March 07, 2009


How secure is Pakistan's nuclear arsenal from a commando-style attack by jihadi terrorists operating from sanctuaries inside Pakistan?

2. That is the question which should be worrying security experts all over the world as they learn with horror----based on visual evidence from closed circuit TV (CCTV) cameras and oral evidence from members of the Sri Lankan cricket team and the British match umpires and referees--- how the 12 or so terrorists who attacked the SL cricket team had the Liberty Square of Lahore at their disposal for about 30 minutes and walked away after the attack without the least fear of being chased and caught either by the security forces or the public.

3. It was as if they were walking away from a golf green after a game of golf---unhurried, unconcerned and totally relaxed..

4. Seven police officers, who were in the escort party of the convoy, died in the exchange of fire. Their bravery must be acknowledged and saluted. But how about the dozens of other police officers, who were supposed to be on route security to prevent an ambush of the convoy? The British match officials have said that not a policeman was to be seen on the road. This, despite the Presidential-scale security reportedly promised by President Asif Ali Zardari to the SL team.

5. How about the staff of the police station located near the Square? Why didn't they rush out and confront the terrorists? How about the police vehicles, which were supposed to be on patrol along the route to look out for suspicious movements and characters? How about the rapid response commando teams, which were supposed to be there in the stadium and at the LIberty Square, which was known as a vulnerable point since all vehicular movements had to slow down there?

6. They just disappeared or were not posted at all. In all the CCTV footage, the only sign of police one sees is a police vehicle crossing a terrorist and not taking any action as if it was crossing a normal pedestrian.

7. How about the road blocks all over Lahore which were supposed to have been put up after a terrorist strike to prevent the terrorists from getting away?

8. Many compelling questions arise as one gets details of what happened and what did not happen in Lahore on March 3,2009? Were there insiders in the security establishment, who had played a role in the conspiracy? Were there accomplices or jihadi sympathisers in the security establishment, who facilitated the terrorist strike? Do the political and military leaders of Pakistan realise the total security vacuum in their country, which has made it a safehaven to jihadi terrorists from all over the world, who are able to operate at will without any fear of the consequences?

9. It has become a cliche to say that the Pakistani leaders are in a denial mode. So was former President Megawati Sukarnoputri of Indonesia till the Bali terrorist strike of October,2002. Thereafter, she realised the gravity of the situation and made amends for her past negligence. So was former President Begum Khalida Zia of Bangladesh till the the nearly 400 synchronised explosions organised by the Jamiat-ul-Mujahideen (JUM) in August, 2005. Thereafter, she realised the gravity of the situation and acted against the JUM.

10.Pakistan has been the scene of repeated terrorist strikes and the spawning ground of jihadi terrorism of various hues directed against other countries since 1981. Till today, neither the political nor the military leaders of Pakistan are prepared to admit this. After the Lahore attack on the SL team, Ilyas Khan, of the Islamabad Bureau of the British Broadcasting Corporation, reported as follows the same day: "Militant attacks in all parts of the world have been investigated and solved, but Pakistan is yet to solve even one out of the hundreds of attacks it has suffered since the 1980s."

11. In every major terrorist strike of Pakistan, there was evidence of insider involvement. Some junior officers of the Pakistani Air Force were found to have been involved in the conspiracy to kill former President Pervez Musharraf at Rawalpindi in December,2003. The investigation brought out the startling fact that the conspirators had met in the staff quarters of one of the PAF officers in a PAF complex in the Islamabad-Rawalpindi area to finalise their attack.

12. Before and after the unsuccessful terrorist strike on her at Karachi on October 18,2007, Benazir Bhutto had alleged that Qari Saifullah Akhtar, the Amir of the Harkat-ul-Jihad-al-Islami (HUJI), and some serving and retired officers of the Pakistan Intelligence Bureau and Inter-Services Intelligence (ISI) were involved in the conspiracy to kill her. Saifullah was detained for some weeks for interrogation, but thereafter released without any action being taken against him. No action was taken against the officers named by her. Not even a formal enquiry.

13. After addressing a public meeting at Rawalpindi on December 27,2007, she left for her home in her car. Neither the police escort party nor Rehman Malik, the present Internal Security Adviser, who was at that time the co-ordinator of her physical security, followed her. They left for home by a different route after the meeting was over. Benazir was shot dead as her car came out of the ground. Malik and other officers came to know only after they reached home that she had been shot dead.

14. One can go on giving such instances, which show a total lack of control over the security establishment, which has become a law unto itself and disturbing indicators of the extent and depth of penetration of the security set-up by the jihadi terrorists. Many countries in the world, including India, are badly affected by terrorism. In many countries of the world, including India, there are inefficiencies and inadequacies in the counter-terrorism apparatus. But in no country of the world is the security establishment so badly penetrated by the jihadi terrorists as it is in Pakistan.

15. The Pakistani leaders not only refuse to admit this. Even more alarming, they live in a world of self-delusion which makes them think that all these realities are the figments of imagination of others ill-disposed towards them.

16. If this is the real state of affairs, one has very valid reasons to worry about the security of Pakistan's nuclear arsenal. Pakistani political and military leaders repeatedly assure the international community that their nuclear arsenal has tight physical security and that no terrorist can penetrate it and get hold of nuclear weapons or material. After seeing what has happened in Lahore, the international community cannot afford to accept the Pakistani assurances at their face value. It must subject the physical security of the arsenal to greater scrutiny by independent outside experts. Even if this is done, a 100 per cent security of Pakistan's nuclear arsenal cannot be assured so long as the terrorist safehavens and infrastructure in Pakistan are not removed. Pakistan must be forced to do so through international pressure. (6-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For topical Studies, Chennai. E-mail: )



In our preoccupation with what is happening and what could happen in Pakistan, we should not overlook the urgent need for having a relook at our physical security architecture in sensitive establishments such as the nuclear establishments, oil refineries, gas production infrastructure, road, rail and air transport, critical information infrastructure etc. As I have emphasised repeatedly in the past, physical security is the most important component of counter-terrorism. If it is strong, a terrorist attack can be thwarted even if the intelligence agencies fail. If it is weak, even the best of intelligence may not be able to thwart a terrorist attack. In both India and Pakistan, we have a weak culture of physical security. The main reason why the US has been able thus far to prevent a repeat of 9/11 is the strengthening of the physical security apparatus by the newly-created Department of Homeland Security.

2. What happened at Mumbai, Kabul and Lahore---namely, commando-style surprise attacks by small groups of well-trained terrorists wielding lethal hand-held weapons--- could happen again in India.We should not think that only Pakistan is vulnerable to such attacks.We too are vulnerable as demonstrated so tragically at Mumbai. Our security architecture may not be as bad as that of Pakistan, but Mumbai clearly showed that it is not as good as it should be.

3. There is an urgent need for two actions. Firstly, an audit of the physical security measures at all sensitive establishments----whether run by the Government or the private sector ---- in order to determine whether any physical security enhancements are called for.There is a need for dividing all sensitive establishments into two categories-----those where a single-layer of physical security would be enough and those where a double or multiple-layer of physical security would be necessary . The idea of a double or multiple-layer of physical security is that even if the terrorists manage to beat the outside gate or perimeter security, they will not have a free run of the establishment due to a second or more layers of armed physical security. To counter determined terrorists such as those one saw at Mumbai, Kabul and Lahore a single-layer of physical security may not be sufficient in sensitive establishments.

4. The second action required is to have a relook at our consequence management capabilities to deal with a situation should, despite revamped physical security, the terrorists manage to have access to sensitive establishments. The consequence management drill should take into account various issues such as control over media coverage, prevention of panic, minimisation of damage and lethality etc. It is important to associate the consequence management set-ups of the States with this exercise because it is ultimately they who would act as the protector of first resort through their consequence management capabilities till there is intervention by the consequence management community of the Govt. of India.

5. In Mumbai, the terrorists succeeded so dramatically because they targeted private establishments with no physical security measures except some anti-explosive capability. Since the security guards of these establishments were unarmed, they were helpless before the terrorists wielding sophisticated hand-held weapons. Once the terrorists managed to gain access to these establishments and take them under their control, the special intervention forces of the Govt. of India such as the National Security Guards (NSGs) found themselves unable to act fast enough without causing too many loss of lives.

6. Situated as we are in the sub-continental region where terrorism will continue to be a fact of life at least for another 10 years or more and keeping in view our ambition of emerging as a major economic power, we just cannot afford to take up the stand that the physical security of the private sector is its responsibility and that the Government's role will be limited to issuing periodic advisories regarding likely threats. The Government has to play a more proactive role in encouraging and helping at least establishments of a strategic nature such as those associated with the tourism industry, the information technology companies etc in improving their physical security.They already have some capability for checks for explosives, but the methods used by them are primitive and do not take into account dangers from suicide bombers and vehicle-borne suicide terrorists.

7. Their weakest capability----which is almost non-existent--- is in facing a commando-style surprise attack by small groups of terrorists with modern hand-held weapons. The only way of thwarting them is by having well-armed and well-trained guards. Do the present laws allow the employment of such guards? If not, should the laws be modified to permit them to employ such well-armed guards? Who is going to supervise their training and keep them under control to prevent the arms issued to them finding their way into the hands of terrorists? These are questions, which need urgent attention.

8. From the point of view of the physical security architecture. the distinction between the public and the private sector is disappearing. Many private companies are already in the fields of oil refining and gas exploration, production and transport. An increasing number of airports is now privately managed. We intend allowing private companies into the field of nuclear power production. The Government cannot evade the responsibility for ensuring that such private establishments have a high level of physical security. There is a need for a joint task force consisting of the representatives of the intelligence and security agencies and professional organisations of private industries such as the FICCI (Federation of Chambers of Commerce and Industries), the CII ( the Confederation of Indian Industries) etc as well as representatives of foreign business organisations to go into the question of physical security enhancements for private establishments of strategic significance.

9. Practically all major private establishments----Indian as well as foreign--- have their own physical security set-up. It is important for senior intelligence and security officials at the State and Central levels to regularly interact with them to exchange threat and vulnerability perceptions and ideas as to how to strengthen physical security.

10. In an important article titled "The Coming Swarm" in the "New York Times" of February 15,2009, which should be required reading for all our physical security experts, John Acquilla, who teaches in the special operations program at the Naval Postgraduate School at Monterey in California, wrote as follows: "It seems that a new “Mumbai model” of swarming, smaller-scale terrorist violence is emerging. The basic concept is that hitting several targets at once, even with just a few fighters at each site, can cause fits for elite counterterrorist forces that are often manpower-heavy, far away and organized to deal with only one crisis at a time. This approach certainly worked in Mumbai. The Indian security forces, many of which had to be flown in from New Delhi, simply had little ability to strike back at more than one site at a time. While it’s true that the assaults in Kabul seem to be echoes of Mumbai, the fact is that Al Qaeda and its affiliates have been using these sorts of swarm tactics for several years...... How are swarms to be countered? The simplest way is to create many more units able to respond to simultaneous, small-scale attacks and spread them around the country. This means jettisoning the idea of overwhelming force in favor of small units that are not “elite” but rather “good enough” to tangle with terrorist teams. In dealing with swarms, economizing on force is essential. ....For the defense of American cities against terrorist swarms, the key would be to use local police officers as the first line of defense instead of relying on the military. The first step would be to create lots of small counterterrorism posts throughout urban areas instead of keeping police officers in large, centralized precinct houses. This is consistent with existing notions of community-based policing...... At the federal level, we should stop thinking in terms of moving thousands of troops across the country and instead distribute small response units far more widely. Cities, states and Washington should work out clear rules in advance for using military forces in a counterterrorist role, to avoid any bickering or delay during a crisis. Reserve and National Guard units should train and field many more units able to take on small teams of terrorist gunmen and bombers. Think of them as latter-day Minutemen.Saudi Arabia, Tunisia, Turkey and Yemen all responded to Qaeda attacks with similar “packetizing” initiatives involving the police and armed forces; and while that hasn’t eliminated swarm attacks, the terrorists have been far less effective and many lives have been saved."

11.Jihadi terrorism in India outside Jammu & Kashmir is essentially an urban phenomenon. We cannot use against it the techniques learnt by us in dealing with the insurgency in the North-East and with Maoist terrorism in Central India, which is essentially a rural phenomenon. We need a different system of response, which is comprehensive enough to cover all likely targets of strategic significane----whether in the Government or private sector.

12. Even if we do not create an independent Ministry of Internal Security,we should create a separate Department of Physical Security in the Ministry of Home Affairs, which is, inter alia, responsible for counter-terrorism, to act as the nodal agency for all physical security measures on the pattern of the Department of Homeland Security of the US. This newly-created department should interact continuously with its US counterpart to pick its brains and profit from its expertise and experience. (7-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: )

Abu Dhabi A Public-Private Space Intelligence Center


Source :

Abu Dhabi A Public-Private Space Intelligence Center

The emirate of Abu Dhabi has entrusted a well connected consortium of local companies and Western industrial groups with building its space intelligence center.

