The arrests of key Taliban leaders in Pakistan and slow but steady progress on the battlefield of Helmand province have offered the first flicker of hope in years that the U.S. and its allies may be able to check the rise of an insurgency that seemed unstoppable only a few months ago. That's a long way from victory – a word that has fallen out of favor within a U.S. military keenly aware of the complexity of Afghanistan and the dangers of elevated expectations among a war-weary public in the United States and Europe. However, the events of the last few weeks suggest that failure isn't inevitable either. For the first time in four years, the Taliban and their allies are on the defensive. Key leaders are in Pakistani custody, insurgents on the verge of losing their supply and logistical base in the Helmand town of Marjah and they face an expected showdown in the months ahead around their spiritual birthplace of Kandahar. "The situation remains serious but is no longer deteriorating," Defense Secretary Robert Gates told reporters at the Pentagon on Monday. – Washington Post

Dominant Social Theme: The Afghan war is worth fighting and winning. America, generally, is resurgent.

Free-Market Analysis: This is an optimistic story by the Washington Post, but it brings up a bigger point – that the endless-war-for-endless peace now being prosecuted in the Middle East may well be a bridge too far. Start with the Taliban. The above excerpt, focuses on the Taliban as an enemy that is losing ground. But the Taliban is actually drawn from the Afghan people.

Yes, in truth, it is an indigenous movement funded by the Saudis and encouraged by those in leadership in Pakistan for a variety of reasons. There is no bifurcation from our point of view. Not only that, but the Pakistan pols and apparently the military want to preserve the Taliban in Afghanistan as an ally against India. One of the main diplomatic tasks of the US is to convince the Pakistan leadership to stop cultivating, supporting and supplying the Taliban.

Meanwhile, back in Marjah, the strategy of the US and allied forces is to provide "government in a box" to pacified areas while rooting out the Taliban. All this means, so far as we can tell, is that the US is substituting a homegrown Pashtun movement for a Kabul regime that depends on various ethnic groups for policing and governance that the Pashtun themselves have rejected previously. But how is this to be seen by Afghan's 40 million Pashtuns as something other than an occupation? And why in fact is the US bothering? Here's some more from the article:

Once the area around Marjah is secured – a process that could still take weeks – NATO and its Afghan partners plan to shift eastward to a far bigger challenge – Kandahar, the second largest city in the country and the economic and cultural capital of the south. The city was the Taliban's headquarters until the city fell to U.S.-led forces in 2001. But with only 1,000 Canadian troops to protect the city and the surrounding area, the insurgents have managed to make significant inroads, controlling villages to the north and west of Kandahar and expanding their influence into numerous neighborhoods in the urban center itself.

To reverse the trend, NATO is boosting its presence in the Kandahar area to 6,000 troops in the coming months – many of them Americans ordered to Afghanistan as part of President Barack Obama's troop surge. Thousands more are expected to join in an offensive widely expected this summer. If the Kandahar area can be secured, NATO hopes to establish an arc of stability extending from Helmand in the southwest all the way to Kabul in the northeast. That would enable the Afghan government to expand its influence in parts of the country which have been the most estranged and – if all goes to plan – convince many Afghans that their future lies with the government and not the insurgents. Bolstering the capacity and efficiency of Afghan local government remains the key. …

That's a tall order in a country so poor that local administrators earn little and have even fewer resources to spend. Villagers say one of the attractions of the Taliban was their ability to resolve local disputes and maintain law and order – without the bribes and delays that plague the Afghan administration. "Even if the coalition achieves limited tactical successes, the Taliban will quickly replace the fighters it loses, and it can easily target the `traitors,'" Gilles Dorronsoro, an Afghan expert with the Carnegie Endowment for International Peace, wrote this month. "These coalition tactics are not new and have never worked before."

We can see from the above excerpt – as well as our previous analysis – how ambitious this war-effort really is. First the US and allied troops will pacify Marjah and create governance with ties to the Karzai regime in Kabul. Then the war effort will move onto Kandahar, pacify it and gradually extend secure zones around Kandahar. At the same time, the US will be working with Pakistan to put pressure on the Taliban in Pakistan to come to the negotiating table.

But what incentive does the Taliban have to come to the table? In our humble opinion, the Taliban simply needs to wait. The US won't make war in Afghanistan forever, no matter how many bases it builds. By pre-announcing a willingness to negotiate with the Taliban, it seems to us that the US and allied troops have undercut the larger military enterprise. Why negotiate with an enemy that has announced its intention eventually to quit?

We have spent some time analyzing Afghanistan and Pakistan, but there is also Iraq to consider. Yesterday we focused on a report that an influential Sunni group had pulled out of the electoral campaign that culminates in early March. We don't know if the Sunnis will end up boycotting the election but we are not sure that Iraq will remain settled. Here's a little of what we wrote about Iraq yesterday:

Three distinct cultures vie for primacy in Iraq, and that is probably two too many. The Sunnis are the minority in Iraq but make up the majority of Muslims in the world. The Shiites are the majority in Iraq and the base of this religious element is in Iran. Then there are the Kurds, mostly Sunni, but also more ecumenical than the Shia and Sunni factions in Iraq. Additionally, the Kurds straddle three countries. There is Iraq of course, and then Turkey (10 million Kurds) and Iran. The Kurdish population has a history of confrontation with all three states, and since the Kurds are a tribal entity with more than a thousand years of history, we don't see tensions falling anytime soon. In fact, in Iraq, there really are three separate nations from what we can tell.

