China's Great Retail Race
by Bruno Lannes, Jerry Li and Stephane Charveriat
South Korea’s Lotte conglomerate became the last in a series of multinational retailers to seek their fortune in China. In June, Lotte bought 100% of CTA Makro, which operates six supermarkets in Beijing and two in Tainjin, under the Chinese brand name Wankelong. In addition to supermarkets in Beijing, Shandong, Lianing and other provinces, the South Korean company plans to open 300 hypermarkets in China over the next 10 years.
Even before Lotte’s move, China was the only retail market on earth where the top four global players—Wal-Mart, Carrefour, Tesco and Japan’s Seven and I Holding Company—compete in a significant way.
Yet scratch beneath the expansionist euphoria and you find that China really is a tough place to stay in business. Despite 11.4% year-on-year GDP growth in 2007 and dynamic growth in consumer spending, retailers across China are suffering due to overcapacity and inefficient operations.
Bain & Company projects growth in modern trade (hypermarkets, supermarkets, chain convenience stores and discount stores) in China will face a significant slow down over the next four years. Already by 2007, modern trade had reached the point of market saturation in China’s Tier 1 cities and some Tier 2 cites.
For example, in Shanghai and Fuzhou, the retail space per household ratio, an indicator of market saturation, exceeded that of France and other developed countries. In fact, CTA Makro’s acquisition by Lotte reflects the industry consolidation and restructuring that is happening in the retail sector throughout China.
As sales growth slows and the retail market becomes increasingly crowded, the winning companies will be those that make the most of scale to lower overall costs and the prices they charge in leading product categories. They’ll also need to streamline operations and learn how to make the most of their basic business model while adapting it successfully to local specificities.
When Bain & Company analyzed nearly 300 attempts by more than 60 U.S. retailers to expand into adjacent businesses during the period between 1989 and 2004, we found that only 29% of the moves contributed to profitable growth. Just 15% hit the jackpot—defined as moves that had a positive net present value and added more than 5% to revenues and profits. Successful movers tend to be those that enter new businesses that are closer to their "core" business activities, with success rates rising sharply for those moves involving expansions into adjacent businesses with few variants in the companies’ current cost structures, target consumers or capabilities.
Chinese retailer Wu-Mart has deployed a successful strategy of concentrating in one region at a time—a geographic core—and then selectively expanding as it gained market share and learned how to address regional preferences. The company uses multiple store formats to drive market share dominance, making selective acquisitions along the way. Using this approach, Wu-Mart has captured more than 5% of retail market share in Beijing, a leading position in a fragmented market. A full 90% of its stores are concentrated in three closely located areas: Beijing, Tianjin, and Hebei Province.
Similarly, France’s Carrefour has emerged as a major multinational retailer in China by learning how to take a carefully honed core operating model and adjusting it to the specificities of a new market. Carrefour, the world’s second-largest retailer, took a measured approach. As of June 2008, the company operates more than 110 hypermarkets throughout China and 283 discount stores in Beijing and Shanghai, for total revenues of around €3 billion (around $4.8 billion) in 2007.
When Carrefour entered China in 1995, it opened its first hypermarket through a joint venture with a local partner. The relationship helped the French retailer learn the local characteristics to which it needed to adapt before moving its higher-margin hypermarket format to China. This partnership approach has been pursued since then, with different partners in the different regions of China to better adapt to regional variations.
Like Wu-Mart, Carrefour was painstakingly careful in its expansion strategy. The French retailer started out in selected Tier 1 cities throughout China. Only after it established itself in those cities and felt confident it could transfer its operating model did the company enter affluent second-tier cities such as Dongguan and Zhuhai. In particular, it learned how to adapt its product offerings to an average basket of about 100 yuan (around $14), whereas it can reach more than 160 yuan in the most affluent suburbs of Beijing and Shanghai.