The first stage in the United Arab Emirate’s space intelligence program - the construction of a land station to receive satellite images -is due to be operational by mid-2009, with work being coordinated by 4C Controls. A firm run by former executives of France’s defense industry (IOL 581/587), the company has teamed up with Hydra Trading, an offshoot of the holding concern Royal Group headed by Tahnoon Bin Zayed Al Nahyan (younger brother son of the UAE’s president) and with the local defense firm Baynuna Aviation.Elsewhere, Abu Dhabi is putting together the financial package for its Gulf Satellites Program, a first system of high resolution radar satellites that is scheduled to come on stream by 2013. At the same time, the prime contractor of the UAE program, 4C Controls, is pursuing its own commercial development. In addition to naming a new chief executive last month, Greece’s Anastasios Angeloglou, the firm has announced the creation of specialized affiliates in partnership with Greek firms: 4C Global Security Consulting with ISDS Hellas; 4C Systems Engineering with Hellenic Technologies; and 4C Homeland Security and Defence Systems with Theron, which specializes in offset programs

March 05, 2009

Taliban bombed Pashtun poet Rehman Baba’s mausoleum

(Source: The Hindu , India)

PESHAWAR: Islamist terrorists on Thursday blew up the mausoleum of a 17th century poet in Peshawar, apparently because women visited it. It was revered in both Pakistan and Afghanistan.

Dedicated to Pashto poet Abdul Rehman, commonly known as Rehman Baba, the shrine drew thousands of followers, particularly at gatherings where his mystical love poetry was sung.

Reports said the poet’s grave was totally destroyed and the surrounding marble building badly damaged. However, there were no casualties.

A letter to the mausoleum’s management warned against “shrine culture” three days before the attack, said Sahibzada Mohammad Anees, a government official here.

Local residents told Dawn News television that Islamists had warned the local residents to stop visiting the shrine.

Pakistan Prime Minister Syed Yusuf Raza Geelani has condemned the attack. — Agencies

Praveen Swami reports from New Delhi:

Neo-fundamentalist groups like the Taliban, as well as some political organisations, including the Jamaat-e-Islami, consider the popular practice of worshipping at shrines and veneration of saints as heretical.

In a 2004 article, writer William Dalrymple reported that tensions were brewing over the shrine between students at two Saudi Arabia-funded seminaries and local residents.

The local residents said the seminary students —also known as Taliban — had driven out musicians who played at the shrine, in an effort to halt what they claimed were un-Islamic practices.

Last year, the Afghanistan government offered to renovate the shrine.

Terror groups had allegedly carried out similar attacks in India in recent years. In October 2007, terrorists set off bombs at the mausoleum of Khwaja Moinuddin Chisti at Ajmer Sharif, one of South Asia’s most revered shrines. Two people were killed and 17 injured in the bombing.

In May 2005, the Lashkar-e-Taiba allegedly carried out an arson attack that gutted the 14th century shrine of Saint Zainuddin Wali at Ashmuqam.

The following month, a Lashkar operative was alleged to have attempted to assassinate the north Kashmir-based mystic, Ahad B’ab Sopore.

By Ali Hazrat Bacha (Source: Dawn)

PESHAWAR: The mausoleum of renowned Pashto mystic poet Abdur Rehman Baba was bombed by unidentified miscreants, badly damaging its structure and his grave in the Hazarkhwani area early on Thursday.

No one was hurt in the bombing, but the blast has left residents deeply shaken.

The shrine’s watchman had received a threat from suspected militants on his cell phone three days ago. He told police that the attack took place to crack down on the tradition of women making pilgrimages to the site of the grave of Rehman baba; a 17th century poet, revered for his message of love and peace.

The high intensity device almost destroyed the grave of the Rehman Baba and the gates of a mosque, canteen and conference hall situated in the spacious Rehman Baba Complex.

Police said the bombers had tied explosives around the pillars of the tombs, to pull down the mausoleum.

Following the occurrence visibly shaken followers and volunteers were seen wielding sticks and forcing the visitors to leave the area, fearing that the badly damaged structure of the mausoleum might crumble down.

The police said they suspected the involvement of outlawed Lashkar-i-Islam chief, Mangal Bagh in the incident but were investigating the matter to ascertain the facts.

‘We have been able to give them a black eye and this is their way of getting back at us. Its pure desperation,’ a senior police official said.

The news of the occurrence soon spread like wildfire and a large number of his followers and other people visited the shrine.

A bomb disposal squad official said that five explosives each weighing around five kgs were planted at the shrine. The explosives, the official said were packed in containers which had been jointly connected and detonated simultaneously.

‘The entire area was covered with thick smoke and dust soon after the blast,’ said the president of the volunteers of the shrine association of the complex, Sardar Khan, who was busy in removing rubble of the damaged portions.

He told Dawn that he was the first one to reach the shrine after the blast. ‘I saw major portion of the grave was blown up and the building was badly damaged but no one was present there,’ he said and added that he informed the local police and some media persons about the incident.

He claimed that in past some groups of Taliban-like persons with long hair and beards used to come there and asked the caretaker of the shrine why they had not been forbidding women from visiting the shrine.

‘Once two Taliban came and said that performing prayers in the complex mosque was harram and when I heard that I asked them to get lost,’ the chief volunteer said.

He said that apparently the miscreants had entered the complex by scaling the boundary wall from the rear side and planted the explosives beneath the four main pillars and one in the grave by connecting them through an electric wire.

Provincial minister for culture and tourism, Syed Aqil Shah, visited the site and stated that although the said complex was attached to the archive department, but he would take up the issue with the Chief Minister regarding the repairing or reconstruction of the mausoleum.

He said that apparently the structure was damaged beyond repairing and had to be reconstructed.

The caretakers said that they had three watchmen who used to perform duties on rotation basis. The concerned watchman said that he was preparing himself for Fajr (morning) prayer when he heard a loud blast.

‘I was puzzled and couldn’t decide as to what I should do,’ one of the caretakers said adding that he had no weapon to resist any attacker. The caretakers and other employees of the complex said that they had time and again informed the officials of Archives Library to beef up security at the complex but to no avail.

Malik Wazir a member of the Rehman Baba Adbi jirga said that there was only one watchman who couldn’t check movement of the suspected people around such a vast area of the complex.

He suggested that there must be at least three watchmen armed with sophisticated weapons in each single shift.

The people demanded establishment of a police check post in area. They said that the nearby Akhun Baba graveyard had become a safe heaven for criminals and no one could safely pass through the Rehman Baba Road after evening in routine.

The tomb was a part of the spacious complex housing a conference hall, library, mosque, canteen, guest house, small shrines of some other saints, Tawoos Baba, Syed Sattar Bacha and Syed Sultan Bacha.

The work on construction of the complex was initiated on November 17, 1991 and completed in 1994 with an estimated cost of about 15 million rupees.

Police officials of Yakatut police station said they had no information about threats to the caretakers. They said it couldn’t be ascertained as to who was behind the crime. The officials reported that a case against unidentified terrorists had been registered at the police station.

The local Nazim of Hazarkhwani Union Council Hidayatullah Khan Advocate told Dawn that it was a terrorist act and the local population had decided to stage a protest demonstration against it today (Friday).

The nazim said the building was not repairable and demanded of the government to reconstruct it as soon as possible. He said the local lashkar (volunteers) would devise strategy within a couple of days to protect lives and properties from the militants.


INSIGHT: Refusing responsibility —Ejaz Haider

It becomes our war not because America is fighting for its interests but because we are under threat ourselves (even if we accept that this is a foreign conspiracy against us). Posited thus, even if America were to pack up and leave, we would still be left holding the baby

How should one open the story of the bombing of the mausoleum of 17th century poet Abdul Rahman, affectionately and reverentially called Rahman Baba by the Pashtun. Let me try.

“Islamist warriors won a great victory Thursday in the ongoing global jihad against the satanic western powers, especially the United States, when they successfully bombed and damaged the mausoleum of Rahman Baba, a Pashto sufi poet.”

I can see some readers shaking their heads in disapproval. How could the story begin thus; how could such an outrage be termed jihad?

Okay, how about this.

“Foreign intelligence agencies, inimical to Pakistan and Islam, hatched a conspiracy to get the mausoleum of Rahman Baba bombed as part of their nefarious agenda to discredit the Islamist warrior movement that is now coursing through the veins of the ummah.”

No? Not specific enough? Well, I didn’t give the full story. There is the sinister hand here of CIA, Mossad, and, yes, Indian R&AW. The second paragraph of the story runs thus:

“The bombing of Rahman Baba’s mausoleum is part of the campaign by these intelligence agencies which has earlier seen them perpetrate such acts as bombing girls’ schools, blasting CD and barber shops, threatening cinema houses and killing the Shia etc.”

There are two versions here and you can take your pick.

Choosing the first could lead to two possible reactions. One, you accept what the warriors have done as correct. You could argue that the target was not Rahman Baba’s mausoleum per se; that it was bombed because it was frequented by women and hence needed to be destroyed. It would have stayed unscathed if women had not conspired with the serpent to do mischief. This bit of sophistry could even absolve you of the blame for bombing and destroying the mausoleum.

If you believe this, you are “blessed”. In fact, if you haven’t already enlisted with the warriors, I suggest that you do so immediately. This choice also means that you reject everything Pakistan currently stands for despite its troubles. At least you are honest in your deadliness because those who don’t agree with you must be killed.

The other possibility is that you consider the bombing an outrage; you also consider that the idea of pushing women to the periphery is not one that you could accept or condone. That the Legend of the Fall is not part of the Islamic discourse; in fact, as Allama Iqbal argued in The Reconstruction of Religious Thought in Islam, eating the Forbidden Fruit was a transition from a state of simple consciousness to one of self-consciousness with all the complexities that such a transition entailed.

But such thinking must also lead you to reconsider any idea about this movement’s credentials as Islamist and its exegesis as Islamic.

Moreover, you might begin to see the movement less in terms of its great resistance to the current “satanic” world order and more as a force that wants to tear asunder the social, economic and political fabric of Muslim society.

To quote Mao Tse-Tung, to do so, you would need to figure out where the principal contradiction lies. Does it lie between the West and Muslim societies or does it lie between what can be termed the normalcy of Muslim societies and the millenarianism of this movement?

But let’s add a variable. You might praise the warriors, nonetheless, for giving fight to western imperialism. In that case, despite your anger at this outrage, you would likely support the warriors. You will probably ignore what they do within because they are doing something outside which you approve of. The benefit of what they do externally should then outweigh the cost of what they do internally.

But there is a problem with this thinking. What would you do once they are done on the outside; or even that in the course of their struggle against the West they continue to deprive you of what you might otherwise cherish and what makes life worth living. Do note that some of us, yourself included, respect our women and do not want to banish them from social and political spaces on the basis of some regressive ideology.

At the minimum, you will have to accept that much of what the warriors might be doing is not “reactive” but “proactive”. I flag this point because sympathisers tend to ignore their actions — for instance chopping off of heads — by arguing that these excesses have to be contextualised and they are “reactive”. You will have to accept that what the movement is doing internally is “proactive” cleansing. It is based on an ideology that brooks no opposition, no dialogue.

Whether you want to live with this is a decision you must take, as all of us have to take, and take quickly.

On the other hand, what does it mean if you believe that what is happening — the entire range of activities conducted by the warriors — is a grand foreign conspiracy? Does it mean that Muslims cannot commit such acts and atrocities? Are you abdicating any responsibility? Or is it simply self-denial?

It does seem to me, even if “we” were to choose this line of reasoning, that there are some in our midst, their numbers growing, who are doing the bidding of foreigners to destroy our society.

What does that make them: friends or foes? The question is crucial not only because the enemy-friend distinction is vital — and here I invoke Carl Schmitt again — but because it should be obvious that peoples cannot allow Trojan horses in their midst.

This is not happening, though. What I see instead is an attempt to relinquish responsibility by blaming the “other” without, on the basis of that very logic, looking inside and taking care of those who might be carrying out such an agenda (I am, of course, going by the logic of the argument). This is most amazing and incredibly disturbing. Also, such an attitude can only be begotten of either utter naivety or deliberate perfidy. I suspect the latter is at work here since the logic of the argument of “othering”, which supposes help from inside, is so obvious that it could not escape anyone save a village idiot.

The point of convergence in these choices should therefore be clear: a threat we are unprepared or unwilling to address. Here’s the rub. Are we going to live with it; or should we face this challenge squarely without hemming and hawing? It becomes our war not because America is fighting for its interests but because we are under threat ourselves (even if we accept that this is a foreign conspiracy against us). Posited thus, even if America were to pack up and leave, we would still be left holding the baby.

Do we want that?

Ejaz Haider is Consulting Editor of The Friday Times and Op-Ed Editor of Daily Times. He can be reached at

March 04, 2009



Six players of the Sri Lankan cricket team, which had arrived on a visit to Pakistan, are reported to have been injured and four policemen killed when 10 or more persons wielding hand-held weapons, including hand-grenades, attacked a bus in which the team was going to the Gaddafi Stadium in Lahore on the morning of March 3,2009. The attack has been recorded on closed circuit TV and should enable the Pakistani authorities to identify the terrorists and the organisation to which they belong. The Sri Lankan Government is reported to have advised the team to cancel the visit and return to Sri Lanka.

2. While it is too early to assess as to who might have been responsible for the attack and why, one has to recall past instances of contacts of the Liberation Tigers of Tamil Eelam (LTTE) with the Harkat-ul-Mujahideen (HUM---known before 1997 as the Harkat-ul-Ansar), a member of the International Islamic Front (IIF) of Al Qaeda and the role played by the commercial ships of the LTTE in the 1990s in facilitating heroin smugglimg from the Afghanistan-Pakistan region.

