State Hillary Clinton condemned the killing of the Iranian scientist and stated that Washington had played no role in his killing, former Senator and current presidential candidate Rick Santorum stated bluntly that the condemnation was a mistake. Santorum, along with fellow presidential candidates Newt Gingrich and Mitt Romney, have all taken a much harder line on Iran than the White House and, along with Israel’s most right-wing supporters in the United States, are goading the administration to be tougher on Iran, even to the point of launching a military strike against its nuclear facilities.

Given the fragility of the U.S. economy, which seems just on the cusp of recovery, the Obama administration does not want a war with Iran. But the president cannot control or predict Iranian behavior. A truly provocative act by Iran — such as the sinking of a U.S. warship — would force Obama’s hand, especially in an election year, but he must nevertheless resist the temptation to attack Iran’s nuclear facilities. This could only be justified if Iran had provided unambiguous evidence that it was determined to develop a nuclear weapon. Under these circumstances, international support for war would likely be forthcoming.

Geoffrey Kemp is a Senior Fellow with the Transatlantic Academy at the German Marshall Fund of the United States in Washington DC.

Image by the United States Department of Defense.

WASHINGTON—Slowly but surely, climate change is opening up the Arctic. Greenland’s glaciers and ice fields are melting, sea ice around the North Pole is decreasing each year, and the huge permafrost areas of Russia and Canada are beginning to thaw. This has led to widespread speculation of a Great Game-style scramble for the region’s abundant resources. Many studies, including those by the private sector and the U.S. Geological Survey, confirm that there are vast treasure-troves of oil, gas, and minerals in the Arctic. Yet, with the exception of iron ore in Greenland, these resources have not yet been exploited. In fact, despite rising temperatures, the impediments to extracting and transporting most resources from the Arctic will remain formidable for the foreseeable future.

One factor facing developers is that, despite global warming, the Arctic remains largely inhospitable, and there are innumerable obstacles to cashing in on its riches. Oil rigs require airstrips, roads, electricity generation, and pipelines; mining operations require port facilities and technology to withstand the bitterest winters; and all resource extraction requires a specialized labor force. For the private sector to develop any part of the Arctic, enormous investments of capital and labor would be necessary.

While there is a possibility that the Arctic seaways – running through Canada and along the northern Russian coast – will become open to transportation for most of the year, large container ships are unlikely to use these routes. The Arctic will remain a dangerous trade route for commercial shipping, and neither Canadian nor Russian authorities can offer much in the way of support and rescue facilities in the event of emergencies along their northern borders. The dangers are further evidenced by recent investments in traditional sea routes and facilities, such as the Panama Canal. By contrast, the port of Reykjavik in Iceland, which would be ideally positioned to serve as a future hub for northern sea routes, has seen no such investment.

In the long run, permafrost thawing may prove to be the greatest obstacle to Arctic developers. It has made the construction of roadways and airfields much more difficult, and in some cases has caused extractive projects to be abandoned. This process has already caused enormous problems in Russia, where large cities such as Yakutsk and several large river ports, pipelines, conventional hydro electricity plants, and even a nuclear power station lie in permafrost areas. Yakutsk in particular has seen severe damage to its infrastructure and the closure of a runway of its airport as a result of the land below melting.

Despite these continuing challenges to development, there is no question that, for better or worse, relations between the countries of the region are gradually changing. One view of the Arctic’s future stability is that governance of the region is evolving peacefully and will likely continue to do so. An Arctic Council was established in 1996, building on the momentum of a 1987 speech by Soviet leader Mikhail Gorbachev calling for the Arctic to be a “zone of peace.” The Council, which includes not only the five Arctic Ocean countries – Russia, the United States, Canada, Denmark, and Norway – but also Finland, Iceland, and Sweden, has reached agreements that advance cooperation on oil spills and drilling disasters. Most geographical boundaries in the region have also now been agreed upon, with questions about the international status of the Canadian Northwest Passages marking the rare exception.