The company went to great lengths to understand how retailing in China would be different than anywhere else. For starters, it knew that less than 10% of its potential shoppers would drive cars. Instead of following its more typical model of locating stores in relatively remote locations, Carrefour opened most of its stores in dense urban areas, even if it meant two-level stores. Also, Carrefour knew it had to allow suppliers to manage their own logistics, instead of setting up Carrefour’s own logistics arm and charging suppliers for logistics services as it does elsewhere in the world. The reason: Chinese suppliers often don’t know their logistics costs.
Carrefour also identified which of its accepted business principles and processes it needed to maintain while adjusting to the new market. Among the unchanged principles: Its store operating model, its management-information system, and its employee career-management and training programs would be the same as they are in the other countries where it operates.
Knowing what to change as it moved beyond its geographic core has been a key factor related to the retailer’s success. Carrefour determined that its internal store design could be similar to that of its hyperstores in other regions throughout the world. But for Chinese customers it allocated more space for bulk products and snack foods, and it also stocked fresh fish in an aquarium—catering to Chinese shoppers’ preference for purchasing live seafood. And while Carrefour’s location criteria and overall store size was unchanged, it made some distinct adjustments for China: The company opted for two-level stores over a single level, and—catering to China's relative shortage of automobiles—allocated a large share of its parking lots for bicycles and even provided a bus to pick up shoppers.
Attention to cultural differences is helping distinguish the retailing winners from losers in China and elsewhere. Our study found that only one in every three international expansion by retailers results in profitable growth. But companies have discovered that the very strategy that has contributed to their growth over the decades—standardization—now can hurt the bottom line. In response, companies like Carrefour are replacing standardization with localization, the fine art of stocking store shelves based on an area’s ethnicity, wealth, lifestyle and values. As an example, for Chinese consumers, shopping has to be a fun and enjoyable experience; so Carrefour stores have several "retail-tainment" events and promotions every day.
For retailers, learning how to localize stores requires striking a tricky balance. Too much customization drives up costs. Too little attention to regional trends and product preferences leads to stagnation, sending customers into the arms of more innovative competitors. Our analysis of 30 localization leaders found that these pioneers use three criteria to achieve an optimal balance: They figure out which elements of a business should be localized, how costly they are to customize, and how much impact they'll have from store to store.
As the competition heats up in China, Lotte and other players would be wise to take a lesson from winning retailers like Wu-Mart and Carrefour. Both have learned that what it takes to succeed in China is not very different from elsewhere in the world. In addition to making the most of scale and honing operations, winning companies stay close to their core as they honor cultural differences. That can spell the difference between capturing share in China’s magnificent growth—or being acquired or closing up shop.
Mr. Lannes is a partner and Mr. Li is a manager in Bain & Company's Shanghai office. Mr. Charveriat is a partner in Bain & Company’s Paris office.
The New and Improved Japan Inc.
by Jesper Koll
In the summer of 2008, the global economy faces unprecedented challenges. Torn between the threat of asset deflation in America and rampant commodit-price inflation in emerging markets, something will have to give. A global slowdown seems inevitable. For forward looking investors, the really interesting question is now which country and which market is likely to emerge as the winner once the downturn dust settles. In my view, Japan is poised to be next star performer. Yes, that’s right, watch out for Japan to emerge as a great winner once the next global up-cycle starts.
Why? Four reasons: two microeconomic and company specific, and two macroeconomic. Since all economies are essentially the parts of the individual players, let’s start with the micro.
One word—hypercompetitiveness. During what seemed like a "lost decade," corporate Japan was building the right foundation for a strong future. First of all, corporate Japan has invested very aggressively in research and development. Despite banks being bankrupt and politics being terrible, R&D spending was ramped-up aggressively since the mid-1990s, rising from barely 2% of GDP to almost 3.5%. This investment in the future is now paying off. Whether in cars, electronics or even fashion, Japan’s innovation power spans almost the entire spectrum of consumer and capital goods.
T-shirts that feed you vitamins? Hybrid cars? The new global standard for next generation DVDs? Robots that can weld with one-micron of precision when the competition can not even manage 10 micron? Best quality steel that no global carmaker can do without? Yes, that’s right, all made in Japan, or rather, only made in Japan. The relentless focus on R&D during the lost decade is now paying off and puts Japan back at the cutting edge of global competitive power.