3. In 1993, the Indian Coast Guard had intercepted an LTTE ship in which Kittu, a leader of the LTTE, was travelling from Karachi to the Wanni region of Northern Sri Lanka. When cornered by the Coast Guard, the LTTE cadres on board the ship set fire to it and it sank. Kittu chose to go down with the ship in order to avoid falling into the hands of the Coast Guard. Some members of the crew jumped from the sinking ship and were arrested and interrogated. The subsequent investigation brought out that the ship was carrying a consignment of arms and ammunition, which was loaded by the HUM cadres at Karachi, in the presence of some officers of the Pakistani Inter-Services Intelligence (ISI) and Navy.

4. Reports received in 1994-95 had indicated that the LTTE had helped the HUM in smuggling arms and ammunition in its ships to jihadi elements in Southern Philippines and that in return for this the HUM and the ISI had gifted some anti-aircraft weapons and ammunition and surface-to-air missiles to the LTTE.

5.Since 9/11, this source for clandestine arms procurement and heroin smuggling for the LTTE has dried up due to the deployment of NATO ships off Pakistan to prevent any shipping activity in support of Al Qaeda. The HUM continues to have an active presence in the Southern Philippines and the Harkat-ul-Jihad-al-Islami (HUJI) in the Arakan area of Myanmar and in Southern Thailand. One cannot rule out the possibility of the HUM---and possibly even the HUJI--- maintaining fraternal ties with the LTTE despite its Hindu/Christian background and past anti-Muslim policies in the areas controlled by it.

6. These are opportunistic alliances to assist each other and the fact that the LTTE had followed an anti-Muslim policy should not come in their way. In my past articles, I had mentioned that the ISI's arms gifts to the LTTE despite its anti-Muslim policies started after its assassination of Rajiv Gandhi in May,1991.

7. Against this background, a possible line of enquiry should be whether the HUM or any of its allies in the IIF is repaying a debt to the LTTE for its past assistance by attacking the Sri Lankan cricket team.

8. Relevant extracts from my past articles having a bearing on this are annexed. (3-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: )


In the second half of 1994, the LTTE had helped the Harkat-ul-Ansar (since renamed as the Harkat-ul-Mujahideen), the terrorist organisation of Pakistan run by the Inter-Services Intelligence (ISI), in smuggling at least two shiploads of arms and ammunition from Karachi for the Moro Islamic Liberation Front (MILF) of the Southern Philippines. In return for the LTTE's assistance in safely carrying these items to the Southern Philippines, the HUM and the ISI gave to it an undetermined quantity of anti-aircraft guns with ammunition and surface-to-air shoulder-fired missiles. The LTTE brought these weapons into use for the first time in April 1995 when it downed two aircraft of the Sri Lankan Air Force (SLAF) at Palali. Subsequently, it continued to use its anti-aircraft capability acquired from the HUM and the ISI against the SLAF effectively . It was also reported to have received replenishments of this capability in return for assisting the HUM in shipping to a port in Turkey consignments of arms and ammunition meant for the Islamic terrorists in Chechnya.

---From my article of 24. 07. 2001 titled ATTACK ON SRI LANKAN AIR BASE AT KATUNAYAKE at

The details also indicate that the maximum damage to the planes of the SLAF and the SL Airlines was, most probably, caused with rocket-propelled grenade (RPG) launchers of Soviet vintage which the Afghan Mujahideen, now forming part of the Taliban, and the Inter-Services Intelligence (ISI) of Pakistan had captured in large numbers from the arms depots of Kabul after the collapse of the Najibullah regime in April, 1992. In the past, the ISI and its creation, the Harkat-ul-Mujahideen (HUM), had supplied at least three consignments of weapons seized from Kabul, including the launchers and anti-aircraft guns and missiles, to the LTTE in return for its assistance in narcotics smuggling and in shipping arms consignments to the Muslim separatists in Southern Philippines and to the Chechen terrorists in Russia through a Turkish port.

--- From my article of 26. 07. 2001 titled THE OMENS FROM KATUNAYAKE at

In its fierce determination to achieve its political objective of a Tamil Eeelam, a separate Tamil State encompassing the Northern and Eastern provinces of Sri Lanka, the LTTE follows a no-holds-barred approach. It has had no qualms over letting its fleet be used for narcotics-running by the heroin barons of Pakistan and Afghanistan or for gun running to the Abu Sayyaf and the Moro Islamic Liberation Front of the Southern Phillipines by the Harkat-ul-Mujahideen (HUM) of Pakistan in order to replenish its coffers and arsenal. It did not hesitate to accept a consignment of arms and ammunition from the Inter-Services Intelligence (ISI) of Pakistan in 1993.

---- From my article of 29. 04. 2002 titled THE LTTE: The Metamorphosis at

India has also an international obligation under various international conventions relating to counter-terrorism and particularly under the UN Security Resolution No.1373, which was passed after the 9/11 terrorist strikes in the US. The UNSC Resolution No.1373 applies to all international terrorist organisations and not just to international jihadi terrorist organisations. The LTTE comes under the definition of an international terrorist organisation due to various reasons. Firstly, it had carried out acts of terrorism in Indian soil in the past, including the assassination of Rajiv Gandhi in 1991. Secondly, it has had contacts in the past with the Harkat-ul-Mujahideen (HUM) of Pakistan, which is a founding-member of Osama bin Laden's International Islamic Front (IIF) and which is behind many acts of jihadi terrorism in Indian territory. Thirdly, it has had contacts in the past with Pakistan's Inter-Services Intelligence (ISI). The arms and ammunition carried by the late Kittu's ship in 1993 were given by the HUM and were loaded on to the LTTE ship at Karachi with the complicity of the ISI. Fourthly, it has had and continues to have contacts with various terrorist organisations of West Asia such as the Hezbollah of the Lebanon. Fifthly, it runs an international arms smuggling and procurement network with the help of some members of the Sri Lankan Tamil diaspora abroad. Sixthly, the recent investigations by the Tamil Nadu Police have brought out that though the LTTE has not used the Indian territory for an act of terrorism after the assassination of Rajiv Gandhi, it continues to use the Indian territory for the procurement of material required for improvised explosive devices. Seventhly, it has set up logistics support sanctuaries in many countries of the world with the help of members of the Sri Lankan Tamil diaspora as well as others sympathetic to it. These factors oblige India to extend to Sri Lanka two kinds of assistance----namely, intelligence-sharing and action against the LTTE's logistics support sanctuaries in Indian territory. India has already been extending such assistance. While intelligence-sharing cannot be public knowledge, the details of the recent actions by the Coast Guard and the Tamil Nadu Police against the LTTE's procurement activities are evidence of the Indian co-operation. The 9/11 terrorist strikes also brought about a recognition by the international community that terrorism is an absolute evil, whatever be its cause and objective and should not be tolerated. Every State, which is a victim of terrorism, has a right to take all legitimate self-defence measures to protect the lives and property of its nationals. Thus, the Government of Sri Lanka has the right to take all legitimate measures to protect its citizens from acts of terrorism. Such legitimate measures include procurement of the weapons and expertise required for counter-terrorism operations from other countries.

---- Extract from my article of 2-6-07 titled SRI LANKA & INDIA: FACING REALITIES at

Baloch Nationalism as a Forestaller for Talibanization

By Divya Kumar Soti

Baloch Leadership should make the struggle compatible with strategic aims of the International Community

Taking into account the present political and strategic circumstances as well as future likelihoods, Baloch nationalism will have to develop and re-orient itself according to changed times, in a way, so as to factor in the long term strategic calculations of West and not just tactical ones. Baloch nationalism has in it, lot of potential of being developed as a modal antithesis to radical Islam that is fast engulfing the region. Secular nationalisms are best antidotes for epidemic called Taliban which after spinning out of control of political establishment in Islamabad is making ingress into Punjab and is trying to spread its influence in Balochistan. Baloch leaders should advertise the Baloch freedom struggle as an instrumentality for nurturing temperate and modern Islam in the region. Baloch leaders should now sincerely contemplate the establishment of ‘Modern state of Balochistan’ as their primary aim instead of fighting primarily for Tribal interests and indulging in rhetoric about free Balochistan as a time pass.

Although, question of Balochistan gaining independence or autonomy is secondary at this point of time and will depend upon a large number of uncontrollable factors which lie in womb of future, the preponderance of probability favors the former given certain atmospheric conditions are maintained and catalysts remain in supply. These conditions consist of redesigning Baloch struggle, keeping alive the new student movement and importing good quality tradecraft for armed struggle. These matters will be dealt with in a detailed manner in the later part of this paper.

In view of current situation there is a likelihood of Pakistan going ‘Split Wide Open’. Even if that does not happen it is certain that writ of Islamabad will progressively deteriorate in Balochistan as well as in North West Frontier Province. In that case, Balochs can realistically expect to secure a high level of autonomy in short term.

However, due to stakes of a large number of players (both national as well as non-national), which render the equations quite multifarious, these aims cannot be achieved without support of international community. Baloch leadership should try to convince the international community about the importance of rise of a moderate Islamic State of Balochistan in repelling the challenge posed by advent of radical Islam and dangerous implications of complete talibanization of all tribes in Gedrosia. Such a State of Balochistan will play the role of a buffer cum filter between Pakistan and region beyond Bolan Pass and will be highly useful in management of radical elements on both sides of Durand Line. The process is very similar to that of attracting Venture Capitalists and the Obama administration is likely to be receptive of such thoughts given Obama’s own innovative thinking about the region.

Successive regimes in Islamabad for last three decades are using jehadi elements to undermine Baloch struggle. ISI has been constantly using Taliban against Baloch nationalists. Strategy of Islamabad is to encourage the talibanisation of Balochistan, which by its very effect will harm Baloch freedom struggle and will also provide an alternative haven for its radical assets. Baloch leaders must try to make West understand the dangerous implications of all this. West must be made to understand the Strategic utility of Balochistan in war on terror.

Options for India

India has little option but to helplessly watch the talbanization of Pakistan which now seems to be quite an irreversible phenomenon if Islamabad’s inconsistent policies towards Taliban and Pak Army’s double and triple dealings are to continue. But India along with international community should start to garner elements within Pakistan’s civil society and various aspirants of nationhood who do not entertain jehadi thought and in event of a major fiasco may try to counter-balance the radical elements.

Keeping this in view, India should support and encourage the Baloch leadership in seeking West’s support. India should employ its track two diplomatic channels in carrying this forward. This will work as a strong rebuttal of Ahmed Rashid Theory inasmuch as it shows how Islamabad is using Islamic fundamentalism, on one hand to secure secession of Kashmir from secular State of India and at the same time, to suppress legitimate secular struggle of Balochs and emphasizes on implicit dangers of letting Islamabad continue with such policies.

As it is becoming increasingly clear that in fighting Taliban, dependence on Islamabad is going to be non-productive, it will be prudent for Americans to establish direct relations with Tribal leaders and for that Balochistan is a good place to start with. Kabul should also be roped in to make Americans understand tactical benefits of befriending Baloch and Brohi tribes. This will increase the flow of actionable intelligence from Taliban and Qaeda safe havens and will decrease dependence upon ISI and Afghan sources, thus diversifying the collection threads. The opening of Baloch option will help in keeping a check on Pak military-intelligence establishment and will deter it from playing mind games with international community.

Need to recast the Baloch Struggle

To be strategically as well as tactically relevant for sponsors and to be a successful venture, Baloch leadership needs to draw some lessons from past mistakes. Although, History does not acknowledge the word ‘mistake’, it refers to them as ‘blunders’. To understand why Baloch uprisings always failed to achieve what they aimed, a critical analysis of them is warranted at this point. Some of the conclusions are as under:-

Baloch uprisings always got centered on one or two personalities and whenever any of them was eliminated or enticed away by Pak army, the mobilization melted away like butter in the heat. Be it Prince Abdul Karims Khan’s struggle or 1958 Baloch uprising and subsequent execution of Nawab Navroz Khan or Nawab Bugti’s tilt towards Islamabad in 70’s and recent martyrdom of Nawab in 2005.

Baloch leadership at most of the occasions failed to build around martyrdoms and lost the chances of deriving the spark required to convert feudal dissatisfaction into a wider national movement.

Baloch insurgencies were very badly managed and poorly advertised. There was a complete lack of professionalism and unnecessary interruptions in forms of ceasefires, talks and talk for talks. These were nothing else but political camouflages for bargaining for benefit and advancement of personal and feudal interests.

Tradecraft employed in waging these insurgencies was at times silly and unprofessional. Mass movement and armed struggle were never separated from each other. This caught mass leaders between the crossfire unable to carry on with mass movement. And there were low grade sabotage activities that were many a times led by mass leaders from the front and dramatic surrenders. These things proved disastrous for higher direction of struggle.

Baloch leadership failed to demonstrate the ability to counter political finesse of regimes in Islamabad and terminated the building momentums for the carrots that were just in the process of being dangled. Recent example is unilateral ceasefire by BLA and BRA in reciprocation to (as there is no other visible reason) Islamabad’s move of removing names of some Baloch leaders from Exit Control List and promises of new passports for some tribal leaders.

The Way Ahead

Baloch leadership should incorporate and nurture following crucial features into their struggle-

The practice of mobilizing upsurges around some personalities should be done away with and attempts must be made to ready second and third lines of leadership. Movement must be mass based not leader based or tribe based.

