Friday News Analysis — November 9, 2018: Civility in Divided Government; Midterm Wrap-up; New Iran Sanctions; and Stories You May Have Missed…

Happy Friday! Like many of you, we had a late night on Tuesday watching the midterm election returns come in. With the Democratic Party taking the majority in the House of Representatives and an expanded Republican majority in a Senate that will no longer include two of President Trump’s most visible critics in the GOP, it is clear that the political dynamics of the next two years will be very different than the last two.

This week in the CSPC News Analysis, we are taking a look at what the midterm elections will mean here in Washington. CSPC’s CEO Glenn Nye and Senior Fellow James Kitfield wrote in The Hill last weekend about how, regardless of the outcome of any particular election, advocates for political reform are gaining power at the grassroots level because the American people want effective governance, not partisan rancor.

We received a lot of helpful feedback from you last week regarding the relaunch of the CSPC Friday News Analysis. We are working to make this a more interesting and helpful resource for you, so let us know what you like or don’t like. Send emails or questions to dan.mahaffee@thepresidency.org or michael.stecher@thepresidency.org or reach out to us on Twitter @hoyadan or @stchmbl.

In this week’s analysis:

  • Glenn Nye argues that members of both parties and both houses will need to emphasize cooperation and civility in order to address the problems they promised to solve in their campaign
  • Dan Mahaffee takes a deeper dive into the results themselves to find out what they mean and how the Trump administration is responding to the new political reality
  • Michael Stecher looks abroad to the new batch of sanctions placed on Iran after the Trump administration’s decision to breach the Iran nuclear deal
  • We look at stories that you might have missed, including a European leader “feeling his oats” and an interstellar object that is almost certainly not an alien space probe

If It Is to Serve the American People, Divided Government Needs Civility

Glenn Nye

With the results of Tuesday’s midterms and the resulting divided government, the political fault lines of our nation were laid bare. Democrats and Republicans both have grounds to declare victory, yet neither will be able to achieve anything further if they cannot work with the other party.

The genius of our founders created a system where civility and cooperation are necessary for lasting accomplishment. In our history, divided government has demonstrated that extreme partisanship only brings deadlock, while compromise can bring about success. In reading CSPC’s Triumphs and Tragedies of the Modern Congress, it is easy to see that in recent history, welfare reform, immigration reform, entitlement reform, and balanced budgets are just a handful of the great accomplishments that took place under a divided government.

The next two years can be wasted posturing for 2020. They can also be an opportunity for leaders on both sides of the aisle to step forward and deliver what the American people need. Our economy is strong, but the benefits are far too uneven and its infrastructure crumbles before our eyes. We are a beacon to the oppressed and industrious from around the world, but our immigration policies have failed to adapt to the times. Our military is unparalleled, but adversaries seek to weaken our advantage and unresolved conflicts around the world demonstrate the limits of force alone. Our universities and companies drive exploration and innovation on almost every imaginable frontier, yet we saddle future generations with growing debts — personal, fiscal, and environmental.

We do not have two years to stand pat on these issues. If either party is to deliver for the country, they must compromise with the other. With that inexorable truth, we hope that they find common ground instead of falling into the trap of the permanent campaign. For if they do, they will have ignored the countless Americans across the country who also voted for a range of reforms — from redistricting to campaign finance — who seek to shake up the incentives and structure of the political status quo to reorient politics to prioritize results over rhetoric.


Midterms Shake Up Capitol Hill; Trump Begins to Shake Up Administration

Dan Mahaffee

An estimated 113 million Americans earned one of these this week

With few exceptions, Tuesday’s results are clear. In the House, dissatisfaction with President Trump and the Republican Congress from educated voters, women, and minorities powered Democrats to victory. At the same time, a Red State-heavy Senate map allowed Republicans to take advantage of geography and gain seats, despite close calls in Texas, an unofficial lead in Arizona, and the Florida Senate race now headed to an automatic recount.

The election provided some historical milestones as well, including the highest turnout in a midterm election since 1966, more than 100 women elected to the House for the first time, the first openly gay governor and the first Muslim-American women elected to Congress.

At the same time, the results are a testament to the growing geographical and regional divides in America. Whereas the cities and suburbs trended bluer with increased turnout from women and young voters, the Republican successes were driven by increased turnout in exurban and rural areas where the Trump base came out in force. For Democrats, the issues of healthcare protections for preexisting conditions and the prospect of a Congressional check on the Trump presidency attracted swing voters to their side. For Republicans, continued ire over the Kavanaugh hearings and President Trump’s hard line on immigration drove their base turnout.

While there has been some talk of cooperation and bipartisanship — especially surrounding a potential infrastructure measure — there are already warning signs of parties settling in for partisan deadlock until 2020. President Trump has begun to signal that he will not tolerate extensive Congressional oversight of his administration, and Senate Majority Leader Mitch McConnell coined a new term for the political lexicon, calling potential aggressive oversight “presidential harassment.