A second view is that growing nationalism over the Arctic and its resources, particularly in Canada and Russia, paints a far bleaker picture. The current Canadian Prime Minister, Stephen Harper, has asserted Canada’s rights in the region, with some critics labeling him a “purveyor of polar peril.” Meanwhile, the Russians have made dramatic and provocative gestures, such as sending a submarine to the North Pole to plant a Russian flag on the seabed. With mutual suspicions on the rise, Russia, Canada, and Norway are all investing in maritime reconnaissance and long-range strike capabilities. And for the first time, Canada is building Arctic-capable offshore patrol vessels.

But despite such saber rattling, it is still premature to describe the competition over resources and northern sea routes as a race for the Arctic. There are encouraging signs of cooperation and wise, if limited, development of resources. However this is a region where isolated incidents can quickly turn nasty. Moreover climate change and permafrost thawing are already changing the game on the ground, and there is little reason to hope that any of these processes can be reversed in the near future. While there may be little real cause for competition over remote and costly Arctic resources, there is always the chance that the purveyors of polar peril might yet have their way in the end.

Geoffrey Kemp and Tim Boersma are fellows and Nicholas Siegel is program officer at the Transatlantic Academy in Washington DC. 

EU Climate Action Commissioner Connie Hedegaard and Indian environment minister Jayanthi Natarajan at the center of the “huddle” on the last night of the COP17 negotiations in Durban, South Africa; Todd Stern, US Special Envoy for Climate Change, looks on. Photo: IISD

The enduring image from last week’s UN conference on climate change in Durban, South Africa, was of negotiators “huddling” in full view on the plenary floor to come up with the form of words that allowed the final deal to be reached. The negotiators are in shirtsleeves, visibly tied at the end of talks that had run 36 hours past the deadline, and surrounded by hundreds of observers straining to hear the back-and-forth. At the center are the two protagonists (obscured in this picture): Connie Hedegaard, the EU Commissioner for Climate Action, and Jayanthi Natarajan, the Indian Environment Minister. Todd Stern, the U.S. Special Envoy for Climate Change, is offering suggestions and Maite Nkoana-Mashabane, South Africa’s foreign minister and host-president of the conference, is looking on. She made the extraordinary decision to interrupt the plenary negotiations and invite the main players to take ten minutes to come up with an acceptable wording on the legal form of a new treaty, to be negotiated by 2015. The ten minutes stretched to almost an hour but resulted in the breakthrough that carried the conference to a conclusion.

The picture stands in contrast to the iconic photograph from the talks in Copenhagen two years ago. Those negotiations took place in an even brighter glare of international attention because an unprecedented number of heads of state and government attended. The main outcome of the Copenhagen conference was hammered out in an impromptu summit of the leaders of the United States, Brazil, South Africa, India, and China; the EU was not in the room and was acutely embarrassed by its absence and by its failure to achieve a deal on emission reductions that was sufficiently ambitious.

United States President Barack Obama sits with South Africa’s President Jacob Zuma, Brazil's President Luiz Inacio Lula da Silva, Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh, and other world leaders during a multilateral meeting at the Bella Center in Copenhagen, Denmark, on 18 December 2009. The European Union was not in the room. Photo: Jewel Samad

These pictures present contrasting images that are both informative and incomplete. In fact, Europe had much greater influence in Copenhagen than many of the media appreciated at the time – the final outcome of the Copenhagen conference contained much of what the EU had been pushing for. Its exclusion from the room was not deliberate but due to happenstance in the chaos of that final evening. Nevertheless, the denting of Europe’s pride was real, and EU negotiators, led by Hedegaard, invested every ounce of diplomatic capital they possessed to position themselves for a stronger, EU-led outcome in Durban. And the strategy paid off: The agreement in Durban marks the EU’s return to its accustomed place at the front of international leadership on climate diplomacy. It is also a welcome rapprochement between Europe and the United States on climate change.

At the outset of the talks there was a fear that divisions between Europe and the United States on climate policy could sour transatlantic relations. The EU combines ambitious domestic targets with calls for strong international cooperation and has made no secret of its frustration with the lack of U.S. reciprocal action. The 2001 withdrawal of the United States under President George W. Bush from the Kyoto Protocol (which the United States never ratified) was one of the low points of transatlantic relations last decade. The Obama administration is more favorably disposed toward action on climate change but it is constrained by the lack of domestic political support for strong measures to reduce greenhouse gas emissions.