The Baloch leaders should try to build the movement around something more fundamental than Gas Royalties of tribal chiefs. Baloch nationalism is not just about criminal misappropriation of Baloch natural resources by Islamabad; it is just one reason of dissatisfaction. The roots of Baloch nationalism lie deep in greater historical and cultural causes.

Inter-tribal egos and rivalries must be given up not just at public forums but at the ground. Pak army has been using this as a tool to crush and malign the image of Baloch people. Musharraf was able to misrepresent to the whole World that the killing of Nawab Bugti, was a result of inter-tribal rivalry only because of world famous differences among Baloch Tribal leaders. Fortunately there are signs that new generation understands this and proof of that is the BLA message distributed in a freedom rally in Quetta on Nov 2 this year. This message represents the new renaissance phase Baloch thinking is going through. A paragraph of it reads as under:

“We must get rid of egoism, selfishness, tribal and regional differences, where the concept of nation should not be affiliated with tribe. But, here it is very astonishing to see that every one takes its tribe as a nation. Like Raisani National Alliance, Shahwani National Alliance, Sarpara National Alliance, Kumbarani National Alliance etc. If a tribe is a nation then what is the application of Baloch nation in your mind?”

It goes on further and hits at major drawbacks: “If we want to be free from the occupying country of Pakistan then from today onwards we must solidify the concept of nationhood in the minds of Baloch people. With the departing from Pakistani occupation we must also farewell selfishness, tribalism and personality cults, which are a cancer for national survivor.”

Writing is clear on the wall for the old guard. And if Baloch leaders failed to read this, history will fail them. Baloch leaders must try to reinvent inter-tribal relationships and all tribes be them Baloch or Brohi must work in complete convergence.

Baloch people must conserve the new student movement that is building up. The new generation is likely to clean the Baloch struggle of orthodox practices and will rescue it from hijackings by few people for their personal interests. Baloch student movement will prove to be a panacea for all ailments Baloch struggle suffers from, if guided properly. The injection of new blood and thinking will bring new tradecraft and professionalism. This student movement is free from draconian reservations and is a major platform to unite the Baloch society for greater causes.

At the same time Baloch leadership should do all that is required to defecate and to expurgate the broader struggle. It should be remembered that nations just do not emerge out of struggles; they emerge out of movements capable of causing intellectual upheaval on a mass scale thereby leading a society to maturity which ultimately culminates into a nation.

March 02, 2009

Why U.S. is Losing Growing Number of Immigrants Who Spur Innovation and Economic Growth

Kauffman Foundation Study Presents Insights
Contact:Rossana Weitekamp, 516-792-1462, rossana@weitekamp.comBarbara Pruitt, 816-932-1288;, Kauffman Foundation Economic and professional opportunities top list of reasons

(KANSAS CITY, Mo.) March 2, 2009 – The Ewing Marion Kauffman Foundation released a study today that indicates placing limits on foreign workers in the U.S. is not the answer to the country's rising unemployment rate and may undermine efforts to spur technological innovation.
For the study by Harvard professor Vivek Wadhwa titled America's loss is the world's gain: America's New Immigrant Entrepreneurs, Part IV, researchers surveyed highly skilled immigrants who had studied and/or worked in the United States and subsequently returned to their home countries.

"A substantial number of highly skilled immigrants have started returning to their home countries in recent years, draining a key source of brain power and innovation," said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. "We wanted to know what is encouraging this much-needed growth engine to leave our country, thereby sending entrepreneurship and economic stimulus to places like Bangalore and Beijing."
Immigrants historically have provided one of America's greatest competitive advantages. Between 1990 and 2007, the proportion of immigrants in the U.S. labor force increased from 9.3 percent to 15.7 percent, and a large and growing proportion of immigrants bring high levels of education and skill to the United States. Immigrants have contributed disproportionately in the most dynamic part of the U.S. economy—the high-tech sector—co-founding firms such as Google, Intel, eBay and Yahoo. In addition, immigrant inventors contributed to more than a quarter of U.S. global patent applications. Immigrant-founded U.S.-based companies employed 450,000 workers and generated $52 billion in revenue in 2006.
"While some have tried to associate the increase in foreign workers over recent years with the economic problems that have plagued the country, this data verifies the opposite effect," said Wadhwa. "If the U.S. Government and the business community could find better ways to offer good jobs in tandem with less restrictive visa policies for talented immigrants, the U.S. might be able to recapture many of these immigrants and their potential to help grow the U.S. economy."
In the two-year study of 1,203 Indian and Chinese subjects who had studied or worked in the United States for a year or more before returning home, Wadhwa and his team uncovered several trends:

Most of the Indian and Chinese immigrant subjects who returned to their home countries were relatively young (35 and 37, respectively), male, married and had no children.
These returnees had degrees primarily in management, technology or science, with most holding Master's and PhD degrees.

Most returnees originally came to the Unites States for professional and educational development opportunities, and the majority of returnees cited career and quality of life as the main reasons to return to their home countries rather than stay in the United States.

The most common professional factor (86.8 percent of Chinese and 79.0 percent of Indians) motivating workers to return home was the growing demand for their skills in their home countries.

Returnees also believed that their home countries provided better career opportunities than they could find in America.

Family considerations are strong magnets pulling immigrants back to their home countries, as well. Being close to family and friends was a significant consideration in the decision to return home, with many returnees considering care for aging parents to be much better in their home countries (89.4 percent of Indians and 79.1 percent of Chinese).

Since returning home, 56.6 percent of Indians and 50.2 percent of Chinese respondents indicated that they would be likely to start a business in the next five years, but they believed their best opportunities for entrepreneurship were at home (53.5 percent of Indian and 60.7 percent of Chinese respondents said opportunities to start their own businesses were better in their home countries).

More than half of the foreign-born founders of U.S. technology and engineering businesses initially came to the United States to study. Very few came with the sole purpose of starting a company. Almost 40 percent of immigrant founders entered the country because of a job opportunity, with only 1.6 percent entering the country with the sole purpose of entrepreneurship. They typically founded companies after working and residing in the United States for an average of 13 years.

Immigrant founders were educated in a diverse set of universities in both their home countries and across the United States. No single U.S. institution stands out as a source of immigrant founders. Similarly, those who received their undergraduate degrees in India or China graduated from a diverse assortment of institutions. Even the famed Indian Institutes of Technology educated only 15 percent of Indian technology and engineering company founders.

Immigrant entrepreneurs tend to move to cosmopolitan technology centers. The regions with the largest immigrant population also tend to have the greatest number of technology startups. On average, 31 percent of the engineering and technology companies founded from 1995 to 2005 in the 11 technology centers that were surveyed had an immigrant as a key founder. This compares to the national average of 25.3 percent.

Technology centers with a greater concentration of immigrant entrepreneurs in their state averages include Silicon Valley (52.4 percent), New York City (43.8 percent), and Chicago (35.8 percent). Three technology centers had a below-average rate of immigrant-founded companies: Portland (17.8 percent), Research Triangle Park (18.7 percent) and Denver (19.4 percent).
In a research and policy guide for transforming the U.S. economy toward an innovative entrepreneurial economy published earlier this year, Kauffman Foundation researchers said the nation could benefit from more enlightened immigration policies, designed to attract and retain highly skilled foreign workers and potential entrepreneurs.

Curse of the Khyber Pass

The National Intrest

by Milton Bearden


AS THE United States settles into its eighth year of military operations in Afghanistan, and as plans for ramping up U.S. troop strength are under way, we might reflect on an observation made by the Chinese military sage, Sun Tzu, about twenty-five hundred years ago:

In military campaigns I have heard of awkward speed but have never seen any skill in lengthy campaigns. No country has ever profited from protracted warfare.
These words tell the tale of the string of superpowers that have found themselves drawn into a fight in the inhospitable terrain we now call Afghanistan. Their stories of easy conquest followed by unyielding rebellion are hauntingly similar, from the earliest accounts of Alexander’s Afghan campaign, when, in 329 BC, the great warrior found the struggle longer, more brutal and more costly than his battle in Persia. And through six centuries the Mughals never managed to bring the Afghans to heel, and most certainly not the Pashtuns. Of course, there were also the disastrous expeditions of Britain and the Soviet Union. Now it is up to the Obama administration to try to change the long odds in what will become America’s longest war.

Perhaps the failure of empires in Afghanistan is merely destiny. Each has largely made the same mistakes as its forebears, above all underestimating the Afghans. The premier historian on Afghanistan, the late Louis Dupree, explained how the occupation of Afghan territory by foreign troops, the placing of an unpopular emir on the throne, the harsh acts of occupier-supported segments of the Afghan population against their Afghan enemies and the reduction of the subsidies paid to the tribal chiefs all led to imperial demise.

The United States may not yet have reached that point where it is just another occupation force facing a generalized resistance, but it is getting close. It is, indeed, much as the Mughals who came before, facing a Pashtun insurgency in the east and south of Afghanistan, where invaders historically fail. In Hamid Karzai they have placed an unpopular leader at the helm. The ineffective U.S. aid programs have done little to subsidize potential allies. And so America finds itself pursuing the failed plan of so many ambitious states of the past.

AFGHANISTAN, THOUGH never conquered, has rarely found itself without a potential occupier to hold at bay. And all of those empires have fallen victim to Dupree’s four banes. Alexander may have been the first to almost lose his kingdom to the Afghan battlefield, but many followed. This may be the starkest case of Obama’s need to learn from history.

After centuries of unrelenting but ultimately failed attempts at conquest, early in the nineteenth century, as imperial Russia expanded its influence in central Asia and as Britain consolidated control of the Indian subcontinent, Afghanistan (much like its occupiers) found itself a victim of circumstance once again. Russia and Great Britain set themselves on a collision course. Afghanistan lay between them as the fulcrum of the “Great Game” of espionage, diplomacy and proxy conflict that would play out over the rest of the century.

The First Anglo-Afghan War of 1839–1842 sprang from British India’s need to protect its western flank. Certain that Russia intended to encroach on its empire, in December 1838 the British governor general of India declared the Russian-favored emir of Afghanistan, Dost Mohammed Khan, “dethroned,” and launched British forces into Afghanistan. Entry was easy, and after a leisurely march through Kandahar and Ghazni, British forces reached Kabul in August 1839 and placed their man, Shah Shuja, on the throne. The first fatal error.

By 1841 British forces in Afghanistan faced a murderous rebellion led by the deposed emir’s son. On January 1, 1842, three years after their invasion, a combined force of sixteen thousand five hundred British and Indian troops began its retreat from Kabul under an agreement of safe conduct. The passage was anything but safe, however, as the retreating forces came under persistent attack by Pashtun Ghilzai warriors in the snowbound mountain passes on the hundred-mile route to Jalalabad. In one of the most crushing defeats in the empire’s history, the remnants of the British column were massacred about thirty-five miles from Jalalabad. The sole survivor of the march was an army surgeon. Shah Shuja was assassinated four months later. In 1878, the British would repeat these mistakes in a brief war that would end with another humiliating defeat at Maiwand, about fifty miles northwest of Kandahar, where Afghans killed around one thousand British and Indian troops.

The Soviets would follow the failed British playbook a century later, embarking on their own Afghan adventure on Christmas Eve, 1979. Their decision to move a “limited contingent of Soviet forces” into Afghanistan was based on cooked intelligence that argued America was plotting to use Afghanistan to threaten Russia’s central-Asian republics. Really a cover-up for the Soviet Union’s own imperial agenda for Afghanistan, these claims supported the doctrines of their aging and ailing leader, Leonid Brezhnev. And so the invasion was launched. The Soviet foray was brutally efficient. The troublesome Afghan leader, Hafizullah Amin, was assassinated; Kabul was secured; and “their emir,” Babrak Karmal, was installed at the helm of the Afghan government. Another false leader placed atop the throne. It seemed easy, and it initially looked as if the politburo had called it right; they would be in and out of Afghanistan almost before anyone noticed. Certainly, President Jimmy Carter must be too preoccupied with his hostage crisis in Iran to give much thought to Afghanistan, or so the Kremlin thinking went.

Not quite. Carter reacted decisively. He cancelled a number of pending agreements with the USSR, ranging from wheat sales to consular exchanges, set in motion the boycott of the 1980 Moscow Olympics and quietly signed a presidential finding tasking the CIA to organize assistance, including lethal aid, to the Afghan people in their resistance to the Soviet invasion.

By the fifth year of their war, the Soviet 40th Army had grown from its original limited contingent to a countrywide occupation force of around one hundred twenty thousand troops. Again, here was an outside state foolishly attempting to occupy Afghan territory. As Soviet forces grew, so did the Afghan resistance; by the mid-1980s there were around two hundred fifty thousand full- or part-time mujahideen. Soviet efforts were beginning to falter, and, in 1986, the new Soviet leader, Mikhail Gorbachev, declared Afghanistan a “bleeding wound.” He gave his commanders a year to turn it around. They didn’t, and by the end of the 1986 fighting season, the Soviet position had deteriorated further. When the snows melted in the high passes for the new fighting season of 1987, diplomatic activity intensified. A year later, on April 14, 1988, the Geneva Accords ending Soviet involvement in Afghanistan were signed. The Soviets were out of Afghanistan nine months later.