The “resignation” of Attorney General Jeff Sessions has only complicated the post-midterm scene by quickly turning the narrative away from the shake-up on Capitol Hill to the long-speculated post-midterm shakeup of key figures in the Trump administration. The prospect that Special Counsel Mueller’s investigation is now imperiled during the lame duck final weeks of 2018 only heightens the rhetoric on both sides of the aisle — especially when it comes to resuming the House Intelligence Committee investigation into the 2016 election.

While the Attorney General’s firing came more rapidly than many expected, there is speculation about other potential departures from the Trump Administration, including Chief of Staff John Kelly and Secretary of Defense James Mattis. Over the coming weeks, these shakeups will demonstrate just how empowered President Trump feels to cast aside many of the figures who had served as “guardrails” for the past two years. With potential deadlock in Washington, President Trump may seek, as many past presidents have, to focus on foreign policy. He will still have the Republican Senate to continue to reshape the judiciary and confirm replacements for dismissed Cabinet officials.

Looking ahead to years of divided government, President Trump may very well be looking to push ahead with what he can accomplish with Executive Power and the Republican-controlled Senate, setting the House up as a foil in the narrative he will present to voters in 2020.


Iran Sanctions Are Back but to What End?

Michael Stecher

President Trump Signs Order Re-imposing Sanctions, US Department of State

On Monday, the Trump administration announced the re-imposition of sanctions against Iran that had been limited or waived under the Joint Comprehensive Plan of Action (JCPOA), better known as the Iran Nuclear Deal. This announcement followed the decision by President Trump to declare the United States in breach of the JCPOA on May 8 and his instruction to the executive branch to re-impose all sanctions on Iran within 180 days. According to the Treasury Department, the new sanctions will disrupt a “broad range of malign activities” in the interest of pushing the Islamic Republic to negotiate a comprehensive deal that would cover Iran’s support for terrorist groups, ballistic missiles, and nuclear weapons program.

These sanctions prohibit US persons (individuals or corporations) within the United States from interacting with more than 700 named entities, including Iranian banks linked to elements of the Iranian regime, Iranian shipping and oil tankers, the Atomic Energy Organization of Iran, the Iranian national airline, as well as scores of people and organizations involved in Iran’s shipping and energy sectors. The sanctions also bar the named individuals and organizations from large parts of the global financial system because the Treasury Department considers US Dollar-denominated transactions to “transit the United States.”

Despite rhetoric that suggested that the United States would cut Iran off from the global oil market, the US government did grant 180-day exemptions for eight major buyers of Iranian crude: India, China, Taiwan, Japan, South Korea, Turkey, Greece, and Italy. China and India both continued to import Iranian oil during the pre-JCPOA sanctions regime and are likely to continue to do so in the future.Turkey has also said they will not comply with new sanctions. Russia has set itself up to benefit from the market disruption through the purchase of large quantities of Iranian crude — probably at below-market prices due to the sanctions — while stealing Iran’s traditional customers and profiting from the higher prices on the global market.

In order to implement the restored sanctions, the United States government leaned heavily on the Belgium-based SWIFT network to cut off Iranian banks. The details of SWIFT’s participation are not yet known, but as recently as last week, it was unclear if it would comply with US sanctions at all. SWIFT is one of the most important but little-understood corners of the financial system that facilitates payment instructions across borders. Without access to SWIFT messages, corresponding banking relationships with Iranian firms will be extremely difficult to execute and international companies will tend to limit their business dealings there.

SWIFT’s announcement does not specifically state that it is complying with US sanctions; after President Trump’s decision to breach the terms of the JCPOA, the European Union passed a law that prohibited European companies from complying with US sanctions against Iran that violated the nuclear deal. The European Union, along with China and Russia, remain committed to the JCPOA and have expressed strong opposition to the Trump administration’s decision. In theory, this puts SWIFT in a difficult bind: if they comply with the sanctions, they violate EU law; if they fail to comply, they risk secondary sanctions from the United States that could put the organization out of business. SWIFT’s decision highlights two things: that they fear the power of US regulators and that the showdown between Washington and Brussels over Iran policy may be deferred but is still lurking.

One thing that could very well trigger this crisis is a special purpose vehicle (SPV) currently being considered by the EU to facilitate Iranian trade with Europe. The SPV might allow Iran to offset oil and gas sales against the purchases of goods and services so that no net payments need to be made and potentially skittish banks do not need to be involved. It might also directly access the central bank of a large EU member on the theory that the US would not sanction such a major pillar of the global financial system. This question reminds me of the scene from Butch Cassidy and the Sundance Kid where Robert Redford tells Paul Newman that they cannot possibly jump from a high cliff into a river because he does not know how to swim. In this case, the fall that would kill them is the risk of a catastrophic break between Washington and the political retaliation that could fall on whichever EU member agrees to host the SPV. For what it is worth, however, Butch and Sundance jump, so we should be careful in potentially underestimating European resolve.