The EU and the United States went into the talks with different agendas and expectations. Europe wanted to win agreement on a new international treaty to replace the Kyoto Protocol, the only international agreement with teeth, whose provisions only run until the end of 2012. The United States approached this issue from what it regarded as a pragmatic position, which is that international treaties are really only a reflection of what countries are doing anyway and the emphasis should be on encouraging national policies. Nevertheless, the United States was not opposed to talking about future commitments, as long as big emerging economies like China and India were included. But the U.S. priority was to focus agreement on the creation of a Green Climate Fund and the other issues on the agenda since the Copenhagen conference in 2009.

At the beginning of the conference there were some predictions that China could seek to isolate the United States by keeping the conversation on the future of the Kyoto Protocol. But the U.S. delegation surprised many observers by lending its support, in the Thursday of the second week of talks, to the EU demand for a “roadmap” that would lead to a new international treaty. For all the expectations that these talks would not bring any progress on a central EU demand, the United States decided that it was not, this time, going to be the country seen as blocking progress. That role fell instead to India, which (with some historical justice) complained bitterly that it was being bound to constrain its emissions thanks to the profligacy of the developed countries. But India eventually acquiesced to a form of words (“a protocol, legal instrument, or an agreed outcome with legal force applicable to all Parties”) suggested by Stern in the late-night huddle.

Even if the “Durban Platform” is not as ambitious as it would have liked or as the science of climate change requires, the EU successfully pressed the need for some kind of continuing international legal process that applies to all countries. This is the most important long-term result of the Durban outcome: the fracturing of the long-standing and artificial divide between “developed” and “developing” nations that obliges only the developed countries to reduce their emissions.

But the United States helped effect this outcome. By ceding to the EU the role of climate champion, the United States allowed this outcome to happen simply by not standing in its way. By the same token, however, the United States insisted on, and won, the point that developing countries must be included in any global approach. On both tracks, the Obama administration managed to avoid drawing fire from the conservative opposition back home, which sees political opportunity in anything that implies constraining U.S. economic growth or diminishing its competiveness with China. The EU negotiators know the Obama administration’s political constraints well and are sympathetic to them.

The result was a victory for the EU in its insistence for a renewed international recognition of the urgency of climate change. It is probably correct to say that a “legally binding” treaty on climate change is never more than a reflection of what is happening anyway. But the EU feared, rightly, that a commitment to do nothing before 2020 – which was the effective Indian and Chinese position – would have sent a disastrous signal to the world. In the mere fact of forcing an international recognition of a new regime by 2015 (which is tomorrow by the glacial pace of international talks), the EU vindicated its position on the talks in opposition to those who thought that such gestures were irrelevant.

MINSK– On 19 December 2010, Belarus’ president Alexander Lukashenko claimed victory in a re-election (his fourth) marred by irregularities and falsifications. The mass protests that ensued were brutally repressed. All nine opposition candidates and 700 protesters were arrested; the opposition leaders Andrei Sannikov and Nikolai Statkevich remain in prison, as well as 13 other political prisoners. Since then, the situation in the country has become ever more desperate; Belarus is a state hovering on a precipice. The numbers speak more strongly than any words.

189 percent is the rate at which the Belarusian rouble devalued this year.

113.6 percent is the current figure for base inflation. Food prices have risen by 127.4 percent, those of services by 72.4 percent.

45 percent is the current refinancing rate, the highest in the world (a year ago, it stood at 10.5 percent).

70 percent of GDP is the estimated size of Belarus’ external debt by the end of 2011.

$177 is the difference between wages in December 2010 and October 2011 (average incomes dropped from $530 to $353 per month).

11 price increases have driven up the cost of gasoline in 2011, provoking several mass protests.

100 percent is the ownership by Gazprom of Belarusian pipeline operator Beltransgaz. Having just purchased the remaining 50 percent for $2.5 billion, Russia now for the first time owns a pipeline outside its territory. Gazprom has promised a threefold wage growth to its new employees.

