-Caveat Lector-

http://www.mises.org/fullstory.asp?control=1497

A Dangerous Form of Outsourcing
by Grant M. Nülle

[Posted April 22, 2004]

Many of my fellow Austrians have shown the outsourcing of the production of
goods and services in the marketplace to be beneficial to society at
large.The same cannot be said, however, for subcontracting foreign policy.
Indeed, the American government's propensity to outsource certain aspects of
its military activities to regional governments or local non-state
organizations has rendered Washington's already reckless and aggressive
brand of adventurism all the more dangerous to the world and America itself.

Hiring local agents to further the diplomatic or military objectives of
expansionist states is not a new phenomenon; history is rife with ambitious
imperial powers utilizing indigenous labor and intelligence to outmaneuver
competing hegemonic rivals.

Since Central Asia abuts India, that derided bastion of outsourcing, and
Central Asia is the focal region (alongside the Middle East) of America's
purported foreign policy endeavors, it will serve as a timely example of
what is wrong with the wrong kind of outsourcing. The rebels and states that
the US has funded and backed have become the US's biggest foreign-policy
problem, even as the US adopts new friends and hypocritically averts its
eyes to their violation of stated American values.

The story beings in December 1979 when the Soviet Union invaded Afghanistan,
exploiting the trans-Afghan highway built by Moscow but financed by
Washington to quickly establish a presence throughout the country. Eric
Margolis's War at the Top of the World, an excellent account of the
conflict, describes how beginning in the early 1970s the contending
superpowers both realized the strategic importance of this Central Asian
nation and subsequently vied for Afghan allegiance, much like the
Kiplinger's aptly named nineteenth century "Great Game," which pitted
Imperial Britain and Russia in a struggle for regional preeminence.

Margolis describes how a surprised and disoriented Carter Administration
mulled employing tactical nuclear weapons to halt what was interpreted as
the USSR's march through Afghanistan and Iran to the Persian Gulf, thereby
obtaining a chokehold over Western oil supplies. The nearest American ground
forces were located some 7,000 miles away, would take 30 days to assemble in
theatre and would still confront overwhelming Soviet numerical superiority.

Fortunately for the United States, an ally was available in neighboring
Pakistan, namely President Zia ul-Haq. Convinced that the USSR was also
intent on running roughshod over Pakistan en route to the Arabian Sea, the
wily general planned to foment indigenous resistance to ensnare the Soviets
in Afghanistan. Pakistan's vaunted Inter-Service Intelligence (ISI) was
tasked to arm, equip and train the Afghan mujahedin with Western and Arab
largesse. Unable to confront the Soviets directly, the United States and its
allies opted to subcontract the war fighting out to the mujahedin and its
Pakistani patrons.

In tandem with the U.S.-Pakistan condominium, individuals and organizations
hailing from the ummah, or Muslim communities, from around the world began
to directly or indirectly participate in the jihad against the godless
Soviets. Afghan delegations fanned the globe in search of contributions for
the religiously inspired undertaking. The staunchly anti-communist,
Egyptian-based Muslim Brotherhood (among other entities) began to organize,
raise and dispatch monetary aid and volunteers to Afghan mujahedin units via
the Pakistani conduit. More than ten thousand Muslims comprised the Islamic
International Brigade, one of the primary contingents that waged war against
the USSR.

Once in Pakistan, aspiring mujahedin received insurgency training from the
ISI, America's CIA, Britain's MI6, and Saudi intelligence as well as
fervently aggressive religious instruction from on-site Islamic preachers.
According to Margolis, the CIA secretly collaborated with the Muslim
Brotherhood to procure recruits, money and Eastern Bloc arms and introduced
the Afghan resistance to the war's decisive weapon-the Stinger missile.
Pakistan's logistical support ensured that the arms and other covert
assistance provided by the United States and its Western and Arab allies,
which by 1988 was exceeding $600m per annum, found its way into the hands of
the mujahedin, including the Islamic International Brigade.

The combination of Western aid and weaponry, Pakistani logistical prowess,
and the indefatigable and motley array of mujahedin bogged Moscow's military
machine down in the Afghan quagmire, prompting Mikhail Gorbachev to call for
the Soviets to beat a retreat, which occurred by the middle of 1989.