But innovation is only one part of a business, cost control is the other. And here Japan Inc. has also taken huge strides. Supply-chain management has improved dramatically, sales and administrative costs have been cut and domestic factory automation has gone into overdrive. The bottom line speaks for itself—productivity has been surging at rates of more than 3% for the past 12 months, a stunning performance against a backdrop of global slowdown. Corporate profit margins have surged to new historic highs. If you exclude currency effects—dollar depreciation hurts profits as exports earn fewer yen—Japan is poised for a fifth consecutive year of double-digit profit growth.
Make no mistake, the combination of relentless investment in R&D plus unprecedented cost cuts and operational rationalization have turned Japan Inc. into a competitive powerhouse that is posed to take global market share from the U.S., European and Asian competitors in the current global downturn, while at the same time delivering better returns and profits. And of course, once the global economy starts to pick up, the upside gearing of Japan Inc. will turbo-charge profits.
OK, so corporate Japan has restructured and invested for the future. What about Japan’s economy? Here, the scope for positive surprises is also better than commonly assumed. Two reasons—one structural and one cyclical. The structural one is inflation. Yes, for Japan inflation is actually very good news. This is because, until last year, Japan had been stuck in over a decade of deflationary rot. During a decade of deflation, consumers and corporations were stuck in a perverse cycle. It was actually rational to hoard money, to keep cash because as prices fell you could count on the purchasing power of your cash to constantly increase.
The result is an unprecedented mountain of “futon money.” Indeed, more than 1.5-times Japan GDP is stashed away in household savings. Mr. and Mrs. Watanabe have been hoarding cash as it was the right thing to do. Deflation breeds deflationary expectations which breed further deflation. Such was the vicious cycle of Japan’s long domestic recession.
Now that prices have begun to rise, this vicious cycle will turn to a virtuous one. Money will come out of the futon because Mr. and Mrs. Watanabe know that the purchasing power of their hoarded cash is starting to decline. The velocity of money is poised to rise for the first time in almost two decades, which should ensure a structural pick-up in domestic demand growth in Japan.
Put another way, Japan’s cash hording amassed during the lost decade now puts Japan in a great position to enjoy a structural upturn in growth. Japan is poised to be the one country where cost-push inflation actually triggers demand-pull inflation.
The cyclical reason is also straightforward. Last year, Japan’s private sector was hit with a triple tightening of policy. Fiscal policy, credit policy and regulatory policy were all tightened together, choking off consumer demand as well as forcing a sharp rise in bankruptcies amongst small- and medium-sized companies. Consumer confidence started to slide and the household savings rate surged to more than 16% from barely 12% of incomes .
All this because of policy tightening under Prime Minister Shinzo Abe. The good news: that explains last year’s domestic recession. Mr. Abe got ousted after loosing last year’s election and his successor, Yasuo Fukuda, has been a welcome pragmatist.
This year, Japan gets no new taxes, the credit crunch is largely passed and, with a little luck, business will not be stifled by new rules and regulations like last year’s Draconian construction code change and pension debacle (the government admitted to having lost records for about 60 million pensioners, i.e., about half of Japan’s 128 million people). All said, last year the cycle was choked-off by policy tightening, but this year, policy is not tightened, so a headwind is turning into a modest positive.
Yes, Japan has been a huge underperformer over the past decade. However, past performance is no guarantee for future performance. While China and India and the other BRIC economies have been grabbing headlines with high growth rates and population dynamics, Japan has been written off as stuck in graceful decline at best, demographic death-spiral at worst. Beneath the headlines, however, corporate Japan has restructured and innovated and invested in the future.
On top of this, the turn from deflation to inflation puts Japan in a better-than-ever position to emerge as the great positive surprise during the current global downturn. In other words, Japan is poised to win big.
Mr. Koll is the president of TRJ KK, a Tokyo-based investment-research firm.