$7.3 billion is the total of Russian subsidies to Belarus, as per Moscow’s calculations, in 2011. For example, the price of gas will drop from $ 270 per one thousand cubic meters to $ 165.50 for Belarusians (Ukrainians will pay $ 416). Besides reductions in gas prices and the purchase of Beltransgaz, Sberbank has provided a $1 billion loan to potash giant Belaruskali, and the Eurasian Economic Community made available a $440 stabilisation loan.

Tens of thousands of Belarusians have migrated to Russia and Ukraine for work; the worst-case scenario expects 1 million people to leave.

20.5 percent is the share of Belarusian citizens that would cast their vote for Lukashenko today. The official number given for the 2010 election was 79.6 percent; independent polls at the time showed the real number was 51.1 percent.

It has been a long year for the Belarusians.

Maryna Rakhlei is a journalist with the independent Belarusian news agency Belapan.

BRUSSELS — Expectations are low at the beginning of the 17th annual United Nations conference on climate change that began this week in Durban, South Africa. The European Union and the United States have assumed contrary positions and even disagree over what would constitute a successful outcome. But, behind the talks, and despite that standoff, the threat of global warming continues to cry out for transatlantic leadership.

The talks themselves – which will culminate next week in three days of ministerial talks – are intended to add definition to the political agreements that were reached at last year’s talks in Cancun, Mexico, such as on a new fund to help developing countries reduce their greenhouse gas emissions. But what will attract the biggest attention in Durban is the Kyoto Protocol, the 1997 treaty that binds industrialized countries to reduce their emissions by a certain amount by 2012. There is no provision for a second “commitment period” beyond next year, so the EU is calling for a sequence of actions to lead to a new treaty by 2015. The United States rules out a new treaty before 2020 and only if large emerging economies like China are similarly bound; Japan, Canada, and Russia have aligned themselves with this view. There seems to be no way to reconcile these two positions.

But Europe and the United States are divided even on the significance of this divide. Among the U.S. negotiators, and echoed in many Washington, DC, think tanks, the Kyoto Protocol (or any successor treaty) is seen as irrelevant to the climate talks. Instead, an effective response to climate change lies in vigorous domestic action by the big emitters. Many U.S. commentators consider the Kyoto Protocol an obstacle to progress because of its outmoded distinction between developed and developing countries and its zero-sum emphasis on legally binding emission caps. The EU counters that a legally binding treaty is the only way to bring clarity and to drive domestic action, and points to a growing chorus of international bodies – from the UN to the Organisation for Economic Co-operation and Development – that warn that we have no more time to delay action to reduce global emissions if the Earth is to have a hope of avoiding temperature increases that would change the face of the planet.

While the United States may think that the EU has tied itself to a sinking ship, Europeans visiting the United States express exasperation at the U.S. failure to grapple with climate change and at the prominence afforded to pundits who dispute the scientific consensus on climate change. It is common to hear European officials suggest that it is time for Europe to look elsewhere and focus on building cooperation with developing countries. But it would be a grave mistake to give up on the United States. The two continents, working together, have the political and financial capacity to drive global change through policy leadership and the market effect of their domestic policies. Disagreement threatens to hinder international action when there is no time left for delay, and to sour transatlantic relations, as seen in the brewing dispute over the inclusion of U.S. airlines in the EU Emissions Trading System beginning in 2012.

In Durban, the EU and the United States will probably manage to avoid an acrimonious falling-out. Memories of the rift in transatlantic relations following George W. Bush’s decision to withdraw from the Kyoto Protocol in early 2001 are still raw. The EU is sympathetic to the domestic political constraints that U.S. President Barack Obama faces and the real actions that his administration is advancing, such as new regulations to control pollution from power stations and to improve efficiency standards in automobiles. Whatever deal is struck in Durban, it will probably be enough to allow the Kyoto Protocol to continue in some form without forcing the United States to denounce the agreement.