Revolving adversaries

With the warm waters of the Persian Gulf and Indian Ocean well beyond Soviet
clutches and Moscow in a more amenable mood to diplomatic engagement, the
United States abandoned its Afghan and Pakistani proxies as quickly as
Washington had acquired their services, opting for a modus vivendi with
Moscow that would return Afghanistan to the status preferred by previous
imperial powers: a fractious, infirm buffer zone.

The decade-long Russian occupation and the anteceding political turmoil of
the 1970s claimed the lives of close to 2 million Afghans and turned 5
million more into refugees. The loosely-knit, American-backed, Afghan
resistance groups soon dropped all cooperative pretenses and descended into
civil conflict, exacerbating the travails of an already battered country.

The fate of Zia ul-Haq was no less kind. America's steadfast ally in
combating the Soviets became expendable after Moscow's ouster from
Afghanistan. Margolis asserts President Zia, who harbored ambitions of
dominating his country's feeble Afghan neighbor and subsequently died in a
mysterious airplane crash, was the casualty of a joint Soviet-American
assassination plot. Like the attempt on Pope John Paul II's life, Western
investigators were willing to ignore the evidence strongly implicating
Moscow in favor of East-West rapprochement.

Zia was swiftly replaced by the Western-educated, media savvy, seemingly
more compliant (at least in Washington's view) Benazir Bhutto. She quickly
destroyed or euphemistically "lost" evidence pertaining to her predecessor's
death. No matter, however, as Pakistan quickly fell out of favor with its
American benefactors in 1990 when President Bush I terminated all military
and economic assistance to Islamabad after the Pakistani military continued
to bolster its nuclear capabilities.

In any event, the United States was busy contending with the collapse of the
Iron Curtain and was occupied with dislodging Saddam Hussein-the horse
America backed in Iraq's war against Islamist Iran, another outsourcing
project (the Shah) gone awry-from Kuwait, a gulf state that had loaned
Baghdad billions of dollars to combat Ayatollah Khomeini.

Zia's death did not necessarily mean Islamabad would abide by the
American-Soviet/Russian concord to leave Afghanistan neutral and prostrate.
The ISI, flush with success in ousting the Soviets took up a new vocation,
this time outfitting products of its ultra-conservative Islamist religious
schools as well as holdovers from the Islamic International Brigade to
impose Islamabad's rule by proxy in Afghanistan. Armed with Pakistani wares
the Taliban largely overran the petty warlords bickering over bits of a
fractured Afghanistan, imposing its medieval variant of Islam on an already
beleaguered populace.

Not to be outdone, Iran, Russia, and its Soviet-era Central Asian satrapies,
bankrolled Afghanistan's other ethnic groups, all of which were opposed to
the predominantly Pushtun and Pakistani-backed Taliban. As Margolis points
out, a destitute Russia, at that time canvassing for International Monetary
Fund (IMF) credits and other sources of Western taxpayer-funded assistance,
could still stump up more than $1 billion to back its surrogate, Gen. Rashid
Dostom, with Russian military advisors and Air Force pilots.

Bin Laden, September 11 and Pakistan

Buffeted by interethnic fighting on the frontiers and the draconian rule of
the ISI's brainchild, Afghanistan became what the Clinton administration
dubbed "a hotbed of terrorist activity." Osama bin Laden and his nebulous
al-Qaeda network set up shop in the chaotic country with the consent and
protection of the Taliban. A former member of the American-supported Islamic
International Brigade, bin Laden oversaw the establishment of training camps
from which to launch his violent jihad against the United States, its
Western friends, and the corrupt and decadent House of Saud.

Following the attacks of September 11, 2001, a retaliation-minded United
States decided to liquidate bin Laden's organization and unseat his Taliban
hosts in Afghanistan. In a calculated move, Pakistan's leader, Pervez
Musharraf, an army general, who like Zia ul-Huq seized power from civilian
authorities, cast his lot with Washington, ostensibly spurning the Pakistani
military's own creation next door. Musharraf's volte-face provided America
and its anti-terror coalition logistical support and overflight privileges
that enabled it to assist the indigenous, though foreign
government-financed, armed opposition movements to drive the Taliban into
hiding and dismantle al-Qaeda's training infrastructure.