China’s Guerrilla War for the Web
by David Bandurski
By some estimates, these commentary teams now comprise as many as 280,000 members nationwide, and they show just how serious China’s leaders are about the political challenges posed by the Web. More importantly, they offer tangible clues about China’s next generation of information controls—what President Hu Jintao last month called “a new pattern of public-opinion guidance.”
It was around 2005 that party leaders started getting more creative about how to influence public opinion on the Internet. The problem was that China’s traditional propaganda apparatus was geared toward suppression of news and information. This or that story, Web site or keyword could be banned, blocked or filtered. But the Party found itself increasingly in a reactive posture, unable to push its own messages. This problem was compounded by more than a decade of commercial media reforms, which had driven a gap of credibility and influence between commercial Web sites and metropolitan media on the one hand, and old party mouthpieces on the other.
In March 2005, a bold new tactic emerged in the wake of a nationwide purge by the Ministry of Education of college bulletin-board systems. As Nanjing University, one of the country’s leading academic institutions, readied itself for the launch of a new campus forum after the forced closure of its popular “Little Lily” BBS, school officials recruited a team of zealous students to work part time as “Web commentators.” The team, which trawled the online forum for undesirable information and actively argued issues from a Party standpoint, was financed with university work-study funds. In the months that followed, party leaders across Jiangsu Province began recruiting their own teams of Web commentators. Rumors traveled quickly across the Internet that these Party-backed monitors received 50 mao, or roughly seven cents, for each positive post they made. The term Fifty Cent Party, or wumaodang, was born.
The push to outsource Web controls to these teams of pro-government stringers went national on Jan. 23, 2007, as President Hu urged party leaders to “assert supremacy over online public opinion, raise the level and study the art of online guidance, and actively use new technologies to increase the strength of positive propaganda.” Mr. Hu stressed that the Party needed to “use” the Internet as well as control it.
One aspect of this point was brought home immediately, as a government order forced private Web sites, including several run by Nasdaq-listed firms, to splash news of Mr. Hu’s Internet speech on their sites for a week. Soon after that speech, the General Offices of the cpc and the State Council issued a document calling for the selection of “comrades of good ideological and political character, high capability and familiarity with the Internet to form teams of Web commentators ... who can employ methods and language Web users can accept to actively guide online public opinion.”
By the middle of 2007, schools and party organizations across the country were reporting promising results from their teams of Web commentators. Shanxi Normal University’s 12-member “red vanguard” team made regular reports to local Party officials. One report boasted that team members had managed to neutralize an emerging BBS debate about whether students should receive junior college diplomas rather than vocational certificates, the former being much more valuable in China’s competitive job market. “A question came up among students about what kind of diplomas they would receive upon graduation,” the university report read. “A number of vanguards quickly discovered the postings and worked together to enforce guidance with good results.”
China’s Culture Ministry now regularly holds training sessions for Web commentators, who are required to pass an exam before being issued with job certification. A Chinese investigative report for an influential commercial magazine, suppressed by authorities late last year but obtained by this writer, describes in some detail a September 2007 training session held at the Central Academy of Administration in Beijing, at which talks covered such topics as “Guidance of Public Opinion Problems on the Internet” and “Crisis Management for Web Communications.”
In a strong indication of just how large the Internet now looms in the Party’s daily business, the report quotes Guan Jianwen, the vice president of People’s Daily Online, as saying during the training session: “In China, numerous secret internal reports are sent up to the Central Party Committee through the system each year. Of those few hundred given priority and action by top leaders, two-thirds are now from the Internet Office [of the State Council Information Office].”
The CCP’s growing concern about the Internet is based partly on the recognition of the Web’s real power. Even with the limitations imposed by traditional and technical systems of censorship—the best example of the latter being the so-called “Great Firewall”—the Internet has given ordinary Chinese a powerful interactive tool that can be used to share viewpoints and information, and even to organize.
But the intensified push to control the Internet, of which China’s Web commentators are a critical part, is also based on a strongly held belief among Party leaders that China, which is to say the CCP, is engaged in a global war for public opinion. In Gongjian, a book released earlier this year that some regard as President Hu’s political blueprint, two influential Party theorists wrote in somewhat alarmist terms of the history of “color revolutions” in Eastern Europe and Central Asia. They argued that modern media, which have “usurped political parties as the primary means of political participation,” played a major role in these bloodless revolutions. “The influence of the ruling party faces new challenges,” they wrote. “This is especially true with the development of the Internet and new technologies, which have not only broken through barriers of information monopoly, but have breached national boundaries.”