But outside the negotiations, Europe has a good story to tell about its response to climate change, and it needs to do a better job at persuading the United States to partner with it on this enterprise. In European capitals, policymakers are busy with plans to build new renewable electricity generating capacity, transform the electricity grid to carry the power, and train a whole generation of new engineers who can operate it all. The European Commission is preparing to publish a new “roadmap” for a low-carbon energy system by 2050, the latest in a series of policy statements and regulations since 2008 that are slowly accumulating momentum that could take the EU on a low-carbon trajectory. No conversation on anything like this scale is happening in the United States, nor is one expected until at least after next year’s presidential election.

The United States holds that international treaties like the Kyoto Protocol are less relevant than action on the ground. The EU thinks that such action on the ground is a result of the downward pressure of international commitments. Surely there is room to agree here on the outcomes, if not the cause? If the United States were to embark on an ambitious plan of reducing its emissions, and to lead international efforts to imitate it, the EU would be quick to agree that a treaty would be superfluous to this end.

Thomas Legge, based in Brussels, is a senior program officer for the German Marshall Fund’s Climate & Energy Program.

Image by Meraj Chhaya

The avalanche of media coverage of the Department of Energy’s roughly half million dollar loan guarantee to Solyndra, a solar technology company that ultimately went bankrupt, has distorted what urgently needs to be a healthy debate on policy options to dramatically increase private sector investments in clean-energy technologies.  The real question is not aboutwhether governments should provide these incentives, but rather how they can do so most effectively.

There is clear scientific evidence that rising fossil energy use will lead to irreversible climate change that poses serious risks to public health, safety and the global economy.  To reduce these risks, we need governments to quickly adopt smart policies that will create the stable and predictable environment that the private sector needs to invest in clean-energy technologies so that we can reduce our dependency on fossil fuels over the long term.

Government support for energy companies is not new.  According to the International Energy Agency’s 2011 World Energy Outlook, governments around the world provided subsidies to fossil fuel industries that totaled more than $400 billion in 2010. These subsidies create an uneven playing field for renewable and other clean-energy technologies.

Given the long-term economic lifetime of energy-related capital stocks globally, there is little room to delay the transition from fossil fuels to cleaner energy sources.  Even if countries commit to emissions limits that would prevent global temperatures from rising above 2 degrees Celsius or 3.6 Fahrenheit—the threshold for avoiding costly and dangerous climate impacts agreed by scientists worldwide—the IEA estimates that 80% of cumulative global CO2 emitted worldwide between 2009 and 2035 would already be “locked-in” by power stations, buildings and factories that either exist now or are under construction.

The IEA also calculates that without coordinated international action to dramatically shift away from fossil fuels toward low or zero carbon energy sources between now and 2017, the only way nations can avoid temperatures from exceeding 2 degrees Celsius would be to either ensure that all new infrastructure built between 2017 and 2035 is zero carbon or to phase out existing infrastructure before the end of its economic lifetime—a solution that is neither cost effective or politically viable.

The public has a right to understand the process behind DOE’s decision to provide a $535 million loan gaurantee to Solyndra.  Fortunately, as Secretary Chu notes in his testimony before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, DOE has provided more than 186,000 pages of documents to cooperate with the Committees’ investigation. President Obama has also asked for a review of the Department’s loan portfolio.

Secretary Chu noted in his testimony to the subcommittee that “Solyndra was poised to compete in the marketplace”.  If Solyndra was indeed commercially viable and in a position to attract private capital on its own, then Congress and the public are right to question whether a DOE loan guarantee to this company was the best use of tax payers’ money.

Nonetheless, the unrelenting focus on Solyndra is distracting policy makers and the public from the much bigger and more pressing problem of finding and implementing the right mix of policies to remove market distortions that place clean-energy technologies at a disadvantage–including fossil fuel subsidies and trade barriers—and to rapidly mobilize investments in low or zero carbon energy sources.

Cathleen Kelly is the Director of the Climate and Energy program at the German Marshall Fund of the United States in Washington DC.

Image by Solyndra.