Since September 11, Pakistan has been handsomely rewarded for its services
to America's anti-terror posse. Reversing his father's decision to abrogate
Washington's commercial and military links with Islamabad, Bush II canceled
$1 billion of Pakistani debt to Washington, ensured another $12.5 billion of
international foreign debt was restructured and coaxed the IMF's Executive
Board into extending over $1 billion of credit on accommodative terms[i].

Moreover, US taxpayers will be delighted to know (following the explanation
below) that Musharraf's government will be eligible for grants totaling $3
billion over five years, half of which can be spent on American military
equipment. Though the bilateral gift is contingent on Pakistan's commitment
to uprooting the Taliban and al-Qaeda, participating in global
anti-proliferation efforts and practicing good governance, these criterion
are apt to be overlooked. The US State Department's near contradictory
condemnation of Pakistan's human rights record and its inclusion of $700
million for Islamabad (the single-largest proposed disbursement to any
foreign ally in the "war on terror") in the Fiscal Year 2005 departmental
budget testifies to this contention.

Duplicitous dealings

So just what is Washington's coddling of Pakistan purchasing? According to
statements made by Islamabad's top nuclear scientist coupled with previously
and subsequently discovered evidence, one of Washington's indispensable
allies in the war on terror has been unmasked as a chief architect of the
worldwide proliferation of weapons of mass destruction.

On Feb. 4, 2004, Abdul Qadeer Khan, dubbed the father of Pakistan's
"Islamic" nuclear bomb, confessed to his compatriots his role in supplying
nuclear material to the likes of Libya, Iran and North Korea. Khan, who was
previously convicted in absentia in the Netherlands for pilfering the
technological secrets that made Pakistan's uranium-based nuclear program
possible from his private employer in the 1970s, also revealed the existence
of a covert trafficking network of staggering proportions[ii].

Aspiring nuclear club candidates could tap into a proliferation system that
offered everything from bomb designs, pre-packaged centrifuge kits capable
of producing uranium, to post-purchase counseling services from Pakistan
itself or a multitude of companies dotting Africa, Asia, Europe and the
Middle East that served as intermediaries.

Khan's web of nuclear commerce was unraveled thanks to a paper trail
supplied by a reluctant Iranian government, which in October 2003 began to
divulge to the International Atomic Energy Agency (IAEA) its interactions
with the clandestine network of suppliers and middlemen. Tehran's admissions
eventually pointed the finger to Islamabad, beginning with Khan's associates
and finally leading to the father of Pakistan's nuclear bomb himself. Days
of intense interrogation by the ISI finally prompted Khan to deliver his
startling admission.

Khan and Pakistan's (explained below) proliferation sins are thought to have
commenced in the late 1980s when Khan began to swap nuclear components for
the technologies necessary to complete the country's atomic weaponization
campaign. Driven by a paucity of funding-America was poised to terminate
assistance to its client and the depository of Pakistan's nuclear funds, The
Bank of Credit and Commerce and Credit International, was flirting with
insolvency-Khan initially made contact with the reclusive North Korean
government in 1992. From there he began to arrange an exchange of Pakistan's
uranium enrichment capabilities for Pyongyang's Nodong missiles, weapons
well-suited to lob warheads on Islamabad's bitter nemesis:  India. The
following year Pakistani Prime Minister Benazir Bhutto made a covert trip to
Kim Jong Il's fief to clinch the deal.

According to classified CIA assessments based on transcripts of Khan's
testimony in February, North Korea likely received a nuclear kit comprised
of warhead schematics, fuel and centrifuges capable of producing uranium.
Pyongyang was eager to pursue the uranium route of nuclearization, given
that its plutonium-based program had been suspended under its 1994 accord
with America, which it unilaterally scuppered in late 2002. True to the
bargain's terms, North Korea is believed to have received its first uranium
enrichment assistance in 1997 and Pakistan tested its Ghauri missile, a
thinly veiled facsimile of Pyongyang's Nodong, in 1998. Overall, the
exchange was reckoned to have been worth $60 million.[iii]

A similar transaction also constitutes Khan's dealings with Libya. After
scrapping his nuclear ambitions and rogue leader status last December,
Libya's mercurial president, Col. Muammar Qaddafi, unequivocally permitted
international inspectors to ascertain how astonishingly close Tripoli had
come to being a full-fledged nuclear power. American and IAEA officials say
that beginning in 1995, when Libya decided to resume its pursuit of a
nuclear deterrent, Khan's network, a veritable atomic Wal-mart, outfitted
Libya with everything needed to churn out several nuclear weapons a year.