In the nine years of their Afghan adventure, the Soviet Union admitted to having lost around fifteen thousand troops killed in action, several tens of thousands wounded and tens of thousands more dead from disease. The Afghan population had suffered horrendous losses—more than a million dead, a million and a half injured, plus 6 million more driven into internal and external exile. The costs to the USSR, however, would soar with the breathtaking events that followed their February 15, 1989, retreat. In May, Hungary opened its border with Austria without fear of Soviet intervention; a month later came the election of Polish Solidarity leader Lech Walesa, bringing an end to Communist rule in Poland; throughout the summer of 1989, the people of East Germany took to the streets until, on the night of November 9, 1989, the Berlin wall was finally breached. The world had only just digested the events in Berlin when Vaclav Havel carried out his “velvet” revolution in Czechoslovakia a month later. Three hundred twenty-nine days after the Berlin wall fell, Germany was reunited inside nato, and the Soviet Union and the Warsaw Pact were on deathwatch. Their Afghan campaign was indeed the death knell for the Soviet Union. But Afghanistan too would plague the United States a short time later.

WITH THE world’s attention focused almost entirely on the historic events in Eastern Europe, scant attention was paid to the drama unfolding in Afghanistan at the end of the cold war. There was no looking back by senior levels of the administration of George H. W. Bush. All energies were consumed by the denouement of the Soviet Union and its aftermath. The neglect would be a grave error.

No one accounted for the fact that during the Soviet occupation, the call to jihad had reached all corners of the Islamic world, attracting Arabs young and old and with a variety of motivations to take up arms against the invaders of an Islamic country. There were sincere volunteers on humanitarian missions; there were adventure seekers on paths of glory; and there were Salafist psychopaths. As the war dragged on, some Arab states emptied their prisons of their own scourges and sent them off to the Afghan jihad with the hope that they would never return. Altogether, over ten years of war as many as twenty-five thousand Arabs may have passed through Pakistan and Afghanistan.

As the 1990s began with great hope elsewhere in the world, a new post-cold-war construct took shape in Afghanistan—the failed state. Though the Soviets had quit the country in 1989, it would not be until April 1992 that the mujahideen would finally take Kabul. Almost immediately, ancient hatreds and ethnic rivalries drove events. Absent the presence of that single unifying factor that had survived the test of history—foreign armies on Afghan soil—the state failed. Intrastate conflict took on a new brutality, until the population was ready for any path to security.

Rising almost mystically from the chaos, what was soon to be America’s enemy, the Taliban (meaning Islamic students or seekers), formed under the leadership of a one-eyed cleric from Maiwand. Almost exclusively a Pashtun movement, the Taliban swept easily through eastern Afghanistan, bringing relief to the people from brigands controlling the valleys and mountain passes. By 1996, the Taliban had seized Kabul, and the Afghan people seemed to accept their deliverance. The West fleetingly saw the Taliban as a source of order and a possible tool in a modern replay of the Great Game—the race to market the energy riches of central Asia. But the optimism was short-lived, and Afghanistan continued its downward spiral as the Taliban overreached in its quest for total control of the state. The movement’s human-rights record and treatment of women drew international scorn, and with the exception of diplomatic recognition from Saudi Arabia, the UAE and Pakistan, Afghanistan was in complete isolation. Its failure as a state of any recognizable form was total.

Against this failed-state backdrop, the old Afghan Arab troublemakers—who had witnessed close hand the Soviet folly in Afghanistan a decade earlier—drifted back into the country. The Arab jihadists had returned. Among them was the son of a Saudi billionaire, Osama bin Laden.

America’s fate was sealed. Bin Laden had settled in Khartoum after a failed attempt to bring about change in his Saudi homeland. It was in Sudan that he became consumed by his brooding enmity toward the United States, a hatred that had been defined by the Gulf War and the presence of U.S. troops in Saudi Arabia. In 1996, responding to U.S. and Saudi pressure, Sudan expelled bin Laden. He moved to Afghanistan—the last stop on the terror line—where his seething hatred of the United States would take its deadly shape, first with an attack on the American embassies in Kenya and Tanzania in 1998, and then again on September 11, 2001, in a blow of unimaginable boldness and immeasurable devastation.

THE UNITED States reeled. Four weeks later, on October 7, 2001, small contingents of CIA officers and U.S. Army Special Forces troops linked up with elements of the Northern Alliance and other Afghan anti-Taliban groups, and, supported by U.S. and British air and missile strikes, kicked off the United States’ war in Afghanistan. The response seemed right to most observers; it looked easy, even entertaining, to a stunned nation looking for payback in the early days of Operation Enduring Freedom, as the Afghan action was called. U.S. Defense Secretary Donald Rumsfeld became a matinee idol as he briefed the press on the U.S. operations, sometimes using romantic footage of U.S. troopers and CIA officers in cavalry charges, galloping across the Shomali Plains on Afghan ponies. An eerie repetition of history began to unfold on the fields of Afghanistan.

At the outset it was almost entirely a war prosecuted by CIA paramilitary teams and special-operations forces with air support. There was little need for large-scale army or marine forces. The goals of the invasion seemed reasonable: capture or kill Osama bin Laden and other al-Qaeda players behind the attack on 9/11; remove al-Qaeda’s Taliban supporters from power; and then set things right in an Afghanistan the United States and the West had abandoned after the Soviets quit the field a dozen years earlier.

Things stayed on schedule, at first. By mid-November the Taliban had slipped out of Kabul, and Northern Alliance forces moved quickly to fill the vacuum. Within days, the Taliban was collapsing like a house of cards, and on December 7 their leader, Mullah Omar, escaped encirclement at Kandahar and withdrew to the mountains of nearby Oruzgan Province. The last Taliban-held city fell and the movement ceased to exist as a political or military force, at least for the moment. The Taliban had been dispersed in all directions.

Large numbers of the Pashtun Taliban had slipped across the Durand Line, a border between Afghanistan and Pakistan that they and their forebears had ignored. Another legacy of the violent past, it was a demarcation made by the British out of the frustration of their two failed wars against the Afghans almost a century earlier. It was a border that served the nineteenth-century needs of Great Britain, but it artificially separated the Pashtun tribes, whose numbers today total around 40 million, with about 25 million on the Pakistani side of the zero line (as the Durand Line is also called) and around 15 million on the Afghan side. The Pashtuns’ tribal linkages have always trumped the demarcation, and by the end of 2001 a reestablishment of the Pashtun safe haven in Pakistan’s Federally Administered Tribal Areas (FATA) that had so tormented the Soviets was under way.

But still the Americans were fooled into seeing an easy victory ahead. In early December 2001, the noose had tightened on Osama bin Laden at Tora Bora in the White Mountains of eastern Afghanistan near Pakistan’s Kurram Agency, one of the districts in the FATA. Yet, in a sequence of events still hotly debated by those on the ground at the time, bin Laden slipped away and made his journey into Pakistan’s tribal areas. In the last seven years there have been few, if any, credible sightings of him in Afghanistan or Pakistan, though it has become conventional wisdom that he is somewhere in the FATA.

Meanwhile, a gathering of prominent Afghans was convened at the Hotel Petersberg, across the Rhine from Bonn, under the auspices of the United Nations. On December 22, 2001, an Afghan Interim Authority, comprised of thirty members, was established, with Hamid Karzai at its head. Thus, within ninety days of the terrorist attack on America, just reprisals had been seemingly executed. The Taliban had been overthrown, a ruling body for Afghanistan had been chosen, a constitution was in train, elections planned, and, we were assured, Osama bin Laden was steps away from capture or death.

It had all seemed so easy that by 2002 vital military resources were being redirected from Afghanistan to the Bush administration’s new target, Iraq.

HOWEVER, THE United States had committed the cardinal sins of empire. Fast-forward seven tough years, and the experience of the latest superpower to venture into Afghanistan looks like that of all of those who came before. The admonition against placing an unpopular emir on the Afghan throne was breached at the outset. The “unpopular emir” cachet, in the eyes of the Pashtuns, originally fell to the Northern Alliance leaders placed in high positions in the Afghan government. While Hamid Karzai was not the “unpopular emir” at the beginning of his tenure, he is achieving that distinction now. He is viewed as able to remain in office only with U.S. protection. And then there were the harsh acts of the U.S.-supported segments of the Afghan population against their Afghan enemies, which have also worked against the United States. Tales of massacres of Pashtun Taliban prisoners in the north by our Northern Alliance allies are now part of Pashtun legend, fuelling their code of revenge. Dupree’s counsel against reducing subsidies paid to the tribal chiefs can best be understood here in the utter failure of the foreign-assistance packages for Afghanistan—of the more than $30 billion in programmed aid, little has made it beyond the dark recesses of foreign contractors and NGOs. And of course, in the meantime, America had occupied Afghan territory.

There is an unrelenting insurgency—we call it the Taliban, though that is a dangerous oversimplification. It is in effect a Pashtun insurgency, made up of, indeed, Taliban, but also angry Pashtuns, criminal bands and paid gunfighters. Rural Afghanistan is engulfed in the opium trade, with poppy cultivation accounting for about 53 percent of the 2008 Afghan GDP, last estimated at $7.5 billion and accounting for over 90 percent of the world’s illicit heroin production. The corruption spawned by the drug trade has permeated all levels of the Afghan government, severely limiting its ability to deliver services or security even in some parts of Kabul. Most affected by the corruption may be the Afghan National Police, forcing hopes for improved security to recede even more.

Cynical Afghans derisively refer to Karzai as “the mayor of Kabul,” and whispers of his family’s involvement in the drug trade are growing louder. U.S. casualties have surged from an even dozen in 2001 to 155 in 2008. Coalition casualties have risen above one thousand. Across the zero line in Pakistan’s FATA, always part of any war against the Pashtuns, conditions are dire. Islamabad is fully involved in the conflict now. FATA is a war zone, with the Pakistan Army taking higher casualties than coalition forces in Afghanistan. Further afield in Pakistan, the so-called “settled areas” of the North-West Frontier Province, prominently the picturesque Swat Valley, are under mounting threat of “Talibanization,” though in many cases the Pakistani Taliban is little more than teenage punks with guns, paid around $8 per day from drug money flowing in from Afghanistan. Attacks against U.S.-contracted convoys through Pakistan to Afghanistan have increased, blocking the flow of vital food and fuel supplies to coalition forces, and forcing the United States to seek deals with Russia and the central-Asian countries to the north of Afghanistan for alternate supply routes. It is difficult to understate the irony in that or to overestimate the potential political costs of cutting a deal with Vladimir Putin, the successor to those who launched the most recent and brutal occupation of Afghanistan, and lost their empire in the process.

Suicide bombings have killed large numbers of Pakistani civilians and senior military officers, as well as assassinating former–Prime Minister Benazir Bhutto as she campaigned for office just over a year ago. U.S. complaints that Pakistan is “not doing its part” fail to take into account that its army is organized and trained to defend against India, an adversary with which it has fought three very real wars; it is not constituted to carry out the counterinsurgency we demand. Such criticism also misses the fact that Pakistan is understandably reluctant to carry out counterinsurgency operations when doing so amounts to engaging in a civil war. Finger wagging won’t change that, particularly when most Pakistanis are convinced that it’s only a matter of time before the United States abandons them in the field once again.


The Obama administration has been quick to learn that Afghanistan is anything but “the good war.” In his earliest discussions with his military advisers, Obama has also learned that Afghanistan is not Iraq, and that neither an Iraq-style surge nor a replication of the so-called Anbar Awakening is readily transferable to Afghanistan—where the tribal structure, topography, level of education, national economy and development are totally different from conditions in Iraq. Per capita GDP in Afghanistan, at about $350, is one-tenth that of Iraq; adult literacy is 25 percent compared to about 75 percent in Iraq; and the actual population pool for the Afghan insurgency spans the Durand Line and is around 40 million Pashtuns. In appointing Richard Holbrooke as his special envoy to Pakistan and Afghanistan, the president has acknowledged that the two countries are one theater of conflict. This is progress.

But the first problem with U.S. planning begins with the idea that increasing America’s military footprint is enough. Campaign rhetoric about ramping up U.S. troop presence by another three brigades is being challenged, and properly so. Former commander of the International Security Assistance Force (ISAF) in Afghanistan, General Dan McNeill, in a moment of candor last June, estimated that it would take four hundred thousand troops to pacify Afghanistan. He may have been right. And those numbers are not possible. Critics also point out that a fundamental redefinition of the mission is more important than troop numbers. If the troop increase means more of the same type of operations, there will be no advantage gained. More gunfighters means more gunfights, and there has never been evidence to suggest that outsiders can wear down an Afghan insurgency through rising body counts. Even sending in additional special-operations forces has its problems, since there is a growing recognition in military circles that far too many U.S. Special Forces elements have been “rangerized”—that they may be less focused on working with Afghans than on hunting them down. Unless we can get some old-fashioned special-forces teams into Afghanistan working on new approaches—helping rebuild the traditional system of rule and simply providing the security for the Afghans to start doing more for themselves—a troop increase will probably accomplish very little other than replacing the NATO troops that, in any case, will be pulling out over the next two years. It should not be forgotten that the USSR maintained one hundred twenty thousand troops in Afghanistan for nearly a decade, and still lost. Perhaps Defense Secretary Robert Gates had it right when in his January 27 testimony on Capitol Hill he said that “if we set ourselves the objective of creating some sort of central Asian Valhalla over there, we will lose. . . .”