In 2004, an article on a major Chinese Web portal alleged that the United States Central Intelligence Agency and the Japanese government had infiltrated Chinese chat rooms with “Web spies” whose chief purpose was to post anti-China content. The allegations were never substantiated, but they are now a permanent fixture of China’s Internet culture, where Web spies, or wangte, are imagined to be facing off against the Fifty Cent Party.
Whatever the case, there is a very real conviction among party leaders that China is defending itself against hostile “external forces” and that the domestic Internet is a critical battleground. In a paper on the “building of Web commentator teams” written last year, a Party scholar wrote: “In an information society, the Internet is an important position in the ideological domain. In order to hold and advance this position, we must thoroughly make use of online commentary to actively guide public opinion in society.”
Mr. Hu’s policy of both controlling and using the Internet, which the authors of Gongjian emphasize as the path forward, is the Party’s war plan. Chinese Web sites are already feeling intensified pressure on both counts. “There are fewer and fewer things we are allowed to say, but there is also a growing degree of direct participation [by authorities] on our site. There are now a huge number of Fifty Cent Party members spreading messages on our site,” says an insider at one mainland Web site.
According to this source, Web commentators were a decisive factor in creating a major incident over remarks by CNN’s Jack Cafferty, who said during an April program that Chinese were “goons and thugs.” “Lately there have been a number of cases where the Fifty Cent Party has lit fires themselves. One of the most obvious was over CNN’s Jack Cafferty. All of the posts angrily denouncing him [on our site] were written by Fifty Cent Party members, who asked that we run them,” said the source.
“Priority” Web sites in China are under an order from the Information Office requiring that they have their own in-house teams of government-trained Web commentators. That means that many members of the Fifty Cent Party are now working from the inside, trained and backed by the Information Office with funding from commercial sites. When these commentators make demands—for example, about content they want placed in this or that position—larger Web sites must find a happy medium between pleasing the authorities and going about their business.
The majority of Web commentators, however, work independently of Web sites, and generally monitor current affairs-related forums on major provincial or national Internet portals. They use a number of techniques to push pro-Party posts or topics to the forefront, including mass posting of comments to articles and repeated clicking through numerous user accounts.
“The goal of the government is to crank up the ‘noise’ and drown out progressive and diverse voices on China’s Internet,” says Isaac Mao, a Chinese Web entrepreneur and expert on social media. “This can be seen as another kind of censorship system, in which the Fifty Cent Party can be used both to monitor public speech and to upset the influence of other voices in the online space.”
Some analysts, however, say the emergence of China’s Web commentators suggest a weakening of the Party’s ideological controls. “If you look at it from another perspective, the Fifty Cent Party may not be so terrifying,” says Li Yonggang, assistant director of the Universities Service Centre for China Studies at the Chinese University of Hong Kong. “Historically speaking, the greatest strength of the CCP has been in carrying out ideological work among the people. Now, however, the notion of ‘doing ideological work’ has lost its luster. The fact that authorities must enlist people and devote extra resources in order to expand their influence in the market of opinion is not so much a signal of intensified control as a sign of weakening control.”
Whatever the net results for the Party, the rapid national deployment of the Fifty Cent Party signals a shift in the way party leaders approach information controls in China. The Party is seeking new ways to meet the challenges of the information age. And this is ultimately about more than just the Internet. President Hu’s June 20 speech, the first since he came to office in 2002 to lay out comprehensively his views on the news media, offered a bold new vision of China’s propaganda regime. Mr. Hu reiterated former President Jiang Zemin’s concept of “guidance of public opinion,” the idea, emerging in the aftermath of the Tiananmen Massacre, that the Party can maintain order by controlling news coverage. But he also talked about ushering in a “new pattern of public-opinion guidance.”