Iranian participation in the market for WMD wares, disclosed only under
intense diplomatic and political pressure, dates back to the late 1980s. The
IAEA believes Zia ul-Haq spearheaded the transaction, delivering details of
uranium enrichment technology to America's sworn enemy just as Pakistan and
America were jointly combating the Soviets in Afghanistan. Zia, like Khan
and many other top Pakistani officials and military officers, was keen on
defying western countries by forging a nuclear-armed coalition of
like-minded Islamic states[iv]. Despite the contention its enthusiasm for
fission is purely peaceful, petroleum-rich Iran's uranium enrichment
centrifuges smack of Pakistani design, due to the fact Khan's network
remitted several shipments of these components to Tehran in 1994 and 1995.

What is more, the revelation that Tehran has employed more advanced nuclear
machinery and conducted more sophisticated experiments than it revealed to
the IAEA in October 2003 has prompted speculation that the Islamic Republic
acquired a nuclear package similar to that of Tripoli and Pyongyang.
Whatever the outcome, it is certain that Khan's network played an
instrumental role in furthering Iran's nuclear vocation.

Lastly, international investigators have discovered, via testimony from
former Pakistani officials, that soon after Iraq's occupation of Kuwait, an
intermediary acting on behalf of Khan offered the network's expertise in
helping Baghdad harness the atom. A British translation of an October 6,
1990 Iraqi intelligence memorandum stated that Pakistan's top nuclear
scientist was willing to provide "project designs for a nuclear bomb."  As
it stands, Khan's indirect proposal represents the beginning and the end of
Iraq's relation to the Pakistani scientist's nuclear network

Dodgy alibis and suspect pardons

In his February confession, Khan claimed that the proliferation efforts
directed from his namesake national laboratory were motivated by personal
aggrandizement, lacked government connivance or assistance, occurred before
Musharraf's assumption of the presidency and ceased after the putsch, a line
that the general readily seconds. However, this characterization of
Pakistan's nuclear dealings is belied by several damning pieces of evidence.

For one, Libya would not have dismantled its WMD developments so readily had
it not been for the interdiction of a German vessel, the BBC China, carrying
centrifuge components to Tripoli last year. Indeed, the pace of Qaddafi's
accumulation of uranium enrichment and nuclear weapon equipment reached its
zenith over the past two years, well after Musharraf became president and
aligned Islamabad with Washington.

Similarly, North Korean-Pakistani cooperation accelerated between 1998 and
2002, as evidenced by the dispatch of North Korean scientists to Khan's
laboratories during this period to work on missile technology. Photos taken
by American satellites depict the ubiquitous presence of Pakistani military
cargo planes in the hermit kingdom. Although American intelligence can be
grossly unreliable (e.g. Iraq) South Korea's spooks identified Islamabad as
the source of North Korea's uranium enrichment activities in 2002.

Furthermore, the sheer scale of the exchange-North Korean missiles that
seamlessly fit Pakistan's nuclear warheads for a uranium option in lieu of a
then-proscribed plutonium program-could not have been orchestrated without
the sanction and support of officialdom on both sides.

In sum, America's focal ally in Central Asia and the global war on terror
has systematically trafficked nuclear weapons technology and expertise to
"Axis of Evil" states North Korea and Iran (approached Iraq) and junior
member Libya even after Bush II made his combative 2002 State of the Union
Address dubbing the aforementioned rogue states as such.

Predictably, Abdul Qadeer Khan was granted a full pardon for his
proliferation activities, given that the metallurgist is revered by his
compatriots and any punishment would prompt him to divulge the extent of
Pakistani government and military participation in his nuclear game,
sullying the reputation of countless officials and military officers and
jeopardizing the country's present bonhomie with America.

