November 15, 2010
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
November 15, 2010
It’s one of the great ironies of the post-Cold War era. During the 1980s, Afghan insurgents turned the tide against Soviet occupiers after learning, with the help of U.S. advisors and funding, how to effectively shoot down Russian helicopters. Now, battling their own domestic insurgency, Afghanistan is in the market for those very same Russian helicopters, and the United States is picking up the bill.
If all goes according to plan, Afghanistan’s air force should be fully staffed and equipped by 2016, forming a vital part of the country’s armed forces — and allowing the U.S. military to make an exit. The backbone of the air force will be over 70 Russian Mi-17 troop transport helicopters, far from the most advanced design on the market, but rugged, easily serviceable, and ideally suited to local conditions. The U.S. government is backing a deal worth upwards of $380 million to procure 21 of the new choppers from their Russian manufacturers. But buying from your former enemy is never easy, and the procurement has been mired in bureaucratic infighting and commercial protests.
The U.S. purchase of Russian helicopters dates back to Cold War intrigue, when the Pentagon and intelligence community clandestinely procured Russian equipment in order to study its capabilities and figure out how to destroy it. As the Soviet Union broke apart and the U.S. Army’s Russian helicopters emerged from the “black world,” the Army’s once secret Russian fleet found a new mission: operating as the opposing force, or OPFOR, in war games to train U.S. soldiers. Eventually, the helicopters also allowed the U.S. military to train with new NATO partners, like the Czech Republic, which used the Mi-17. After 9/11, when the United States found itself having to quickly re-equip local armies in Iraq and Afghanistan, both countries that flew Mi-17s, buying more Russian helicopters seemed like an expedient solution.
But going from buying one or two helicopters through arms dealers to buying fleets of helicopters from Russia has proved an interesting lesson in East-West procurement.
This year, the U.S. Navy was expected to select a company to broker the sale, essentially allowing competing firms — mostly Western — to bargain with Russian factories for the best price. Sikorsky, the U.S. helicopter manufacturer, initially protested the competition to the Government Accountability Office, arguing that the procurement was flawed because it wouldn’t consider a U.S. aircraft. The procurement process may now be taken over by the Aarmy, and officials are now saying there shouldn’t be any competition at all, but rather, the U.S. government should buy straight from the Russian arms agency.
“It really is in the best interest of our soldiers that we have this relationship with the Russian original equipment manufacturer, similar to how we have a relationship with Boeing for Chinook or Sikorsky for Black Hawk,” Col. Bert Vergez, the Army’s project manager for nonstandard rotary-wing aircraft (the U.S. military euphemism for Russian aircraft), told Defense News, a trade publication, in a recent interview.
But going straight to the source is not so easy. Arms purchases from Russia typically start with Rosoboronexport, Russia’s state arms exporter, which is both a state agency and a commercial enterprise. But until recently, Rosoboronexport was under sanctions for violating U.S. laws against selling weapons to Iran and Syria. That changed in May, when President Barack Obama’s administration lifted sanctions against Rosoboronexport as part of the “reset” in relations with Moscow…
November 15, 2010
Like the rest of America, New York City has been buffeted by the recession that began in December 2007. This past August, the city’s unemployment rate stood at 9.6 percent, just over the national rate of 9.5. But New York’s economy will never recover from the downturn by trying to compete with China’s labor costs or with Houston’s housing costs. Nor can the city continue to rely on finance, which came to dominate it over the last 40 years: as the sad history of Detroit illustrates, one-industry towns rarely succeed in the long run. Rather, New York’s success will depend on its ability to produce a steady stream of new products and ideas.
Indeed, studies have shown that all over the country, entrepreneurship—along with January temperature and education—is one of the three great predictors of urban success. But nowhere is that more the case than in Gotham, whose very history is a tale of entrepreneurship. To survive, New York must continue to bring forth innovators who will reinvent the city—with luck, making it more economically diverse. If they succeed, it will change as much between 2010 and 2050 as it did between 1970 and today.
Entrepreneurs have played a key role in every stage of New York’s development. During the early nineteenth century, when waterways were the lifelines of commerce, New York owed its expanding sea trade partly to natural advantages: a safe, centrally located harbor and a deep river that cut far into the American hinterland. But those advantages became important because of the vision and energy of entrepreneurs like Jeremiah Thompson, the gambling Quaker. Thompson immigrated to New York at 17 to work in the American branch of his family’s wool business. By the 1820s, he had established himself as America’s largest importer of English clothing, its largest exporter of raw cotton, and its third-largest issuer of bills of exchange.
As a global trader, Thompson was acutely aware of the shortcomings of the transatlantic ships of the time, which would stay in port until their hulls were filled with goods. (Imagine showing up at LaGuardia and having to sit around until the airline sold enough tickets to fill the entire flight to Frankfurt.) Thompson saw an opening and created the Black Ball packet line, whose ships set sail on a scheduled day every month, no matter how light their cargoes were. His innovation was a gamble, since sometimes his ships sailed with relatively empty hulls, which meant less income from the merchants who bought the space. But a virtuous circle developed: fixed schedules attracted more cargo, and more cargo made ships sailing on fixed schedules more profitable. Once Thompson was turning a profit, other packet lines, like the Yellow Ball and Swallowtail lines, entered the market. An 1827 letter to the New England Palladiumdescribed the significance of Thompson’s invention: “I consider Commerce by lines of ships, on fixed days, an invention of the age nearly as important as Steam Navigation and in its results as beneficial to New York, which has chiefly adopted it, as the Grand [Erie] Canal.”
Thanks to such innovation, the city grew great during the first half of the nineteenth century, its population rising from 33,000 in 1790 to 814,000 on the eve of the Civil War. In 1821, New York’s exports, measured in dollars, were less than 10 percent higher than Boston’s. By 1860, New York was exporting over 700 percent more than the city on the Charles.
The surging harbor traffic was important to the city not only directly but also because of the business that sprang up around the port. New York’s three largest nineteenth-century industries—sugar refining, apparel manufacturing, and printing—all benefited from the ships coming into the harbor. Again, the rise of these industries did reflect the city’s innate advantages. Sugar refining thrived, for example, because New York was the natural hub of the triangular trade that connected the northern colonies with European manufacturers and markets and with southern sugar, tobacco, and cotton farmers. Since so much sugar was already flowing into New York’s harbor, it made sense to refine sugar nearby. By 1860, 18 of America’s 39 sugar refineries were in New York.
But New York wouldn’t have become America’s sugar capital without risk-taking entrepreneurs. In the mid-eighteenth century, Isaac Roosevelt, Franklin Delano’s great-great-grandfather, started refining sugar near Wall Street. He was taking a substantial risk—sugar refineries were big factories for their time—but his investment paid off. Roosevelt later became president of the Bank of New York and a New York state assemblyman. Some suggest that the Roosevelt interest in politics began because Isaac didn’t like British sugar policies.
Roosevelt’s success foreshadowed the even more remarkable path of German immigrant William Havemeyer. Havemeyer learned the sugar trade in London and came to New York in 1799 to manage a sugar house on Pine Street, carrying a bill of exchange drawn on Isaac Roosevelt’s sugar-refining son. Havemeyer eventually broke away to form his own enormously successful firm, which his descendants would rename Domino Sugar…