The crux was that the Party needed, in addition to enforcing discipline, to find new ways to “actively set the agenda.” Mr. Hu spoke of the Internet and China’s new generation of commercial newspapers as resources yet to be exploited. “With the Party [media] in the lead,” he said, “we must integrate the metropolitan media, Internet media and other propaganda resources.”
Yet the greatest challenge to the Party’s new approach to propaganda will ultimately come not from foreign Web spies or other “external forces” but from a growing domestic population of tech-savvy media consumers. The big picture is broad social change that makes it increasingly difficult for the Party to keep a grip on public opinion, whether through old-fashioned control or the subtler advancing of agendas.
This point became clear on June 20, as President Hu visited the official People’s Daily to make his speech on media controls and sat down for what Chinese and Western media alike called an “unprecedented” online dialogue with ordinary Web users. The first question he answered came from a Web user identified as “Picturesque Landscape of Our Country”: “Do you usually browse the Internet?” he asked. “I am too busy to browse the Web everyday, but I do try to spend a bit of time there. I especially enjoy People’s Daily Online’s Strong China Forum, which I often visit,” the president answered.
On the sidelines, the search engines were leaping into action. Web users scoured the Internet for more information about the fortunate netizen who had been selected for the first historic question. Before long the Web was riddled with posts reporting the results. They claimed that Mr. Hu’s exchange was a “confirmed case” of Fifty Cent Party meddling. As it turned out, “Picturesque Landscape of Our Country” had been selected on three previous occasions to interact with party leaders in the same People’s Daily Online forum.
For many Chinese Internet users, these revelations could mean only one thing—Party leaders were talking to themselves after all.
Mr. Bandurski is a free-lance journalist and a scholar at the China Media Project, a research program of the Journalism & Media Studies Centre at the University of Hong Kong.
Who Obama Should See in Iraq
July 17, 2008
Barack Obama is headed to Baghdad, probably within days. It's a shame he chose to pre-empt the visit with a big speech and an op-ed on the subject. He just might learn a thing or two while he's there.
I helped plan these congressional delegations (or CODELS) to Iraq for over 250 congressmen and senators when I worked for the Coalition Provisional Authority. I know that congressmen find them illuminating despite the obvious limitations imposed by time and security concerns. Here are some individuals and groups Mr. Obama should make it a priority to see:
![[Who Obama Should See in Iraq]](http://s.wsj.net/public/resources/images/OB-BV812_oj_sen_20080716201311.jpg) |
| AP |
| Barack Obama |
- Sheikh Abu Risha. He's a founder of what's become known as Sahawa al Iraq, or the Anbar Awakening Movement. This is the grass-roots Sunni tribal movement that has driven al Qaeda from Ramadi. Abu Risha inherited the leadership of the movement in September 2007, after his brother was assassinated.
When his tribe recently captured the lead murder suspects – rank-and-file tribal members in collaboration with al Qaeda – the tribal leadership turned them over to the Iraqi government's national police force. Abu Risha told me that this was the first time in the tribe's history it had surrendered its own to a national government (a Shiite-led government, no less) instead of subjecting them to the Sunni tribe's own extrajudicial system.
Critics tend to belittle the pace and seriousness of reconciliation taking place via legislation in Iraq's National Assembly. But they should not underestimate the real-life reconciliation that has been occurring every day, as exemplified by Sunni Sheikhs like Abu Risha cooperating with the Shiite government of Prime Minister Nouri al-Maliki.
The reconciliation can also be seen in the Iraqi Army. The First Brigade of the First Division, for example, is 60% Sunni, 40% Shiite. This mixed brigade has fought in Anbar province against Sunni al Qaeda terrorists, as well as in operations in Basra against the Shiite Sadrist militia. The sectarian mix, cohesion and effectiveness of Iraq's army is increasingly reflecting the First Division's First Brigade.
It's in part because of this kind of reconciliation that violence against Iraqi civilians has declined by approximately 80% over the past year, according to data from the U.S. military, the Iraqi government, and several independent research organizations. U.S. casualties are at record lows too.