So, the question remains – how can all three of these groups live together in harmony. The answer of course (from the American/allied standpoint) is a participatory democracy that gives each faction a say in the larger unitary political environment. But Iraq is not like the United States or even Britain. The fissures run deep and one begins to believe that the same optimism that has supported the European Union experiment is at work in Iraq as well – perhaps unrealistically. Just because a political union is declared, doesn't make it so. Just because electoral politics are implemented doesn't mean broad participation is imminent.

To read the full article, click here: Some Sunnis Drop Out of Iraq Election

OK, in the above analysis, it seems fairly clear the US and allies have a difficult task ahead. Iraq is actually subject to divisive Iranian influence. Afghanistan has not been fully pacified for a thousand years or more. And the enemies that the US are fighting are in some ways undifferentiated from the larger Pashtun population. But leaving aside the tremendous challenges faced in winding down these wars successfully, there is the home front to consider. At home, the US is faced with many challenges as well. Employment is down, the national debt is up and the US government itself is gridlocked and facing a populist electoral uprising from the Tea Party movement.

Here is an excerpt from an article at Alternet.org that summarizes some of what US citizens are going through as the recession gives way – according to government statistics – to a recovery:

America is the richest nation in history, yet we now have the highest poverty rate in the industrialized world with an unprecedented amount of Americans living in dire straights and over 50 million citizens already living in poverty.

The government has come up with clever ways to downplay all of these numbers, but we have over 50 million people who need to use food stamps to eat, and a stunning 50 percent of U.S. children will use food stamps to eat at some point in their childhoods. Approximately 20,000 people are added to this total every day. In 2009, one out of five U.S. households didn't have enough money to buy food. In households with children, this number rose to 24 percent, as the hunger rate among U.S. citizens has now reached an all-time high.

We also currently have over 50 million U.S. citizens without health care. 1.4 million Americans filed for bankruptcy in 2009, a 32 percent increase from 2008. As bankruptcies continue to skyrocket, medical bankruptcies are responsible for over 60 percent of them, and over 75 percent of the medical bankruptcies filed are from people who have health care insurance. We have the most expensive health care system in the world, we are forced to pay twice as much as other countries and the overall care we get in return ranks 37th in the world.

In total, Americans have lost $5 trillion from their pensions and savings since the economic crisis began and $13 trillion in the value of their homes. During the first full year of the crisis, workers between the age of 55 – 60, who have worked for 20 – 29 years, have lost an average of 25 percent off their 401k. "Personal debt has risen from 65 percent of income in 1980 to 125 percent today." Over five million U.S. families have already lost their homes, in total 13 million U.S. families are expected to lose their home by 2014, with 25 percent of current mortgages underwater. Deutsche Bank has an even grimmer prediction: "The percentage of 'underwater' loans may rise to 48 percent, or 25 million homes."

Every day 10,000 U.S. homes enter foreclosure. Statistics show that an increasing number of these people are not finding shelter elsewhere, there are now over 3 million homeless Americans, the fastest-growing segment of the homeless population is single parents with children.

Is the American exception dimming? We don't think it is a coincidence. From our point of view, America has been driven to her current state by an Anglo-American power elite that wants to see her weakened. This group of wealthy families and individuals have viewed the American republic as a threat and have worked to undermine it. Through several wars, and finally the Civil War, this group sought to undermine the republic and turn it from a representative government into a regulatory democracy that merely mimicked representation.

Today, America is indeed a wounded, bleeding giant. But as we have pointed out before, we do not believe that the power elite realized the impact that the Internet would have on citizens in America and elsewhere. The learning curve has been enormous but the education is taking place. There is a powerful movement arising of citizens who are not happy with the status quo and understand some, if not all, of what has taken place.

NOTED: George Soros (left) doubles his gold holdings to two-thirds of a billion … Far from selling gold as some misunderstood from his comments at the World Economic Forum, George Soros has been buying gold as ArabianMoney suspected. In a filing with the US Securities and Exchange Commission, Soros Fund Management owned 6.2 million shares of SPDR Gold Trust, the popular GLD exchange traded fund. At the Davos World Economic Forum the famous hedge fund manager reckoned to have made a billion from the devaluation of sterling in late 1992 refused to say whether he was buying gold. But he did describe gold as the 'ultimate asset bubble' leaving some headlines concluding Mr. Soros a seller of the yellow metal. – Seeking Alpha … (Ed Note: If one always does the opposite of what Soros says, maybe one can grow rich too?)

Is America on the wrong side of history? Perhaps so, for now. Its wars, in fact, are being fought to inflict a social order on the Middle East (and elsewhere) that its own citizens are starting to reject. We anticipate that as the educative effects of the Internet continue to make an impact that things will change. Perhaps America may right herself and begin to find a path back to national solvency and a less aggressive military stance. These changes would place her on the right side of history once again. All true American patriots would devoutly hope for such a result. As do we.