Albright Says U.S. Must Overcome Loss of Arab World Trust

Former Secretary of State Madeleine Albright said the U.S. must overcome a loss of trust from Arab nations that’s developed since the Iraq war as it seeks a deal with Iran on its nuclear program.

“In many different ways, there was an erosion of trust in terms of what we were doing there,” Albright said of the Iraq war in a session yesterday at “The Year Ahead: 2014,” a two-day conference in Chicago hosted by Bloomberg LP.

The decision to invade Iraq in 2003 and U.S. handling of the wave of popular unrest known as the Arab Spring that began in late 2010 have complicated U.S. efforts to overcome Arab skepticism about American intentions on Iran, Albright said. Israel’s doubts about efforts to seek a compromise with Iran are shared by Arab allies of the U.S. such as Saudi Arabia.

“The politics here have to do with a lack of trust, and the politics there clearly do,” she said. “And this is going to be a long process.”

Albright, who was the top diplomat under President Bill Clinton, endorsed the Obama administration’s effort to seek an interim deal with Iran aimed at freezing some of the Islamic Republic’s nuclear program in exchange for a limited loosening of economic sanctions. Some members of Congress from both political parties have opposed any deal that doesn’t freeze all of Iran’s uranium enrichment.

Albright described the “segmented approach” of an interim deal as “a very important step” toward a long-term solution.

Providing Time

Joao Vale de Almeida, the European Union’s ambassador to the U.S., joined Albright in arguing for the first-step negotiations now under way in Geneva.

“You cannot have a second agreement if you don’t have a first agreement,” Vale de Almeida said at the conference, as part of a panel that sought to forecast geopolitical risk around the world next year.

Ivo Daalder, a former U.S. ambassador to NATO in the Obama administration, said Asia was the most likely hotspot for military conflicts next year because of a “fundamental mistrust” among nations such as China and Japan. The two countries have had skirmishes over territorial disputes in the South China Sea.

“Those are recipes for accidental wars,” said Daalder, who’s now president of the Chicago Council on Global Affairs.

Snowden Damage

All three panelists said disclosures of American spying on allies made by former National Security Agency contractor Edward Snowden had damaged U.S. relations with Europe.

“It’s really bad,” Daalder said. “We’ve lost a lot of trust. It’s going to take serious efforts to get it back.”

Albright, who now teaches and leads firms that consult on global strategy and investments in emerging markets, scoffed at European governments for taking umbrage at American spying.

When she traveled to Europe as secretary of state, Albright said, she couldn’t always read her intelligence in her hotel or a public place.

“I had to do it in a tent so people wouldn’t see it,” she said.“The Europeans are hypocrites about this.”

Other panelists at yesterday’s conference discussed the U.S. economy, politics and government. CBOE Holdings Inc.’s William Brodsky and Ariel Investments LLC’s Mellody Hobson said the biggest risk to equity markets and growth next year is dysfunction in Washington, after the strongest year in American stocks in a decade.

Debt Ceiling

Events such as the fight between Democrats and Republicans over lifting the nation’s debt ceiling, are “the cause of many of the problems” with the economy, Brodsky said. The White House Office of Management and Budget has estimated that last month’s partial government shutdown would trim economic growth by as much as 0.6 percentage point in the fourth quarter.

Chicago Mayor Rahm Emanuel, formerly President Barack Obama’s chief of staff, agreed that Washington’s fumbles have hindered the economy.

“The American economy would be growing better and faster if Washington wasn’t always getting in the way,” he said. Emanuel acknowledged there were problems with the rollout of Obama’s signature health-care program, which he played a central role in creating, while saying the U.S. is already seeing a payoff from the plan.

America’s lack of cohesion also risks having an impact abroad. Prince Alwaleed bin Talal, the billionaire investor and a member of Saudi Arabia’s royal family, said government turmoil is hindering a strong foreign policy from the U.S.

“Unless your house is in order here and unless the bickering stops between the Republican side and the president, you can’t have a strong foreign policy,” he said. Alwaleed described the U.S. economy as “somewhat down now, but it’s not out.”

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