Earlier this year, Mr. Obama credited the Democratic takeover of Congress in the 2006 elections for the decline in Iraqi violence, arguing that Sunni tribes only then began to recognize the need to reconcile. He should ask Abu Risha whether he agrees.
- The military men and women who re-enlisted on July 4. Over the recent holiday weekend, 1,215 America airmen, marines, sailors and soldiers gathered at the U.S. military headquarters at Camp Victory, Baghdad, to raise their right hands and pledge to continue to serve. It was the largest re-enlistment ceremony since the U.S. armed forces went all-volunteer in 1973, according to Sgt. Maj. Marvin L. Hill. He commented afterwards that "these service members know the cost of war and they are still re-enlisting."
As is customary on these CODELs, while he is in Iraq Mr. Obama will visit with troops from Illinois, his own state. He should also carve out time to meet those who have re-enlisted while serving on a battlefield.
There is a tendency in some corners to characterize our troops as victims, rather than heroes, let alone people who are proud of their mission and remain confident in its chances for success. Mr. Obama should hear why some of these men and women on the front lines believe the current strategy is working.
- Ambassador Ryan Crocker. Of course Mr. Obama will spend time with the U.S. ambassador in Baghdad. But beyond the standard briefing on the current state of affairs, he should probe the ambassador about his own change of heart on U.S. policy in Iraq.
Mr. Crocker is a fluent Arabic speaker, widely regarded as among the State Department's most distinguished Arabists. Before Iraq, he was ambassador to Kuwait, Syria, Lebanon and Pakistan, with postings as well to Iran, Qatar, Egypt and Afghanistan.
Before the war, Messrs. Obama and Crocker both opposed the invasion of Iraq. In a 2002 memo to Secretary of State Colin Powell, Mr. Crocker outlined the risks of going to war, including the danger of inflamed sectarian tensions, violent Sunni opposition to the new political order, and meddling from neighbors Iran and Syria.
But Mr. Crocker is a professional diplomat, not an ideologue. Since his days serving with the Coalition Provisional Authority in 2003 and later taking over as ambassador, he has focused on the challenges facing U.S. policy now – not on whether his 2002 views have been vindicated. He is a strong supporter of the surge strategy, and recognizes that a sustained U.S. commitment to Iraq is essential to building on recent successes.
When Mr. Crocker and I were colleagues in Iraq, I often saw him provide unvarnished and sober recommendations to the most senior officials in the administration, including President Bush. He is not afraid of telling his political masters what they do not want to hear. Mr. Obama should avail himself of Mr. Crocker's experience and judgment, and should give him a fair hearing on why – whatever mistakes both men may think were made in 2002 – the current strategy is the right one in 2008.
- The press corps. There are a handful of Western reporters who have been based in Iraq on-and-off for the past few years. They have seen, and lived through, both the near collapse of Iraq as well as its recent stabilization.
The White House has actually invited current and former Baghdad bureau reporters to the Oval Office for the president to hear their observations. Guests have included NBC's Richard Engel and the New York Times's John Burns. Mr. Obama should do the same.
Mr. Burns won Pulitzer Prizes for coverage in Bosnia and Afghanistan before immersing himself in Iraq. Before the surge was implemented, this is how he described the stakes of withdrawal on "The Charlie Rose Show":
"Friends of mine who are Iraqis – Shiite, Sunni, Kurd – all foresee a civil war on a scale with bloodshed that will absolutely dwarf what we're seeing now. It's really difficult to imagine that that would happen . . . without Iran becoming involved from the east, without the Saudis, who have already said in that situation that they would move in to help protect the Sunni minority in Iraq.
"If you pull out now, and catastrophe ensues, then it is very likely that the United States would have to come back in circumstances which, of course, would be even less favorable, one might imagine, than the ones that now confront American troops here."
These four discussions are not ones that Mr. Obama has had before. Rather than relitigate the choices of 2002 and 2003, Mr. Obama should seek to inform decisions he may have to make in 2009 and 2010 as commander in chief. It's not too late for him to fit some new items into his agenda.
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