To this American previously unfamiliar with the South Caucasus, the first feeling upon arrival in Azerbaijan is a sense of growth and industry. Brightly-lit buildings line the road from the airport to Baku. Arresting new developments like the trio of “flame tower” skyscrapers seem designed to impress visitors and locals alike with a sense of prosperity and stability. One week later, reflecting on a whirlwind tour that also included visits to Tbilisi and Yerevan, the Baku landscape seems to be a fitting physical reflection of the general contemporary Azerbaijani self-perception: that the country will continue expand its dominance in the South Caucasus and importance in the larger world, fueled by the oil wealth flowing from Caspian Basin. This feeling of pride and inevitability emerged in many interactions with Azerbaijanis from across the political and societal spectrum.

Meeting with representatives from Azerbaijani government, political opposition, and civil society of course yields a predictable range of opinions on a host of issues. Persistent corruption across many sectors of Azerbaijan society, ongoing challenges to democratization in a modernizing society, wealth distribution and the penetration of wealth beyond elites and beyond cities, media independence, and the rights and responsibilities of opposition political parties are all burning questions central to the country’s development towards its stated goal of a stable and legitimate democracy. But it is worth noting that all of these issues and more are being discussed, evidence of a new and welcome self-reflection in Azerbaijan.

Some observers paint a relatively improving picture of the situation, pointing to economic growth as mostly a boon to Azeri society. U.S. Ambassador to Baku Matthew Bryza is quick to point out that even if the current poverty rate is double the official figure of 9.1%, Azerbaijan has still managed to reduce that figure from a staggering 49% since 2003. This is an impressive improvement, to be sure, and to some it signals a step in the right direction for broader inclusion of the poorer provinces in the civil discourse.

Nagorno-Karabakh remains a consuming issue, perhaps the more so as a result of the Azerbaijanis’ growing wealth and self-confidence.   Meanwhile, Armenia suffers from a diminishing population and economic stagnation.  This stark contrast feeds a narrative of the inevitability of Azeri preeminence in the region and eventual recapture of the disputed territory.

There is widespread agreement among Azerbaijanis on their country’s historical and moral claims to Nagorno-Karabakh, and with time the divisions continue to widen between ethnic Azerbaijanis and Armenians who once lived peacefully as neighbors. Many Armenian children in Nagorno-Karabakh have likely never met an Azerbaijani person. The converse is true of the children of displaced Azerbaijanis from the region, and contentious media reporting from both sides only hinders efforts at confidence-building. Despite hardening perceptions among the population and halting progress under the OSCE Minsk Process, led by France, Russia, and the United States, people still hope for an eventual rapprochement and peaceful resolution of this so-called “frozen conflict.”

Efforts on the grassroots level in Azerbaijan to build public trust in the Minsk Process and to foster relationships between Azerbaijanis and Armenians are ongoing.  Activities organized primarily by the Azerbaijani displaced community itself through non-governmental organizations such as the Azerbaijan Committee of Helsinki Citizens Assembly (ANC-HCA) and the Centre for Effective Initiatives (CEI) support peace-building and intercultural dialogue as part of their efforts to strengthen Azeri civil society. Efforts like these have the potential to help prepare the public for the complex business of rapprochement by rebuilding familiarity and trust in the other side, but their capacity is limited. NGOs must be government-sanctioned to operate in Azerbaijan, and indeed they often receive small amounts of government support.  A more robust presence of the right kinds of NGOs could help build the capacity of civil society to work not only towards their national democratic aspirations, but also towards peace between the two countries. As has been seen elsewhere, fostering dialogue on the community level that cuts beneath the strata of internationally-brokered negotiation can play a key role in laying the foundations for peace.

Andrew Fishbein is a Program Officer with the Congressional Affairs program of the German Marshall Fund in Washington, DC.

WASHINGTON—Last week’s International Atomic Energy Agency (IAEA) report on Iran further refutes the conclusion of the 2007 U.S. National Intelligence Estimate (NIE) that Iran abandoned weaponization activities in 2003. The Annex to the report makes clear that although Iran temporarily halted weaponization activities in 2003 on the heels of the Iraq invasion, the activities resumed later under a different Iranian entity. In addition, the report spells out details of Iran’s preparations for detonation experiments thought to be “strong indicators” of possible weapons development.

