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JUNE 21, 2004
Edited by Richard S. Dunham Bush: On The Way Back From Iraq For months, President George W. Bush has been battered by bad news from Iraq. The unexpectedly fierce resistance to U.S. occupation sent his approval rating plummeting -- prompting even some Republicans to fret that Bush's democratization mission was in danger of catastrophic failure. But as the President welcomed the leaders of the world's major economic powers to Sea Island, Ga., on June 8 for the annual Group of Eight summit, there were hopeful signs that the diplomatic and military turnaround Bush has sought for so long is nearing. On the day the leaders arrived, the U.N. Security Council unanimously approved a resolution supporting the interim government scheduled to take control in Baghdad on July 1. In forging an international consensus on the future of Iraq -- with France, Germany, and Russia all on board -- Bush displayed the deft sense of diplomacy that has eluded him for 18 months. "It is a major step forward," Russian President Vladimir Putin declared after meeting with Bush. The prevailing optimism at the G-8 mirrors a newly positive mood in Baghdad. Interim Iraqi Prime Minister Ayad Allawi negotiated a pact under which nine militias will disarm. Delegating security authority to Iraqis around such holy -- and hostile -- cities as Fallujah and Najaf has dampened violence. Billions of dollars in American aid are starting to flow, which could improve services and take unemployed youths -- and potential terror recruits -- off the streets. All of this could enable the interim government to assume real power and control in coming months and set the stage for an elected government to take over in January. Meanwhile, the Administration is toning down the blunt rhetoric about democracy in the Middle East that riled longtime U.S. friends such as autocratic Saudi Arabia, which refused to attend the G-8 summit. Bush is instead focusing on political reform for "willing" countries. Mission Progressing Reestablishment of stability in Iraq and the beginnings of an exit strategy would not only boost the President's tarnished image on the world stage but also improve his reelection chances. It would send a message that the mission is finally being accomplished and at the same time undercut Democrat John Kerry's most potent issue. Of course, that outcome is no slam dunk. Kurdish leaders are threatening to withdraw from the new government if it limits their rights to self-rule. The Ramadan holiday starts in mid-October this year, creating a ripe opportunity for an insurgent offensive just weeks before the U.S. election. "The rebels will have every reason to make the new government look like it's a puppet of the American government," says Patrick L. Clawson, deputy director of the Washington Institute for Near East Policy. Nor is it clear that Iraq's elections will come off as scheduled in seven months. U.N. envoy Lakhdar Brahimi has estimated that it would take eight months to have a vote after the electoral system is chosen. And without provisions to protect the rights of minority Kurds and Sunnis, the entire process could collapse. Besides, with casualties continuing to mount, it's far from clear that the U.S. has achieved the stability required for fair elections. So the U.N. vote is just a start. But after months of setbacks, it's a big step for Iraq -- and Bush. By Stan Crock in Savannah, Ga. CAPITAL WRAPUP A Real Bell-Ringer A June 9 decision by the Bush Administration handed a big victory to the Bells -- and could remake the telecom industry. The Justice Dept.'s Solicitor General passed up a chance to appeal a pro-Bell ruling to the Supreme Court, leaving a key part of the 1996 Telecommunications Act in tatters. The result: Long-distance companies and other potential competitors may find it nearly impossible to break into the Bells' local calling business. So while the Bells can offer one-stop shopping for local and long-distance services, the likes of AT&T (T ) and MCI Group (MCWEQ ) will have little ammo to fight for consumers. They may be forced to retreat into the narrower market serving businesses. Today's big winners are Verizon (VZ ), SBC (SBC ), BellSouth (BLS ), and Qwest Communications (Q ). But they, too, may be overshadowed sooner than they think. Cable companies hope to make inroads into local and long-distance services with voice-over-Internet service. Comcast (CMCSK ) and Time Warner Cable (TWX ) could offer the Bells formidable competition. AT&T and state regulators are fighting a rearguard action: They'll ask the Supreme Court to step in without the Bushies. And Congress next year may take another crack at shaping the telecom future. But with technology rushing ahead, law and politics may find it impossible to keep up. By Catherine Yang 
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