Then there is the question of how to deal with the militias. Discussion of arming Afghanistan’s militias has led to little in the way of consensus. Many Afghans and some old Afghan hands say it won’t work because it has never worked before, that it will lead to more conflict and that militias armed by outsiders can never be controlled. Others say it is worth a try. Both may be right.

The militia solution always surfaces when a foreign enterprise in Afghanistan faces failure; and, yes, militias armed by outsiders have ended up fighting each other in the past. During the 1980s militias repeatedly turned on their Soviet armorers, or otherwise betrayed them. Indeed, Soviet-armed militias in eastern Afghanistan became quartermasters for the CIA, selling their weapons to the mujahideen for hard CIA cash, while saving the CIA huge transportation costs to boot. The Soviets paid the freight.

But the United States, inevitably, will arm some militias. The question will be how many and where and how? Some recommend giving the Karzai government a hand in the process. That should be carefully thought through, as it may only end up increasing the intramural fighting. If militias must be raised, the United States had better do it in concert with traditional tribal-leadership systems that have been nearly destroyed by thirty years of warfare on both sides of the zero line. The United States must also concurrently work with Pakistan to help regenerate the traditional tribal system in the FATA as a companion effort to arming militias in Afghanistan.

President Karzai may not be happy with U.S. involvement in a militia program; nor will he view the militias we raise as his natural allies. He will be right. The idea of an Afghan presidency designed somehow to control all of Afghanistan was built into the system when the interim government was established in Bonn in 2001. It was a mistake then, as now. The new administration and the new special envoy should correct this as they cajole into existence a presidency with natural Afghan limits and begin to work out new relationships with the outlying governors who hold real power outside Kabul. Whenever Afghanistan has been “well ruled” in the past, those at the helm in Kabul understood their limitations in dictating to the provinces. That balance will have to be reestablished.

In taking these steps, the United States should not expect any long-term gratitude from the militias it arms. At best we should hope that they might restore an old order as they beat back the nihilist upstarts on either side of the border. The arms flows should be structured to prompt continuing good behavior—a tall order, but not an impossible one. The last British political agent in the FATA, Sir Olaf Caroe, was able to keep the tribes “quiet” during his tenure (in the 1930s and 40s) by rewarding “good” behavior with a continued flow of cash and arms. Caroe’s The Pathans should be read by all involved in this challenge, maybe even before picking up the new Petraeus doctrine on counterinsurgency.

AS WITH all of the other problems the new administration faces, Afghanistan and Pakistan need new, even radical, rethinking if the United States is ever to reverse a failing enterprise. The only certainty about Afghanistan is that it will be Obama’s War, as surely as Iraq is Bush’s War and Vietnam was Lyndon Johnson’s War. The president’s new team for Afghanistan and Pakistan has been dealt a losing hand, but if anyone can turn the tables, they just might be able to do it.

Milton Bearden is a retired CIA officer who managed the CIA’s covert assistance to the Afghans from Pakistan during the Soviet occupation of Afghanistan. He also served in Hong Kong, Switzerland, Nigeria, Sudan and Germany.

How the Crash Will Reshape America


March 2009

The crash of 2008 continues to reverberate loudly nationwide—destroying jobs, bankrupting businesses, and displacing homeowners. But already, it has damaged some places much more severely than others. On the other side of the crisis, America’s economic landscape will look very different than it does today. What fate will the coming years hold for New York, Charlotte, Detroit, Las Vegas? Will the suburbs be ineffably changed? Which cities and regions can come back strong? And which will never come back at all?

by Richard Florida

Image credit: Sean McCabe

This article has been corrected since it was published in the print magazine.

My father was a child of the Great Depression. Born in Newark, New Jersey, in 1921 to Italian immigrant parents, he experienced the economic crisis head-on. He took a job working in an eyeglass factory in the city’s Ironbound section in 1934, at age 13, combining his wages with those of his father, mother, and six siblings to make a single-family income. When I was growing up, he spoke often of his memories of breadlines, tent cities, and government-issued clothing. At Christmas, he would tell my brother and me how his parents, unable to afford new toys, had wrapped the same toy steam shovel, year after year, and placed it for him under the tree. In my extended family, my uncles occupied a pecking order based on who had grown up in the roughest economic circumstances. My Uncle Walter, who went on to earn a master’s degree in chemical engineering and eventually became a senior executive at Colgate-Palmolive, came out on top—not because of his academic or career achievements, but because he grew up with the hardest lot.

My father’s experiences were broadly shared throughout the country. Although times were perhaps worst in the declining rural areas of the Dust Bowl, every region suffered, and the residents of small towns and big cities alike breathed in the same uncertainty and distress. The Great Depression was a national crisis—and in many ways a nationalizing event. The entire country, it seemed, tuned in to President Roosevelt’s fireside chats.

The current economic crisis is unlikely to result in the same kind of shared experience. To be sure, the economic contraction is causing pain just about everywhere. In October, less than a month after the financial markets began to melt down, Moody’s* published an assessment of recent economic activity within 381 U.S. metropolitan areas. Three hundred and two were already in deep recession, and 64 more were at risk. Only 15 areas were still expanding. Notable among them were the oil- and natural-resource-rich regions of Texas and Oklahoma, buoyed by energy prices that have since fallen; and the Greater Washington, D.C., region, where government bailouts, the nationalization of financial companies, and fiscal expansion are creating work for lawyers, lobbyists, political scientists, and government contractors.

No place in the United States is likely to escape a long and deep recession. Nonetheless, as the crisis continues to spread outward from New York, through industrial centers like Detroit, and into the Sun Belt, it will undoubtedly settle much more heavily on some places than on others. Some cities and regions will eventually spring back stronger than before. Others may never come back at all. As the crisis deepens, it will permanently and profoundly alter the country’s economic landscape. I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life.

Global Crises and Economic Transformation

“One thing seems probable to me,” said Peer Steinbrück, the German finance minister, in September 2008. As a result of the crisis, “the United States will lose its status as the superpower of the global financial system.” You don’t have to strain too hard to see the financial crisis as the death knell for a debt-ridden, overconsuming, and underproducing American empire—the fall long prophesied by Paul Kennedy and others.

Big international economic crises—the crash of 1873, the Great Depression—have a way of upending the geopolitical order, and hastening the fall of old powers and the rise of new ones. In The Post-American World (published some months before the Wall Street meltdown), Fareed Zakaria argued that modern history’s third great power shift was already upon us—the rise of the West in the 15th century and the rise of America in the 19th century being the two previous sea changes.

But Zakaria added that this transition is defined less by American decline than by “the rise of the rest.” We’re to look forward to a world economy, he wrote, “defined and directed from many places and by many peoples.” That’s surely true. Yet the course of events since Steinbrück’s remarks should give pause to those who believe the mantle of global leadership will soon be passed. The crisis has exposed deep structural problems, not just in the U.S. but worldwide. Europe’s model of banking has proved no more resilient than America’s, and China has shown that it remains every bit the codependent partner of the United States. The Dow, down more than a third last year, was actually among the world’s better-performing stock-market indices. Foreign capital has flooded into the U.S., which apparently remains a safe haven, at least for now, in uncertain times.

It is possible that the United States will enter a period of accelerating relative decline in the coming years, though that’s hardly a foregone conclusion—a subject I’ll return to later. What’s more certain is that the recession, particularly if it turns out to be as long and deep as many now fear, will accelerate the rise and fall of specific places within the U.S.—and reverse the fortunes of other cities and regions.

By what they destroy, what they leave standing, what responses they catalyze, and what space they clear for new growth, most big economic shocks ultimately leave the economic landscape transformed. Some of these transformations occur faster and more violently than others. The period after the Great Depression saw the slow but inexorable rise of the suburbs. The economic malaise of the 1970s, on the other hand, found its embodiment in the vertiginous fall of older industrial cities of the Rust Belt, followed by an explosion of growth in the Sun Belt.

The historian Scott Reynolds Nelson has noted that in some respects, today’s crisis most closely resembles the “Long Depression,” which stretched, by one definition, from 1873 to 1896. It began as a banking crisis brought on by insolvent mortgages and complex financial instruments, and quickly spread to the real economy, leading to mass unemployment that reached 25 percent in New York.

During that crisis, rising industries like railroads, petroleum, and steel were consolidated, old ones failed, and the way was paved for a period of remarkable innovation and industrial growth. In 1870, New England mill towns like Lowell, Lawrence, Manchester, and Springfield were among the country’s most productive industrial cities, and America’s population overwhelmingly lived in the countryside. By 1900, the economic geography had been transformed from a patchwork of farm plots and small mercantile towns to a landscape increasingly dominated by giant factory cities like Chicago, Cleveland, Pittsburgh, Detroit, and Buffalo.

How might various cities and regions fare as the crash of 2008 reverberates into 2009, 2010, and beyond? Which places will be spared the worst pain, and which left permanently scarred? Let’s consider how the crash and its aftermath might affect the economic landscape in the long run, from coast to coast—beginning with the epicenter of the crisis and the nation’s largest city, New York.

Whither New York?

At first glance, few American cities would seem to be more obviously threatened by the crash than New York. The city shed almost 17,000 jobs in the financial industry alone from October 2007 to October 2008, and Wall Street as we’ve known it has ceased to exist. “Farewell Wall Street, hello Pudong?” begins a recent article by Marcus Gee in the Toronto Globe and Mail, outlining the possibility that New York’s central role in global finance may soon be usurped by Shanghai, Hong Kong, and other Asian and Middle Eastern financial capitals.

This concern seems overheated. In his sweeping history, Capitals of Capital, the economic historian Youssef Cassis chronicles the rise and decline of global financial centers through recent centuries. Though the history is long, it contains little drama: major shifts in capitalist power centers occur at an almost geological pace.

Amsterdam stood at the center of the world’s financial system in the 17th century; its place was taken by London in the early 19th century, then New York in the 20th. Across more than three centuries, no other city has topped the list of global financial centers. Financial capitals have “remarkable longevity,” Cassis writes, “in spite of the phases of boom and bust in the course of their existence.”

The transition from one financial center to another typically lags behind broader shifts in the economic balance of power, Cassis suggests. Although the U.S. displaced England as the world’s largest economy well before 1900, it was not until after World War II that New York eclipsed London as the world’s preeminent financial center (and even then, the eclipse was not complete; in recent years, London has, by some measures, edged out New York). As Asia has risen, Tokyo, Hong Kong, and Singapore have become major financial centers—yet in size and scope, they still trail New York and London by large margins.

In finance, “there is a huge network and agglomeration effect,” former assistant U.S. Treasury secretary Edwin Truman told The Christian Science Monitor in October—an advantage that comes from having a large critical mass of financial professionals, covering many different specialties, along with lawyers, accountants, and others to support them, all in close physical proximity. It is extremely difficult to build these dense networks anew, and very hard for up-and-coming cities to take a position at the height of global finance without them. “Hong Kong, Shanghai, Singapore, and Tokyo are more important than they were 20 years ago,” Truman said. “But will they reach London and New York’s dominance in another 20 years? I suspect not.” Hong Kong, for instance, has a highly developed IPO market, but lacks many of the other capabilities—such as bond, foreign-exchange, and commodities trading—that make New York and London global financial powerhouses.

“A crucial contributory factor in the financial centres’ development over the last two centuries, and even longer,” writes Cassis, “is the arrival of new talent to replenish their energy and their capacity to innovate.” All in all, most places in Asia and the Middle East are still not as inviting to foreign professionals as New York or London. Tokyo is a wonderful city, but Japan remains among the least open of the advanced economies, and admits fewer immigrants than any other member of the Organization for Economic Cooperation and Development, a group of 30 market-oriented democracies. Singapore remains for the time being a top-down, socially engineered society. Dubai placed 44th in a recent ranking of global financial centers, near Edinburgh, Bangkok, Lisbon, and Prague. New York’s openness to talent and its critical mass of it—in and outside of finance and banking—will ensure that it remains a global financial center.

In the short run, the most troubling question for New York is not how much of its finance industry will move to other places, but how much will simply vanish altogether. At the height of the recent bubble, Greater New York depended on the financial sector for roughly 22 percent of local wages. But most economists agree that by then the financial economy had become bloated and overdeveloped. Thomas Philippon, a finance professor at New York University, reckons that nationally, the share of GDP coming from finance will probably be reduced from its recent peak of 8.3 percent to perhaps 7 percent—I suspect it may fall farther, to perhaps as little as 5 percent, roughly its contribution a generation ago. In either case, it will be a big reduction, and a sizable portion of it will come out of Manhattan.

Lean times undoubtedly lie ahead for New York. But perhaps not as lean as you’d think—and certainly not as lean as those that many lesser financial outposts are likely to experience. Financial positions account for only about 8 percent of the New York area’s jobs, not too far off the national average of 5.5 percent. By contrast, they make up 28 percent of all jobs in Bloomington-Normal, Illinois; 18 percent in Des Moines; 13 percent in Hartford; 10 percent in both Sioux Falls, South Dakota, and Charlotte, North Carolina. Omaha, Nebraska; Macon, Georgia; and Columbus, Ohio, all have a greater percentage of population working in the financial sector than New York does.