Leading European intelligence agencies, as well as many U.S. experts, had previously rejected the NIE’s conclusions as implausible. The IAEA report will focus additional attention in the United States on the question whether the intelligence community should further revise or withdraw its conclusions. Moreover, the report will make clear to governments determined to avoid a nuclear-armed Iran that the window is fast closing on the possibility of effective sanctions.

In the view of many experts, the Iranian program is advancing dangerously close to breakout capability. Iran has long had ample delivery devices for a nuclear weapon in the form of a relatively advanced ballistic missile capability. The IAEA report details Iran’s progress in developing a detonation capability, and Iran already possesses almost 5,000 kilograms of low-enriched uranium. According to David Albright of the Institute for Science and International Security, this amount, if enriched further, is sufficient for four nuclear weapons. Albright assesses that once Iran moves to enrich fuel to weapons grade, it could reach breakout capability in only six months. The question now is whether and how the United States and Europe will respond.

We recommend, as one option, that the P3+1 (U.S., U.K., France, and Germany) table a new Security Council Resolution. Membership of the Security Council is, admittedly, unfavorable for sanctions resolutions at the moment, and there will inevitably be Chinese and Russian obstruction. On the other hand, both China and Russia have previously agreed (after painstaking negotiations) to four separate UNSC sanctions resolutions. The United States, moreover, could more fully engage the significant diplomatic weight of the Saudis, who have leverage with the Chinese and may be newly motivated to assist by the recently-revealed plot against their Ambassador. With a significant diplomatic push, the effort may well succeed.

Second, with or without a new Resolution, the U.S. should adopt new bilateral sanctions. Under U.S. law there are two powerful remaining options: Treasury could sanction the Central Bank of Iran, essentially preventing any bank doing business with the Central Bank from having a correspondent account in the United States. Alternatively, the United States could target the National Iranian Oil Company (NIOC), cutting off oil revenues and limiting Iran’s supply of refined petroleum.

Third, the United States and its allies should reaffirm the existence of a credible military threat to Iran if the regime continues to pursue a nuclear weapon. The United States has reiterated that military options remain on the table, and U.K. military planners are reportedly stepping up efforts to develop contingency plans to participate in a military operation against Iran. As a next step, the United States could consider joint military exercises with Israel and a willing European ally or allies.

Finally, the United States and Europe should take additional steps to provide Iranian dissident groups with both material and moral support. Although the regime’s violent suppression of the Green Movement following the 2009-2010 protests has prevented the Movement from continuing to stage large protests in the streets, the regime’s behavior has also served to significantly undermine its legitimacy in the eyes of the Iranian general public. This vulnerability is compounded by recent reports of government corruption.

Iran experts point out that the nuclear program began under a pro-Western government and continued under “reformist” Iranian presidents. That said, there is no question that the chances of persuading the Iranian government to abandon its nuclear weapons program improve significantly if the current regime ends. One of the rallying points of young members of the Green Movement has been the country’s isolation from the rest of the world and economic deprivation in Iran resulting partly from economic mismanagement and partly from international sanctions. A government brought into power by the Green Movement would have significant incentive to rebuild ties with the international community.

To date, restraint by Israel from military action has prevailed in part because of the perception that nonmilitary options remain on the table. The IAEA’s report, however, reveals that the window for these options is closing, and that the costs of inaction are rising. Just in recent months, then-Chairman of the Joint Chiefs of Staff Admiral Michael Mullen and U.S. Defense Secretary Leon Panetta have spoken publicly about Iranian attacks on U.S. soldiers in Iraq; the United States has revealed a plot to attack a foreign diplomat and U.S citizens on U.S. soil; and the IAEA has now reported progress toward breakout capability.

Whatever the costs of the actions we recommend, the costs of inaction are higher. A nuclear armed Iran is in no nation’s interest — including Iran’s. Resolving the issue will require bold and decisive leadership from the United States and Europe.