As Suzanne Maloney from the Brookings Institution points out, by following through on President Trump’s plan to re-impose sanctions, the United States has undercut the argument that the decline of American economic hegemony would prevent it from using coercive economic diplomacy unilaterally. Most of the major players do appear to be playing ball with these sanctions, at least at this point. We can, however, expect Iran to reopen its playbook for clandestine sanctions evasion, smuggling, and money laundering. This is the fight that the Trump administration wanted. They believe that economic disruption will force Iran to cry “uncle” and that fear of secondary sanctions will keep the rest of the international community in line. We have to remember, however, that there are two sets of negative outcomes and major crises that could result from this move. The European Union and others could help Iran evade sanctions, signaling their willingness to constrain American power at times of strategic disagreements, and Iran could decide that without the inducements of the JCPOA, they might want to restart their nuclear program.


News You Might Have Missed

Ukrainian Anti-Corruption Activist Dies after Acid Attack

Katherine Atherton

Kateryna Handziuk, a prominent Ukrainian anti-corruption activist, died on Sunday due to complications from a sulfuric acid attack on July 31st. She was outspoken about the corruption within Ukraine’s justice system and police departments. Five suspects, including a law enforcement officer, have been detained for their alleged involvement in the attack. A video from Hromsadske Television in September shows Ms. Handziuk in her hospital bed with burns to 30% of her body, stating “I’m sure that I look better than fairness and justice in Ukraine, because they are not being treated by anybody today.”

San Francisco Voters Approve Anti-Homelessness Ballot Measure

Charlie Cousar

San Francisco’s homelessness problem has reached a tipping point, with so-called “tent cities” springing up all across the city. The business community is split on how to address the issue, and who should pay for it. This Tuesday, 60% of San Francisco voters approved the controversial Proposition C, which will impose new taxes on big business to fund expanded social programs. The ballot measure was backed by salesforce.com CEO Marc Benioff, who spent $7 million supporting it and opposed by San Francisco’s mayor and many members of the business community, as well as citizens who argued that it serve as a magnet attracting homeless people from nearby communities. Opponents have pledged legal action to try and derail the new tax.

CIA Losses Caused by Insecure Communications Channel
Last week Yahoo News revealed that an online covert communication system used by the CIA to contact sources around the world was penetrated by the Iranian and Chinese governments between 2009 and 2013. The Iranians first discovered the communication system in 2009 as they sought to identify moles responsible for intelligence leaks that led to the Obama Administration’s discovery of a secret Iranian nuclear enrichment facility. Pulling a thread that began with Google searches, the Iranians were able to identify secret CIA websites and track users. As a result, they disrupted a CIA spy network of 30 agents. Chinese authorities similarly gained access to the system in 2011 and 2012 leading U.S. intelligence officials to conclude they received assistance from the Iranians. Yahoo’s reporting suggests that CIA officials were alerted to the systems vulnerabilities but failed to take action.

California Wildfire Intensifies Rapidly

The town of Paradise, California was completely destroyed in a hellish scene as a wildfire rapidly intensified due to extremely arid conditions and 50+ mph Santa Ana winds. Thousands were forced to rapidly flee and property damage was total as the flames swept through the area. The increased intensity and rapid expansion of this and other wildfires have highlighted concerns about the impact of climate change on life in California, as emergency management officials face the immediate challenge of containing the fire and managing the evacuation and shelter of those affected.

French President Emmanuel Macron Envisions a “European Army”

Macron has been an advocate for a European force since taking power last year, but his most recent remarks made pointed comments about how he perceives the United States in Europe. Speaking at the Verdun battlefield memorial, he said, “When I see President Trump announcing that he’s quitting a major disarmament treaty which was formed after the 1980s euro-missile crisis that hit Europe, who is the main victim? Europe and its security.” He also listed threats for which a European Army would be helpful, naming “China, Russia, and even the United States of America.”

Australia Launches Investment Fund to Compete with Chinese Largesse

Increasingly concerned about Chinese government aid to its neighbors in the Pacific, the Australian government has launched an investment fund to offer up to A$2 billion in grants and loans. Combined with the prospect of an additional A$1 billion in additional spending aid, it is a significant increase in Australian efforts to compete with Chinese influence. The investment fund is intended to improve regional infrastructure and telecommunications, as well as to build stronger ties with Pacific neighbors.

There is No Reason to Believe that Mysterious Comet Is an Alien Space Probe

Oumuamua, a comet whose high speed and odd trajectory suggest that it originated outside the solar system, is almost certainly not a space probe dispatched by extraterrestrials to observe humans, according to The Washington Post. This was a response to a preprinted article in the Astrophysical Journal that argued that it could be a “solar powered probe sent by an alien civilization.” But obviously that is what they would say.