New York is much, much more than a financial center. It has been the nation’s largest city for roughly two centuries, and today sits in America’s largest metropolitan area, as the hub of the country’s largest mega-region. It is home to a diverse and innovative economy built around a broad range of creative industries, from media to design to arts and entertainment. It is home to high-tech companies like Bloomberg, and boasts a thriving Google outpost in its Chelsea neighborhood. Elizabeth Currid’s book, The Warhol Economy, provides detailed evidence of New York’s diversity. Currid measured the concentration of different types of jobs in New York relative to their incidence in the U.S. economy as a whole. By this measure, New York is more of a mecca for fashion designers, musicians, film directors, artists, and—yes—psychiatrists than for financial professionals.

The great urbanist Jane Jacobs was among the first to identify cities’ diverse economic and social structures as the true engines of growth. Although the specialization identified by Adam Smith creates powerful efficiency gains, Jacobs argued that the jostling of many different professions and different types of people, all in a dense environment, is an essential spur to innovation—to the creation of things that are truly new. And innovation, in the long run, is what keeps cities vital and relevant.

In this sense, the financial crisis may ultimately help New York by reenergizing its creative economy. The extraordinary income gains of investment bankers, traders, and hedge-fund managers over the past two decades skewed the city’s economy in some unhealthy ways. In 2005, I asked a top-ranking official at a major investment bank whether the city’s rising real-estate prices were affecting his company’s ability to attract global talent. He responded simply: “We are the cause, not the effect, of the real-estate bubble.” (As it turns out, he was only half right.) Stratospheric real-estate prices have made New York less diverse over time, and arguably less stimulating. When I asked Jacobs some years ago about the effects of escalating real-estate prices on creativity, she told me, “When a place gets boring, even the rich people leave.” With the hegemony of the investment bankers over, New York now stands a better chance of avoiding that sterile fate.

America’s “Fast” Cities: Crisis and Reinvention

In his 2005 book, The World Is Flat, Thomas Friedman argues, essentially, that the global economic playing field has been leveled, and that anyone, anywhere, can now innovate, produce, and compete on a par with, say, workers in Seattle or entrepreneurs in Silicon Valley. But this argument isn’t quite right, and doesn’t accurately describe the evolution of the global economy in recent years.

In fact, as I described in an earlier article for this magazine (“The World Is Spiky,” October 2005 [link opens PDF]), place still matters in the modern economy—and the competitive advantage of the world’s most successful city-regions seems to be growing, not shrinking. To understand how the current crisis is likely to affect different places in the United States, it’s important to understand the forces that have been slowly remaking our economic landscape for a generation or more.

Worldwide, people are crowding into a discrete number of mega-regions, systems of multiple cities and their surrounding suburban rings like the Boston–New York–Washington Corridor. In North America, these mega-regions include SunBelt centers like the Char-Lanta Corridor, Northern and Southern California, the Texas Triangle of Houston–San Antonio–Dallas, and Southern Florida’s Tampa-Orlando-Miami area; the Pacific Northwest’s Cascadia, stretching from Portland through Seattle to Vancouver; and both Greater Chicago and Tor-Buff-Chester in the old Rust Belt. Internationally, these mega-regions include Greater London, Greater Tokyo, Europe’s Am-Brus-Twerp, China’s Shanghai-Beijing Corridor, and India’s Bangalore-Mumbai area. Economic output is ever-more concentrated in these places as well. The world’s 40 largest mega-regions, which are home to some 18 percent of the world’s population, produce two-thirds of global economic output and nearly 9 in 10 new patented innovations.

Some (though not all) of these mega-regions have a clear hub, and these hubs are likely to be better buffered from the crash than most cities, because of their size, diversity, and regional role. Chicago has emerged as a center for industrial management and has rolled up many of the functions, such as finance and law, once performed in smaller midwestern centers. Los Angeles has a broad, diverse economy with global strength in media and entertainment. Miami, which is being hit hard by the collapse of the real-estate bubble, nonetheless remains the commercial center for the large South Florida mega-region, and a major financial center for Latin America. Each of these places is the financial and commercial core of a large mega-region with tens of millions of people and hundreds of billions of dollars in output. That’s not going to change as a result of the crisis.

Along with the rise of mega-regions, a second phenomenon is also reshaping the economic geography of the United States and the world. The ability of different cities and regions to attract highly educated people—or human capital—has diverged, according to research by the Harvard economists Edward Glaeser and Christopher Berry, among others. Thirty years ago, educational attainment was spread relatively uniformly throughout the country, but that’s no longer the case. Cities like Seattle, San Francisco, Austin, Raleigh, and Boston now have two or three times the concentration of college graduates of Akron or Buffalo. Among people with postgraduate degrees, the disparities are wider still. The geographic sorting of people by ability and educational attainment, on this scale, is unprecedented.

The University of Chicago economist and Nobel laureate Robert Lucas declared that the spillovers in knowledge that result from talent-clustering are the main cause of economic growth. Well-educated professionals and creative workers who live together in dense ecosystems, interacting directly, generate ideas and turn them into products and services faster than talented people in other places can. There is no evidence that globalization or the Internet has changed that. Indeed, as globalization has increased the financial return on innovation by widening the consumer market, the pull of innovative places, already dense with highly talented workers, has only grown stronger, creating a snowball effect. Talent-rich ecosystems are not easy to replicate, and to realize their full economic value, talented and ambitious people increasingly need to live within them.

Big, talent-attracting places benefit from accelerated rates of “urban metabolism,” according to a pioneering theory of urban evolution developed by a multidisciplinary team of researchers affiliated with the SantaFe Institute. The rate at which living things convert food into energy—their metabolic rate—tends to slow as organisms increase in size. But when the Santa Fe team examined trends in innovation, patent activity, wages, and GDP, they found that successful cities, unlike biological organisms, actually get faster as they grow. In order to grow bigger and overcome diseconomies of scale like congestion and rising housing and business costs, cities must become more efficient, innovative, and productive. The researchers dubbed the extraordinarily rapid metabolic rate that successful cities are able to achieve “super-linear” scaling. “By almost any measure,” they wrote, “the larger a city’s population, the greater the innovation and wealth creation per person.” Places like New York with finance and media, Los Angeles with film and music, and Silicon Valley with hightech are all examples of high-metabolism places.

Metabolism and talent-clustering are important to the fortunes of U.S. city-regions in good times, but they’re even more so when times get tough. It’s not that “fast” cities are immune to the failure of businesses, large or small. (One of the great lessons of the 1873 crisis—and of this one so far—is that when credit freezes up and a long slump follows, companies can fail unpredictably, no matter where they are.) It’s that unlike many other places, they can overcome business failures with relative ease, reabsorbing their talented workers, growing nascent businesses, founding new ones.

Economic crises tend to reinforce and accelerate the underlying, long-term trends within an economy. Our economy is in the midst of a fundamental long-term transformation—similar to that of the late 19th century, when people streamed off farms and into new and rising industrial cities. In this case, the economy is shifting away from manufacturing and toward idea-driven creative industries—and that, too, favors America’s talent-rich, fast-metabolizing places.

The Last Crisis of the Factory Towns

Sadly and unjustly, the places likely to suffer most from the crash—especially in the long run—are the ones least associated with high finance. While the crisis may have begun in New York, it will likely find its fullest bloom in the interior of the country—in older, manufacturing regions whose heydays are long past and in newer, shallow-rooted Sun Belt communities whose recent booms have been fueled in part by real-estate speculation, overdevelopment, and fictitious housing wealth. These typically less affluent places are likely to become less wealthy still in the coming years, and will continue to struggle long after the mega-regional hubs and creative cities have put the crisis behind them.

The Rust Belt in particular looks likely to shed vast numbers of jobs, and some of its cities and towns, from Cleveland to St. Louis to Buffalo to Detroit, will have a hard time recovering. Since 1950, the manufacturing sector has shrunk from 32 percent of nonfarm employment to just 10 percent. This decline is the result of long-term trends—increasing foreign competition and, especially, the relentless replacement of people with machines—that look unlikely to abate. But the job losses themselves have proceeded not steadily, but rather in sharp bursts, as recessions have killed off older plants and resulted in mass layoffs that are never fully reversed during subsequent upswings.

In November, nationwide unemployment in manufacturing and production occupations was already 9.4 percent. Compare that with the professional occupations, where it was just a little over 3 percent. According to an analysis done by Michael Mandel, the chief economist at BusinessWeek, jobs in the “tangible” sector—that is, production, construction, extraction, and transport—declined by nearly 1.8 million between December 2007 and November 2008, while those in the intangible sector—what I call the “creative class” of scientists, engineers, managers, and professionals—increased by more than 500,000. Both sorts of jobs are regionally concentrated. Paul Krugman has noted that the worst of the crisis, so far at least, can be seen in a “Slump Belt,” heavy with manufacturing centers, running from the industrial Midwest down into the Carolinas. Large swaths of the Northeast, with its professional and creative centers, have been better insulated.

Perhaps no major city in the U.S. today looks more beleaguered than Detroit, where in October the average home price was $18,513, and some 45,000 properties were in some form of foreclosure. A recent listing of tax foreclosures in Wayne County, which encompasses Detroit, ran to 137 pages in the Detroit Free Press. The city’s public school system, facing a budget deficit of $408 million, was taken over by the state in December; dozens of schools have been closed since 2005 because of declining enrollment. Just 10 percent of Detroit’s adult residents are college graduates, and in December the city’s jobless rate was 21 percent.

To say the least, Detroit is not well positioned to absorb fresh blows. The city has of course been declining for a long time. But if the area’s auto headquarters, parts manufacturers, and remaining auto-manufacturing jobs should vanish, it’s hard to imagine anything replacing them.

When work disappears, city populations don’t always decline as fast as you might expect. Detroit, astonishingly, is still the 11th-largest city in the U.S. “If you no longer can sell your property, how can you move elsewhere?” said Robin Boyle, an urban-planning professor at Wayne State University, in a December Associated Press article. But then he answered his own question: “Some people just switch out the lights and leave—property values have gone so low, walking away is no longer such a difficult option.”

Perhaps Detroit has reached a tipping point, and will become a ghost town. I’d certainly expect it to shrink faster in the next few years than it has in the past few. But more than likely, many people will stay—those with no means and few obvious prospects elsewhere, those with close family ties nearby, some number of young professionals and creative types looking to take advantage of the city’s low housing prices. Still, as its population density dips further, the city’s struggle to provide services and prevent blight across an ever-emptier landscape will only intensify.

That’s the challenge that many Rust Belt cities share: managing population decline without becoming blighted. The task is doubly difficult because as the manufacturing industry has shrunk, the local high-end services—finance, law, consulting—that it once supported have diminished as well, absorbed by bigger regional hubs and globally connected cities. In Chicago, for instance, the country’s 50 biggest law firms grew by 2,130 lawyers from 1984 to 2006, according to William Henderson and Arthur Alderson of Indiana University. Throughout the rest of the Midwest, these firms added a total of just 169 attorneys. Jones Day, founded in 1893 and today one of the country’s largest law firms, no longer considers its Cleveland office “headquarters”—that’s in Washington, D.C.—but rather its “founding office.”

Many second-tier midwestern cities have tried to reinvent themselves in different ways, with varying degrees of success. Pittsburgh, for instance, has sought to reimagine itself as a high-tech center, and has met with more success than just about anywhere else. Still, its population has declined from a high of almost 700,000 in the mid-20th century to roughly 300,000 today. There will be fewer manufacturing jobs on the other side of the crisis, and the U.S. economic landscape will be more uneven—“spikier”—as a result. Many of the old industrial centers will be further diminished, perhaps permanently so.

That’s not to say that every factory town is locked into decline. You need only look at the geographic pattern of December’s Senate vote on the auto bailout to realize that some places, mostly in the South, would benefit directly from the bankruptcy of GM or Chrysler and the closure of auto plants in the Rust Belt. Georgetown, Kentucky; Smyrna, Tennessee; Canton, Mississippi: these are a few of the many small cities, stretching from South Carolina and Georgia all the way to Texas, that have benefited from the establishment, over the years, of plants that manufacture foreign cars. Those benefits could grow if the Big Three were to become, say, the Big Two.

This phenomenon, a sort of lottery whereby some places win merely by outlasting others, will not be limited to towns built around automobiles, or even around manufacturing. As the recession continues and large companies in a variety of industries fail, their remaining competitors may grow stronger, along with the places where those competitors are situated. Charlotte, North Carolina, offers an interesting case study. The financial crisis left one of the city’s two big banks, Wachovia, ailing; this fall, Wachovia was acquired by San Francisco–based Wells Fargo, in a deal that will cost the city many thousands of jobs. But things could have been much worse; the deal also preserved many jobs. What’s more, at roughly the same time, Bank of America, Charlotte’s other large bank (and the biggest bank in the U.S.) bought Merrill Lynch for pennies on the dollar.

A business truism holds that when your competitors are retrenching, it’s a great time to grow your market share. Deborah Strumsky, an economist at the University of North Carolina at Charlotte, told me she believes that in the end, both Charlotte’s banking industry and Charlotte itself will emerge from the crisis all the stronger: “The Wells Fargo deal has saved thousands of jobs by keeping Wachovia afloat. More importantly, Bank of America has taken to the banking crisis like a shopaholic with a new credit card; it has been bargain-hunting and cutting some astonishing deals. Bank of America will come out the other side far better than in any fantasy it might have entertained previously.”