Ambassador Kristen Silverberg is the former U.S. Ambassador to the European Union as well as former U.S. Assistant Secretary of State for International Organizations. Daniel Fata is the former U.S. Deputy Assistant Secretary of Defense for Europe and NATO. Both are Transatlantic Fellows at the German Marshall Fund of the United States in Washington.

WASHINGTON—Earlier this week, according to the U.N. Population Fund, the world’s population surpassed 7 billion. With the global economy in recession and the impacts of a warming climate increasingly apparent, this new milestone comes at a time of enormous strain and has significant implications for the world’s natural resources, its economy, and of course, its urban areas. More than half of the world’s population lives in urban areas, and the upward trend is continuing unabated. It has been suggested that by 2050, approximately three-quarters of the world’s population will be urbanized. At this rate, one thing is very clear: cities must be part of the solution to the economic, environmental, and social challenges of our time.

But as asked in the recent U.N. State of the World Population report, “what, exactly, is a ‘city’ in 2011?” Traditional city government structures and boundaries generally do not match the web of economic and social activities among urban residents, businesses, and other institutions. Are cities then the right geography for responding to today’s tough challenges? And if not, at what scale can the pressing economic, environmental, and economic challenges of our times best be addressed?

Urban experts have long called for a more regional approach that reaches beyond city boundaries to include the residents of entire metropolitan areas. In a recent article for Atlantic Cities, for example, Bruce Katz of the Brookings Institution wrote that “metropolitan communities, here and abroad, represent the true economic geography…they are also the undisputed vehicles for environmental sustainability and social inclusion.”

But another trend is also emerging in the drive toward sustainable urban development: a greater focus on neighborhood efforts to integrate environmental, economic, and social responses to our current crises. Last week, the Portland Sustainability Institute (PoSI) hosted its third annual Ecodistricts Summit, bringing together practitioners around the globe who are pioneering neighborhood-level sustainability projects. Participants highlighted both new development and redevelopment efforts – projects that, in the words of Rob Bennett, PoSI’s Director, are “small enough to go fast and large enough to make a difference.” Among the projects presented were the Seattle 2030 project, which engages downtown property owners and businesses in an effort to minimize the environmental impact of building construction and operation; the Hammarby Sjöstad project in Stockholm, which converted an old industrial area into a modern, mixed-use, low-emissions neighborhood with state-of-the-art environmental infrastructure; and pilot projects spanning the globe from Portland, Oregon, to New Orleans, Louisiana, Sao Paolo, Brazil, and Nagoya, Japan.

So what types of innovation can best be supported at the neighborhood level? Clearly, there are technologies and strategies, such as district energy systems, that are highly relevant and effective at this scale, while other policy interventions, including those related to transportation, are more effectively implemented at a larger scale. Perhaps the strongest argument for working at the district level is that all of us live in, do business in, and identify with neighborhoods. The personal relevance of neighborhood interventions can drive community engagement and help build new coalitions. EcoVillage Cleveland, a project launched in the 1990s, for example, built new partnerships among environmental and community development advocates and the public sector around a plan that combined environmental sustainability and affordability goals, all with the aim of supporting neighborhood revitalization. Among the project’s many achievements are the construction of homes that are both permanently affordable and energy efficient, the creation of community gardens, bike trails, and other recreational spaces, the rehabilitation of the local transit station with passive solar heating and other green elements. Indeed, the district scale may be the ideal geography for effectively integrating the multiple approaches — environmental, social, and economic — that truly make a neighborhood sustainable.

Metropolitan and neighborhood approaches to sustainable urban development are not in conflict. Nor does either approach diminish the role of the city with its formal authority and urban development tools. But as we reflect on the size of our population and the enormity of the challenges we face, it is important to remember that we will only be able to resolve our current economic, social, and environmental challenges if we engage as many of the world’s 7 billion residents as possible in developing new, more sustainable forms of development and growth. This will require focusing not only on regional visions and strategies, but on making these strategies come to life through neighborhood projects and design decisions shaped by the very people who live with them every day.

Tamar Shapiro is the senior director of urban and social policy at The German Marshall Fund of the United States in Washington, DC.

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