For its part, America and Britain treated the Khan affair as germane only to
Islamabad. An implicit quid pro quo exists, exonerating Pakistan, named by
Washington a major non-NATO ally in March, in exchange for help in flushing
vestiges of the Taliban and al-Qaeda out of the mountainous Afghan-Pakistani
border region.

Taking to task a blatantly treacherous underling like Pakistan is
incomprehensible for the Bush administration to do, for such a move would
detract from its efforts in painting the Afghan venture a success and
undermine the entire thrust of the president's foreign policy, especially
when his economic achievements during this electoral season are dubious at
best.

The troubles of outsourcing

What conclusions can one glean from this tale of Central Asia, nuclear
weapons proliferation and the enlistment of local strongmen in the pursuit
of American national security objectives? For one, this ongoing saga
underscores the gross hypocrisy, inconsistencies and failures of the
professed aims of Washington's foreign policy.

Democractization of failed, unruly or despotic regimes? Whatever the merits
of democracy, and despite talk of imposing this political structure on the
Middle East and Afghanistan, Washington scarcely objects to Pakistan's
ruling military junta (although the country elects a nominally significant
parliament).

Rather, American policy makers welcome democratic decisions only when they
reaffirm fealty to the world's hegemon. Otherwise, as in the case of Spain,
where voters chose to oust a pro-Washington government that deliberately
mislead the public about the likely source of the horrific train bombings of
March 11, the exercise of the franchise is ridiculed as foolhardy.

How about promoting human dignity and enhancing the welfare of populaces
systematically victimized by regional tyrants? Just as Washington insists on
entitling the inhabitants of Iraq and Afghanistan to a plethora of civil
liberties (in rhetoric) it also props up abusive rulers like Uzbekistan's
Islam Karimov, the ex-Soviet despot whose unsavory depredations against his
subjects go largely unreported in the West.

Whereas dodgy intelligence and prior acts were sufficient grounds to invade
a sanctions-stricken Iraq, America lavishes billions of dollars of aid on a
country that not allegedly but actually sold the technology and expertise
requisite to produce nuclear weapons to Iran, North Korea and Libya well
after the inauguration of the so-called "War on Terror."  With friends like
Pakistan, who needs enemies?

Thus, American foreign policy is nothing more than (don't look neocons) the
respective French and German concepts of raison d'etat and realpolitik, pur
et dur. Bereft of any moral moorings and predicated on the use of might,
this opportunistic type of foreign policy dovetails with the agenda of the
state, which relies on incessant warfare to consolidate preeminence over the
territory it controls and aggrandizes its international standing along with
ostensibly allied states to the detriment of perceived rivals.

Clearly, cultivating proxies to further foreign policy objectives is an
inherently hazardous proposition. Funneling economic and military assistance
to client states is inimical to liberty in that the patron government robs
its populace, via taxation, to obtain the necessary funds for the transfer,
thereby placing additional resources at the disposal of the recipient regime
enhancing that ruler's capability to coerce its own citizens as well as
antagonizing its neighbors.

Additionally, beneficiaries of state-to-state aid are prone to accept
handouts with one hand and drive a dagger into the flank of its benefactor
with the other. The contrast between market and state-to-state transactions
is stark: the former is predicated on peaceful and mutually beneficial
exchange, the latter is coercive (as far as subjects of countries either
paying or receiving state aid are concerned) and duplicitous, tending toward
a zero-sum outcome.

Rather than bemoaning the wildly overblown notion of outsourcing jobs to
South Asia, Americans should direct their attention to addressing
Washington's penchant for meddling abroad. The outsourcing of US foreign
policy has fueled wars and madmen, and made the world a more dangerous
place.

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Grant M. Nülle is a Research Fellow at the Council on Hemispheric Affairs in
Washington D.C. He can be reached at [EMAIL PROTECTED] See his archive
and discuss this article on the blog.

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[i] "Payback time."  The Economist. June 26, 2003.

[ii] "Rogues step in." The Economist. Jan. 10, 2004.

[iii] "US widens view of Pakistan link to Korean arms."  New York Times.
March 13, 2004.

[iv] "What did Pakistan know about Khan's deals?" Financial Times. April 5,
2004.

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