In recent years, Charlotte’s leaders have made some smart decisions about how to attract businesses and professionals, enabling the city to grow into the nation’s second-largest traditional banking center; in the lottery of business failure and consolidation, it was well positioned to win. But it was also lucky, and last fall, it escaped losing, big-time, by no more than a hair’s breadth. Overall, the roster of places that benefit from the failure of their champions’ rivals will probably be pretty short, and the names on the roster somewhat unpredictable. Especially among cities built around declining industries, more places will be weakened than strengthened; as with all lotteries, most players will lose.

Cities in the Sand: The End of Easy Expansion

For a generation or more, no swath of the United States has grown more madly than the Sun Belt. Of course, the area we call the “Sun Belt” is vast, and the term is something of a catch-all: the cities and metropolitan areas within it have grown for disparate reasons. Los Angeles is a mecca for media and entertainment; San Jose and Austin developed significant, innovative high-tech industries; Houston became a hub for energy production; Nashville developed a unique niche in low-cost music recording and production; Charlotte emerged as a center for cost-effective banking and low-end finance.

But in the heady days of the housing bubble, some Sun Belt cities—Phoenix and Las Vegas are the best examples—developed economies centered largely on real estate and construction. With sunny weather and plenty of flat, empty land, they got caught in a classic boom cycle. Although these places drew tourists, retirees, and some industry—firms seeking bigger footprints at lower costs—much of the cities’ development came from, well, development itself. At a minimum, these places will take a long, long time to regain the ground they’ve recently lost in local wealth and housing values. It’s not unthinkable that some of them could be in for an extended period of further decline.

To an uncommon degree, the economic boom in these cities was propelled by housing appreciation: as prices rose, more people moved in, seeking inexpensive lifestyles and the opportunity to get in on the real-estate market where it was rising, but still affordable. Local homeowners pumped more and more capital out of their houses as well, taking out home-equity loans and injecting money into the local economy in the form of home improvements and demand for retail goods and low-level services. Cities grew, tax coffers filled, spending continued, more people arrived. Yet the boom itself neither followed nor resulted in the development of sustainable, scalable, highly productive industries or services. It was fueled and funded by housing, and housing was its primary product. Whole cities and metro regions became giant Ponzi schemes.

Phoenix, for instance, grew from 983,403 people in 1990 to 1,552,259 in 2007. One of its suburbs, Mesa, now has nearly half a million residents, more than Pittsburgh, Cleveland, or Miami. As housing starts and housing prices rose, so did tax revenues, and a major capital-spending boom occurred throughout the Greater Phoenix area. Arizona State University built a new downtown Phoenix campus, and the city expanded its convention center and constructed a 20-mile light-rail system connecting Phoenix, Mesa, and Tempe.

And then the bubble burst. From October 2007 through October 2008, the Phoenix area registered the largest decline in housing values in the country: 32.7 percent. (Las Vegas was just a whisker behind, at 31.7 percent. Housing in the New York region, by contrast, fell by just 7.5 percent over the same period.) Overstretched and overbuilt, the region is now experiencing a fiscal double whammy, as its many retirees—some 21 percent of its residents are older than 55—have seen their retirement savings decimated. Mortgages Limited, the state’s largest private commercial lender, filed for bankruptcy last summer. The city is running a $200 million budget deficit, which is only expected to grow. Last fall, the city government petitioned for federal funds to help it deal with the financial crisis. “We had a big bubble here, and it burst,” Anthony Sanders, a professor of economics and finance at ASU, told USA Today in December. “We’ve taken Kevin Costner’s Field of Dreams and now it’s Field of Screams. If you build it, nobody comes.”

Will people wash out of these places as fast as they washed in, leaving empty sprawl and all the ills that accompany it? Will these cities gradually attract more businesses and industries, allowing them to build more-diverse and more-resilient economies? Or will they subsist on tourism—which may be meager for quite some time—and on the Social Security checks of their retirees? No matter what, their character and atmosphere are likely to change radically.

The Limits of Suburban Growth

Every phase or epoch of capitalism has its own distinct geography, or what economic geographers call the “spatial fix” for the era. The physical character of the economy—the way land is used, the location of homes and businesses, the physical infrastructure that ties everything together—shapes consumption, production, and innovation. As the economy grows and evolves, so too must the landscape.

To a surprising degree, the causes of this crash are geographic in nature, and they point out a whole system of economic organization and growth that has reached its limit. Positioning the economy to grow strongly in the coming decades will require not just fiscal stimulus or industrial reform; it will require a new kind of geography as well, a new spatial fix for the next chapter of American economic history.

Suburbanization was the spatial fix for the industrial age—the geographic expression of mass production and the early credit economy. Henry Ford’s automobiles had been rolling off assembly lines since 1913, but “Fordism,” the combination of mass production and mass consumption to create national prosperity, didn’t emerge as a full-blown economic and social model until the 1930s and the advent of Roosevelt’s New Deal programs.

Before the Great Depression, only a minority of Americans owned a home. But in the 1930s and ’40s, government policies brought about longer-term mortgages, which lowered payments and enabled more people to buy a house. Fannie Mae was created to purchase those mortgages and lubricate the system. And of course the tax deduction on mortgage-interest payments (which had existed since 1913, when the federal income-tax system was created) privileged house purchases over other types of spending. Between 1940 and 1960, the homeownership rate rose from 44 percent to 62 percent.

Demand for houses was symbiotic with demand for cars, and both were helped along by federal highway construction, among other infrastructure projects that subsidized a new suburban lifestyle and in turn fueled demand for all manner of household goods. More recently, innovations in finance like adjustable-rate mortgages and securitized subprime loans expanded homeownership further and kept demand high. By 2004, a record 69.2 percent of American families owned their home.

For the generation that grew up during the Depression and was inclined to pinch pennies, policies that encouraged freer spending were sensible enough—they allowed the economy to grow faster. But as younger generations, weaned on credit, followed, and credit availability increased, the system got out of hand. Housing, meanwhile, became an ever-more-central part of the American Dream: for many people, as the recent housing bubble grew, owning a home came to represent not just an end in itself, but a means to financial independence.

On one level, the crisis has demonstrated what everyone has known for a long time: Americans have been living beyond their means, using illusory housing wealth and huge slugs of foreign capital to consume far more than we’ve produced. The crash surely signals the end to that; the adjustment, while painful, is necessary.

But another crucial aspect of the crisis has been largely overlooked, and it might ultimately prove more important. Because America’s tendency to overconsume and under-save has been intimately intertwined with our postwar spatial fix—that is, with housing and suburbanization—the shape of the economy has been badly distorted, from where people live, to where investment flows, to what’s produced. Unless we make fundamental policy changes to eliminate these distortions, the economy is likely to face worsening handicaps in the years ahead.

Suburbanization—and the sprawling growth it propelled—made sense for a time. The cities of the early and mid-20th century were dirty, sooty, smelly, and crowded, and commuting from the first, close-in suburbs was fast and easy. And as manufacturing became more technologically stable and product lines matured during the postwar boom, suburban growth dovetailed nicely with the pattern of industrial growth. Businesses began opening new plants in green-field locations that featured cheaper land and labor; management saw no reason to continue making now-standardized products in the expensive urban locations where they’d first been developed and sold. Work was outsourced to then-new suburbs and the emerging areas of the Sun Belt, whose connections to bigger cities by the highway system afforded rapid, low-cost distribution. This process brought the Sun Belt economies (which had lagged since the Civil War) into modern times, and sustained a long boom for the United States as a whole.

But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required.

The Next Economic Landscape

The housing bubble was the ultimate expression, and perhaps the last gasp, of an economic system some 80 years in the making, and now well past its “sell-by” date. The bubble encouraged massive, unsustainable growth in places where land was cheap and the real-estate economy dominant. It encouraged low-density sprawl, which is ill-fitted to a creative, postindustrial economy. And not least, it created a workforce too often stuck in place, anchored by houses that cannot be profitably sold, at a time when flexibility and mobility are of great importance.

So how do we move past the bubble, the crash, and an aging, obsolescent model of economic life? What’s the right spatial fix for the economy today, and how do we achieve it?

The solution begins with the removal of homeownership from its long-privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage-interest rates) distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology, or software, or alternative energy—the sectors and products that could drive U.S. growth and exports in the coming years. Artificial demand for bigger houses also skews residential patterns, leading to excessive low-density suburban growth. The measures that prop up this demand should be eliminated.

If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

And while homeownership has some social benefits—a higher level of civic engagement is one—it is costly to the economy. The economist Andrew Oswald has demonstrated that in both the United States and Europe, those places with higher homeownership rates also suffer from higher unemployment. Homeownership, Oswald found, is a more important predictor of unemployment than rates of unionization or the generosity of welfare benefits. Too often, it ties people to declining or blighted locations, and forces them into work—if they can find it—that is a poor match for their interests and abilities.

As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.

The foreclosure crisis creates a real opportunity here. Instead of resisting foreclosures, the government should seek to facilitate them in ways that can minimize pain and disruption. Banks that take back homes, for instance, could be required to offer to rent each home to the previous homeowner, at market rates—which are typically lower than mortgage payments—for some number of years. (At the end of that period, the former homeowner could be given the option to repurchase the home at the prevailing market price.) A bigger, healthier rental market, with more choices, would make renting a more attractive option for many people; it would also make the economy as a whole more flexible and responsive.

Next, we need to encourage growth in the regions and cities that are best positioned to compete in the coming decades: the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them—places like Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle.

Whatever our government policies, the coming decades will likely see a further clustering of output, jobs, and innovation in a smaller number of bigger cities and city-regions. But properly shaping that growth will be one of the government’s biggest challenges. In part, we need to ensure that key cities and regions continue to circulate people, goods, and ideas quickly and efficiently. This in itself will be no small task; increasing congestion threatens to slowly sap some of these city-regions of their vitality.

Just as important, though, we need to make elite cities and key mega-regions more attractive and affordable for all of America’s classes, not just the upper crust. High housing costs in these cities and in the more convenient suburbs around them, along with congested sprawl farther afield, have conspired to drive lower-income Americans away from these places over the past 30 years. This is profoundly unhealthy for our society.

In his forthcoming book, The Wealth of Cities, my University of Toronto colleague Chris Kennedy shows that only wholesale structural changes, from major upgrades in infrastructure to new housing patterns to big shifts in consumption, allow places to recover from severe economic crises and to resume rapid expansion. London laid the groundwork for its later commercial dominance by changing its building code and widening its streets after the catastrophic fire of 1666. The United States rose to economic preeminence by periodically developing entirely new systems of infrastructure—from canals and railroads to modern water-and-sewer systems to federal highways. Each played a major role in shaping and enabling whole eras of growth.

The Obama administration has declared its intention to open the federal government’s pocketbook wide to help us get through this recession, and infrastructure spending seems poised to play a key role. Done right, such spending could position the United States for the next round of growth. But that will entail more than patching up roads and bridges.

If there is one constant in the history of capitalist development, it is the ever-more-intensive use of space. Today, we need to begin making smarter use of both our urban spaces and the suburban rings that surround them—packing in more people, more affordably, while at the same time improving their quality of life. That means liberal zoning and building codes within cities to allow more residential development, more mixed-use development in suburbs and cities alike, the in-filling of suburban cores near rail links, new investment in rail, and congestion pricing for travel on our roads. Not everyone wants to live in city centers, and the suburbs are not about to disappear. But we can do a much better job of connecting suburbs to cities and to each other, and allowing regions to grow bigger and denser without losing their velocity.

Finally, we need to be clear that ultimately, we can’t stop the decline of some places, and that we would be foolish to try. Places like Pittsburgh have shown that a city can stay vibrant as it shrinks, by redeveloping its core to attract young professionals and creative types, and by cultivating high-growth services and industries. And in limited ways, we can help faltering cities to manage their decline better, and to sustain better lives for the people who stay in them.

But different eras favor different places, along with the industries and lifestyles those places embody. Band-Aids and bailouts cannot change that. Neither auto-company rescue packages nor policies designed to artificially prop up housing prices will position the country for renewed growth, at least not of the sustainable variety. We need to let demand for the key products and lifestyles of the old order fall, and begin building a new economy, based on a new geography.

What will this geography look like? It will likely be sparser in the Midwest and also, ultimately, in those parts of the Southeast that are dependent on manufacturing. Its suburbs will be thinner and its houses, perhaps, smaller. Some of its southwestern cities will grow less quickly. Its great mega-regions will rise farther upward and extend farther outward. It will feature a lower rate of homeownership, and a more mobile population of renters. In short, it will be a more concentrated geography, one that allows more people to mix more freely and interact more efficiently in a discrete number of dense, innovative mega-regions and creative cities. Serendipitously, it will be a landscape suited to a world in which petroleum is no longer cheap by any measure. But most of all, it will be a landscape that can accommodate and accelerate invention, innovation, and creation—the activities in which the U.S. still holds a big competitive advantage.

The Stanford economist Paul Romer famously said, “A crisis is a terrible thing to waste.” The United States, whatever its flaws, has seldom wasted its crises in the past. On the contrary, it has used them, time and again, to reinvent itself, clearing away the old and making way for the new. Throughout U.S. history, adaptability has been perhaps the best and most quintessential of American attributes. Over the course of the 19th century’s Long Depression, the country remade itself from an agricultural power into an industrial one. After the Great Depression, it discovered a new way of living, working, and producing, which contributed to an unprecedented period of mass prosperity. At critical moments, Americans have always looked forward, not back, and surprised the world with our resilience. Can we do it again?